Interim Report 2016

Transcription

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2 Interim Report For the six months ended 30th June, 2016

3 1 CONTENTS 2 Corporate Information 4 Condensed Consolidated Statement of Profit or Loss 6 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 7 Condensed Consolidated Statement of Financial Position 9 Condensed Consolidated Statement of Changes in Equity 11 Condensed Consolidated Statement of Cash Flows 13 Notes to the Condensed Consolidated Financial Statements 41 Report on Review of Condensed Consolidated Financial Statements 43 Interim Dividend 43 Management Discussion and Analysis 49 Directors Interests 50 Substantial Shareholders and Other Persons Interests 53 Corporate Governance and Other Information 55 Audit Committee Review 56 Purchase, Sale or Redemption of Shares 天安中國投資有限公司

4 2 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 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

5 index.htm CORPORATE INFORMATION (continued) 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. OCBC 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 天安中國投資有限公司

6 4 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS for the six months ended 30th June, 2016 The board of directors ( Board ) of Tian An China Investments Company Limited ( Company ) announces that the unaudited consolidated results of the Company and its subsidiaries ( Group ) for the six months ended 30th June, 2016 with the comparative figures for the corresponding period in 2015 are as follows: (Unaudited) Six months ended 30th June, NOTES HK$ 000 HK$ 000 Revenue 3 416, ,097 Cost of sales (199,016) (340,451) Gross profit 217, ,646 Other income and gains 4 405,578 87,688 Marketing and distribution expenses (24,120) (27,779) Administrative expenses (151,468) (156,243) Other operating expenses (21,273) (7,739) Net (decrease) increase in fair value of held-for-trading investments (11,347) 13,612 Fair value gain on transfer of inventories of completed properties to investment properties 36, ,605 Increase in fair value of investment properties 51, ,737 Amortisation of properties for development (31,166) (40,303) Gain on disposal of a subsidiary 5 125,009 18,693 Finance costs 6 (89,462) (118,600) Share of loss of associates (1,032) Share of profit (loss) of joint ventures 111,996 (7,316) Profit before tax 617, ,001 Taxation 7 (108,210) (220,862) TIAN AN CHINA INVESTMENTS COMPANY LIMITED

7 5 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS (continued) for the six months ended 30th June, 2016 (Unaudited) Six months ended 30th June, NOTES HK$ 000 HK$ 000 Profit for the period 8 509, ,139 Profit for the period attributable to: Owners of the Company 513, ,975 Non-controlling interests (3,831) (836) 509, ,139 HK cents HK cents Earnings per share 9 Basic 天安中國投資有限公司

8 6 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the six months ended 30th June, 2016 (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Profit for the period 509, ,139 Other comprehensive (expense) income Items that will not be reclassified to profit or loss: Exchange differences arising on translation to presentation currency (210,284) (2,277) Items that may be subsequently reclassified to profit or loss: Net change in fair value of available-for-sale investments 4, ,508 Net reversal of impairment loss on available-for-sale investments reclassified to profit or loss (10,636) Release upon disposal of available-for-sale investments to profit or loss (202,667) (26,674) Deferred tax effect on share of change in fair value of available-for-sale investments 18,892 (54,563) (179,215) 497,635 Other comprehensive (expense) income for the period (389,499) 495,358 Total comprehensive income for the period 119, ,497 Total comprehensive income (expense) attributable to: Owners of the Company 124, ,333 Non-controlling interests (4,199) (836) 119, ,497 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

9 7 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 30th June, 2016 (Unaudited) (Audited) 30th June, st December, 2015 NOTES HK$ 000 HK$ 000 Non-current assets Property, plant and equipment , ,115 Deposits for acquisition of property, plant and equipment Investment properties 12 9,983,300 10,037,160 Properties for development 3,012,740 4,358,872 Deposits for acquisition of properties for development 171, ,789 Prepaid lease payments on land use rights 41,504 54,162 Other assets properties interests 18,909 19,440 Interests in associates 429, ,210 Interests in joint ventures 1,935,755 1,909,229 Loans receivable , ,703 Available-for-sale investments 394, ,411 Deferred tax assets 78,388 74,822 16,842,597 18,540,935 Current assets Inventories of properties under development 4,758,983 3,120,427 completed 3,247,695 3,404,316 Other inventories 337 1,682 Amounts due from associates 2,563 2,563 Amounts due from joint ventures 961, ,511 Amounts due from noncontrolling shareholders 18,824 19,093 Loans receivable , ,866 Trade and other receivables, deposits and prepayments , ,649 Prepaid lease payments on land use rights 897 1,541 Held-for-trading investments 86,829 99,369 Prepaid tax 42,966 37,351 Pledged bank deposits , Bank balances and cash 3,309,882 4,134,708 13,691,680 13,020,207 Assets classified as held for sale ,079 14,579,759 13,020,207 天安中國投資有限公司

10 8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) at 30th June, 2016 (Unaudited) (Audited) 30th June, st December, 2015 NOTES HK$ 000 HK$ 000 Current liabilities Trade and other payables 16 3,499,229 4,205,274 Pre-sale deposits 1,558,906 1,351,307 Tax liabilities 788, ,884 Membership debentures 17 41,303 Interest-bearing borrowings 18 2,321,005 2,184,237 Interest-free borrowings , ,254 8,347,548 9,250,259 Liabilities associated with assets classified as held for sale ,119 9,157,667 9,250,259 Net current assets 5,422,092 3,769,948 Total assets less current liabilities 22,264,689 22,310,883 Capital and reserves Share capital 20 3,788,814 3,788,814 Reserves 13,247,520 13,349,516 Equity attributable to owners of the Company 17,036,334 17,138,330 Non-controlling interests 11,809 16,008 Total equity 17,048,143 17,154,338 Non-current liabilities Interest-bearing borrowings 18 3,024,315 2,901,939 Deferred rental income from a tenant 46,537 51,495 Rental deposits from tenants 31,277 28,557 Membership debentures 17 11,060 Deferred tax liabilities 2,114,417 2,163,494 5,216,546 5,156,545 22,264,689 22,310,883 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

11 9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 30th June, 2016 Share capital Special capital reserve Attributable to owners of the Company Exchange translation reserve Revaluation reserves Other reserves Retained earnings Noncontrolling interests Total equity Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1st January, 2015 (audited) 3,788,814 1,417,669 2,044, ,087 (46,053) 8,017,522 15,445,171 32,633 15,477,804 Exchange differences arising on translation to presentation currency (2,277) (2,277) (2,277) Net change in fair value of available-for-sale investments 589, , ,508 Net reversal of impairment loss on available-for-sale investments reclassified to profit or loss (10,636) (10,636) (10,636) Release upon disposal of available-for-sales investments to profit or loss (26,674) (26,674) (26,674) Deferred tax effect on share of change in fair value of available-for-sale investments (54,563) (54,563) (54,563) Profit for the period 209, ,975 (836) 209, Total comprehensive income (expense) for the period (2,277) 497, , ,333 (836) 704,497 Transfer upon disposal of a subsidiary (note 5) (1,413) 1,413 Dividend recognised as distribution (note 10) (150,677) (150,677) (150,677) Dividend distributed to non-controlling interests (10,106) (10,106) At 30th June, 2015 (unaudited) 3,788,814 1,417,669 2,040, ,722 (46,053) 8,078,233 15,999,827 21,691 16,021,518 Exchange differences arising on translation to presentation currency (873,552) (873,552) (2,217) (875,769) Net change in fair value of available-for-sale investments (432,699) (432,699) (432,699) Release upon disposal of available-for-sales investments to profit or loss 1,271 1,271 1,271 Deferred tax effect on share of change in fair value of available-for-sale investments 53,438 53,438 53,438 Profit for the period 2,390,045 2,390,045 (3,715) 2,386,330 Total comprehensive income (expense) for the period (873,552) (377,990) 2,390,045 1,138,503 (5,932) 1,132,571 Transfer on disposal of subsidiaries (47,501) 47,501 Dividend distributed to non-controlling interests At 31st December, 2015 (audited) 3,788,814 1,417,669 1,119, ,732 (46,053) 10,515,779 17,138,330 16,008 17,154,338 天安中國投資有限公司

12 10 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) for the six months ended 30th June, 2016 Share capital Special capital reserve Attributable to owners of the Company Exchange translation reserve Revaluation reserves Other reserves Retained earnings Noncontrolling interests Total equity Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1st January, 2016 (audited) 3,788,814 1,417,669 1,119, ,732 (46,053) 10,515,779 17,138,330 16,008 17,154,338 Exchange differences arising on translation to presentation currency (209,916) (209,916) (368) (210,284) Net change in fair value of available-for-sale investments 4,560 4,560 4,560 Release upon disposal of available-for-sales investments to profit or loss (202,667) (202,667) (202,667) Deferred tax effect on share of change in fair value of available-for-sale investments 18,892 18,892 18,892 Profit for the period 513, ,150 (3,831) 509,319 Total comprehensive income (expense) for the period (209,916) (179,215) 513, ,019 (4,199) 119,820 5 Transfer on disposal of a subsidiary (note 5) 5,788 (5,788) Transfer on disposal of joint ventures 3,683 (3,683) 10 Dividend recognised as distribution (note 10) (226,015) (226,015) (226,015) At 30th June, 2016 (unaudited) 3,788,814 1,417, , ,517 (46,053) 10,793,443 17,036,334 11,809 17,048,143 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

13 11 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30th June, 2016 (Unaudited) Six months ended 30th June, NOTES HK$ 000 HK$ 000 Net cash used in operating activities (787,866) (661,549) Net cash (used in) from investing activities Interest received 40,924 44,002 Dividends received from joint ventures 11,430 75,949 Dividend received from available-for-sale investments 593 1,293 Purchase of property, plant and equipment (4,623) (7,965) Proceeds on disposal of property, plant and equipment 138 1,027 Purchase of investment properties (4,168) (7,247) Proceeds from disposal of investment properties, net of business tax 7,901 Purchase of subsidiaries (68,220) Capital contribution to an associate (197,647) Proceeds from disposal of available-for-sale investments 480,000 22,624 Purchase of held-for-trading investments (76,884) Proceeds from disposal of held-for-trading investments 40,051 Net cash inflow (outflow) from disposal of a subsidiary 5 124,141 (755) Net cash outflow from disposal of joint ventures (9,502) Deposits received in relation to disposal of subsidiaries 298, ,819 Deposits refunded in relation to disposal of subsidiaries (325,000) Advances to joint ventures (18,163) (129,042) Repayment from (advances to) non-controlling shareholders 269 (6,151) Loans repaid 316,229 Loans advanced (677,750) (126,582) Placement of pledged bank deposits (300,000) (324,756) 255,139 天安中國投資有限公司

14 12 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (continued) for the six months ended 30th June, 2016 (Unaudited) Six months ended 30th June, NOTES HK$ 000 HK$ 000 Net cash from financing activities Interest paid (154,587) (154,286) Dividend paid (226,015) (150,677) Dividend paid to noncontrolling shareholders (10,106) New bank and other loans raised 834,576 1,316,173 Repayment of bank and other loans (435,013) (550,874) Repayment to associates (130) Advances from joint ventures 170, ,668 Repayment to non-controlling shareholders (8,605) (1,265) Repayment of membership debentures (1,338) (411) 179, ,222 Net (decrease) increase in cash and cash equivalents (933,149) 225,812 Cash and cash equivalents at the beginning of the period 3,971,950 1,320,997 Effect of foreign exchange rate changes (9,797) (391) Cash and cash equivalents at the end of the period 3,029,004 1,546,418 Analysis of the balances of cash and cash equivalents Bank balances and cash 3,309,882 1,769,507 Less: restricted bank deposits (Note) (282,582) (223,195) 3,027,300 1,546,312 Bank balances and cash included in assets classified as held for sale 1, ,029,004 1,546,418 Note: The restricted bank deposits are included in bank balances and cash which can only be applied in the designated property development projects. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

15 13 1. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the six months ended 30th June, BASIS OF PREPARATION 34 The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) as well as the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities ( Listing Rules ) on The Stock Exchange of Hong Kong Limited ( Stock Exchange ). 436 The financial information relating to the year ended 31st December, 2015 that is included in these condensed consolidated financial statements does not constitute the Company s statutory annual consolidated financial statements for this financial year but is derived from those financial statements. Further information relating to these statutory financial statements disclosed in accordance with section 436 of the Hong Kong Companies Ordinance ( CO ) is as follows: 662(3) (2) 407(2) (3) 2. The Company has delivered the financial statements for the year ended 31st December, 2015 to the Registrar of Companies in accordance with section 662(3) of, and Part 3 of Schedule 6 to, the CO. The Company s auditor has reported on those financial statements for The auditor s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the CO. 2. SIGNIFICANT ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments, which are measured at fair values, as appropriate. Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30th June, 2016 are the same as those followed in the preparation of the Group s annual financial statements for the year ended 31st December, 天安中國投資有限公司

16 SIGNIFICANT ACCOUNTING POLICIES (continued) In the current interim period, the Group has applied for the first time in the following new and revised Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the HKICPA that are relevant for the preparation of the Group s condensed consolidated financial statements: Amendments to HKFRS 11 Amendments to HKAS 1 Amendments to HKAS 16 and HKAS 38 Amendments to HKAS 16 and HKAS 41 Amendments to HKFRS 10, HKFRS 12 and HKAS 28 Amendments to HKFRSs Accounting for Acquisitions of Interests in Joint Operations Disclosure Initiative Clarification of Acceptable Methods of Depreciation and Amortisation Agriculture: Bearer Plants Investment Entities: Applying the Consolidation Exception Annual Improvements to HKFRSs Cycle 3. The application of the above amendments to HKFRSs in the current period has had no material effect on the amounts reported and/ or disclosures set out in these condensed consolidated financial statements. 3. SEGMENT INFORMATION The Group s revenue for the period was derived mainly from activities carried out and located in the People s Republic of China ( PRC ) other than Hong Kong. The Group s basis of organisation is determined based on three main operations: property development, property investment and other operations that comprises mainly hotel and property management and golf course operation. Similarly, the Group s reportable and operating segments, reported to the Executive Directors of the Company for the purposes of resource allocation and performance assessment, also focused on the three main operations. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

17 SEGMENT INFORMATION (continued) The Group has not included total asset information as part of segment information. The following is an analysis of the Group s segment revenue, results, assets and liabilities by reportable and operating segments for the period under review: Property development Property investment Other operations Consolidated HK$ 000 HK$ 000 HK$ 000 HK$ 000 For the six months ended 30th June, 2016 SEGMENT REVENUE External sales 135, ,839 69, ,399 RESULTS Segment (loss) profit (28,847) 330,518 (23,412) 278,259 Other income and gains 405,578 Unallocated corporate expenses (87,810) Finance costs (89,462) Share of loss of associates (1,032) (1,032) Share of profit (loss) of joint ventures 64,046 62,446 (14,496) 111,996 Profit before tax 617,529 As at 30th June, 2016 ASSETS Segment assets 11,440,949 10,188, ,290 22,544,846 Interests in associates 429, ,213 Interests in joint ventures 301,577 1,643,950 (9,772) 1,935,755 Amounts due from associates 2,563 2,563 Amounts due from joint ventures 954,392 6, ,281 Unallocated corporate assets 5,548,698 Consolidated total assets 31,422,356 LIABILITIES Segment liabilities 4,103,299 1,980, ,095 6,912,693 Unallocated corporate liabilities 7,461,520 Consolidated total liabilities 14,374,213 天安中國投資有限公司

18 SEGMENT INFORMATION (continued) Property development Property investment Other operations Consolidated HK$ 000 HK$ 000 HK$ 000 HK$ 000 For the six months ended 30th June, 2015 SEGMENT REVENUE External sales 285, ,756 65, ,097 RESULTS Segment (loss) profit (25,835) 553,972 (18,909) 509,228 Other income and gains 87,688 Unallocated corporate expenses (40,999) Finance costs (118,600) Share of (loss) profit of joint ventures (91,081) 106,016 (22,251) (7,316) Profit before tax 430,001 As at 31st December, 2015 ASSETS Segment assets 11,314,709 10,251, ,714 22,277,498 Interests in associates 234, ,210 Interests in joint ventures 866,570 1,085,787 (43,128) 1,909,229 Amounts due from associates 2,563 2,563 Amounts due from joint ventures 842,482 51, ,511 Unallocated corporate assets 6,244,131 Consolidated total assets 31,561,142 LIABILITIES Segment liabilities 4,550,286 1,989,281 78,818 6,618,385 Unallocated corporate liabilities 7,788,419 Consolidated total liabilities 14,406,804 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

19 OTHER INCOME AND GAINS (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Dividend income unlisted shares listed shares Interest income on bank deposits 17,644 7,050 Interest income from loans receivable 8,407 31,291 Interest income from a joint venture 20,188 1,536 Net reversal of impairment loss on available-for-sale investments reclassified to profit or loss 10,636 Revaluation reserves released upon disposal of available-for-sale investments to profit or loss 202,667 26,674 Reversal of write-down of inventories of completed properties Deposit forfeited for termination of disposal of subsidiaries 145,693 Other income 9,677 8, ,578 87,688 天安中國投資有限公司

20 GAIN ON DISPOSAL OF A SUBSIDIARY During the period ended 30th June, 2016, the Group disposed of its entire interests in and a shareholder s loan owed by a subsidiary to a third party, which is incorporated in the PRC and is engaged in property investment in the PRC. During the period ended 30th June, 2015, the Group disposed of its entire interests in and a shareholder s loan owed by a subsidiary to a third party, which is incorporated in Hong Kong and its subsidiary is engaged in property development in the PRC. Details of the disposals are as follows: The net liabilities of the subsidiaries at the date of disposal: HK$ 000 HK$ 000 Net liabilities disposed of: Property, plant and equipment 934 Investment properties 153,000 Trade and other receivables, deposits and prepayments 231 Bank balances and cash 1, Trade and other payables (80,251) (7,033) Pre-sale deposits (112) Amount due to immediate holding company (97,291) Tax liabilities (102) Deferred tax liabilities (8,278) Net liabilities disposed (31,432) (5,558) Settlement of a shareholder s loan 97,291 Gain on disposal 125,009 18,693 Net proceeds on disposals 190,868 13,135 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

21 GAIN ON DISPOSAL OF A SUBSIDIARY (continued) HK$ 000 HK$ 000 Cash consideration received in current period 28,007 Settlement of a shareholder s loan in current period 97,291 Cash consideration received in prior year as deposit 65,570 13, ,868 13,135 Exchange translation reserve transferred to retained earnings (Note) (5,788) 1,413 Net cash inflow (outflow) arising on disposal: Cash consideration received in current period 28,007 Settlement of a shareholder s loan in current period 97,291 Bank balances and cash disposed of (1,157) (755) 124,141 (755) Note: Since the functional currencies of the disposed subsidiary and the Company are the same, exchange differences accumulated in exchange translation reserve relating to the disposed subsidiary are reclassified from exchange translation reserve to retained earnings at the time of disposal. 天安中國投資有限公司

22 FINANCE COSTS (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Interest on: Bank loans 126, ,462 Other loans 3,825 1,376 Loans arrangement fee 5,590 3,418 Imputed interest expenses on non-current membership debentures Less: amount capitalised on properties 136, ,897 under development (47,251) (36,297) 89, ,600 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

23 TAXATION (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 The charge comprises: Current tax PRC Enterprise Income Tax 64,280 12,513 Land Appreciation Tax 14,766 18,836 79,046 31,349 (Over) under provision in prior years PRC Enterprise Income Tax (3,204) 2,171 Land Appreciation Tax (23) 1,353 (3,227) 3,524 75,819 34,873 Deferred tax 32, , , ,862 No provision for Hong Kong Profits Tax has been made as the group companies operating in Hong Kong do not have any assessable profit for both periods. The PRC Enterprise Income Tax is calculated at the rates applicable to respective subsidiaries. 天安中國投資有限公司

24 PROFIT FOR THE PERIOD (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Profit for the period has been arrived at after charging (crediting): Depreciation of property, plant and equipment 15,884 16,018 Less: amount capitalised on properties under development (1,384) (2,921) 14,500 13,097 Amortisation of: Other assets properties interests Properties for development 31,166 40,303 Prepaid lease payments on land use rights Total depreciation and amortisation 46,714 54,490 Cost of inventories recognised as expenses 77, ,632 Net exchange loss 11, Share of tax of joint ventures included in share of profit (loss) of joint ventures 157, ,190 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

25 EARNINGS PER SHARE The calculation of the basic earnings per share attributable to the owners of the Company is based on the following: (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Earnings Earnings for the purpose of basic earnings per share (profit for the period attributable to owners of the Company) 513, ,975 (Unaudited) Six months ended 30th June, Number of shares Number of ordinary shares for the purpose of basic earnings per share 1,506,769 1,506,769 天安中國投資有限公司

26 DIVIDEND (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 Dividend recognised as distribution during the period: 15 Interim dividend (in lieu of final dividend) paid of HK15 cents in respect of 2015 (2015: Nil) per share 226, No final dividend paid in respect of 2015 (2015: HK10 cents in respect of 2014) per share 150, PROPERTY, PLANT AND EQUIPMENT 4,623,000 12,653,000 During the six months ended 30th June, 2016, the Group acquired property, plant and equipment for a cash consideration of HK$4,623,000 (31st December, 2015: HK$12,653,000). TIAN AN CHINA INVESTMENTS COMPANY LIMITED

27 INVESTMENT PROPERTIES During the six months ended 30th June, 2016, (a) 8,809,000 8,131,000 76,870,000 (a) Investment properties with carrying amount of HK$8,809,000 as at 31st December, 2015 were disposed of for a cash consideration of HK$8,131,000. Inventories of completed properties with fair value of HK$76,870,000 at the date of transfer were transferred to investment properties. (b) (b) The fair values of the Group s investment properties at the date of transfer, 31st December, 2015 and 30th June, 2016 have been arrived at on the basis of a valuation carried out on that date by Norton Appraisals Limited, a firm of independent and qualified professional valuers not connected with the Group. The valuation was principally based on income approach by taking into account the current rents passing and the reversionary income potential of tenancies. For the properties which are currently vacant, the valuation was based on each of the property interests by capitalisation of the hypothetical and reasonable market rents with a typical lease term and also make reference to the direct comparison approach. For the properties which were transferred from inventories of completed properties to investment properties, the valuation was based on direct comparison approach. The valuations of investment properties held for undetermined future use were arrived at the adoption of the residual approach with the basis that they will be developed and completed in accordance with the latest development proposals and taken into account the constructions cost that will extent to complete the development to reflect the quality of the completed development. There has been no change from the valuation technique used in the prior year. 天安中國投資有限公司

28 LOANS RECEIVABLE At 30th June, 2016, loans receivable consist of: (a) 750,701, ,699,000 6% 18%12% 18% 406,878, ,703,000 12% 12% (a) Loans receivable of HK$750,701,000 (31st December, 2015: HK$770,699,000) bear interest ranging from 6% to 18% (31st December, 2015: 12% to 18%) per annum, are secured by debentures and shares mortgage and receivable between August 2016 to December 2018 (31st December, 2015: March 2016 to December 2018). The carrying amount of HK$406,878,000 (31st December, 2015: HK$412,703,000) is classified as non-current loans receivable and is receivable in December 2018 (31st December, 2015: December 2018) and carries a fixed interest rate of 12% (31st December, 2015: 12%) per annum. (b) 5,970,000 5,970,000 4% 4% (b) Loans receivable of HK$5,970,000 (31st December, 2015: HK$5,970,000) bear interest at Hong Kong Inter-bank Offered Rate plus 4% (31st December, 2015: Hong Kong Inter-bank Offered Rate plus 4%) per annum, are secured by share mortgage and receivable in February 2017 (31st December, 2015: February 2016). (c) 162,750,000 17,900, % 8.5% 12% 116,250, % (c) Loans receivable of HK$162,750,000 (31st December, 2015: HK$17,900,000) bear interest ranging from 4.75% to 8.5% (31st December, 2015: 12%) per annum, are unsecured and receivable between November 2016 to May 2021 (31st December, 2015: November 2016). The carrying amount of HK$116,250,000 (31st December, 2015: Nil) is classified as non-current loans receivable and is receivable in May 2021 and carries a fixed interest rate of 4.75% per annum. (d) 230,000, % (d) Loans receivable of HK$230,000,000 (31st December, 2015: Nil) bear interest at Hong Kong Inter-bank Offered Rate plus 2.75% per annum, are unsecured and receivable in March TIAN AN CHINA INVESTMENTS COMPANY LIMITED

29 TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Proceeds receivable in respect of sale of properties are settled in accordance with the terms stipulated in the sale and purchase agreements. Except for the proceeds from sales of properties and rental income from lease of properties which are payable in accordance with the terms of the relevant agreements, the Group generally allows a credit period of 30 days to 120 days to its customers. The following is an aged analysis of trade receivables at the end of the reporting period: (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 Within 3 months 11,084 10,327 Between 4 and 6 months 1,662 1,503 Between 7 and 12 months Over 12 months 301 1,983 13,411 14,452 90,047,000 91,337,000 As at 30th June, 2016, other receivables included the deposits of HK$90,047,000 (31st December, 2015: HK$91,337,000) which was paid for acquisition of properties held for sales from third parties and the transaction has not yet completed at the end of the reporting period. 天安中國投資有限公司

30 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE 111,418,000 On 3rd December, 2007, the Group entered into a sale and purchase agreement with a related company, of which a director of the subsidiary to be disposed of is a beneficial owner. On 30th January, 2008, the ordinary resolution for approving the sale and purchase agreement was duly passed by the shareholders of the Company ( Shareholders ) at extraordinary general meeting. Pursuant to the sale and purchase agreement, the completion date of sale and purchase of the subsidiary which is engaged in golf course operation and property development shall not be later than 7th December, The related company requested to extend the completion date in order to obtain financing for the payment of the balance of the consideration. At 31st December, 2010, the Group received a non-refundable deposit of HK$111,418,000 which had been included in trade and other payables. 810,000, ,000,000 On 10th June, 2011, the Group entered into a new sale and purchase agreement. Pursuant to the new sale and purchase agreement, the total consideration has been revised to HK$810,000,000. A further nonrefundable payment of HK$200,000,000 was received during the year. On 1st August, 2011, the ordinary resolution for approving the sale and purchase agreement was duly passed by the Shareholders at an extraordinary general meeting. 570,918,000 On 8th May, 2014, the Group entered into a supplemental agreement to revise the payment schedule of the remaining balance. As at 30th June, 2016, the Group received a non-refundable deposit of HK$570,918,000. As the remaining balance was received in August 2016 and the transaction was completed after the end of the reporting period, the Group lost control of the disposed subsidiary when the transaction was completed. 3 As at 30th June, 2016, the assets and liabilities attributable to the subsidiary in this note had been classified as assets and liabilities held for sale (see below). The operations were included in the Group s property development and other operations as appropriate for segment reporting purposes (see note 3). The proceeds of disposal were expected to exceed the net carrying amount of the relevant assets and liabilities at 30th June, Accordingly, no impairment loss had been recognised upon the classification of these operations as assets and liabilities held for sale. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

31 ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE (continued) The major classes of assets and liabilities comprising the disposal group classified as held for sale are as follows: (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 Property, plant and equipment 127,356 Properties for development 742,040 Prepaid lease payments on land use rights 12,233 Trade and other receivables 2,482 Other inventories 2,264 Bank balances and cash 1,704 Assets classified as held for sale 888,079 Trade and other payables 136,985 Pre-sale deposits 21,127 Membership debentures 51,117 Interest-bearing borrowings 73,886 Interest-free borrowings 472,329 Deferred tax liabilities 54,675 Liabilities associated with assets classified as held for sale 810,119 天安中國投資有限公司

32 TRADE AND OTHER PAYABLES The following is an aged analysis of trade payables by age, presented based on the invoice date, which are included in trade and other payables, at the end of the reporting period: (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 Within 3 months 173, ,868 Between 4 and 6 months 14,272 52,177 Between 7 and 12 months 731 7,633 Over 12 months 367, , , ,657 1,147,736,000 1,455,775,000 As at 30th June, 2016, the Group has received HK$1,147,736,000 (31st December, 2015: HK$1,455,775,000) deposits for disposal of properties for development and properties under development through disposal of subsidiaries, which are included in trade and other payables. The transactions have not yet completed at the end of the reporting period MEMBERSHIP DEBENTURES Membership debentures represent golf guarantee fees which are refundable to members twenty years after joining the golf club or can be used by members to set off against the cost of purchasing villas at the golf course. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

33 INTEREST-BEARING BORROWINGS 834,576, ,013, % 10% 19. During the six months ended 30th June, 2016, the Group obtained new loans in the amount of HK$834,576,000 and repaid bank and other loans of HK$435,013,000. The majority of the loans are repayable within 5 years and bear interest at fixed or floating market rates which range from 2.64% to 10% per annum. Proceeds from new borrowings were used to finance the progress payments for properties under development and operating activities of the Group. 19. INTEREST-FREE BORROWINGS (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 Advances from non-controlling shareholders ,278 Amounts due to joint ventures 179,903 9,318 Amounts due to associates 6, , ,254 天安中國投資有限公司

34 SHARE CAPITAL Number of ordinary shares Share capital HK$ 000 Issued and fully paid: At 31st December, 2015 and 30th June, 2016 Ordinary shares with no par value 1,506,769,491 3,788, CONTINGENT LIABILITIES (a) (a) At 30th June, 2016 and 31st December, 2015, the Group had guarantees as follows: (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 Guarantees given to banks in respect of mortgage loans granted to property purchasers 17,340 10,609 Guarantees given to banks in respect of banking facilities granted and utilised by: joint ventures 1,496,000 1,448,972 available-for-sale investments 230,500 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

35 CONTINGENT LIABILITIES (continued) b) 50% 2,606,000 2,680,000 (b) A portion of a property for development that is held by a 50%-owned joint venture of the Group with carrying value of approximately HK$2,606,000 (31st December, 2015: HK$2,680,000) 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. 39,005,000 39,602,000 Another property for development that is held by a subsidiary of the Group with carrying value of approximately HK$39,005,000 (31st December, 2015: HK$39,602,000) 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. 499,340,000 Further, property for development that is held by another subsidiary of the Group with carrying value of approximately HK$499,340,000 (31st December, 2015: Nil) had been identified as idle land by the local authority. The construction works for the first phase of development is in progress. 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. (c) 32,941,000 33,413,000 (c) A joint venture partner has initiated legal proceeding against the joint ventures of the Group claiming that according to the cooperating memorandum of the joint venture, the joint venture should sell a certain portion of the properties developed by the joint venture to that joint venture partner at a disputed price of approximately HK$32,941,000 (31st December, 2015: HK$33,413,000). The case is under trial by the court in the PRC. The Group has assessed the claims and obtained legal advice, and considers that the final outcome of the claim will not have material effect on the financial position of the Group. 天安中國投資有限公司

36 FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS Some of the Group s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values are determined (in particular, the valuation techniques and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable. Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). TIAN AN CHINA INVESTMENTS COMPANY LIMITED

37 FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued) Fair value as at 30th June, st December, 2015 (Unaudited) (Audited) Fair value hierarchy Valuation techniques and key inputs HK$ 000 HK$ 000 Equity securities listed in the PRC classified as held-for-trading investments 86,829 99,369 Level 1 Quoted bid prices in an active market. Equity securities listed in the PRC classified as available-for-sale investments 41,562 67,804 Level 1 Quoted bid prices in an active market. Equity securities listed in Hong Kong classified as available-for-sale investments 338, ,777 Level 1 Quoted bid prices in an active market. Unlisted debt securities classified as available-for-sale investments 13,863 12,830 Level 2 Discounted cash flow. Future discounted cash flows are estimated based on relevant interest rates (from observable yield curves at the end of the reporting period) and contracted interest rates, discounted at a rate that reflects the credit risk of various counterparties. The directors of the Company ( Directors ) consider that the carrying amount of the Group s financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values. 天安中國投資有限公司

38 RELATED PARTY TRANSACTIONS AND BALANCES During the six months ended 30th June, 2016, the Group had transactions and balances with related parties as follows: (Unaudited) Six months ended 30th June, HK$ 000 HK$ 000 (a) (b) (a) A major shareholder with significant influence, Allied Properties (H.K.) Limited ( APL ) and its subsidiaries and its ultimate holding company and subsidiaries of its ultimate holding company Rent, property management and air-conditioning fees charged to the Group 1,608 1,580 Management fee charged to the Group 13,560 12,060 Interest expenses charged to the Group 1,311 1,376 Loan arrangement fee charged to the Group Sundry expenses charged to the Group 9 38 i (b) A subsidiary of APL, Sun Hung Kai & Co. Limited ( SHK ) and its subsidiaries (Note i) Insurance charged to the Group Leasing agency income earned by the Group 8 Rental and property management fee income earned by the Group 2,395 2,315 Property, plant and equipment purchased by the Group 280 the subsidiaries acquired by the Group 68,220 (c) (c) A partnership of which a Non-Executive Director of the Company is a partner Legal and professional fees charged to the Group 1,475 (d) (d) Key management personnel compensation Salaries and other short-term benefits ii (Note ii) 35,776 22,894 Post-employment costs (e) (e) Associates and joint ventures Rent earned by the Group Interest income earned by the Group 14,204 3,072 iii Dividend received or receivable by the Group (Note iii) 124,068 Property management fee charged to the Group 2,517 3,864 Consultancy fee income earned by the Group 12,487 4,411 Properties purchased by the Group 370,715 Financial guarantee granted and utilised by the Group 1,496,000 1,907,456 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

39 RELATED PARTY TRANSACTIONS AND BALANCES (continued) (Unaudited) 30th June, 2016 HK$ 000 (Audited) 31st December, 2015 HK$ 000 (f) (f) APL and its subsidiaries and its ultimate holding company and subsidiaries of its ultimate holding company iv Loan payable (Note iv) 7,002 6,552 Other payable 43,332 43,952 (g) (g) SHK and its subsidiaries Other payable 2,680 4,423 (h) (h) Associates and joint ventures Other payable Apart from the renewed sharing of administrative services and management services agreement entered into by the Company with the ultimate holding company of APL and the leasing agreements entered into by the Group with subsidiaries of SHK, none of the above related party transactions constitutes a discloseable connected transaction as defined in the Listing Rules. (a) Certain key management personnel of the Group received remuneration from a company, or a wholly-owned subsidiary of such company, which has significant beneficial interests in the Company. Such company provided management services to the Group and charged the Group a fee, which has been included in management fee as disclosed in part (a) of this note, for services provided by those personnel as well as others who were not key management personnel of the Group. 天安中國投資有限公司

40 RELATED PARTY TRANSACTIONS AND BALANCES (continued) 21,276,000 12,371,000 The above-mentioned management fee is calculated by reference to the time devoted by the management personnel on the affairs of the Group and can be apportioned to the above key management personnel. The total of such apportioned amounts, which has been included in the key management personnel compensation above, is HK$21,276,000 (2015: HK$12,371,000). Notes: (i) (i) APL has significant influence on the Company and SHK is a subsidiary of APL. (ii) (ii) The immediate holding company of APL and the Company s 2015 bonus are released in July (iii) 124,068,000 11,430,000 75,949,000 (iii) The joint ventures have declared dividend HK$124,068,000 (2015: Nil) during the period ended 30th June, 2016, while the Group received HK$11,430,000 (2015: HK$75,949,000) in the current period. (iv) 5.0% (iv) The loan payable bears interest at 5.0% per annum, is unsecured and repayable in June TIAN AN CHINA INVESTMENTS COMPANY LIMITED

41 PLEDGED ASSETS At 30th June, 2016, (a) 190,519, ,916,000 2,024,074,000 2,307,401,000 3,218,931,000 2,298,342,000 1,842,459,000 2, 314, 115, (a) Property, plant and equipment, properties for development, properties under development, inventories of completed properties, investment properties and bank deposits of certain subsidiaries with carrying values of HK$190,519,000 (31st December, 2015: HK$197,916,000), HK$2,024,074,000 (31st December, 2015: HK$2,307,401,000), HK$3,218,931,000 (31st December, 2015: HK$2,298,342,000), HK$1,842,459,000 (31st December, 2015: HK$2,314,115,000), HK$8,025,969,000 (31st December, 2015: HK$8,284,089,000) and HK$300,000,000 (31st December, 2015: Nil) respectively were pledged to banks for banking facilities granted to the Group. 8,025,969,000 8,284,089, ,000,000 (b) 1,352,000 1,368,000 (b) Properties for development with carrying value of HK$1,352,000 (31st December, 2015: HK$1,368,000) were pledged against other loans. (c) 129, ,000 (c) Bank deposits with carrying value of HK$129,000 (31st December, 2015: HK$131,000) were pledged against mortgage loans granted to property purchasers. 27,657,000 At 31st December, 2015, investment properties with carrying value of HK$27,657,000 were pledged to bank for banking facility granted to the property purchasers. 天安中國投資有限公司

42 EVENTS AFTER THE REPORTING PERIOD 1,641,600, ,300,000 On 8th July, 2016, the Group entered into two sale and purchase agreements with an independent third party in relation to the disposal of the entire interests in two subsidiaries at cash considerations of HK$1,641,600,000 and HK$771,300,000. The joint venture of one subsidiary is engaged in property development and golf course operation and the other subsidiary is engaged in investment holding with a loan receivable. 500,000,000 12% On 28th July, 2016, the Group entered into a second supplemental agreement in relation to an additional loan of HK$500,000,000 to an existing independent borrower. The loan bears a fixed interest of 12% per annum, is secured by debenture and share mortgage and repayable at two months from the drawdown date. 60% 60%480,000,000 On 29th July, 2016, the Group entered into a sale and purchase agreement with an independent third party in relation to the acquisition of the 60% of the entire interests and 60% of the aggregate amount of the shareholder s loan owned by the joint venture at total cash consideration of RMB480,000,000. The joint venture is incorporated in the British Virgin Islands and is engaged in property development. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

43 41 REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF TIAN AN CHINA INVESTMENTS COMPANY LIMITED (Incorporated in Hong Kong with limited liability) Introduction We have reviewed the condensed consolidated financial statements of Tian An China Investments Company Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 4 to 40, which comprise the condensed consolidated statement of financial position as of 30th June, 2016 and the related condensed consolidated statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Main Board Listing Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. 天安中國投資有限公司