Annual Report 2014

Transcription

1 Annual Report 2014

2 CONTENTS 2 Corporate Information 4 Managing Director s Statement 10 Management Discussion and Analysis 10 Operational Review 14 Financial Review 16 Project Review 16 Major Property Development 22 Major Property Investments 23 Other Investments 24 Particulars of Property Development 28 Particulars of Properties under Construction 29 Particulars of Property and Hotel Investments 32 Corporate Governance Report 52 Directors Report 76 Independent Auditor s Report 78 Consolidated Statement of Profit or Loss 80 Consolidated Statement of Profit or Loss and Other Comprehensive Income 81 Consolidated Statement of Financial Position 83 Company s Statement of Financial Position 84 Consolidated Statement of Changes in Equity 86 Consolidated Statement of Cash Flows 89 Notes to the Consolidated Financial Statements 228 Financial Summary

3 2 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors Song Zengbin, Deputy Chairman Patrick Lee Seng Wei, Managing Director Ma Sun, Deputy Managing Director Edwin Lo King Yau Tao Tsan Sang Non-Executive Directors Lee Seng Hui, Chairman Moses Cheng Mo Chi Lee Shu Yin Independent Non-Executive Directors Francis J. Chang Chu Fai Jin Hui Zhi Ngai Wah Sang Lisa Yang Lai Sum EXECUTIVE COMMITTEE Patrick Lee Seng Wei, Chairman Ma Sun Edwin Lo King Yau Tao Tsan Sang AUDIT COMMITTEE Ngai Wah Sang, Chairman Francis J. Chang Chu Fai Moses Cheng Mo Chi Jin Hui Zhi Lisa Yang Lai Sum REMUNERATION COMMITTEE Francis J. Chang Chu Fai, Chairman Jin Hui Zhi Ngai Wah Sang Lisa Yang Lai Sum NOMINATION COMMITTEE Lisa Yang Lai Sum, Chairman Francis J. Chang Chu Fai Jin Hui Zhi Ngai Wah Sang Edwin Lo King Yau

4 CORPORATE INFORMATION () () () () () index.htm BANKERS Hong Kong Bank of China (Hong Kong) Limited The Bank of East Asia, Limited China CITIC Bank International Limited The Hongkong and Shanghai Banking Corporation Limited Standard Chartered Bank (Hong Kong) Limited OCBC Wing Hang Bank Limited Mainland China Bank of China Limited Bank of Communications Company Limited The Bank of East Asia (China) Limited China Construction Bank Corporation China Merchants Bank Company Limited Industrial and Commercial Bank of China Limited Ping An Bank Co., Ltd. Wing Hang Bank (China) Limited REGISTERED OFFICE 22nd Floor, Allied Kajima Building 138 Gloucester Road, Wanchai, Hong Kong Tel. : Fax : info@tiananchina.com SHARE REGISTRAR Tricor Secretaries Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong COMPANY SECRETARY Cindy Yung Yee Mei AUDITOR Deloitte Touche Tohmatsu SOLICITOR P. C. Woo & Co. STOCK CODE 28 WEBSITES index.htm

5 4 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGING DIRECTOR S STATEMENT I am pleased to present to you the annual results for FINANCIAL RESULTS 1, , , The revenue of the Group from continuing operations for the year ended 31st December, 2014 was HK$1,031.8 million (2013: HK$1,029.8 million), no material change compared to the year before. The profit attributable to owners of the Company was HK$1,284.5 million (2013: HK$337.6 million), representing an increase of over 2.8 times from The increase in profit for the year was the result of: (1) 1, (1) a gain on disposal of a subsidiary of HK$1,229.5 million. This has included a recovery of the loss realised in prior years of HK$199.3 million and an unrealised gain on holding the remaining interests in the subsidiary now classified to interests in joint ventures of HK$65.7 million; (2) (2) an increase in fair value gain on transfer of inventories of completed properties to investment properties as a Shenzhen project started to enter the rental market during the year; and (3) (3) a realised gain on disposal of the shares in a listed subsidiary of HK$81.6 million and an unrealised gain on holding the remaining shares of HK$78.8 million, totalling HK$160.4 million before tax or HK$117.8 million after tax Earnings per share (including continuing and discontinued operations) amounted to HK85.25 cents (2013: HK22.40 cents), while the net asset value per share attributable to owners of the Company was HK$10.25 at the end of 2014 (2013: HK$9.33). DIVIDEND The board of directors of the Company has recommended a final dividend of HK10 cents per share for the year ended 31st December, 2014 (2013: HK6.5 cents per share) payable to the shareholders of the Company ( Shareholders ) whose names appear on the register of members of the Company on Friday, 5th June, 2015.

6 MANAGING DIRECTOR S STATEMENT (1) (2) CLOSURE OF REGISTER OF MEMBERS (1) For determining the entitlement to attend and vote at the forthcoming annual general meeting of the Company ( 2015 AGM ) The 2015 AGM is scheduled to be held on Wednesday, 27th May, For determining the entitlement to attend and vote at the 2015 AGM, the register of members of the Company will be closed on Tuesday, 26th May, 2015 and Wednesday, 27th May, 2015, during which period no transfer of shares of the Company will be registered. In order for a Shareholder to be eligible to attend and vote at 2015 AGM, all transfer forms accompanied by the relevant share certificates must be lodged with the Company s share registrar, Tricor Secretaries Limited of Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong for registration not later than 4:30 p.m. on Friday, 22nd May, (2) For determining the entitlement to the proposed final dividend The proposed final dividend is subject to the approval by the Shareholders at the 2015 AGM. For determining the entitlement to the proposed final dividend for the year ended 31st December, 2014, the register of members of the Company will be closed on Thursday, 4th June, 2015 and Friday, 5th June, 2015, during which period no transfer of shares of the Company will be registered. In order for a Shareholder to qualify for the proposed final dividend, all transfer forms accompanied by the relevant share certificates must be lodged with the Company s share registrar, Tricor Secretaries Limited of Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong for registration not later than 4:30 p.m. on Wednesday, 3rd June, Subject to approval by the Shareholders at the 2015 AGM, dividend warrants are expected to be despatched to the Shareholders by post on or around Friday, 26th June, 2015.

7 6 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGING DIRECTOR S STATEMENT (1) (2) 150, ,60020% 536, ,000 81% 1,116,100 1,332,70016% (3) 6% (4) BUSINESS REVIEW The Group is engaged principally in the development of apartments, villas, office buildings and commercial properties, property investment and property management in China. Up to 4th February, 2014, it was also engaged in the manufacture, sales and trading of cement and clinker in China (please see below for details). An outline of our achievements in 2014 is described below: (1) We have continued to dispose of non-core assets. During the year, we completed the disposal of half of our interests in our Fujian development. (2) Total attributable registered sales (including sales from joint ventures and pre-sales of properties under construction) of the Group amounted to 150,800 m 2 in 2014 (2013: 189,600 m 2 ), a decrease of 20%. A total attributable gross floor area ( GFA ) of approximately 536,300 m 2 (2013: 296,000 m 2 ) was completed, an increase of 81%. By the end of 2014, a total attributable GFA of approximately 1,116,100 m 2 (2013: 1,332,700 m 2 ) was under construction, representing a 16% decrease from last year, including Shenzhen Tian An Cloud Park (Phase 1), Shanghai Tian An Villa (Phase 2 Part 1), Wuxi Manhattan (Phase 1 Part 2 and Phase 2), Fuzhou Dengyun Resort (Phase 1), Huizhou Huiyang Tian An Sun Life City (Phase 1 Part 2), Changchun Tian An City One (Phase 4 Part 1), Dalian Tian An Jinma Centre, Foshan Tian An Centre (Phases 2 and 3), Changzhou Tian An Cyber Park (Phase 2 Part 1), Nanjing Tian An Cyber Park (Phase 2), Nantong Tian An Cyber Park (Phase 1 Part 2), Chongqing Tian An Cyber Park (Phase 3), Qingdao Tian An Cyber Park (Phase 1), Tianjin Tian An Cyber Park (Phases 2, 3 and 4) and Tianjin Tian An Intelligent Port (Phase 1). (3) Rental income continued to increase and was up by 6% as compared with With the addition of Shenzhen Tian An Park Place, the rate of increase in rental income has improved. (4) Cyberpark: The overall contribution of our cyberpark unit has been below our expectations as the slowing Chinese economy affected sales and leasing.

8 MANAGING DIRECTOR S STATEMENT Our southern cyberparks Shenzhen, Panyu, Longgang, Foshan and Dongguan were less affected with sales and leasing performing slightly below budget. However, our eastern and northern cyberparks performed poorly. With the exception of Nanjing, sales and leasing of Changzhou, Jiangyin, Wuxi, Nantong, Chongqing, Qingdao, Tianjin Tian An Cyber Park and Tianjin Tian An Intelligent Port were well short of expectations. Where necessary, we have slowed down construction of future phases to alleviate pressure on sales and leasing of current phases. By focusing on sales of existing stock, we also hope to reduce overall bank debt of the cyberpark unit. (5) 531,600 (5) Tian An s urban renewal project, Tian An Cloud Park, in Huawei New City Area in the Longgang District of Shenzhen is a large scale cyberpark of approximately 4 times our standard size. Construction works of the superstructure of all seven towers of phase 1 of the project with GFA of approximately 531,600 m 2 (including basement) are progressing well and the development should be completed in We have commenced the leasing and pre-sales of this phase since November 2014 and have been clearing the land for future phases. Although this means an increased outlay of resources either through capital injection or loans, it is expected to reduce complications when we start developing these phases. Sales and leasing to date have been encouraging and we hope this project will contribute to our performance this year. (6) % 18.94% (6) Tian An s sale of approximately 56.06% of the issued share capital of Allied Cement Holdings Limited was completed on 4th February, 2014 at the consideration of HK$532.8 million, with a remaining interest of approximately 18.94%. The total realised and unrealised gain amounting to approximately HK$160.4 million has been accounted for in PLANS FOR 2015 Objectives for 2015 are as follows: (1) (1) We will continue to adjust the quality of our landbank through acquisitions and disposals and sale of our end products to balance the demands of short term returns and long term capital appreciation. (2) (2) We will adjust our products and pricing as well as the speed of construction where necessary to assist the sale of our products in the current difficult environment.

9 8 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGING DIRECTOR S STATEMENT (3) (4) (1) (2) (3) We hope to responsibly gear up our projects rather than overutilising equity in order to increase our return on equity. (4) We will review our management and cost structure so as to improve efficiency and reduce expenses where possible. LONG TERM CORPORATE STRATEGIES (1) The Group will retain certain development properties for investment where we believe these properties will provide increasing rental streams and corresponding increases in capital value. (2) We will concentrate our effort on developing our cyberpark and urban renewal units where we believe our products are welcomed by the government and the local market. BUSINESS OUTLOOK With weak sales sentiment, there have been downward adjustments of property prices in most cities of China in Some local governments have relaxed the policy of restricting the number of homes that can be purchased in order to support the property market. There have been some changes to the property market sentiment in the recent months in the form of reduction in bank interests and lowering of the reserve requirement ratio. The sentiment in the short term may appear to be encouraging but significant market improvement is yet to be seen. However, we remain confident of the longer term prospects of the property market in China. APPRECIATION I would like to take this opportunity to thank my fellow Directors and the staff for their diligence and contributions to the Group in the past year, to the Shareholders for their understanding and support, and to the customers for their trust. Patrick Lee Seng Wei Managing Director Hong Kong, 20th March, 2015

10 MANAGING DIRECTOR S STATEMENT GFA Sold 2014 GFA Sold by Region in 2014 Year % Eastern China 30% Northern China m 2 ( 000) 63% Southern China Properties Under Construction in terms of GFA 2014 GFA of Properties Under Construction by Region in 2014 Year % Eastern China 52% Northern China m 2 ( 000) 26% Southern China Properties Completed in terms of GFA 2014 GFA of Properties Completed by Region in 2014 Year % Eastern China 35% Southern China m 2 ( 000) Residential Commercial

11 10 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 1. OPERATIONAL REVIEW 1. INCOME SOURCES Income derived from operations in property development, property investment and joint venture investments in the People s Republic of China ( PRC ) constituted the most significant source of revenue to the Group. An analysis is as follows: (1) (1) Property development Revenue derived from property development of the Group (including subsidiaries but excluding associates and joint ventures) decreased from HK$487.2 million to HK$451.6 million compared with Projects offered for sale during the year mainly consisted of Huizhou Huiyang Tian An Sun Life City (Phase 1 Part 1), Changzhou Tian An Villas (Phase 2 Part 2) and Nantong Tian An Garden (Phase 5). (2) (2) Property investments % During the year, Shanghai Tian An Centre, Shanghai Racquet Club & Apartments, Nanjing Tian An International Building, Dalian Tian An International Tower and Beijing Park Apartments had satisfactory leasing result and led to rental income of the Group increase from HK$418.2 million to HK$441.8 million, representing an increase of approximately 6%. (3) (3) Associate and Joint venture investments HK$ 000 HK$ 000 Contribution to profit: Share of profit of associates 1,263 14,346 Share of profit of joint ventures 72, ,835 73, ,181

12 MANAGEMENT DISCUSSION AND ANALYSIS MAJOR SALES, the Group s sales activities were concentrated principally on the following projects: Attributable GFA sold Project Use m 2 Shenzhen Tian An Cloud Park (Phase 1) Commercial 26,500 Shenzhen Tian An Longgang Cyber Park Commercial 12,100 (Phases 1 to 3) Dongguan Tian An Cyber Park (Phases 2 to 4) Guangzhou Tian An Panyu Hi-Tech Ecological Park (Phases 4 to 7) Foshan Tian An Nanhai Cyber Park (Phases 1 to 7) Changzhou Tian An Cyber Park (Phases 1 to 3) Commercial/ Residential Commercial/ Residential 28,800 18,200 Commercial 9,200 Commercial/ Residential Nantong Tian An Garden Residential 2,800 Changchun Tian An City One (Phase 4) Residential 34,000 Tianjin Tian An Cyber Park (Phase 1 & 3) Qingdao Tian An Cyber Park (Phase 1) Other projects Commercial/ Residential Commercial/ Residential Commercial/ Residential 6,400 4,600 6,000 2,200 Total 150, LAND PORTFOLIO 9,480,900 6,810, ,400 6,366,500 The Group currently has a landbank of total GFA of approximately 9,480,900 m 2 (total GFA attributable to the Group is approximately 6,810,900 m 2, consisting of approximately 444,400 m 2 of completed investment properties and approximately 6,366,500 m 2 of properties under development and for development), located mainly in Shanghai, Shenzhen, Guangzhou, Huizhou, Dongguan, Foshan, Chongqing, Nantong, Wuxi, Changzhou, Jiangyin, Nanjing, Fuzhou, Changchun, Dalian, Tianjin and Qingdao.

13 12 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS (1) As at 31st December, 2014, the Group s land portfolio principally consisted of the following: (1) Properties under development and for development GFA attributable Commercial Residential to the Group Region m 2 m 2 m 2 Northern China 1,530,100 1,009,300 2,539,400 Eastern China 1,340, ,700 2,272,100 Southern China 634, ,100 1,555,000 Total 3,505,400 2,861,100 6,366,500 (2) (2) Completed investment properties GFA attributable Commercial Residential to the Group Region m 2 m 2 m 2 Northern China 65,600 23,000 88,600 Eastern China 216,600 69, ,600 Southern China 57,400 12,800 70,200 Total 339, , ,400

14 MANAGEMENT DISCUSSION AND ANALYSIS EMPLOYEE AND TRAINING 2,002 2,315 As at 31st December, 2014, the Group including its subsidiaries but excluding associates and joint ventures, employed 2,002 (31st December, 2013: 2,315) persons. The Group maintains a policy of paying competitive remuneration packages and employees are also rewarded on performance related basis including salary and bonus. The profile of the Group s management staff as at 31st December, 2014 is listed below: Qualified University Region Professionals Graduates Age 50 or Below Age Over (76%) 27 (82%) 15 (45%) 18 (55%) Hong Kong 29 (83%) 33 (94%) 27 (77%) 8 (23%) Northern China 77 (69%) 93 (83%) 92 (82%) 20 (18%) Eastern China 25 (63%) 35 (88%) 36 (90%) 4 (10%) Southern China Note: The numbers in bracket show the percentage of management staff in the region Quality staff has always been the Group s indispensable intangible asset. Training programmes were organised during the year to ensure that both the market sensitivity of the front line people and the cost consciousness of the back office staff were well maintained. The emoluments of key management personnel can be seen by reference to notes 15, 16 and 50 to the consolidated financial statements.

15 14 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 1. 1, ,996.64, , , ,627.02, %19% 65% 83% 2. FINANCIAL REVIEW 1. LIQUIDITY AND FINANCING The Group always maintained its liquidity at a healthy level with a balanced portfolio of financial resources. As at 31st December, 2014, the total bank balances and cash reserves of the Group were approximately HK$1,514.9 million, providing sufficient working capital for the daily operations of the Group. As at 31st December, 2014, the total borrowings of the Group amounted to approximately HK$4,996.6 million (2013: HK$4,754.3 million), including current liabilities of HK$2,369.6 million (2013: HK$2,676.3 million) and non-current liabilities of HK$2,627.0 million (2013: HK$2,078.0 million). The gearing ratio (net debt over total equity) of the Group was 22% (2013: 19%). The borrowings were mainly used to finance the properties for development and properties under construction. Increase in finance costs is mainly due to the increase in borrowings. Approximately 65% of the Group s outstanding borrowings will mature within 2 years. Since most of the investments and operation of the Group are carried out in the PRC, most of the bank borrowings are denominated in Renminbi which will be repaid in the same currency. Around 83% of the Group s borrowings bear interest at fixed rates while the remainders are at floating rates. Due to maintaining flexible and sufficient cashflow for acquiring the potential quality landbank and accelerating construction works for our development projects, the Group intends to obtain proper bank borrowings with reasonable pricing terms. The management continuously monitors its gearing ratio and raises new external borrowings when necessary. 2. RISK OF FOREIGN EXCHANGE FLUCTUATION The Group is required to maintain foreign currency exposure to cater for its recurring operating activities and present and potential investment activities, meaning it will be subject to reasonable exchange rate exposure. However, the Group will closely monitor this risk exposure as required.

16 MANAGEMENT DISCUSSION AND ANALYSIS , , , PLEDGE ON ASSETS As at 31st December, 2014, bank deposits of HK$0.1 million, aggregate carrying values of property, plant and equipment, development properties and investment properties of approximately HK$214.9 million, HK$5,870.2 million and HK$7,297.6 million respectively, were pledged for banking facilities and other loans granted to the Group and mortgage loans granted to property purchasers. 4. CONTINGENT LIABILITIES A portion of a property for development that is held by a joint venture with carrying value of approximately HK$2.9 million is under idle land investigation by the local authority. The piece of land owned by the joint venture was held under several land use right certificates. The development of more than half of the piece of land was either completed or under development, except for a portion which is retained for the remaining development of the whole project. Another property for development that is held by a subsidiary of the Group with carrying value of approximately HK$40.7 million is also under idle land investigation by the local authority. This piece of land owned by the subsidiary has been developed by several phases and more than half was completed, except the last portion which is under the planning approval by the local authority. The Group is currently working diligently to prevent the possible classification as idle land, including negotiating the feasibility of development plans with local authorities. Based on legal advices, the Group has assessed the issue and considers that the idle land confiscation may not materialise. As at 31st December, 2014, guarantees given to banks in respect of mortgage loans granted to property purchasers and bank facilities granted or utilised by the joint ventures amounted to approximately HK$2,519.7 million. All the guarantees provided by the Group were requested by banks and under normal commercial terms. Legal actions were taken against the Group resulting in possible contingent liabilities of approximately HK$8.2 million. The Group has assessed the claims and obtained legal advices, and considers that either it is too early to assess the range of possible liability at this stage or no additional provision is required to be made.

17 16 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 1. 50% 273, ,700 48,810 50% 118,850356,500 50% 760,000 2,800, ,600 PROJECT REVIEW 1. MAJOR PROPERTY DEVELOPMENT Southern China Shenzhen Tian An Cyber Park (50%) Located at the heart of Shenzhen and adjacent to Shenzhen Golf Club, this large-scale project occupies a site area of approximately 273,500 m 2 with a total GFA of approximately 787,700 m 2. The Cyber Park consists of industrial buildings, office and commercial buildings, cyber technology buildings, deluxe residential apartments and multifunction clubhouse in an Urban Industrial Complex. The lettable commercial GFA is 48,810 m 2, including remaining areas of Shenzhen Cyber Times Building, Shenzhen Tian An Innovation Science and Technology Plaza (Phases 1 and 2) and Shenzhen Futian Tian An Hi-Tech Venture Park. Shenzhen Tian An Cyber Park has expanded its successful pattern to other cities, including Guangzhou Panyu, Foshan Nanhai, Dongguan, Shenzhen Longgang, Changzhou, Jiangyin, Tianjin, Chongqing and Qingdao, so as to develop into a group company. For accomplishing the upgrade industries transformation and urban renewal of Shenzhen, Shenzhen Tian An Cyber Park plans to have area upgrade and redevelopment. The total GFA of the Park will increase accordingly. Shenzhen Tian An Longgang Cyber Park (50%) Located in the core area of Longgang in Shenzhen, this project has a site area of approximately 118,850 m 2 and total GFA of approximately 356,500 m 2. The model of Shenzhen Tian An Cyber Park is used to develop this project. Shenzhen Tian An Cloud Park (50%) This project is a Model project of urban renewal and located in Huawei New City Area, Longgang District, Shenzhen. Shenzhen Tian An Cloud Park will have a site area of approximately 760,000 m 2 and plan to have a total GFA of approximately 2,800,000 m 2. The project is planned to be developed into a combination of new technology and a modern city complex, including industrial R&D, commercial, residential and apartments properties. Construction work for Phase 1 with a GFA of approximately 531,600 m 2 (including basement) had been commenced and expected to be completed in 2015.

18 MANAGEMENT DISCUSSION AND ANALYSIS 39% Dongguan Tian An Cyber Park (39%) 278, ,100 Situated right at the new city central area Nancheng District of Dongguan. Upon acquiring the land nearby the project in 2012, it covers land area of approximately 278,987 m 2 with total GFA of approximately 823,100 m 2.. The project is planned to be developed into an integrated business park with comprehensive science and technology buildings, commercial and residential composite. The construction of Phase 5 of industrial/office buildings will be commenced in % Guangzhou Tian An Panyu Hi-Tech Ecological Park (50%) 513,088712,500 Located in the central district of Panyu in Guangzhou, this large scale project has a site area of 513,088 m 2 and a total GFA of approximately 712,500 m 2. The design work of Phase 9 will be commenced in The park development consists of industrial/office buildings, science and technology buildings, high-class residential buildings and multifunction club house. 45% Foshan Tian An Nanhai Cyber Park (45%) 165, , ,000 Located in Guicheng of Nanhai. Upon acquiring the land nearby the project in 2012, it covers site area of approximately 165,252 m 2 and total GFA of approximately 472,900 m 2. This project is developing with the similar pattern as Shenzhen Tian An Cyber Park and planned to develop into a business district with hotel/office buildings. Phases 8 and 9 with GFA of approximately 127,000 m 2 are under construction and expected to be completed in 2016 and % Huizhou Huiyang Tian An Sun Life City (100%) 393, ,000 25,000 Located in Huiyang of Huizhou and lying by both sides of Danshui River, this project has a site area of approximately 393,570 m 2 and total GFA of approximately 783,000 m 2. The project is planned to be developed into a comprehensive commercial/residential composite. Since the local government had modified the surrounding planning of the land, the master planning for property development had been modified accordingly. Phase 1 Part 2 with GFA of approximately 25,000 m 2 is under construction and expected to be completed in 2015.

19 18 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 99.99% 338, , , % 32, ,700 16, % 1,100 58, % 59, ,500 Eastern China Shanghai Tian An Place (99.99%) This project is situated at the Golden Hongqiao District where the oriental and international residents like to reside and adjacent to the entrance of the transit station of Subway No. 9. The project will be developed to a deluxe residential district with a site area of approximately 338,113 m 2 and a total GFA of approximately 470,000 m 2. Construction work of Phase 1 with total GFA of approximately 155,000 m 2 was completed and a new phase is expected to commence in Shanghai Tian An Villa (100%) This project, located near the Shanghai Sheshan National Travel and Resort Area, combines the art of western architecture and eastern architectural style, integrating island living, water facing, garden and greenery. Construction work for the Phase 1 low density high-class villas with GFA of approximately 32,200 m 2 was completed. Phase 2 has total GFA of approximately 401,700 m 2. Phase 2 Part 1 villas with GFA of approximately 16,300 m 2 are under construction. Since the local government is modifying the surrounding planning of the land, the master planning for property development is being modified accordingly. Construction of new phase will be commenced in Shanghai Tian An Sunshine Peninsula (100%) Located in the Putuo District of Shanghai, this project is to be built along the 1,100 m bank of Suzhou River with a site area of approximately 58,930 m 2. This project has been re-planned as a commercial and entertainment complex. Design planning has been approved. Construction work of Phase 1 will be commenced in Wuxi The Manhattan (100%) This residential project is situated to the southwest of Wuxi city centre on a site of 59,480 m 2 to be developed into a total GFA of approximately 148,500 m 2. Construction of Phase 2 is expected to be completed in 2015.

20 MANAGEMENT DISCUSSION AND ANALYSIS 100% 118, , ,200 50% 203,061578,700 57, % 473, % 92,766210,100 51,800 Wuxi Tian An Intelligent Park (100%) This project is located in Wuxi New District, with a site area of approximately 118,330 m 2 and a total GFA of approximately 236,100 m 2. The project is planned to be developed into integrated business park with comprehensive science and technology buildings, commercial and residential composite. The construction of Phase 1 Part 1 with a GFA of approximately 107,200 m 2 was completed and under leasing and sales. Changzhou Tian An Cyber Park (50%) This project is located in Changzhou Wujin Hi-Tech Industrial Zone, with a site area of approximately 203,061 m 2 and a total GFA of approximately 578,700 m 2. The project is planned to be developed into comprehensive science and technology buildings, commercial and residential composite. Construction work of Phase 2 Part 1 residential with a GFA of approximately 57,300 m 2 is expected to be completed in Changzhou Tian An Villa (100%) This project is located in the Wu Jin District, the planning and development focus of the Changzhou government. With a favorable location, it is one of the largest deluxe villa district in Changzhou. The project occupies a site of 473,335 m 2. Phase 2 Part 3 is expected to commence in Nanjing Tian An Cyber Park (100%) This project is located in Nanjing Baixia Hi-Technology Industrial Development Area with a site area of approximately 92,766 m 2 and a total GFA of approximately 210,100 m 2. The project is planned to be developed into comprehensive science and technology buildings, commercial and residential composite. Construction work of Phase 2 with approximately 51,800 m 2 is expected to be completed in 2015.

21 20 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 100% 160,367398,200 23,900 50% 173,200363, ,600 50% 357, ,900 44,000 60% 84, % 132,000 Nantong Tian An Cyber Park (100%) This project is located in Nantong Gangzha Economic Development Zone, with a site area of approximately 160,367 m 2 and a total GFA of approximately 398,200 m 2. The project is planned to be developed into integrated business park with comprehensive science and technology buildings and commercial composite. Construction work of Phase 1 Part 2 with a GFA of approximately 23,900 m 2 is expected to be completed in Jiangyin Tian An Cyber Park (50%) This project is located in Jiangyin Economic Development Zone, Jiangsu, with a site area of approximately 173,200 m 2 and a total GFA of approximately 363,700 m 2. The project is planned to be developed into integrated business park with comprehensive science and technology buildings, commercial and residential composite. Phase 1 office and residential with a GFA of approximately 145,600 m 2 was completed and under leasing and sales. Chongqing Tian An Cyber Park (50%) Chongqing Tian An Cyber Park is located in commercial centre area of Dadukou District, Chongqing, with a site area of approximately 357,800 m 2 and a total GFA of approximately 894,900 m 2. The project is planned to be developed into integrated business park with comprehensive science and technology buildings, commercial and residential composite. Phase 3 of office and commercial buildings with a GFA of approximately 44,000 m 2 is under construction and expected to be completed in Northern China Dalian Tian An Seaview Garden (60%) This project for high-class residential development is located in the Dalian Economic & Technology Development Zone. Phases 1 and 2 with a total GFA of approximately 84,100 m 2 have been completed. Master plan for Phase 3 is waiting for approval. Dalian Tian An Jinma Centre (100%) This project is located at the main road, Jin Ma Road, of the Dalian Economic & Technology Development Zone and will be developed into commercial/residential buildings with a total GFA of 132,000 m 2. Construction work of the property had been commenced and expected to be completed in 2016.

22 MANAGEMENT DISCUSSION AND ANALYSIS 100% 414, ,100 82,400 50% 588,075 1,216, , % 582,000 1,319, ,800 50% 313, , ,200 Changchun Tian An City One (100%) This high class residential project is situated within the Changchun High-Tech Industrial Development Zone. Erected on a site of approximately 414,954 m 2, the project with a total GFA of approximately 413,100 m 2 is being developed by stages. Construction work for Phase 4 Part 1 with a total GFA of 82,400 m 2 will be completed in Tianjin Tian An Cyber Park (50%) This project is located in Zhangjiawo Industrial Zone, Xiqing District, Tianjin, with a site area of approximately 588,075 m 2 and a total GFA of approximately 1,216,100 m 2. The project is planned to be developed into integrated business park with comprehensive science and technology buildings, commercial and residential composite. Phases 2, 3 and 4 with a GFA of approximately 195,100 m 2 are under construction and expected to be completed in Tianjin Tian An Intelligent Port (100%) This project is located in Dongli District, Tianjin, with a site area of approximately 582,000 m 2 and a total GFA of approximately 1,319,400 m 2. The project is planned to be developed into urban integrated business complex with Grade A office buildings, comprehensive science and technology park, commercial and residential composite. Construction work for Phase 1 with a GFA of approximately 185,800 m 2 is expected to be completed in Qingdao Tian An Cyber Park (50%) This project is located in Chengyang District, Qingdao, with a site area of approximately 313,466 m 2 and a total GFA of approximately 522,900 m 2. The project is planned to be developed into urban integrated business complex with Grade A office buildings, comprehensive science and technology park, commercial and residential composite. Phase 1 with a GFA of approximately 153,200 m 2 is under construction and expected to be completed in 2015.

23 22 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 MANAGEMENT DISCUSSION AND ANALYSIS 2. 98% 48,91024,940 1,62022,350 95% (100%) (1) 68,660262(2) 10,600 (3) 2, (4) % 100% 66,400 10, % 67,210 14,790 40% 5, MAJOR PROPERTY INVESTMENTS Shanghai Tian An Centre (98%) The office building is situated at the hub of Shanghai central business district of Nanjing Road West and People s Square, adjacent to the entrances to the transit platforms of Subway Nos. 1 and 2. It is a 30-storey Grade A commercial building with a total GFA of 48,910 m 2. 24,940 m 2 were sold, 1,620 m 2 were self occupied and the remaining GFA of 22,350 m 2 have been transferred to property investment. Most of the tenants are multinational companies. The occupancy rate is more than 95%. Shanghai Racquet Club & Apartments (100%) This project is located in the Minhang District, Shanghai, and adjacent to the Hongqiao International Airport, Hongqiao Transport Hub and 6 International Schools. The properties include (1) 262 apartments with 68,660 m 2 ; (2) a club house with 10,600 m 2 and ancillary facilities; (3) 116 car parking spaces with 2,510 m 2 ; and (4) 218 storage rooms with 979 m 2. This project is leased property. Most of the tenants are overseas top management from multinational companies. The occupancy rate is more than 89%. Nanjing Tian An International Building (100%) The project is located at Xinjiekou of Nanjing central district, the most flourishing shopping district in Nanjing City. The building links up to the subway station. The shopping arcades with a GFA of 66,400 m 2 have been leased to a department store. The office building with a GFA of approximately 10,700 m 2 have been transferred to property investment. Dalian Tian An International Tower (100%) This Grade A office building is situated in the Zhongshan Road central business district and faces the Victory Square in Dalian City. The total GFA is 67,210 m 2. This 52-storey building is the tallest landmark building of Dalian. 14,790 m 2 were sold, the remaining GFA have been transferred to property investment. Beijing Tian An Building (40%) With a total GFA of 5,730 m 2, this office building is located at a prime site near the Beijing Hotel and the Tiananmen Square. The whole building has been rented out to a lessee. The lessee had renovated the building as a business hotel.

24 MANAGEMENT DISCUSSION AND ANALYSIS 100% Beijing Park Apartments (100%) 42,100 This premium residential project is located at the Beijing Chaoyang District to the west of Chaoyang Park and adjacent to the Embassy area. The project has a total GFA of approximately 42,100 m 2. Approximately half of the total number of units have been sold and the remaining units kept for leasing purpose OTHER INVESTMENTS 34.2% Fuzhou Summit Golf Country Club & Dengyun Resort (34.2%) 1,632, , ,300140,000 Built on a site of approximately 1,632,000 m 2, of which will be developed into an 18-hole golf course, driving range and clubhouse, and the remaining site area of approximately 642,770 m 2 will be developed into villas and other deluxe living amenities. Rebuilding of golf course was commenced in The revised master planning of the Resort, which will optimise the application of land resources, includes total GFA of approximately 592,300 m 2 for residential and 140,000 m 2 for ancillary and commercial area. Development of a new phase of villas will be completed in % Zhaoqing Resort & Golf Club (87.97%) An agreement was entered on 3rd December, 2007 to dispose in stages of this project, of which the transaction is estimated to be completed before the end of 2016.

25 24 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 PARTICULARS OF PROPERTY DEVELOPMENT Project Name Site Area Use Buildable Gross Floor Area Project Progress Completed Gross Floor Area Gross Floor Area under Construction m 2 m 2 m 2 m 2 Interest Held by the Group Shenzhen Tian An Longgang Cyber Park Huangge Road North, Longgang District, Shenzhen 118,850 Commercial 356,500 Phased Construction Stage 51,605 Commercial 414,100 Construction Shenzhen Tian An Cloud Park (Phase 1) Stage Bantian, Longgang District, Shenzhen 269,300 50% 414,100 50% 1 Dongguan Tian An Cyber Park No.1, Huangjin Road, Nancheng District, Dongguan 278,987 Commercial Residential 739,000 84,100 Phased Construction Stage 240,700 84, , ,800 39% 39% ,088 Commercial 667,200 Phased 571,500 50% Guangzhou Tian An Panyu Hi-Tech Ecological Park Residential 45,300 Construction Stage 45,300 50% No. 730, Ying Bin Road, Panyu District, Guangzhou 712, ,800 1 Foshan Tian An Nanhai Cyber Park No.1, Jianping Road, Nanhai District, Foshan 165,252 Commercial 472,900 Phased Construction Stage (1) Huizhou Huiyang Tian An Sun Life City (1) Danshui Town, Huiyang District, Huizhou 393,570 Commercial & Residential 783,000 Phased Construction Stage 336, ,000 45% 27,500 25, % (2) Zhaoqing Resort & Golf Club (2) Huilong Town, Gaoyao City, Zhaoqing 1,441,848 Commercial & Residential (2) Note (2) Phased Construction Stage (2) Note (2) 87.97% ,770 Residential 592,300 Phased 15,100 12, % Fuzhou Dengyun Resort Construction No. 388, Dengyun Road, Fuzhou Ancillary & Stage Commercial 140, % 732,300 15,100 12,400

26 PARTICULARS OF PROPERTY DEVELOPMENT Project Name Site Area Use Buildable Gross Floor Area Project Progress Completed Gross Floor Area Gross Floor Area under Construction m 2 m 2 m 2 m 2 Interest Held by the Group 338,113 Residential 405,800 Phased 141, % 52 Shanghai Tian An Place Ancillary & Commercial 64,200 Construction Stage 13, % Lot No. 52, Qibao Town, Cao Bao Road, Minhang District, Shanghai 470, , Shanghai Tian An Villa (Phase 2) Lot No. 654, Song Jiang, Shanghai 333,717 Residential 401,700 Phased Construction Stage Shanghai Tian An Sunshine Peninsula Chang Hua Road, Putuo District, Shanghai 58,930 Commercial 178,000 Planning & Design Stage GS 1028 Shanghai Central Garden (Phase 3 GS) No. 1028, Jin Xiu Road, Shanghai 3,600 Residential 3,600 Planning & Design Stage 16, % 100% 100% ,480 Residential 137,800 Phased 39,200 98, % Wuxi The Manhattan No. 809, Hubin Road, Wuxi Ancillary & Commercial 10,700 Construction Stage 3,700 7, % 148,500 42, , Wuxi Tian An Intelligent Park No. 228, Ling Hu Road, Wuxi New District, Wuxi 118,330 Commercial 236,100 Phased Construction Stage 107, % 588 Changzhou Tian An Cyber Park No. 588, Wunan Road, Wujin Hi-Tech Industrial Zone, Changzhou 203,061 Commercial Residential 338, , ,700 Phased Construction Stage 145,100 94, ,400 57,300 57,300 50% 50%

27 26 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 PARTICULARS OF PROPERTY DEVELOPMENT Project Name Site Area Use Buildable Gross Floor Area Project Progress Completed Gross Floor Area Gross Floor Area under Construction m 2 m 2 m 2 m 2 Interest Held by the Group 2 Changzhou Tian An Villa No. 2, Fengyuan Road, Wu Jin District, Changzhou 473,335 Residential 137,900 Phased Construction Stage 93, % Nanjing Tian An Cyber Park Guanghua Road, Nanjing 92,766 Commercial 210,100 Phased Construction Stage 34,800 51, % 88 Nantong Tian An Garden No. 88, Hongjiang Road, Nantong 203,800 Residential 239,300 Phased Construction Stage 239, % Nantong Tian An Cyber Park South of Changping Road and East of Yongtong Road, Nantong 160,367 Commercial 398,200 Phased Construction Stage 89,700 23, % ,200 Commercial 228,700 Phased 81,000 50% Jiangyin Tian An Cyber Park Construction No. 55, Changshan Road, Jiangyin Residential 135,000 Stage 64,600 50% 363, , ,800 Commercial 586,100 Phased 145,400 44,000 50% Chongqing Tian An Cyber Park Construction Chunhui Road, Dadukou District, Residential 308,800 Stage 85,600 50% Chongqing 894, ,000 44,000

28 PARTICULARS OF PROPERTY DEVELOPMENT Project Name Site Area Use Buildable Gross Floor Area Project Progress Completed Gross Floor Area Gross Floor Area under Construction m 2 m 2 m 2 m 2 Interest Held by the Group Dalian Tian An Seaview Garden Liaohe Road West, Economic & Technical Development Zone, Dalian 58,650 Residential 122,100 Phased Construction Stage 84,100 60% (2) 19,421 Commercial 32,800 Construction 32, % Dalian Tian An Jinma Centre (2) Residential 99,200 Stage 99, % Jin Ma Road, Economic & Technical Development Zone, Dalian 132, , ,954 Residential & Phased Construction Changchun Tian An City One No. 661, Guigu Street, Changchun Commercial 413,100 Stage 157,500 82, % 1 588,075 Commercial 918,100 Phased 119,600 96,300 50% Tianjin Tian An Cyber Park Construction No.1 Tianan Road, Xiqing District, Tianjin Residential 298,000 Stage 98,800 50% 1,216, , ,100 (1) 582,000 Commercial 934,400 Phased 185, % Tianjin Tian An Intelligent Port (1) Construction Dongli District, Tianjin Residential 385,000 Stage 100% 1,319, , Qingdao Tian An Cyber Park No. 88, Chunyang Road, Chengyang District, Qingdao 313,466 Commercial 328,000 Phased 94,000 50% Construction Residential 194,900 Stage 59,200 50% 522, ,200 (1) 50% (2) Notes: (1) Agreement for disposal of 50% interest was signed. (2) Disposal agreement was signed. (3) (3) The above table is based on information as of 31st December, 2014.

29 28 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 PARTICULARS OF PROPERTIES UNDER CONSTRUCTION Project Name Gross Floor Area Interest Held by the Group Gross Floor Area Attributable to the Group m 2 m 2 Estimated Completion Year 1. Shenzhen Tian An Cloud Park (Phase 1) 2. Foshan Tian An Nanhai Cyber Park (Phases 8 and 9) 3. Huizhou Huiyang Tian An Sun Life City (Phase 1 Part 2) 4. Fuzhou Dengyun Resort (Phase 1) 5. Shanghai Tian An Villa (Phase 2 Part 1) 6. Wuxi The Manhattan (Phase 1 Part 2 and Phase 2) 7. Changzhou Tian An Cyber Park (Phase 2 Part 1) 8. Nanjing Tian An Cyber Park (Phase 2) 9. Nantong Tian An Cyber Park (Phase 1 Part 2) 10. Chongqing Tian An Cyber Park (Phase 3) 11. Dalian Tian An Jinma Centre 12. Changchun Tian An City One (Phase 4 Part 1) 13. Tianjin Tian An Cyber Park (Phases 2, 3 and 4) 14. Tianjin Tian An Intelligent Port (Phase 1) 15. Qingdao Tian An Cyber Park (Phase 1) 414,100 50% 207, ,000 45% 57, / , % 25, , % 4, , % 16, , % 105, ,300 50% 28, , % 51, , % 23, ,000 50% 22, , % 132, , % 82, ,100 50% 97, , % 185, ,200 50% 76, Total: 1,625,900 1,116,100 Note: The above table is based on information as of 31st December, 2014.

30 PARTICULARS OF PROPERTY AND HOTEL INVESTMENTS 1. PROPERTY Property Name Property GFA Car Parking Space GFA Interest Held by the Group GFA Attributable to the Group m 2 m 2 m 2 Use Shenzhen Tian An Cyber Park Shenzhen Tian An Innovation Science and Technology Plaza, Phase 1 Shenzhen Tian An Innovation Science and Technology Plaza, Phase 2 Shenzhen Cyber Times Building Shenzhen Futian Tian An Hi-Tech Venture Park 26 26/F, Shenzhen Cyber Times Building 20 20/F, Shenzhen Tian An International Building Shenzhen Tian Bei Yi Road, shops Shenzhen Tian An Park Place Shenzhen Tian An Longgang Cyber Park Dongguan Tian An Cyber Park Guangzhou Tian An Panyu Hi-Tech Ecological Park Foshan Tian An Nanhai Cyber Park Shanghai Tian An Centre /F, 8/F & 16/F, Shanghai Tian An Centre Shanghai Racquet Club & Apartments Shanghai The Riverside Shanghai Elegant Garden 10,540 50% 5,270 Commercial and office 4,400 50% 2,200 Commercial and office 20,530 50% 10,260 Commercial and office 13,340 50% 6,670 Commercial and office % 900 Office % 850 Office 1, % 1,460 Commercial 12, % 12,800 Residential 31,620 50% 15,810 Commercial and office 3,830 39% 1,500 Commercial 14,900 50% 7,450 Commercial 11,100 45% 5,000 Commercial 22,350 98% 21,900 Commercial and office 4, % 4,740 Office 68, % 68,660 Residential 1,520 99% 1,500 Commercial % 340 Residential

31 30 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 PARTICULARS OF PROPERTY AND HOTEL INVESTMENTS Property Name Property GFA Car Parking Space GFA Interest Held by the Group GFA Attributable to the Group m 2 m 2 m 2 Use Wuxi Tian An Building Wuxi Redhill Peninsula Wuxi Tian An Intelligent Park Nanjing Tian An International Building Nanjing Tian An Cyber Park 1,420 95% 1,350 Office 2,830 95% 2,690 Commercial 20, % 20,650 Commercial 77, % 77,100 Commercial and office 22, % 22,750 Commercial (1) 24, % 24,400 Changzhou Tian An City Plaza (1) Commercial and office Changzhou New City Garden Changzhou Tian An Cyber Park 4 4/F, Nantong Sun Hai Tung Building /F, Block 17, Nantong Jin Xiu Court Nantong Tian An Garden Nantong Tian An Cyber Park Jiangyin Tian An Cyber Park Chongqing Tian An Cyber Park Beijing Tian An Building Beijing Lakeside Garden Beijing Park Apartments Dalian Tian An Seaview Garden Dalian Tian An International Tower Changchun Tian An City One Tianjin Tian An Cyber Park 9, % 9,090 Commercial 23,360 50% 11,680 Commercial % 720 Office 1, % 1,300 Commercial 3, % 3,250 Commercial 5, % 5,600 Commercial 8,770 50% 4,390 Commercial 7,130 50% 3,560 Commercial 5,730 40% 2,300 Office % 560 Residential 22, % 22,170 Residential % 280 Residential 52, % 52,420 Office 5, % 5,660 Commercial 10,340 50% 5,170 Commercial 529, ,400

32 PARTICULARS OF PROPERTY AND HOTEL INVESTMENTS Property Name Property GFA Car Parking Space GFA Interest Held by the Group GFA Attributable to the Group m 2 m 2 m 2 Use Shanghai Tian An Centre, Car Parking Space Shanghai Central Garden, Car Parking Space Shanghai Racquet Club & Apartments, Car Parking Space Shanghai Racquet Club & Apartments, Club House Wuxi The Manhattan, Club House 7,770 98% 7,610 Car Parking Space 3, % 3,180 Car Parking Space 2, % 2,510 Car Parking Space 10, % 10,600 Club House 3, % 3,670 Club House 14,270 13,460 27, HOTEL Project Name Expiry Date Interest Held by the Group Hotel Gross Area Year m 2 No. of Rooms 9-12 (1) 9/F to 12/F, Changzhou Tian An City Hotel (1) % 1, (1) (2) Notes: (1) Disposal agreement was signed. (2) The above tables are based on information as of 31st December, 2014.

33 32 TIAN AN CHINA INVESTMENTS COMPANY LIMITED Annual Report 2014 CORPORATE GOVERNANCE REPORT The Company is committed to maintaining a high standard of corporate governance within a sensible framework with an emphasis on the principles of transparency, accountability and independence. The board of directors of the Company ( Board ) believes that good corporate governance is essential to the success of the Company and to the enhancement of shareholders value. CORPORATE GOVERNANCE CODE AND CORPORATE GOVERNANCE REPORT In the light of the Corporate Governance Code and Corporate Governance Report ( CG Code ) contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ( Listing Rules ), the Board has reviewed the corporate governance practices of the Company with the adoption of the various enhanced procedures which are detailed in this report. The Company has applied the principles of, and complied with, the applicable code provisions of the CG Code during the year ended 31st December, 2014, except for certain deviations as specified with considered reasons for such deviations as explained below. The Board will review the current practices at least annually, and make appropriate changes if considered necessary.