Interim Report 2017

Interim Report For the six months ended 30th June, 2017

1 CONTENTS 2 4 6 7 9 11 13 39 41 41 47 48 53 56 56 Corporate Information Condensed Consolidated Statement of Profit or Loss Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Condensed Consolidated Statement of Financial Position Condensed Consolidated Statement of Changes in Equity Condensed Consolidated Statement of Cash Flows Notes to the Condensed Consolidated Financial Statements Report on Review of Condensed Consolidated Financial Statements Interim Dividend Management Discussion and Analysis Directors Interests Substantial Shareholders and Other Persons Interests Corporate Governance and Other Information Audit Committee Review Purchase, Sale or Redemption of Shares 天安中國投資有限公司

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 Lee Shu Yin Non-Executive Directors Lee Seng Hui, Chairman Moses Cheng Mo Chi 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

3 138 22 2533 3233 2845 3034 info@tiananchina.com 183 22 28 http://www.tiananchina.com http://www.irasia.com/listco/hk/tiananchina/ 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. : 2533 3233 Fax : 2845 3034 E-mail : 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 http://www.tiananchina.com http://www.irasia.com/listco/hk/tiananchina/ index.htm 天安中國投資有限公司

4 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS for the six months ended 30th June, 2017 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, 2017 with the comparative figures for the corresponding period in 2016 are as follows: (Unaudited) Six months ended 30th June, 2017 2016 NOTES HK$ 000 HK$ 000 Revenue 3 504,614 416,399 Cost of sales (212,874) (199,016) Gross profit 291,740 217,383 Other income and gains 4 68,402 405,578 Marketing and distribution expenses (49,894) (24,120) Administrative expenses (176,102) (151,468) Other operating expenses (2,000) (21,273) Net decrease in fair value of held-for-trading investments (13,382) (11,347) Fair value gain on transfer of inventories of completed properties to investment properties 39,541 36,284 Increase in fair value of investment properties 43,981 51,147 Amortisation of properties for development (21,285) (31,166) Gain on disposal of a subsidiary 5 1,633,977 125,009 Finance costs 6 (71,977) (89,462) Share of profit (loss) of associates 64,925 (1,032) Share of profit of joint ventures 102,851 111,996 Profit before tax 1,910,777 617,529 Taxation 7 (213,764) (108,210) Profit for the period 8 1,697,013 509,319 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

5 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS (continued) for the six months ended 30th June, 2017 (Unaudited) Six months ended 30th June, 2017 2016 NOTES HK$ 000 HK$ 000 Profit for the period attributable to: Owners of the Company 1,671,086 513,150 Non-controlling interests 25,927 (3,831) 1,697,013 509,319 HK cents HK cents Earnings per share 9 Basic 110.91 34.06 天安中國投資有限公司

6 CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the six months ended 30th June, 2017 (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 Profit for the period 1,697,013 509,319 Other comprehensive income (expense) Items that will not be reclassified to profit or loss: Exchange differences arising on translation to presentation currency 347,387 (210,284) Surplus on revaluation of properties upon transfer to investment properties 2,217 Deferred tax effect on surplus on revaluation of properties upon transfer to investment properties 7,354 356,958 (210,284) Items that may be subsequently reclassified to profit or loss: Net change in fair value of available-for-sale investments (74,454) 4,560 Release upon disposal of available-for-sale investments to profit or loss (202,667) Deferred tax effect on change in fair value of available-for-sale investments 2,612 18,892 (71,842) (179,215) Other comprehensive income (expense) for the period 285,116 (389,499) Total comprehensive income for the period 1,982,129 119,820 Total comprehensive income (expense) attributable to: Owners of the Company 1,953,663 124,019 Non-controlling interests 28,466 (4,199) 1,982,129 119,820 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

7 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 30th June, 2017 (Unaudited) (Audited) 30th June, 2017 31st December, 2016 NOTES HK$ 000 HK$ 000 Non-current assets Property, plant and equipment 11 278,151 399,357 Investment properties 12 12,023,056 10,862,281 Properties for development 2,075,118 1,999,170 Deposits for acquisition of properties for development 168,429 165,862 Prepaid lease payments on land use rights 72,206 78,678 Other assets properties interests 17,975 17,815 Interests in associates 3,311,710 3,565,352 Interests in joint ventures 2,967,573 2,167,330 Loans receivable 13 241,672 116,250 Available-for-sale investments 298,188 371,553 Deferred tax assets 80,204 72,736 21,534,282 19,816,384 Current assets Inventories of properties under development 2,235,359 1,890,234 completed 3,474,500 3,557,606 Other inventories 415 686 Amounts due from associates 131,573 6,488 Amounts due from joint ventures 1,408,733 994,782 Amounts due from non-controlling shareholders 18,400 17,986 Loans receivable 13 344,139 406,813 Trade and other receivables, deposits and prepayments 14 403,250 394,934 Prepaid lease payments on land use rights 892 886 Held-for-trading investments 86,850 98,217 Prepaid tax 77,859 52,175 Pledged bank deposits 23 843,787 269,786 Bank balances and cash 4,723,577 4,330,115 13,749,334 12,020,708 Assets classified as held for sale 15 1,854,742 13,749,334 13,875,450 天安中國投資有限公司

8 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) at 30th June, 2017 (Unaudited) (Audited) 30th June, 2017 31st December, 2016 NOTES HK$ 000 HK$ 000 Current liabilities Trade and other payables 16 1,385,532 1,472,025 Pre-sale deposits 2,256,331 1,681,943 Tax liabilities 1,140,677 1,030,401 Interest-bearing borrowings 17 1,264,600 1,064,869 Interest-free borrowings 18 86,465 219,895 6,133,605 5,469,133 Liabilities associated with assets classified as held for sale 15 1,382,110 6,133,605 6,851,243 Net current assets 7,615,729 7,024,207 Total assets less current liabilities 29,150,011 26,840,591 Capital and reserves Share capital 19 3,788,814 3,788,814 Reserves 18,863,229 17,724,397 Equity attributable to owners of the Company 22,652,043 21,513,211 Non-controlling interests 1,352,439 538,184 Total equity 24,004,482 22,051,395 Non-current liabilities Interest-bearing borrowings 17 2,721,023 2,451,281 Deferred rental income from a tenant 37,201 40,405 Rental deposits from tenants 19,561 25,813 Deferred tax liabilities 2,367,744 2,271,697 5,145,529 4,789,196 29,150,011 26,840,591 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

9 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the six months ended 30th June, 2017 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 1,119,389 342,732 (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 change in fair value of available-for-sale investments 18,892 18,892 18,892 Profit for the period 513,150 513,150 (3,831) 509,319 Total comprehensive income (expense) for the period (209,916) (179,215) 513,150 124,019 (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 1,417,669 918,944 163,517 (46,053) 10,793,443 17,036,334 11,809 17,048,143 Exchange differences arising on translation to presentation currency (657,395) (657,395) (808) (658,203) Net change in fair value of available-for-sale investments (65,873) (65,873) (65,873) Deferred tax effect on change in fair value of available-for-sale investments 275 275 275 Surplus on revaluation of properties upon transfer to investment properties 88 88 88 Deferred tax effect on surplus on revaluation of properties upon transfer to investment properties (22) (22) (22) Profit for the period 5,199,804 5,199,804 (875) 5,198,929 Total comprehensive income (expense) for the period (657,395) (65,532) 5,199,804 4,476,877 (1,683) 4,475,194 Acquisition of subsidiaries 502,393 502,393 Transfer on disposal of subsidiaries (29,425) 40,883 (11,458) 25,665 25,665 At 31st December, 2016 (audited) 3,788,814 1,417,669 232,124 97,985 (5,170) 15,981,789 21,513,211 538,184 22,051,395 天安中國投資有限公司

10 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) for the six months ended 30th June, 2017 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, 2017 (audited) 3,788,814 1,417,669 232,124 97,985 (5,170) 15,981,789 21,513,211 538,184 22,051,395 Exchange differences arising on translation to presentation currency 347,396 347,396 (9) 347,387 Net change in fair value of available-for-sale investments (74,598) (74,598) 144 (74,454) Deferred tax effect on change in fair value of available-for-sale investments 2,612 2,612 2,612 Surplus on revaluation of properties upon transfer to investment properties 1,660 1,660 557 2,217 Deferred tax effect on revaluation of properties upon transfer to investment properties 5,507 5,507 1,847 7,354 Profit for the period 1,671,086 1,671,086 25,927 1,697,013 Total comprehensive income (expense) for the period 347,396 (64,819) 1,671,086 1,953,663 28,466 1,982,129 5 Transfer on disposal of a subsidiary (note 5) 23,176 (23,176) Partial disposal of a subsidiary without loss of control (Note) (325,131) (325,131) 814,831 489,700 10 Dividend recognised as distribution (note 10) (489,700) (489,700) (489,700) Dividend distributed to non-controlling Interests (29,042) (29,042) At 30th June, 2017 (unaudited) 3,788,814 1,417,669 602,696 33,166 (330,301) 17,139,999 22,652,043 1,352,439 24,004,482 Note: 10 15.77 325,131,000 During the period ended 30th June, 2017, the Group distributed its 15.77% equity interest in Asiasec Properties Limited ( ASP ) (previously known as Dan Form Holdings Limited ) through distribution of special dividend as disclosed in note 10. The difference of HK$325,131,000 between the fair value of the special dividend and the increase in carrying amount of the non-controlling interests had been recognised directly in equity under other reserve. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

11 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30th June, 2017 (Unaudited) Six months ended 30th June, 2017 2016 NOTES HK$ 000 HK$ 000 Net cash from (used in) operating activities 234,371 (787,866) Net cash used in investing activities Interest received 55,288 40,924 Dividends received from associates 78,385 Dividends received from joint ventures 9,048 11,430 Dividend received from available-for-sale investments 2,373 593 Purchase of property, plant and equipment (16,610) (4,623) Proceeds on disposal of property, plant and equipment 20 138 Purchase of investment properties (651,871) (4,168) Proceeds from disposal of investment properties, net of business tax 7,901 Acquisition of subsidiaries (68,220) Capital contribution to an associate (11,429) (197,647) Proceeds from disposal of available-for-sale investments 480,000 Net cash inflow from disposal of a subsidiary 5 1,071,943 124,141 Net cash outflow from disposal of joint ventures (9,502) Deposits received in relation to disposal of subsidiaries 298,692 Deposits refunded in relation to disposal of subsidiaries (325,000) Advances to associates (125,085) Advances to joint ventures (77,926) (18,163) Repayment from noncontrolling shareholders 269 Loans receivable repaid 164,888 316,229 Loans receivable advanced (225,153) (677,750) Withdrawal of pledged bank deposits 233,311 Placement of pledged bank deposits (807,309) (300,000) (300,127) (324,756) 天安中國投資有限公司

12 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (continued) for the six months ended 30th June, 2017 (Unaudited) Six months ended 30th June, 2017 2016 NOTES HK$ 000 HK$ 000 Net cash from financing activities Interest paid (91,586) (154,587) Dividend paid (226,015) Dividend paid to noncontrolling shareholders (29,042) New bank and other loans raised 1,375,192 834,576 Repayment of bank and other loans (873,802) (435,013) Advances from (repayment to) associates 128,258 (130) Advances from joint ventures 6,389 170,585 Repayment to non-controlling shareholders (8,605) Repayment of membership debentures (1,338) 515,409 179,473 Net increase (decrease) in cash and cash equivalents 449,653 (933,149) Cash and cash equivalents at the beginning of the period 3,559,907 3,971,950 Effect of foreign exchange rate changes 12,566 (9,797) Cash and cash equivalents at the end of the period 4,022,126 3,029,004 Analysis of the balances of cash and cash equivalents Bank balances and cash 4,723,577 3,309,882 Less: restricted bank deposits (Note) (701,451) (282,582) 4,022,126 3,027,300 Bank balances and cash included in assets classified as held for sale 1,704 4,022,126 3,029,004 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

13 1. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the six months ended 30th June, 2017 1. 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 ). The financial information relating to the year ended 31st December, 2016 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 is as follows: 662(3)6 3 406(2) 407(2) (3) The Company has delivered the financial statements for the year ended 31st December, 2016 to the Registrar of Companies in accordance with section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance ( CO ). The Company s auditor has reported on those financial statements for 2016. 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. 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, 2017 are the same as those followed in the preparation of the Group s annual financial statements for the year ended 31st December, 2016. 天安中國投資有限公司

14 2. 2. SIGNIFICANT ACCOUNTING POLICIES (continued) In the current interim period, the Group has applied, for the first time, the following amendments to Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the HKICPA that are relevant for the preparation of the Group s condensed consolidated financial statements: 7 12 12 Amendments to HKAS 7 Amendments to HKAS 12 Amendments to HKFRS 12 Disclosure Initiative Recognition of Deferred Tax Assets for Unrealised Losses As part of the Annual Improvements to HKFRSs 2014-2016 Cycle 3. The application of the above new amendments to HKFRSs and HKAS in the current interim period has had no material effect on the amounts reported and/or disclosures set out in these condensed consolidated financial statements but the application may have impact on disclosures in the consolidated financial statements for the year ending 31st December, 2017. 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 ) and 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. For the property investment segment, it includes business activities of a listed property investment subsidiary. No reportable and operating segments of the listed property investment subsidiary are separately presented as its results, assets and liabilities are prepared and reviewed together with the Group s other property investment activities for the internal performance assessment purposes. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

15 3. 3. SEGMENT INFORMATION (continued) 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, 2017 SEGMENT REVENUE External sales 228,225 213,313 63,076 504,614 RESULTS Segment profit (loss) 1,677,966 184,094 (3,388) 1,858,672 Other income and gains 68,402 Unallocated corporate expenses (112,096) Finance costs (71,977) Share of (loss) profit of associates (764) 65,689 64,925 Share of profit (loss) of joint ventures 2,210 102,178 (1,537) 102,851 Profit before tax 1,910,777 As at 30th June, 2017 ASSETS Segment assets 8,240,467 12,251,681 44,672 20,536,820 Interests in associates 455,685 2,856,025 3,311,710 Interests in joint ventures 863,584 1,883,208 220,781 2,967,573 Amounts due from associates 2,563 129,010 131,573 Amounts due from joint ventures 1,341,330 67,403 1,408,733 Unallocated corporate assets 6,927,207 Consolidated total assets 35,283,616 LIABILITIES Segment liabilities 3,463,879 2,086,596 16,949 5,567,424 Unallocated corporate liabilities 5,711,710 Consolidated total liabilities 11,279,134 天安中國投資有限公司

16 3. 3. 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, 2016 SEGMENT REVENUE External sales 135,812 210,839 69,748 416,399 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 31st December, 2016 ASSETS Segment assets 9,754,678 11,242,137 28,281 21,025,096 Interests in associates 428,550 3,136,802 3,565,352 Interests in joint ventures 265,815 1,672,105 229,410 2,167,330 Amounts due from associates 2,563 3,925 6,488 Amounts due from joint ventures 927,498 67,284 994,782 Unallocated corporate assets 5,932,786 Consolidated total assets 33,691,834 LIABILITIES Segment liabilities 4,328,502 2,053,333 9,062 6,390,897 Unallocated corporate liabilities 5,249,542 Consolidated total liabilities 11,640,439 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

17 4. 4. OTHER INCOME AND GAINS (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 Dividend income unlisted shares 1,726 289 listed shares 647 304 Interest income on bank deposits 17,320 17,644 Interest income from loans receivable 9,866 8,407 Interest income from a joint venture 12,864 20,188 Revaluation reserves released upon disposal of available-for-sale investments to profit or loss 202,667 Reversal of write-down of inventories of completed properties 591 709 Deposit forfeited for termination of disposal of subsidiaries 145,693 Net exchange gain 8,310 Other income 17,078 9,677 68,402 405,578 5. 50 50 5. GAIN ON DISPOSAL OF A SUBSIDIARY During the period ended 30th June, 2017, the Group disposed of its entire equity interests in a subsidiary and assigned part of the shareholders loans to an independent third party. The disposed subsidiary is incorporated in the British Virgin Islands and holds 50% equity interest in a company established in the PRC which is engaged in property development in the PRC and its remaining 50% equity interest is also owned by another subsidiary of the Company. As a result, the subsidiary in the PRC became a joint venture ( JV Company ) of the Group upon completion of this disposal. During the period ended 30th June, 2016, the Group disposed of its entire interests in and assigned a shareholder s loan owed by a subsidiary to an independent third party, which is established in the PRC and is engaged in property investment in the PRC. 天安中國投資有限公司

18 5. 5. GAIN ON DISPOSAL OF A SUBSIDIARY (continued) Details of the disposals are as follows: The net liabilities of the subsidiaries at the date of disposal: 2017 2016 HK$ 000 HK$ 000 Net liabilities disposed of: Property, plant and equipment 245 Investment properties 153,000 Properties for development 914,558 Inventories of properties under development 971,778 Trade and other receivables, deposits and prepayments 7,208 231 Bank balances and cash 25,287 1,157 Trade and other payables (763,674) (80,251) Pre-sale deposits (13,056) Shareholders loans (1,004,906) (97,291) Interest-bearing borrowings (679,214) Deferred tax liabilities (8,278) Net liabilities disposed (541,774) (31,432) Assignment of shareholders loans 677,743 97,291 Gain on disposal 1,633,977 125,009 a Fair value of the remaining interests retained in the subsidiary classified to interests in joint ventures (Note a) (627,828) Proceeds of disposals 1,142,118 190,868 Cash consideration received in current period 419,487 28,007 Cash consideration for assignment of shareholders loans 677,743 97,291 Cash consideration received in prior year as deposit 44,888 65,570 1,142,118 190,868 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

19 5. 5. GAIN ON DISPOSAL OF A SUBSIDIARY (continued) 2017 2016 HK$ 000 HK$ 000 b Exchange translation reserve transferred to retained earnings (Note b) (23,176) (5,788) Net cash inflow (outflow) arising on disposal: Cash consideration received in current period 419,487 28,007 Cash consideration for assignment of shareholders loans 677,743 97,291 Bank balances and cash disposed of (25,287) (1,157) 1,071,943 124,141 Notes: (a) (a) Included in the fair value of the remaining interests retained in the subsidiary classified to interests in joint ventures is the present value of an agreed distributable profit of HK$547,169,000 to be received from the JV Company within three years from the date of completion of the disposal pursuant to a letter of confirmation dated 8th May, 2017. 547,169,000 (b) (b) Since the functional currencies of the disposed subsidiary and the Company are the same, exchange differences arising from translation of items to presentation currency accumulated in exchange translation reserve relating to the disposed subsidiary are transferred from exchange translation reserve to retained earnings at the time of disposal. 天安中國投資有限公司

20 6. 6. FINANCE COSTS (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 Interest on: Bank loans 89,009 126,783 Other loans 1,386 3,825 Loans arrangement fee 29 5,590 Imputed interest expenses on non-current membership debentures 515 Less: amount capitalised on properties 90,424 136,713 under development (18,447) (47,251) 71,977 89,462 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

21 7. 7. TAXATION (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 The charge comprises: Current tax Hong Kong Profits Tax 1,501 PRC Enterprise Income Tax 120,426 64,280 Land Appreciation Tax 37,624 14,766 159,551 79,046 Over provision in prior years PRC Enterprise Income Tax (2,827) (3,204) Land Appreciation Tax (23) (2,827) (3,227) 156,724 75,819 Deferred tax 57,040 32,391 213,764 108,210 16.5% Hong Kong Profits Tax is calculated at the rate of 16.5% on the estimated assessable profit for the period. The PRC Enterprise Income Tax is calculated at the rates applicable to respective subsidiaries. 天安中國投資有限公司

22 8. 8. PROFIT FOR THE PERIOD (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 Profit for the period has been arrived at after charging (crediting): Depreciation of property, plant and equipment 11,473 15,884 Less: amount capitalised on properties under development (1,321) (1,384) 10,152 14,500 Amortisation of: Other assets properties interests 247 259 Properties for development (Note) 21,285 31,166 Prepaid lease payments on land use rights 632 789 Total depreciation and amortisation 32,316 46,714 Cost of inventories recognised as expenses 117,453 77,823 Net exchange loss 11,165 Share of tax of associates included in share of profit of associates 12,949 Share of tax of joint ventures included in share of profit of joint ventures 172,899 157,403 Note: Amortisation of properties for development is recognised in profit or loss on a straight-line basis over the term of the relevant land leases, and is presented on the condensed consolidated statement of profit or loss. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

23 9. 9. 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, 2017 2016 HK$ 000 HK$ 000 Earnings Earnings for the purpose of basic earnings per share (profit for the period attributable to owners of the Company) 1,671,086 513,150 (Unaudited) Six months ended 30th June, 2017 2016 000 000 Number of shares Number of ordinary shares for the purpose of basic earnings per share 1,506,769 1,506,769 No diluted earning per share for both 2017 and 2016 were presented as there were no potential ordinary shares in issue for both 2017 and 2016. 天安中國投資有限公司

24 10. 10. DIVIDEND (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 15 Dividend recognised as distribution during the period: Special dividend paid in form of distribution of shares in a listed subsidiary in respect of 2016 (2016: Nil) 489,700 No interim dividend paid in respect of 2016 (2016: HK15 cents per share in respect of 2015) 226,015 100 13 195,880,034 A special dividend in form of distribution in specie of 195,880,034 shares in ASP, a non wholly-owned subsidiary of the Company, ( ASP Shares ) on the basis of 13 ASP Shares for every 100 shares of the Company ( Distribution in Specie ) in respect of the financial year ended 31st December, 2016 has been paid during the period ended 30th June, 2017. 2.5 2.75 25 489,700,000 32.5 Based on the price HK$2.5 per ASP Share (being the price of HK$2.75 per ASP Share at which the Company acquired the ASP Shares in 2016 and adjusted by the special dividend of HK25 cents per ASP Share declared by ASP), the aggregate value of the ASP Shares to be distributed under the Distribution in Specie is approximately HK$489,700,000, which represents a distribution of approximately HK32.5 cents per share. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

25 11. 11. PROPERTY, PLANT AND EQUIPMENT 16,728,000 12,445,000 During the six months ended 30th June, 2017, the Group acquired property, plant and equipment for a cash consideration of HK$16,728,000 (31st December, 2016: HK$12,445,000). 131,185,000 385,000 12. In addition, during the six months ended 30th June, 2017, the Group transferred properties of HK$131,185,000 to investment properties (31st December, 2016: HK$385,000) upon end of owner-occupation. 12. INVESTMENT PROPERTIES Norton Appraisals Holdings Limited The fair values of the Group s investment properties at the date of transfer, 31st December, 2016 and 30th June, 2017 have been arrived at on the basis of valuations carried out on those dates by Norton Appraisals Holdings 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 years. 天安中國投資有限公司

26 13. 13. LOANS RECEIVABLE At 30th June, 2017, loans receivable consist of: (a) 6,508,000 5,970,000 4% 4% 5,970,000 (a) Loans receivable of HK$6,508,000 (31st December, 2016: HK$5,970,000) bear interest at Hong Kong Inter-bank Offered Rate plus 4% (31st December, 2016: Hong Kong Inter-bank Offered Rate plus 4%) per annum, are secured by share mortgage and receivable in February 2019 (31st December, 2016: February 2017). All the carrying amount of HK$5,970,000 (31st December, 2016: Nil) is classified as non-current loans receivable. (b) 349,303,000 230,913,000 4.75% 8% 4.75% 12% 235,165,000 116,250,000 4.75% 6% 4.75% (b) Loans receivable of HK$349,303,000 (31st December, 2016: HK$230,913,000) bear interest ranging from 4.75% to 8% (31st December, 2016: 4.75% to 12%) per annum, are unsecured and receivable between August 2017 to May 2021 (31st December, 2016: March 2017 to May 2021). The carrying amount of HK$235,165,000 (31st December, 2016: HK$116,250,000) is classified as non-current loans receivable and is receivable between September 2019 to May 2021 (31st December, 2016: in May 2021) and carries a fixed interest rate ranging from 4.75% to 6% (31st December, 2016: of 4.75%) per annum. (c) 230,000,000 2.75% (c) At 30th June, 2017, loans receivable of HK$230,000,000 represented loans receivable with repayment terms renewed during the period ended 30th June, 2017. Such loans receivable bore interest at Hong Kong Inter-bank Offered Rate plus 2.75% per annum, are unsecured and repayable in September 2017. 56,180,000 18% At 31st December, 2016, loans receivable of HK$56,180,000 bear interest of 18% per annum, was secured by debentures and shares mortgage and received in March 2017. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

27 14. 14. 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 by date of debit note at the end of the reporting period: (Unaudited) 30th June, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 Within 3 months 4,159 8,497 Between 4 and 6 months 50 1,671 Between 7 and 12 months 136 281 Over 12 months 1,220 1,397 5,565 11,846 145,448,000 142,180,000 As at 30th June, 2017, other receivables included the deposits of HK$145,448,000 (31st December, 2016: HK$142,180,000) 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

28 15. 15. ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE 464,375,000 450,800,000 13,575,000 50% 39,950,000 44,888,000 5 On 10th December, 2016, the Group entered into a sale and purchase agreement with a third party. Pursuant to the sale and purchase agreement, the Group agreed to sell its 50% equity interest of a subsidiary, which is engaged in property development for a cash consideration of HK$464,375,000 (including contract sum and interest on late payment amounting to HK$450,800,000 and HK$13,575,000 respectively) and will result in loss of control of the subsidiary when the transaction is completed. As at 31st December, 2016, the Group received a deposit of RMB39,950,000 (equivalent to HK$44,888,000) and included in trades and other payables. The transaction has been completed during the period ended 30th June, 2017 as disclosed in note 5. 3 As at 31st December, 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 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 31st December, 2016. 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

29 15. 15. 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, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 Property, plant and equipment 253 Properties for development 914,801 Inventories of properties under development 908,948 Trade and other receivables 5,879 Bank balances and cash 24,861 Assets classified as held for sale 1,854,742 Trade and other payables 808,301 Pre-sale deposits 9,202 Interest-bearing borrowings 564,607 Liabilities associated with assets classified as held for sale 1,382,110 天安中國投資有限公司

30 16. 16. 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, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 Within 3 months 190,030 260,283 Between 4 and 6 months 6,545 8,263 Between 7 and 12 months 1,827 709 Over 12 months 404,050 414,524 602,452 683,779 182,256,000 227,144,000 182,256,000 17. 1,375,192,000 1,499,389,000 873,802,000 1,402,769,000 0.96% 10% As at 30th June, 2017, the Group has received HK$182,256,000 (31st December, 2016: HK$227,144,000) deposits for disposal of properties for development and properties under development through disposal of subsidiaries. Subsequent to the reporting period, such disposals have been terminated and the deposits of HK$182,256,000 have been refunded by the Group. 17. INTEREST-BEARING BORROWINGS During the six months ended 30th June, 2017, the Group obtained new loans in the amount of HK$1,375,192,000 (31st December, 2016: HK$1,499,389,000) and repaid bank and other loans of HK$873,802,000 (31st December, 2016: HK$1,402,769,000). The majority of the loans are repayable within 5 years and bear interest at fixed or floating market rates which range from 0.96% 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. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

31 18. 18. INTEREST-FREE BORROWINGS (Unaudited) 30th June, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 Amounts due to associates 15 139,838 Amounts due to joint ventures 15,695 9,306 Advances from non-controlling shareholders 167 163 Amounts due to a joint venture partner 70,588 70,588 86,465 219,895 19. 19. SHARE CAPITAL Number of ordinary shares Share capital HK$ 000 Issued and fully paid: At 31st December, 2016 and 30th June, 2017 Ordinary shares with no par value 1,506,769,491 3,788,814 天安中國投資有限公司

32 20. 20. CONTINGENT LIABILITIES (a) (a) At 30th June, 2017 and 31st December, 2016, the Group had guarantees as follows: (Unaudited) 30th June, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 Guarantees given to banks in respect of mortgage loans granted to property purchasers 537,906 68,614 Guarantees given to banks in respect of banking facilities granted and utilised by joint ventures 1,693,678 1,292,135 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

33 20. 20. CONTINGENT LIABILITIES (continued) (b) 2,546,000 2,455,000 (b) A portion of a property for development that is held by a joint venture with carrying value of approximately HK$2,546,000 (31st December, 2016: HK$2,455,000) 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. 37,609,000 38,776,000 Another property for development that is held by a subsidiary of the Group with carrying value of approximately HK$37,609,000 (31st December, 2016: HK$38,776,000) 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. 847,946,000 470,581,000 Further, property for development that is held by another joint venture of the Group with carrying value of approximately HK$847,946,000 (31st December, 2016: HK$470,581,000) 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 for those under idle land investigation and taking remedy action to prevent from prosecution for those identified 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 classification can be reversed. In the opinion of the directors of the Company ( Directors ), the economic outflows caused by above cases are not probable. (c) (c) At 30th June, 2017, no legal action was taken against the Group for material claim. 天安中國投資有限公司

34 21. 21. 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

35 21. 21. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued) Fair value as at 30th June, 2017 (Unaudited) HK$ 000 31st December, 2016 (Audited) HK$ 000 Fair value hierarchy Valuation techniques and key inputs Equity securities listed in the PRC classified as held-for-trading investments 86,792 98,160 Level 1 Quoted bid prices in an active market. Equity securities listed in the PRC classified as available-for-sale investments 39,819 56,105 Level 1 Quoted bid prices in an active market. Equity securities listed in Hong Kong classified as available-for-sale investments 196,970 253,951 Level 1 Quoted bid prices in an active market. Unlisted debt securities classified as available-for-sale investments 13,681 14,351 Level 2 Price provided by a financial institution Club debentures classified as available-for-sale investments 10,150 9,851 Level 2 Determined by reference to second hand market value Unlisted equity securities classified as available-for-sale investments 37,568 37,295 Level 3 Adjusted net assets value The Directors consider that the carrying amounts of 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

36 22. 22. RELATED PARTY TRANSACTIONS AND BALANCES During the six months ended 30th June, 2017, the Group had transactions and balances with related parties as follows: (a) i (a) A major shareholder with significant influence, Allied Properties (H.K.) Limited ( APL ) (Note i) and its subsidiaries and its ultimate holding company and subsidiaries of its ultimate holding company (Unaudited) Six months ended 30th June, 2017 2016 HK$ 000 HK$ 000 Rent, property management and air-conditioning fees charged to the Group 1,809 1,608 Management fee charged to the Group 21,720 13,560 Interest expenses charged to the Group 1,136 1,311 Loan arrangement fee charged to the Group 110 Sundry expenses charged to the Group 61 9 (b) i (b) A subsidiary of APL, Sun Hung Kai & Co. Limited ( SHK ) and its subsidiaries (Note i) Rental and property management fee income earned by the Group 1,846 2,395 Interest income earned by the Group 2,761 Consideration paid for the subsidiaries acquired by the Group 68,220 (c) (c) Key management personnel compensation Salaries and other short-term benefits ii (Note ii) 58,529 35,776 Post-employment costs 345 348 (d) (d) Associates and joint ventures Rent earned by the Group 925 914 Interest income earned by the Group 12,864 14,204 Property management fee income earned by the Group 2,841 iii Dividend received or receivable by the Group (Note iii) 9,048 124,068 Property management fee charged to the Group 2,660 2,517 Consultancy fee income earned by the Group 127 12,487 Financial guarantee granted and utilised by the Group 1,693,678 1,496,000 TIAN AN CHINA INVESTMENTS COMPANY LIMITED

37 22. 22. RELATED PARTY TRANSACTIONS AND BALANCES (continued) (Unaudited) 30th June, 2017 HK$ 000 (Audited) 31st December, 2016 HK$ 000 (e) (e) APL and its subsidiaries and its ultimate holding company and subsidiaries of its ultimate holding company Other payable 11,280 14,054 iv Loan payable (Note iv) 46,870 41,384 (f) (f) SHK and its subsidiaries v Loans receivable (Note v) 116,465 116,250 Other payable 2,522 2,560 (g) (g) Associates and joint ventures Other payable 511 500 Apart from the renewed sharing of administrative services and management services agreement entered into by the Company with the ultimate holding company of APL, sub-leasing agreements entered into by the Company with the ultimate holding company of APL and a subsidiary of APL, and leasing agreements entered into by the Group with subsidiaries and an associate of SHK, none of the above related party transactions constitutes a continuing 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. 43,054,000 21,276,000 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$43,054,000 (2016: HK$21,276,000). 天安中國投資有限公司

38 22. 22. RELATED PARTY TRANSACTIONS AND BALANCES (continued) Notes: (i) (i) APL has significant influence over the Company and SHK is a subsidiary of APL. (ii) (ii) The immediate holding company of APL and the Company s 2016 bonus are released in July 2017. (iii) 124,068,000 9,048,000 11,430,000 (iii) The joint ventures have not declared dividend (2016: HK$124,068,000) during the period ended 30th June, 2017, while the Group received HK$9,048,000 (2016: HK$11,430,000) in the current period. (iv) 4.6% (iv) The loan payable bears interest at 4.6% per annum, is unsecured and repayable in June 2018. (v) 4.75% (v) The loan receivable bear interest of 4.75% per annum, is unsecured and repayable in May 2021. 23. 23. PLEDGED ASSETS At 30th June, 2017, (a) 843,662,000 269,663,000 173,018,000 155,623,000 1,536,405,000 2, 418, 9 6 8, 0 0 0 78 6,774, 0 0 0 1, 59 6, 619, 0 0 0 (a) Bank deposits, property, plant and equipment, properties for development, properties under development, inventories of completed properties and investment properties of certain subsidiaries with carrying values of HK$843,662,000 (31st December, 2016: HK$269,663,000), HK$173,018,000 (31st December, 2016: HK$155,623,000), HK$1,536,405,000 (31st December, 2016: HK$2,418,968,000), HK$786,774,000 (31st December, 2016: HK$1,596,619,000), HK$1,662,298,000 (31st December, 2016: HK$1,697,103,000), and HK$6,792,942,000 (31st December, 2016: HK$6,888,063,000) respectively were pledged to banks for banking facilities granted to the Group. 1,662,298,000 1, 6 97, 10 3, 0 0 0 6,792,942,000 6,888,063,000 (b) 125,000 123,000 (b) Bank deposits with carrying value of HK$125,000 (31st December, 2016: HK$123,000) were pledged against mortgage loans granted to property purchasers. TIAN AN CHINA INVESTMENTS COMPANY LIMITED

39 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 438 3434 34 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 38, which comprise the condensed consolidated statement of financial position as of 30th June, 2017 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 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