Great Eagle Holdings Limited — Interim / Quarterly Report 2020

Aug 21, 2020

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

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, 2020 with the comparative figures for the corresponding period in 2019 are as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

for the six months ended 30th June, 2020

Notes Revenue (4) Cost of sales Gross profit Other income and gains (5) Marketing and distribution expenses Administrative expenses Other operating expenses Net (decrease) increase in fair value of equity securities at fair value through profit or loss Net decrease in fair value of financial assets at fair value through profit or loss Net impairment losses on loans receivable Fair value gain on transfer of inventories of completed properties to investment properties (Decrease) increase in fair value of investment properties Reversal of write-down (write-down) of inventories of completed properties Impairment loss on properties for development Amortisation of properties for development Finance costs Share of (loss) profit of associates Share of profit of joint ventures

(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 835,273 1,005,980 (439,643) (535,497) 395,630 470,483 165,161 166,006 (21,799) (22,271) (142,598) (171,473) (443) (2,491) (2,792) 16,340 (520) (15,406) (71,942) – 74,560 32,642 (31,769) 131,686 131 (1,935) – (42,330) (29,121) (13,549) (111,374) (78,949) (6,481) 4,867 105,590 527,293

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS (Continued) for the six months ended 30th June, 2020

Notes Profit before tax Taxation (6) Profit for the period (7) Profit for the period attributable to: Owners of the Company Non-controlling interests Earnings per share (8) Basic	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 322,233 1,000,913 (120,784) (135,511) 201,449 865,402 200,205 853,472 1,244 11,930 201,449 865,402 HK cents HK cents 13.34 56.64

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the six months ended 30th June, 2020

Profit for the period Other comprehensive (expense) income Items that will not be reclassified to profit or loss: Exchange differences arising on translation to presentation currency Share of other comprehensive expense of associates and joint ventures Net change in fair value of investments in equity instruments at fair value through other comprehensive income Deferred tax effect on change in fair value of investment in an equity instrument at fair value through other comprehensive income Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations Others Other comprehensive expense for the period Total comprehensive (expense) income for the period Total comprehensive (expense) income attributable to: Owners of the Company Non-controlling interests

(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 201,449 865,402 (274,558) (163,863) (159,134) (43,609) 15,974 (22,689) 1,210 165 (416,508) (229,996) (30,909) (7,918) 255 339 (30,654) (7,579) (447,162) (237,575) (245,713) 627,827 (242,292) 618,124 (3,421) 9,703 (245,713) 627,827

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 30th June, 2020

Note Non-current Assets Property, plant and equipment Right-of-use assets Investment properties Properties for development Deposits for acquisition of properties for development Other assets – properties interests Interests in associates Interests in joint ventures Loans receivable Financial assets at fair value through profit or loss Equity instruments at fair value through other comprehensive income Club memberships Deferred tax assets Current Assets Inventories of properties – under development – completed Other inventories Amounts due from associates Amounts due from joint ventures Amounts due from non-controlling interests Loans receivable Trade and other receivables, deposits and prepayments (9) Financial assets at fair value through profit or loss Equity securities at fair value through profit or loss Prepaid tax Pledged bank deposits Bank balances and cash Assets classified as held for sale

(Unaudited) (Audited) 30th June, 2020 31st December, 2019 HK$’000 HK$’000 242,473 204,679 37,995 38,548 12,292,902 12,380,751 3,722,470 4,016,593 1,305,209 189,367 15,580 16,168 2,880,464 2,891,108 6,905,461 6,526,622 265,770 318,846 336,645 173,267 386,187 354,996 4,261 4,261 117,979 311,393 28,513,396 27,426,599 2,475,931 2,229,928 2,076,555 2,608,674 4,997 1,461 13,792 92,792 1,214,605 1,047,977 – 17,778 1,216,951 1,089,269 518,480 556,885 145,470 32,968 53,045 56,973 51,467 8,911 608,536 604,298 1,618,118 2,942,277 9,997,947 11,290,191 2,254,712 2,332,834 12,252,659 13,623,025

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued) at 30th June, 2020

Note Current Liabilities Trade and other payables (10) Contract liabilities Tax liabilities Interest-bearing borrowings Interest-free borrowings Liabilities associated with assets classified as held for sale Net Current Assets Capital and Reserves Share capital Reserves Equity attributable to owners of the Company Non-controlling interests Total Equity Non-current Liabilities Interest-bearing borrowings Deferred rental income from a tenant Rental deposits from tenants Deferred tax liabilities

(Unaudited) (Audited) 30th June, 2020 31st December, 2019 HK$’000 HK$’000 2,549,477 2,242,469 1,133,826 1,081,448 1,474,596 1,478,223 1,576,555 1,438,604 1,372,902 1,389,614 8,107,356 7,630,358 1,186,454 1,078,688 9,293,810 8,709,046 2,958,849 4,913,979 31,472,245 32,340,578 3,788,814 3,788,814 19,881,895 20,462,162 23,670,709 24,250,976 1,335,932 1,344,195 25,006,641 25,595,171 3,820,462 3,887,081 11,726 15,982 22,046 21,312 2,611,370 2,821,032 6,465,604 6,745,407 31,472,245 32,340,578

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Notes:

(1) Review by auditor

The interim financial report of the Group for the six months ended 30th June, 2020 has been reviewed by our auditor, Deloitte Touche Tohmatsu, in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and an unmodified review conclusion has been issued.

(2) Basis of preparation

The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the HKICPA as well as the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Listing Rules”).

The financial information relating to the year ended 31st December, 2019 that is included in these condensed consolidated financial statements does not constitute the Company’s statutory annual consolidated financial statements for that financial year but is derived from those financial statements. Further information relating to these statutory financial statements is as follows:

The Company has delivered the financial statements for the year ended 31st December, 2019 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 2019. 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.

(2.1) Significant events in the current interim period

The outbreak of the coronavirus disease 2019 (“COVID-19”) and the subsequent quarantine measures imposed by the People’s Republic of China (“PRC”) and the Hong Kong government as well as the travel restrictions imposed by other countries have had negative impact on the economy of the PRC and Hong Kong, and directly and indirectly affect the operations of the Group.

Due to the unfavorable economic environment in the PRC, the sales of completed properties in the PRC have been negatively affected.

Retail tenants in Hong Kong are facing substantial business drop and temporary closure as a result of COVID-19. In response of these, the Group granted rent concessions to tenants and the rental income from the Group’s Hong Kong commercial properties decreased that have impacts over the fair value of the Group’s Hong Kong investment properties.

On the other hand, the Hong Kong government has announced various financial measures and supports for corporates to overcome the negative impact arising from the pandemic.

As such, the financial positions and performance of the Group were affected in different aspects, including reduction in sales of completed properties and rental income and the receipt of government grants in respect of COVID-19 related subsidies.

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(3) Principal 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.

Other than changes in accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards (“HKFRSs”), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30th June, 2020 are the same as those presented in the Group’s annual consolidated financial statements for the year ended 31st December, 2019.

Application of amendments to HKFRSs

In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 1st January, 2020 for the preparation of the Group’s condensed consolidated financial statements:

Amendments to HKAS 1 and Definition of Material HKAS 8 Amendments to HKFRS 3 Definition of a Business Amendments to HKFRS 9, Interest Rate Benchmark Reform HKAS 39 and HKFRS 7

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group’s financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

(3.1) Impacts of application on Amendments to HKAS 1 and HKAS 8 Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31st December, 2020.

(4) Segment information

The Group’s revenue for the period was derived mainly from activities carried out and located in the 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 comprise mainly property management. Similarly, the Group’s reportable and operating segments, reported to the Executive Directors of the Company, the chief operating decision maker, 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 reviewed together with the Group’s other property investment activities for the internal performance assessment purposes.

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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:

For the six months ended 30th June, 2020 SEGMENT REVENUE External sales RESULTS Segment profit (loss) Other income and gains Unallocated corporate expenses Finance costs Share of loss of associates Share of profit of joint ventures Profit before tax As at 30th June, 2020 ASSETS Segment assets Interests in associates Interests in joint ventures Amounts due from associates Amounts due from joint ventures Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities	Property development HK$’000 530,563 124,531 10,530,556 196,224 2,572,764 2,563 1,116,918 5,886,211	Property investment HK$’000 237,385 189,998 13,913,705 2,684,240 4,083,851 11,229 – 2,391,631	Other operations HK$’000 67,325 (1,687) 38,406 – 248,846 – 97,687 163,339	Consolidated HK$’000 835,273 312,842 165,161 (143,505) (111,374) (6,481) 105,590 322,233 24,482,667 2,880,464 6,905,461 13,792 1,214,605 5,269,066 40,766,055 8,441,181 7,318,233 15,759,414

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For the six months ended 30th June, 2019 SEGMENT REVENUE External sales RESULTS Segment profit (loss) Other income and gains Unallocated corporate expenses Finance costs Share of profit of associates Share of profit of joint ventures Profit before tax As at 31st December, 2019 ASSETS Segment assets Interests in associates Interests in joint ventures Amounts due from associates Amounts due from joint ventures Unallocated corporate assets Consolidated total assets LIABILITIES Segment liabilities Unallocated corporate liabilities Consolidated total liabilities	Property development HK$’000 679,868 174,057 10,354,836 200,428 2,660,461 2,563 948,295 5,446,267	Property investment HK$’000 251,037 285,648 13,937,015 2,690,680 3,626,006 90,229 – 2,414,657	Other operations HK$’000 75,075 (12,458) 34,387 – 240,155 – 99,682 165,221	Consolidated HK$’000 1,005,980 447,247 166,006 (65,551) (78,949) 4,867 527,293 1,000,913 24,326,238 2,891,108 6,526,622 92,792 1,047,977 6,164,887 41,049,624 8,026,145 7,428,308 15,454,453

The accounting policies of the reportable and operating segments are the same as the Group’s accounting policies described in note 3. Segment profit (loss) represents the profit earned by (loss from) each segment without allocation of other income and gains, finance costs, share of profit (loss) of associates and joint ventures and unallocated corporate expenses. This is the measure reported to the Executive Directors of the Company for the purposes of resource allocation and performance assessment.

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(5) Other income and gains

Dividend income – unlisted shares – listed shares Interest income on bank deposits Interest income from loans receivable Interest income from a joint venture Recoveries of receivable written off in prior years Others	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 1,789 1,903 89 1,833 21,689 24,459 92,008 98,410 33,950 1,491 – 21,872 15,636 16,038 165,161 166,006	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 1,789 1,903 89 1,833 21,689 24,459 92,008 98,410 33,950 1,491 – 21,872 15,636 16,038 165,161 166,006
		166,006

(6) Taxation

The charge comprises: Current tax – Hong Kong Profits Tax – PRC Enterprise Income Tax – Land Appreciation Tax Under (over) provision in prior years – Hong Kong Profits Tax – Overseas Tax – PRC Enterprise Income Tax Deferred tax	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 2,866 1,805 36,796 46,915 44,208 43,538 83,870 92,258 (532) 5 – (6,495) 2,379 (240) 1,847 (6,730) 85,717 85,528 35,067 49,983 120,784 135,511	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 2,866 1,805 36,796 46,915 44,208 43,538 83,870 92,258 (532) 5 – (6,495) 2,379 (240) 1,847 (6,730) 85,717 85,528 35,067 49,983 120,784 135,511
		92,258
		5 (6,495) (240)
		(6,730)
		85,528 49,983
		135,511

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.

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(7) Profit for the period

Profit for the period has been arrived at after charging (crediting): Depreciation of property, plant and equipment Less: amount capitalised on properties under development Depreciation/amortisation of: Other assets – properties interests Properties for development Right-of-use assets Total depreciation and amortisation Cost of inventories recognised as expenses	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 6,194 9,779 (312) (837) 5,882 8,942 239 247 29,121 13,549 351 352 35,593 23,090 324,074 402,963	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 6,194 9,779 (312) (837) 5,882 8,942 239 247 29,121 13,549 351 352 35,593 23,090 324,074 402,963
		8,942 247 13,549 352
		23,090
		402,963

(8) Earnings per share

The calculation of the basic earnings per share attributable to the owners of the Company is based on the following:

Earnings Earnings for the purpose of basic earnings per share (profit for the period attributable to owners of the Company) Number of shares Number of ordinary shares for the purpose of basic earnings per share	(Unaudited) Six months ended 30th June, 2020 2019 HK$’000 HK$’000 200,205 853,472 (Unaudited) Six months ended 30th June, 2020 2019 ’000 ’000 1,500,647 1,506,769

No diluted earnings per share for both 2020 and 2019 were presented as there were no potential ordinary shares in issue for both 2020 and 2019.

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(9) Trade and other receivables, deposits and prepayments

Proceeds receivable in respect of sales of properties are settled by customers 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:

Within 3 months Between 4 and 6 months Between 7 and 12 months Over 12 months	(Unaudited) (Audited) As at 30th June, 2020 As at 31st December, 2019 HK$’000 HK$’000 25,912 15,764 263 – – 1 457 1,306 26,632 17,071	(Unaudited) (Audited) As at 30th June, 2020 As at 31st December, 2019 HK$’000 HK$’000 25,912 15,764 263 – – 1 457 1,306 26,632 17,071
		17,071

(10) 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:

Within 3 months Between 4 and 6 months Between 7 and 12 months Over 12 months	(Unaudited) (Audited) As at 30th June, 2020 As at 31st December, 2019 HK$’000 HK$’000 312,142 524,753 6,109 6,467 33,779 37,171 255,789 253,802 607,819 822,193	(Unaudited) (Audited) As at 30th June, 2020 As at 31st December, 2019 HK$’000 HK$’000 312,142 524,753 6,109 6,467 33,779 37,171 255,789 253,802 607,819 822,193
		822,193

As at 30th June, 2020, other payables included a deposit of HK$1,251,970,000 (31st December, 2019: HK$748,354,000) which was received from a joint venture for disposal of three subsidiaries and the transactions have not yet completed at the end of the reporting period.

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MANAGEMENT DISCUSSION AND ANALYSIS

Financial Results

The revenue of the Group for the six months ended 30th June, 2020 was HK$835.3 million (2019: HK$1,006.0 million), a decrease of 17% compared to the same period of last year. The profit attributable to owners of the Company amounted to HK$200.2 million (2019: HK$853.5 million), representing a decrease of 77% over the corresponding period of last year.

The profit attributable to owners of the Company for the six months ended 30th June, 2020 is lower than the same period of last year. Some material items are as follows:

• a decrease in the share of results of joint ventures of HK$421.7 million

• a decrease in fair value in respect of the Group’s investment properties of HK$31.8 million as compared with an increase in fair value of HK$131.7 million for the six months ended 30th June, 2019

Earnings per share amounted to HK13.34 cents (2019: HK56.64 cents), while the net asset value per share attributable to owners of the Company was HK$15.77 at the end of June 2020 (31st December, 2019: HK$16.16).

Business Review

The Group is engaged principally in the development of apartments, villas, office buildings and commercial properties, property investment and property management on the mainland in the PRC, as well as property investment and property management in Hong Kong.

An outline of our achievements in the first half of 2020 is described below:

• (1) Total attributable registered sales (including sales from joint ventures and pre-sales of properties under construction) of the Group amounted to 106,300 m[2] in the first half of 2020 (2019: 69,700 m[2] ), an increase of 53%. A total attributable gross floor area (“GFA”) of approximately 86,600 m[2] (2019: 215,100 m[2] ) was completed. For the first half of 2020, a total attributable GFA of approximately 1,076,400 m[2] (2019: 982,000 m[2] ) was under construction at the period end, representing an 10% increase over the corresponding date of last year.

• (2) Rental income slightly decreased by 5% as compared with same period of 2019.

• (3) Cyberpark: There are a total of 17 cyberparks over 12 cities. Those on the Pearl River Delta have been contributing most and we will concentrate on developing new cyberparks and urban renewal projects in this region where we have ample manpower and marketing resources.

• (4) Phase 2 Part 3 of Tian An’s urban renewal project, Tian An Cloud Park, in Huawei New City Area in the Longgang District of Shenzhen, with GFA of approximately 143,300 m[2] was completed in the first half of 2020.

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• (5) We have acquired new residential projects in Jiangsu and Zhejiang Provinces. We expect these projects will contribute a good return to the Group in the coming years.

• (6) For the six months ended 30th June, 2020, Asiasec Properties Limited reported a profit of HK$6.7 million (2019: HK$64.1 million) attributable to its shareholders.

Financial Review

Liquidity and Financing

The Group always maintains its liquidity at a healthy level with a balanced portfolio of financial resources. As at 30th June, 2020, the total bank balances and cash reserves of the Group were approximately HK$2,226.7 million (31st December, 2019: HK$3,546.6 million), providing sufficient working capital for the daily operations of the Group.

As at 30th June, 2020, the total borrowings of the Group amounted to approximately HK$6,769.9 million (31st December, 2019: HK$6,715.3 million), including current liabilities of HK$2,949.4 million (31st December, 2019: HK$2,828.2 million) and non-current liabilities of HK$3,820.5 million (31st December, 2019: HK$3,887.1 million). The gearing ratio (net debt over total equity) of the Group was 18% (31st December, 2019: 12%). The borrowings were mainly used to finance the properties for development and properties under construction. Increase in finance costs is mainly due to the increase in total borrowings and the decrease in capitalisation of finance costs in properties under construction compared to the same period of last year.

Approximately 57% of the Group’s outstanding borrowings will mature within 2 years. Since most of the investments and operations of the Group are carried out in the PRC, most of the bank borrowings are denominated in Renminbi which will be repaid in the same currency. Around 35% of the Group’s borrowings bear interest at fixed rates while the remainders are at floating rates.

Due to maintaining flexible and sufficient cash flow for acquiring the potential quality landbank and accelerating construction works for our development projects, the Group intends to obtain suitable bank borrowings with reasonable pricing terms. The management continuously monitors its gearing ratio and raises new external borrowings when necessary.

Risk of Foreign Exchange Fluctuation

The Group is required to maintain foreign currency exposure to cater for its recurring operating activities and present and potential investment activities, meaning it will be subject to reasonable exchange rate exposure. However, the Group will closely monitor this risk exposure as required.

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Pledge on Assets

As at 30th June, 2020, bank deposits of approximately HK$608.5 million, aggregate carrying values of property, plant and equipment (including assets classified as held for sales), development properties (including assets classified as held for sales) and investment properties (including assets classified as held for sales) of approximately HK$53.3 million, HK$2,487.7 million and HK$9,816.6 million respectively, were pledged for banking facilities granted to the Group and a joint venture, mortgage loans granted to property purchasers and guarantees in respect of utility supplies and government authorities for the development works.

Contingent Liabilities

Two pieces of properties for development that are held by joint ventures of the Group with carrying value of approximately HK$86.9 million and a property for development that is held by a subsidiary of the Company with carrying value of approximately HK$37.5 million are under idle land investigation by the local authorities. These pieces of lands owned by the joint ventures and the subsidiary were held under several land use right certificates. The development of more than half of the pieces of lands were either completed or under development, except for the portions which are retained for the remaining development of the whole projects. Further, property for development that is held by another joint venture of the Group with carrying value of approximately HK$322.9 million had been identified as idle land by the local authority. The construction works for the first phase of development has been completed in previous year while the second phase of development has started since last year. 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 had been 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 confiscation can be reversed. In the opinion of the directors of the Company, the economic outflows caused by above cases are not probable.

As at 30th June, 2020, guarantees given to banks in respect of mortgage loans granted to property purchasers and bank facilities granted to or utilised by the joint ventures and a financial asset at fair value through profit or loss as well as guarantees granted in respect of utility supplies and government authorities for the property development works amounted to approximately HK$1,075.2 million. All the guarantees provided by the Group were requested by banks and under normal commercial terms. Legal actions were taken against the Group resulting in possible contingent liabilities of approximately HK$399.0 million. The Group has assessed the claims and obtained legal advices, and considers that either it is too early to assess the range of possible liability at this stage or no additional provision is required to be made.

Employees

As at 30th June, 2020, the Group including its subsidiaries but excluding associates and joint ventures, employed 1,423 (31st December, 2019: 1,427) persons. The Group maintains a policy of paying competitive remuneration packages and employees are also rewarded on performance related basis including salary and bonus.

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COVID-19 Pandemic Response

The COVID-19 spread globally during the first half of 2020. The Group has implemented, since January 2020, certain protocols below to protect the health and safety of our workforce, their families, local suppliers and neighbouring communities while ensuring a safe environment for operations to continue as usual:

• social distancing protocols;

• meetings are held off-site or by conference calls as far as possible;

• cancellation of all non-essential travel;

• flexible and remote working plans for employees;

• access to office restrictions and temperature screening;

• self-isolation following outbound travel, development of symptoms, or interaction with a confirmed case of COVID-19 and do coronavirus test as and when necessary at the Company’s cost;

• increased inventory of face mask, hand sanitiser and hygiene supplies; and

• increased focus on cleaning and sanitation.

Business Outlook

The cut in the reserve requirement ratio by China’s central bank in response to the COVID-19 pandemic has been well received by the PRC property market, especially the residential sector. US Federal Reserve’s quantitative easing announcement and cuts in interest rates have provided further relief to the Hong Kong property market.

We expect the economy of both the PRC and Hong Kong to remain challenging in the second half of 2020. We are hopeful that the development of a vaccine and medicines to counter COVID-19 will lead to a global economic recovery. We remain confident of the long term prospects of the property market in Mainland China and Hong Kong.

INTERIM DIVIDEND

The Board considers that it is prudent to retain an appropriate level of funds to take advantage of business opportunities as and when they arise, and therefore does not intend to declare an interim dividend for the six months ended 30th June, 2020 (2019: Nil).

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

During the six months ended 30th June, 2020, the Company has applied the principles of, and complied with, the applicable code provisions of the Corporate Governance Code and Corporate Governance Report (“CG Code”) as set out in Appendix 14 of the Listing Rules, except for certain deviations which are summarised below:

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Code Provisions B.1.2 and C.3.3

Code provisions B.1.2 and C.3.3 of the CG Code stipulate that the terms of reference of the remuneration committee and audit committee should include, as a minimum, those specific duties as set out in the respective code provisions.

The terms of reference of the remuneration committee (“Remuneration Committee”) adopted by the Company are in compliance with the code provision B.1.2 of the CG Code except that the Remuneration Committee shall make recommendations to the Board on the remuneration packages of the Executive Directors only and not senior management (as opposed to executive directors and senior management under the code provision).

The terms of reference of the audit committee (“Audit Committee”) adopted by the Company are in compliance with the code provision C.3.3 of the CG Code except that the Audit Committee (i) shall recommend (as opposed to implement under the code provision) the policy on the engagement of the external auditors to supply non-audit services; (ii) only possesses the effective ability to scrutinise (as opposed to ensure under the code provision) whether management has performed its duty to have effective risk management and internal control systems; and (iii) can promote (as opposed to ensure under the code provision) the co-ordination between the internal and external auditors, and check (as opposed to ensure under the code provision) whether the internal audit function is adequately resourced.

The reasons for the above deviations were set out in the Corporate Governance Report contained in the Company’s Annual Report for the financial year ended 31st December, 2019. The Board considers that the Remuneration Committee and the Audit Committee should continue to operate according to the relevant terms of reference as adopted by the Company. The Board will review the terms at least annually and make appropriate changes if considered necessary.

AUDIT COMMITTEE REVIEW

The Audit Committee has reviewed with management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters including a general review of the unaudited interim financial report for the six months ended 30th June, 2020. In carrying out this review, the Audit Committee has relied on a review conducted by the Group’s external auditor in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by HKICPA as well as reports obtained from management. The Audit Committee has not undertaken detailed independent audit checks.

PURCHASE, SALE OR REDEMPTION OF SHARES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s shares during the six months ended 30th June, 2020.

On behalf of the Board Tian An China Investments Company Limited Edwin Lo King Yau Executive Director

Hong Kong, 21st August, 2020

As at the date of this announcement, the Board comprises Mr. Song Zengbin (Deputy Chairman), Mr. Patrick Lee Seng Wei (Managing Director), Mr. Ma Sun (Deputy Managing Director), Mr. Edwin Lo King Yau and Mr. Tao Tsan Sang being the Executive Directors; Mr. Lee Seng Hui (Chairman) and Dr. Moses Cheng Mo Chi being the Non-Executive Directors; and Mr. Francis J. Chang Chu Fai, Mr. Jin Hui Zhi, Mr. Ngai Wah Sang and Ms. Lisa Yang Lai Sum being the Independent Non-Executive Directors.

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