FoRuM 66, SHEnYAnG RIVERSIDE 66, TIAnJIn PALACE 66, SHEnYAnG SHENYANG DALIAN olympia 66, DALIAn TIANJIN JINAN WUXI SHANGHAI WUHAN PLAzA 66, SHAnGHAI G

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1 Above and Beyond We have maintained our commitment to the highest quality standards in construction and management services. This commitment has enabled us to rise above our competitors in mainland China and inject new energy into the retail industry to bring local citizens a dynamic lifestyle, shopping and leisure experience. MAInLAnD CHInA PRoPERTY DEVELoPMEnT PARC 66, JInAn KUNMING CEnTER 66, WuxI SPRInG CITY 66, KunMInG

2 FoRuM 66, SHEnYAnG RIVERSIDE 66, TIAnJIn PALACE 66, SHEnYAnG SHENYANG DALIAN olympia 66, DALIAn TIANJIN JINAN WUXI SHANGHAI WUHAN PLAzA 66, SHAnGHAI GRAnD GATEWAY 66, SHAnGHAI HEARTLAnD 66, WuHAn

Management Discussion and Analysis Mainland China Property Leasing In the 1990s, Hang Lung became one of a few Hong Kong property developers to establish a presence in mainland China s property

3 Management Discussion and Analysis Mainland China Property Leasing In the 1990s, Hang Lung became one of a few Hong Kong property developers to establish a presence in mainland China s property market. Our focus has been to build world-class commercial complexes and iconic landmarks, designed by leading architects, for long-term investment. Center 66 in Wuxi celebrates its grand opening on September 16, HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

4 Despite a moderate growth in the Chinese economy in 2013, our property leasing business in mainland China still recorded a solid performance. Contributing to this was the steady performance of the existing portfolio, together with the full year impact of Forum 66 in Shenyang which commenced operation in September 2012, and the new mall, Center 66 in Wuxi, which opened in September In 2013, the total rental turnover of property leasing in mainland China was HK$3,984 million, up 13% from Rental Turnover HK$ 3,984 Million 45

Management Discussion and Analysis Mainland China Property Leasing IN The award-winning Summer in Paris campaign brings a Parisian-style shopping experience to customers of Plaza 66, Shanghai Plaza

5 Management Discussion and Analysis Mainland China Property Leasing IN The award-winning Summer in Paris campaign brings a Parisian-style shopping experience to customers of Plaza 66, Shanghai Plaza 66, Shanghai Rental turnover of the mall of Plaza 66 increased by 6% to HK$772 million, mainly attributable to positive rental reversions during the year. Despite the government s policy and control on gifting, which affected the sales performance of certain trades such as watches and jewelry, retail sales of Plaza 66 recorded just a slight decrease, attributable to the satisfactory performance of the mall s luxury flagship stores and fashionable designer labels. In 2013, other factors affecting the retail market as a whole included the fact that some affluent shoppers chose to spend their money overseas, taking advantage of the strong RMB, while mass consumers focused more of their spending power on travel, causing local sales in Shanghai to decrease. 46 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

6 Chanel In November 2013, after an impressive refurbishment and expansion program, Plaza 66 welcomed the re-opening of the Chanel Plaza 66 boutique. The new 800-square meter two-story boutique offers customers a Parisian shopping experience that is both timeless and elegant. Berluti Emilio Pucci Repetto As part of Plaza 66 s ongoing repositioning and trade mix reorganization, new brands were introduced to the mall in 2013, including Berluti, Emilio Pucci, the first Repetto store in Shanghai, as well as new specialty restaurants and lifestyle cafés. Satisfactory sales performances were also achieved in 2013 by the existing international fashion labels. IN To promote the mall and increase sales, Plaza 66 held a number of marketing activities in 2013, such as the Summer in Paris campaign. This event attracted a large number of shoppers and, as a result of its success, Plaza 66 received the Gold Award of Spatial Display from the Shanghai Municipal Commission of Commerce and the Shanghai Commercial Association. Looking ahead, trade mix refinement will be carried out continuously to enrich shoppers experience and excitement in We plan to introduce more F&B outlets to provide an attractive offering to shoppers, and launch strategic marketing campaigns in order to maintain the luxury positioning and sales turnover of Plaza 66. VIP The office towers of Plaza 66 continued to enjoy a high occupancy rate in 2013, despite several new commercial spaces entering the market. Rapid tenant replacements also proved that Plaza 66 is a desirable landmark development in the central business district of Shanghai. New tenants in 2013 included the law firm Fangda Partners and VIP, an e-business company. As a result of steady demand by new and existing tenants, the office towers at Plaza 66 enjoyed favorable rental reversions and stable revenue growth in Rental turnover during the year was HK$800 million, up 7% from We are in the process of planning the renovation of the two office towers at Plaza 66. This will help us stay at the forefront of the market as new office buildings come on stream in Puxi district. 47

7 Management Discussion and Analysis Mainland China Property Leasing The opening of a luxury brand store at Grand Gateway 66 attracts a large crowd of customers Grand Gateway 66, Shanghai The softening retail environment in Shanghai had limited effect on the rental turnover of the shopping mall. Rental turnover of Grand Gateway 66 increased 6% to HK$1,068 million in Maje Sandro Red Valentino Diesel MCM During 2013, following the completion of the second floor renovation, a total of 17 international brands including Maje, Sandro, Red Valentino and Diesel opened their doors in Grand Gateway 66. Additionally, MCM set up one more shop on the second floor, following the success of its store located on the first floor. Eland China Eland China, which already has a presence at Palace 66, Forum 66 in Shenyang and Parc 66 in Jinan, leased five units at Grand Gateway 66 in Several factors combined to put pressure on the retail market in Shanghai, including luxury brands holding back on their expansion plans for Asia, reduced marketing budgets, and the rise of on-line shopping. As well, competition intensified in 2013 with the opening of new shopping malls in Shanghai. 48 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

Nevertheless, there were positive trends that emerged during 2013 and these are worth noting. The global economy began to show signs of recovery while average income in mainland China increased.

8 Nevertheless, there were positive trends that emerged during 2013 and these are worth noting. The global economy began to show signs of recovery while average income in mainland China increased. These indicators will give consumers greater spending power and ultimately support the growth of the retail tenants in Grand Gateway 66. Based on the performance of our existing tenants during the review period, we expect both retail sales and rental turnover to continue to increase in In the year ahead, Grand Gateway 66 will continue to support tenants and invest in various marketing and promotional campaigns, while also launching a VIP program and a renovation program in order to maintain the leading position of the mall in the mid- to high-end luxury market. During the year, occupancy rate of the office towers recorded at 93%, while the residential apartments were leased at 89%, generating rental turnover of HK$277 million and HK$181 million, respectively. Overall rental turnover of Grand Gateway 66 was HK$1,526 million, up 5% from Palace 66, Shenyang Commenced operation in 2010, the mall was in the process of a large scale tenant mix reshuffle in 2013 after the completion of the first lease cycle. As a result, rental turnover for the year slipped 2% year-on-year to HK$160 million. Fabulous marketing programs are held at Palace 66 to maintain the mall s positioning as a fashion and lifestyle center 49

9 Management Discussion and Analysis Mainland China Property Leasing Juicy Couture BMW Lifestyle Aape Mandarina Duck CHOCOOLATE Monki We attracted new tenants such as Juicy Couture, BMW Lifestyle, Aape, Mandarina Duck, CHOCOOLATE and Monki after opening the international lifestyle brands and fashion zones on the first floor of the mall. These initiatives led to an increase in retail sales in Starbucks Pacific Coffee Starbucks, Pacific Coffee and a teahouse were introduced to the mall for creating a relax and stylish shopping ambience. A series of creative advertising and promotional campaigns further contributed to the mall s growing popularity. Additionally, the completion of road works in August 2013 helped to increase footfall gradually during the year. Ed Hardy Tony Studio J.Lindeberg Masfer.Su d zzit imi s Massimo Dutti Muji Pierre Balmain Armani Jeans Coach Juicy Couture Ole In the year ahead, we will continue to upgrade the trade mix by bringing in affordable luxury brands, fast fashion brands, more F&B outlets, and lifestyle-oriented services such as a yoga & fitness center. The mall s positioning as a fashion and lifestyle center targets to attract more customers, especially from the young age group. With enhanced tenant mix, we are confident that rental turnover of Palace 66 will grow satisfactorily. Parc 66, Jinan Since opening in Jinan in 2011, Parc 66 has optimized its unique positioning in the local market as a trend-setting fashion and lifestyle shopping destination. In 2013, trendy brands introduced by Parc 66 for the first time in Jinan included Ed Hardy and Tony Studio, and popular fashion brands J.Lindeberg, Masfer.Su, d zzit and imi s also chose to open their flagship stores here. These tenants have been well accepted by the market and are enjoying healthy sales turnover. Existing brands such as Massimo Dutti, Muji, Pierre Balmain, Armani Jeans, Coach, Juicy Couture, and the upscale supermarket Ole also recorded a satisfactory sales performance during the year. A variety of creative marketing campaigns was held to provide a favorable business environment for our tenants, as well as to give our customers an all-round shopping experience. These included shows hosted jointly with fashion brands in the mall, the flash mob performance as a celebration of Parc 66 s second anniversary, and the Halloween parade, which succeeded especially in attracting customers from the young age group. 50 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

Parc 66 celebrates its second anniversary In 2013, Parc 66 enjoyed steady growth in traffic up to a daily average of 50,000 visitors. Rental turnover was HK$367 million, up 1% from the previous year.

10 Parc 66 celebrates its second anniversary In 2013, Parc 66 enjoyed steady growth in traffic up to a daily average of 50,000 visitors. Rental turnover was HK$367 million, up 1% from the previous year. After the completion of the first lease cycle, a lower occupancy rate was recorded in the course of tenant reshuffle. Nevertheless, retail sales of Parc 66 increased 8% during 2013, which proved the great potential in the Jinan retail market. As a result of more efficient cost control, the rental margin and operating profit also recorded increases by three points and 7%, respectively. In the Jinan market, consumers have strong purchasing power but tend to be conservative in their spending habits, with the majority still focused on value-for-money household products. In the year ahead, we will continue to upgrade the mall by exploring the development of special theme zones such as international trendy fashion brands, first-in-jinan brands and domestic designer brands to provide a more convenient one-stop shopping environment. We will also continue to organize more brand promotions with tenants and more creative promotional activities to boost the overall shopping ambience and the sales performance. 51

Management Discussion and Analysis Mainland China Property Leasing Diversified marketing events at Forum 66 always include appearances by renowned celebrities, boosting the shopping ambience MCM

11 Management Discussion and Analysis Mainland China Property Leasing Diversified marketing events at Forum 66 always include appearances by renowned celebrities, boosting the shopping ambience MCM Innisfree MCM, a famous German crafts luxury leather goods retailer, has already opened its first store in Jinan in January Innisfree, a very popular Korean cosmetics brand, will also open its first store in Jinan at Parc 66 in February With this new energy injected into the mall, together with our continuous effort in upgrading the trade mix and organizing diversified marketing campaigns, we are confident that retail sales of the mall will have a more substantial growth in 2014 and achieve the target of positioning Parc 66 as the must-visit place in Jinan. Forum 66, Shenyang Forum 66 has attracted high-end international brands since opening in September These tenants helped us maintain a 99% occupancy rate in The mall was almost fully let. Strategic advertising and promotional campaigns have proved highly effective, enabling us to increase awareness of the mall and traffic to it. Enlisting the close cooperation of the tenants, we held several co-marketing events including fashion shows in the atrium. These innovative marketing initiatives have significantly enhanced the shopping ambience of the mall. 52 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

ibutterfly Other successful campaigns held at Forum 66 in 2013 included the launch of ibutterfly, the first ever mobile app marketing event held in Shenyang; Les Champs-Elysées au Forum 66 2013; a

12 ibutterfly Other successful campaigns held at Forum 66 in 2013 included the launch of ibutterfly, the first ever mobile app marketing event held in Shenyang; Les Champs-Elysées au Forum ; a number of events held in connection with Christmas and New Year; and the premiere of the movie Firestorm at Palace Cinema with a special guest appearance by renowned Hong Kong artist Andy Lau. We expect increased pedestrian traffic in the mall with the opening of the new metro station. The station is directly connected to Forum 66. The Office Tower One, now under construction, is expected to be topped out in Center 66, Wuxi In the few short months after its opening in September 2013, Center 66 has quickly established a following in Wuxi. These factors contributed to its early success: the mall s high-end positioning, a well-designed shopping environment and a desirable location. These components were supported by an extensive marketing campaign promoting Center 66 as a fashionable and cosmopolitan place to shop. More high-end brands will open their doors at Center 66 in

13 Management Discussion and Analysis Mainland China Property Leasing CHAUMET kate spade PRADA Roger Vivier Valentino Cerruti 1881 EMPORIO ARMANI RIMOWA TOD S Uniqlo Destined to become the flagship of our operations in Wuxi, Center 66 offers the highest standards of excellence in architectural design. All under one roof, the mall presents shoppers with an exclusive shopping experience with global brands, F&B outlets, and lifestyle offerings. Among the 250 tenants who have leased premises in Center 66 are CHAUMET, kate spade, PRADA, Roger Vivier, Valentino, Cerruti 1881, EMPORIO ARMANI, RIMOWA, TOD S and Uniqlo. Louis Vuitton Apple (Ermenegildo Zegna) (MONT BLANC) (Panerai) (Jaeger-LeCoultre) Although the mainland China government has implemented measures to rein in the economy, and there has also been an influx of new commercial projects into Wuxi in recent years, we are optimistic about the prospects for Center 66. More footfall is expected as the new subway passageway and office tower will both open in New tenants such as Louis Vuitton, Apple, Ermenegildo Zegna, MONT BLANC, Panerai and Jaeger-LeCoultre, as well as a number of high-end F&B brands, will arrive. In addition, other renowned brands are also paying keen attention to Center 66, creating more and more excitement and opportunities for the mall. Riverside 66, Tianjin Anticipation is growing among prospective tenants, consumers, the media and local government in advance of the grand opening of Riverside 66 in the third quarter of Positioned as a stylish and trend-setting lifestyle destination, this new mall will attract attention with its outstanding architectural design and quality management services. Our marketing efforts have been successful as we have signed or secured commitments from anchor tenants and from international fashion brands, F&B outlets and lifestyle retailers. Some of these tenants are new to the market and will open their first store in Tianjin. Our focus for the mall is on lifestyle luxury products and high-end fashion brands. The new tenants at Riverside 66 are able to support this new, trend-setting shopping experience we are bringing to Tianjin. 54 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

Riverside 66 provides an exciting and trend-setting lifestyle destination The grand opening of Riverside 66 will be the most important event for the Group in 2014.

14 Riverside 66 provides an exciting and trend-setting lifestyle destination The grand opening of Riverside 66 will be the most important event for the Group in To keep expectations and anticipation high, we are planning a series of exciting marketing events. Over the course of next few years, Tianjin and the surrounding area will see an increase in the number of mixed-use developments, international office towers, hotels, serviced apartments and luxury residences. We expect these developments will contribute to a stable and high quality source of consumer traffic for Riverside 66. Despite the competitive market situation in Tianjin, we remain confident that our first-class property management services, as well as creative marketing and promotional activities will be successful in attracting and retaining quality tenants and consumers in Tianjin. 55

15 Management Discussion and Analysis Mainland China Property Leasing Mainland China Rental Turnover Mainland China Rental Turnover by Business Segment At December 31, 2013 HK$ Million 4,000 3,500 $3,984 Million 26% 5% 1% 3,000 2,500 2,000 Commercial 1,500 Office 1, % Residential and Apartment Car Park / 2010^ 2010/ 2011^ 2011 # ^ Financial year ended June 30 # Restated to 12-month period ended December 31, 2011 Segmental Analysis of Mainland China Investment Properties For the year ended December 31 # Total Gross Floor Area # ( 000 sq.m.) Rental Turnover (HK$ Million) Occupancy Rate (%) Commercial ,695 2, Office , Residential and Apartment Car Park N/A N/A Total 1,560 1,326 3,984 3, # Including gross floor area above and below ground 56 HANG LUNG GROUP LIMITED 2013 ANNUAL REPORT

16 Geographical Analysis of Mainland China Investment Properties and Investment Properties Under Development At December 31, 2013 * Total Gross Floor Area* ( 000 sq.m.) Investment Properties Shanghai Xuhui District 315 Jing an District 273 Shenyang Shenhe District (Zhongjie Lu) 181 Shenhe District (Qingnian Da Jie) 301 Jinan 256 Wuxi Chong an District (Renmin Zhong Lu) 234 Total 1,560 Investment Properties Under Development Shenyang Shenhe District (Qingnian Da Jie) 759 Wuxi Chong an District (Renmin Zhong Lu) 145 Chong an District (Jiankang Lu) 109 Tianjin 153 Dalian 222 Kunming 434 Wuhan 460 Total 2,282 * Including gross floor area above and below ground 57

Chinese oil import policies and reforms 随着经济的发展, 目前中国石油消费总量已经跃居世界第二作为一个负责任的大国, 中国正在积极推进能源进口多元化, 鼓励替代

Chinese oil import policies and reforms SINOPEC EDRI 2014.8 Chinese oil import policies and reforms 随着经济的发展, 目前中国石油消费总量已经跃居世界第二作为一个负责任的大国, 中国正在积极推进能源进口多元化,