Tianjin Development : 2020 Interim Report

Stock Code : 882

Interim Report

2020

Contents

Corporate Information	2
Business Structure	3
Condensed Consolidated Statement of Profit or Loss	5
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income	7
Condensed Consolidated Statement of Financial Position	8
Condensed Consolidated Statement of Changes in Equity	10
Condensed Consolidated Statement of Cash Flows	11
Notes to the Condensed Consolidated Financial Statements	12
Management Discussion and Analysis	41
Other Information	48
Report on Review of Condensed Consolidated Financial Statements	53

Corporate Information

BOARD OF DIRECTORS

Executive Directors

Mr. Wang Zhiyong (Chairman)

Mr. Chen Yanhua (General Manager)

Dr. Li Xiaoguang

Mr. Zhuang Qifei

Mr. Cui Xiaofei

Non-Executive Director

Mr. Cheung Wing Yui, Edward

Independent Non-Executive Directors

Dr. Cheng Hon Kwan

Mr. Mak Kwai Wing, Alexander

Ms. Ng Yi Kum, Estella

Mr. Wong Shiu Hoi, Peter

Dr. Loke Yu

AUTHORISED REPRESENTATIVES

Mr. Wang Zhiyong

Dr. Li Xiaoguang

COMPANY SECRETARY

Ms. Lee Su Yee, Bonnia

INDEPENDENT AUDITOR

Deloitte Touche Tohmatsu

Registered Public Interest Entity Auditors

SOLICITOR

Woo Kwan Lee & Lo

REGISTERED OFFICE

Suites 7-13, 36th Floor

China Merchants Tower

Shun Tak Centre

168-200 Connaught Road Central

Hong Kong

Telephone : [phone]

Facsimile : (852) 2311 0896

E-mail : [e-mail]

Website : www.tianjindev.com

SHARE REGISTRAR AND

TRANSFER OFFICE

Tricor Tengis Limited

Level 54, Hopewell Centre

183 Queen's Road East

Hong Kong

STOCK CODE

Hong Kong Stock Exchange: 882

PRINCIPAL BANKERS

China CITIC Bank International Limited

DBS Bank Ltd., Hong Kong Branch

Industrial and Commercial Bank of

China (Asia) Limited

CMB Wing Lung Bank Limited

2	Tianjin Development Holdings Limited Interim Report 2020

Business Structure

TIANJIN DEVELOPMENT HOLDINGS LIMITED

Utilities

Water

Heat and Thermal Power

Electricity

Pharmaceutical	Hotel
Lisheng (002393.SZ)	Courtyard by
Yiyao Printing	Marriott Hong Kong
Research Institute

Electrical and	Strategic
and Other
Mechanical	Investments
Hydraulic Presses	Tianjin Port (3382.HK)
Hydroelectric Equipment	Elevators and Escalators

Tianjin Development Holdings Limited Interim Report 2020

3

Business Structure

UTILITIES

Company Name	Shareholding	Principal Activities
Tianjin TEDA Tsinlien Water Supply Co., Ltd.	91.41%	Distribution of water in TEDA
Tianjin TEDA Tsinlien Heat & Power Co., Ltd.	90.94%	Distribution of steam in TEDA
Tianjin TEDA Electric Power Co., Ltd.	47.09%	Distribution of electricity in TEDA

PHARMACEUTICAL

Company Name

Shareholding

Principal Activities

Tianjin Yiyao Printing Co., Ltd.	43.55%
Tianjin Lisheng Pharmaceutical Co., Ltd.	34.41%
Tianjin Institute of Pharmaceutical Research Co., Ltd.	23.45%

Design, manufacture and printing for pharmaceutical packaging

Manufacture and sale of chemical drugs

Research and development of new medicine technology and new products

HOTEL

Company Name	Shareholding	Principal Activities
Tsinlien Realty Limited	100%	Operation of Courtyard by Marriott Hong Kong

ELECTRICAL AND MECHANICAL

Company Name	Shareholding	Principal Activities
Tianjin Tianfa Heavy Machinery & Hydro Power	82.74%	Manufacture and sale of hydroelectric equipment
Equipment Manufacture Co., Ltd.
Tianjin Tianduan Press Co., Ltd.	64.91%	Manufacture and sale of presses and mechanical
equipment

STRATEGIC AND OTHER INVESTMENTS

Company Name	Shareholding	Principal Activities
Tianjin Port Development Holdings Limited	21%	Provision of port services in Tianjin
Otis Elevator (China) Investment Company Limited	16.55%	Manufacture and sale of elevators and escalators

note: The above shareholding percentages represent effective equity interest in respective companies or group of companies.

4	Tianjin Development Holdings Limited Interim Report 2020

Condensed Consolidated Statement of Profit or Loss

		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
			(unaudited &
	Notes	(unaudited)	restated)
Continuing operations
Revenue	4	1,429,639	1,860,086
Cost of sales		(913,102)	(1,038,936)
Gross profit		516,537	821,150
Other income	5	111,903	80,862
Other (losses) gains, net	6	(36,473)	29,306
Selling and distribution expenses		(273,113)	(430,942)
General and administrative expenses		(158,227)	(188,523)
Other operating expenses		(54,912)	(84,906)
Finance costs		(31,801)	(32,623)
Share of net profit of associates and joint ventures
accounted for using the equity method		222,552	246,617
Profit before tax		296,466	440,941
Tax expense	7	(23,721)	(32,949)
Profit for the period from continuing operations	9	272,745	407,992
Electrical and mechanical business	8(a)
Loss for the period		(99,986)	(97,046)
Electricity business	8(b)
Gain on disposal of a subsidiary		-	136,016
Loss for the period		-	(1,370)
(Loss) profit for the period from electrical and
mechanical business and electricity business		(99,986)	37,600
Profit for the period		172,759	445,592

Tianjin Development Holdings Limited Interim Report 2020

5

Condensed Consolidated Statement of Profit or Loss

		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
			(unaudited &
	Note	(unaudited)	restated)
Profit (loss) for the period attributable to owners of
the Company
- from continuing operations		193,053	299,573
- from electrical and mechanical business		(78,504)	(73,656)
- from electricity business		-	134,723
Profit for the period attributable to owners of
the Company		114,549	360,640
Profit (loss) for the period attributable to
non-controlling interests
- from continuing operations		79,692	108,419
- from electrical and mechanical business		(21,482)	(23,390)
- from electricity business		-	(77)
Profit for the period attributable to
non-controlling interests		58,210	84,952
		172,759	445,592
		HK cents	HK cents
Earnings per share	10
Basic
- Continuing operations, electrical and
mechanical business and electricity business		10.68	33.62
- Continuing operations		18.00	27.93
Diluted
- Continuing operations, electrical and
mechanical business and electricity business		10.68	33.62
- Continuing operations		18.00	27.93

6	Tianjin Development Holdings Limited Interim Report 2020

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(unaudited)
Profit for the period	172,759	445,592
Other comprehensive income (expense)
Items that will not be reclassified to profit or loss:
Change in fair value of equity instruments at
fair value through other comprehensive income	28,264	(249,687)
Deferred taxation on fair value change of equity instruments
at fair value through other comprehensive income	(6,634)	37,921
Share of other comprehensive (expense) income of
investments accounted for using the equity method
- fair value through other comprehensive income reserve	(5,886)	13,981
Items that will not be subsequently reclassified to
profit or loss:
Currency translation differences
- the Group	(159,693)	(13,975)
- investments accounted for using the equity method	(114,385)	(22,491)
Other comprehensive expense for the period	(258,334)	(234,251)
Total comprehensive (expense) income for the period	(85,575)	211,341
Attributable to:
Owners of the Company	(84,131)	281,772
Non-controlling interests	(1,444)	(70,431)
	(85,575)	211,341

Tianjin Development Holdings Limited Interim Report 2020

7

Condensed Consolidated Statement of Financial Position

		30 June	31 December
		2020	2019
		HK$'000	HK$'000
	Notes	(unaudited)	(audited)
ASSETS
Non-current assets
Property, plant and equipment	12	2,083,191	2,859,418
Land use rights	12	442,046	612,740
Investment properties	12	220,523	239,487
Investments accounted for using the equity method	13	6,597,969	6,558,477
Intangible assets		9,520	9,846
Deposits paid for acquisition of property, plant and
equipment		21,951	7,269
Deferred tax assets		40,895	47,213
Equity instruments at fair value through other
comprehensive income	14	1,681,955	1,683,058
		11,098,050	12,017,508
Current assets
Inventories		313,793	1,105,629
Amounts due from investments accounted for
using the equity method		13,008	56,872
Amount due from ultimate holding company		202	299
Amounts due from related companies		64,310	65,788
Contract assets		-	280,979
Trade receivables	15	584,908	689,067
Notes receivables	15	285,871	437,757
Other receivables, deposits and prepayments	15	136,325	465,848
Financial assets at fair value through profit or loss	16	162,694	434,979
Structured deposits	17	247,535	33,482
Entrusted deposits	18	1,030,668	1,283,035
Restricted bank balances		181,490	329,669
Time deposits with maturity over three months		1,987,119	2,257,953
Cash and cash equivalents		3,396,692	3,097,288
		8,404,615	10,538,645
Assets classified as held for sale	8	2,831,536	-
		11,236,151	10,538,645
Total assets		22,334,201	22,556,153

8	Tianjin Development Holdings Limited Interim Report 2020

Condensed Consolidated Statement of Financial Position

		30 June	31 December
		2020	2019
		HK$'000	HK$'000
	Notes	(unaudited)	(audited)
EQUITY
Owners of the Company
Share capital		5,136,285	5,136,285
Reserves		6,092,837	6,226,129
		11,229,122	11,362,414
Non-controlling interests		4,527,917	4,529,398
Total equity		15,757,039	15,891,812
LIABILITIES
Non-current liabilities
Lease liabilities		7,368	7,348
Bank borrowings	19	1,986,667	1,985,417
Deferred tax liabilities		215,566	236,488
		2,209,601	2,229,253
Current liabilities
Trade payables	20	349,199	878,762
Notes payables	20	133,196	196,818
Other payables and accruals		939,337	1,194,129
Amounts due to related companies		269,215	369,349
Contract liabilities		712,346	1,341,568
Lease liabilities		694	4,900
Bank borrowings	19	-	371,227
Current tax liabilities		49,134	78,335
		2,453,121	4,435,088
Liabilities associated with assets classified as			-
held for sale	8	1,914,440
		4,367,561	4,435,088
Total liabilities		6,577,162	6,664,341
Total equity and liabilities		22,334,201	22,556,153
Net current assets		6,868,590	6,103,557
Total assets less current liabilities		17,966,640	18,121,065

Tianjin Development Holdings Limited Interim Report 2020

9

Condensed Consolidated Statement of Changes in Equity

		Owners of the Company
						Non-
	Share	Other	Retained			controlling
	capital	reserves	earnings	Sub-total	interests	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 January 2019 (audited)	5,136,285	372,545	5,808,169	11,316,999	4,783,834	16,100,833
Profit for the period	-	-	360,640	360,640	84,952	445,592
Other comprehensive expense for the period	-	(78,868)	-	(78,868)	(155,383)	(234,251)
Total comprehensive (expense) income for the period	-	(78,868)	360,640	281,772	(70,431)	211,341
Dividends (Note 11)	-	-	(51,278)	(51,278)	(29,732)	(81,010)
Disposal of a subsidiary (Note 8(b))	-	(228,189)	228,189	-	(65,813)	(65,813)
Transfer upon lapse of share options	-	(19,362)	19,362	-	-	-
Transfer between reserves	-	16,860	(16,860)	-	-	-
	-	(230,691)	179,413	(51,278)	(95,545)	(146,823)
At 30 June 2019 (unaudited)	5,136,285	62,986	6,348,222	11,547,493	4,617,858	16,165,351
At 1 January 2020 (audited)	5,136,285	(167,360)	6,393,489	11,362,414	4,529,398	15,891,812
Profit for the period	-	-	114,549	114,549	58,210	172,759
Other comprehensive expense for the period	-	(198,680)	-	(198,680)	(59,654)	(258,334)
Total comprehensive (expense) income for the period	-	(198,680)	114,549	(84,131)	(1,444)	(85,575)
Dividends (Note 11)	-	-	(51,278)	(51,278)	-	(51,278)
Others	-	2,117	-	2,117	(37)	2,080
	-	2,117	(51,278)	(49,161)	(37)	(49,198)
At 30 June 2020 (unaudited)	5,136,285	(363,923)	6,456,760	11,229,122	4,527,917	15,757,039

10	Tianjin Development Holdings Limited Interim Report 2020

Condensed Consolidated Statement of Cash Flows

		Six months ended 30 June
		2020	2019
		HK$'000	HK$'000
	Notes	(unaudited)	(unaudited)
Net cash from (used in) operating activities		395,677	(285,040)
Net cash from (used in) investing activities		455,960	(1,104,208)
Net cash (used in) from financing activities		(94,383)	22,763
Net increase (decrease) in cash and cash equivalents		757,254	(1,366,485)
Cash and cash equivalents at 1 January		3,097,288	4,483,392
Effect of foreign exchange rate changes		(60,101)	32,053
Cash and cash equivalents at 30 June		3,794,441	3,148,960
Represented by:
Cash and cash equivalents from
continuing operations		3,396,692	3,148,960
Cash and cash equivalents classified as assets held
for sale - electrical and mechanical business	8(a)	181,651	-
Cash and cash equivalents classified as assets held
for sale - Heavenly Palace
(as defined in Note 8 (c))	8(c)	216,098	-
		3,794,441	3,148,960

Tianjin Development Holdings Limited Interim Report 2020 11

Notes to the Condensed Consolidated Financial Statements

1. 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 Hong Kong Institute of Certified Public Accountants (the "HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
   The financial information relating to the year ended 31 December 2019 that is included in these condensed consolidated financial statements as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those consolidated financial statements. Further information relating to these statutory financial statements is as follows:
   The Company has delivered the consolidated financial statements for the year ended 31 December 2019 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.
   The Company's auditor has reported on those consolidated financial statements. 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 Hong Kong Companies Ordinance.
2. PRINCIPAL ACCOUNTING POLICIES
   The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values, as appropriate.
   Other than changes in accounting policies resulting from application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in these condensed consolidated financial statements for the six months ended 30 June 2020 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2019.

12	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

2. PRINCIPAL ACCOUNTING POLICIES (continued)

Application of new and 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 1 January 2020 for the preparation of the Group's condensed consolidated financial statements:

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

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 31 December 2020.

Tianjin Development Holdings Limited Interim Report 2020 13

Notes to the Condensed Consolidated Financial Statements

1. CRITICAL ACCOUNTING JUDGMENTS
   Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Other than those disclosed in the annual financial statements for the year ended 31 December 2019, the judgments and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the amounts recognised in the condensed consolidated financial statements are discussed below.
   The Group's utilities business receives government supplemental income from the Finance Bureau of Tianjin Economic and Technological Development Area (the "TEDA Finance Bureau") on an annual basis whereby the amount of such income will be negotiated between the Group and the TEDA Finance Bureau and the outcome of the negotiation will only be finalised and known after the end of the financial year. For the purpose of these condensed consolidated financial statements, the Group, after discussion with the TEDA Finance Bureau, has recognised an amount of such government supplemental income for the six months ended 30 June 2020 (Note 4 (i)) based on management's assessment of the current governmental, fiscal and economic policies in the Tianjin Economic and Technological Development Area (the "TEDA") and with reference to the Group's operating results in this segment. While the directors of the Company are of the opinion that the government supplemental income for the six months ended 30 June 2020 is reasonable and represents the best estimate of the Group's entitlement after taking all relevant factors into account, it may be different from the actual amount that will be finally determined and agreed with the TEDA Finance Bureau and subsequent adjustment may be necessary.
2. SEGMENT INFORMATION
   Following the outbreak of novel coronavirus (the "Coronavirus") in early 2020, precautionary and control measures including travel restrictions, quarantine and temporary delays in resumption of work have been taken across the People's Republic of China (the "PRC"). The ongoing Coronavirus outbreak in the PRC and beyond has brought about additional uncertainties in the Group's operating environment and has impacted the Group's operations and financial performance for the six months ended 30 June 2020.
   As the overall impact of the Coronavirus outbreak is still unfolding, the Group has taken the necessary actions to minimise the disruptions to its operations and will continue to carefully monitor the situation and proactively implement measures to mitigate the impact to the Group's operations.

14	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

The Group determines its operating segments based on the reports that are used to make strategic decisions and reviewed by the chief operating decision-makers (the "CODM"). The CODM assess the performance of the operating segments based on a measure of profit after tax.

The Group has six reportable segments. The segments are managed separately as each business offers different products and services. The following summary describes the operation in each of the Group's reportable segments.

1. Utilities
   This segment derives revenue from distribution of water, heat and thermal power to industrial, commercial and residential customers in the TEDA, the PRC, while the result of electricity business of this segment is contributed by Tianjin TEDA Electric Power Co., Ltd. (天津泰達電力有限公司) ("TEDA Power"), an investment accounted for using the equity method of the Group.
2. Pharmaceutical
   This segment derives revenue from manufacture and sales of pharmaceutical products as well as design, manufacture and printing for pharmaceutical packaging in the PRC, while the result of the provision of pharmaceutical research and development services of this segment is contributed by Tianjin Institute of Pharmaceutical Research Co., Ltd. (天津藥物研究院有限公司) ("Research Institute"), an investment accounted for using the equity method of the Group.
3. Hotel
   This segment derives revenue from operation of a hotel in Hong Kong.
4. Electrical and mechanical
   This segment derives revenue from manufacture and sales of presses, mechanical and hydroelectric equipment as well as large scale pump units.
5. Port services
   The result of this segment is contributed by a listed investment accounted for using the equity method of the Group, Tianjin Port Development Holdings Limited ("Tianjin Port"), which provides port services in Tianjin.
6. Elevators and escalators
   The result of this segment is contributed by an investment accounted for using the equity method of the Group, Otis Elevator (China) Investment Company Limited ("Otis China"), which manufactures and sells elevators and escalators.

Tianjin Development Holdings Limited Interim Report 2020 15

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

Disaggregation of revenue by the type of goods and services

			For the six months ended 30 June 2020 (unaudited)
			Continuing operations
						Electrical and
						mechanical
Segments	Utilities	Pharmaceutical	Hotel	Subtotal	business	Total
		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Types of goods or services
Utilities
Water	127,226	-	-	127,226	-	127,226
Heat and thermal power	550,010	-	-	550,010	-	550,010
		677,236	-	-	677,236	-	677,236
Pharmaceutical
Manufacture and sales of pharmaceutical
products	-	667,432	-	667,432	-	667,432
Design, manufacture and printing for
pharmaceutical packaging	-	70,605	-	70,605	-	70,605
		-	738,037	-	738,037	-	738,037
Hotel	-	-	14,366	14,366	-	14,366
Electrical and mechanical
Manufacture and sales of presses and
mechanical equipment	-	-	-	-	202,803	202,803
Manufacture and sales of hydroelectric
equipment and large scale pump units	-	-	-	-	68,961	68,961
		-	-	-	-	271,764	271,764
		677,236	738,037	14,366	1,429,639	271,764	1,701,403
Timing of revenue recognition
A point in time	677,236	738,037	-	1,415,273	202,803	1,618,076
Over time	-	-	14,366	14,366	68,961	83,327
		677,236	738,037	14,366	1,429,639	271,764	1,701,403

16	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

Disaggregation of revenue by the type of goods and services (continued)

		For the six months ended 30 June 2019 (unaudited)
		Continuing operations
					Electrical and
					mechanical	Electricity
Segments	Utilities	Pharmaceutical	Hotel	Subtotal	business	business	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Types of goods or services
Utilities
Water	166,526	-	-	166,526	-	-	166,526
Heat and thermal power	579,705	-	-	579,705	-	-	579,705
Electricity	-	-	-	-	-	499,190	499,190
	746,231	-	-	746,231	-	499,190	1,245,421
Pharmaceutical
Manufacture and sales of
pharmaceutical products	-	976,801	-	976,801	-	-	976,801
Design, manufacture and printing
for pharmaceutical packaging	-	74,084	-	74,084	-	-	74,084
	-	1,050,885	-	1,050,885	-	-	1,050,885
Hotel	-	-	62,970	62,970	-	-	62,970
Electrical and mechanical
Manufacture and sales of presses
and mechanical equipment	-	-	-	-	271,312	-	271,312
Manufacture and sales of
hydroelectric equipment and
large scale pump units	-	-	-	-	173,546	-	173,546
	-	-	-	-	444,858	-	444,858
	746,231	1,050,885	62,970	1,860,086	444,858	499,190	2,804,134
Timing of revenue recognition
A point in time	746,231	1,050,885	-	1,797,116	271,312	499,190	2,567,618
Over time	-	-	62,970	62,970	173,546	-	236,516
	746,231	1,050,885	62,970	1,860,086	444,858	499,190	2,804,134

Tianjin Development Holdings Limited Interim Report 2020 17

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

For the six months ended 30 June 2020 (unaudited)

		Continuing operations
					Elevators		Electrical and		Total
				Port	and		mechanical	Electricity	operating
	Utilities	Pharmaceutical	Hotel	services	escalators	Sub-total	business	business	segments
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
	(note (i))						(note (iii))
Segment revenue
- external customers	677,236	738,037	14,366	-	-	1,429,639	271,764	-	1,701,403
Operating profit (loss) before interest	16,330	60,809	(14,504)	-	-	62,635	(87,071)	-	(24,436)
Interest income	22,804	26,418	74	-	-	49,296	2,404	-	51,700
Impairment loss on property,
plant and equipment	-	(457)	-	-	-	(457)	-	-	(457)
Impairment loss on intangible assets	-	(22)	-	-	-	(22)	-	-	(22)
Impairment loss on inventories	-	(3,240)	-	-	-	(3,240)	(9,312)	-	(12,552)
Finance costs	-	(356)	-	-	-	(356)	(6,932)	-	(7,288)
Share of net profit (loss) of associates
and joint ventures accounted for
using the equity method	12,149	(6,632)	-	46,152	167,796	219,465	-	-	219,465
Profit (loss) before tax	51,283	76,520	(14,430)	46,152	167,796	327,321	(100,911)	-	226,410
Tax credit (expense)	70	(13,634)	-	-	-	(13,564)	925	-	(12,639)
Segment results
- profit (loss) for the period	51,353	62,886	(14,430)	46,152	167,796	313,757	(99,986)	-	213,771
Non-controlling interests	(3,506)	(44,368)	-	-	(28,962)	(76,836)	21,482	-	(55,354)
Profit (loss) attributable to
owners of the Company	47,847	18,518	(14,430)	46,152	138,834	236,921	(78,504)	-	158,417
Segment results
- profit (loss) for the period includes:
Depreciation and amortisation	16,858	38,057	7,530	-	-	62,445	28,787	-	91,232

18	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

For the six months ended 30 June 2019 (unaudited & restated)

			Continuing operations
					Elevators		Electrical and		Total
				Port	and		mechanical	Electricity	operating
	Utilities	Pharmaceutical	Hotel	services	escalators	Sub-total	business	business	segments
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
	(note (i))						(note (iii))
Segment revenue
- external customers	746,231	1,050,885	62,970	-	-	1,860,086	444,858	499,190	2,804,134
Operating profit (loss) before interest	21,169	131,049	15,793	-	-	168,011	(32,174)	(2,992)	132,845
Interest income	8,288	12,251	7	-	-	20,546	3,270	2,234	26,050
Gain on disposal of a subsidiary	-	-	-	-	-	-	-	136,016	136,016
Impairment loss on property, plant and
equipment	-	-	-	-	-	-	(60,005)	-	(60,005)
Finance costs	-	(2,841)	-	-	-	(2,841)	(8,902)	-	(11,743)
Share of net profit (loss) of associates
and joint ventures accounted for
using the equity method	2,563	(4,887)	-	62,776	184,359	244,811	-	-	244,811
Profit (loss) before tax	32,020	135,572	15,800	62,776	184,359	430,527	(97,811)	135,258	467,974
Tax (expense) credit	-	(22,876)	-	-	-	(22,876)	765	(612)	(22,723)
Segment results
- profit (loss) for the period	32,020	112,696	15,800	62,776	184,359	407,651	(97,046)	134,646	445,251
Non-controlling interests	(2,639)	(72,431)	-	-	(31,820)	(106,890)	23,390	77	(83,423)
Profit (loss) attributable to
owners of the Company	29,381	40,265	15,800	62,776	152,539	300,761	(73,656)	134,723	361,828
Segment results
- profit (loss) for the period includes:
Depreciation and amortisation	22,193	36,824	7,404	-	-	66,421	32,129	17,737	116,287

Tianjin Development Holdings Limited Interim Report 2020 19

Notes to the Condensed Consolidated Financial Statements

4. SEGMENT INFORMATION (continued)

Six months ended 30 June

2020 2019

HK$'000 HK$'000

(unaudited) (unaudited)

Reconciliation of profit for the period
Total reportable segments	213,771	445,251
Corporate and others (note (ii))	(41,012)	341
Profit for the period	172,759	445,592

notes:

1. Revenue from supply of water, heat and thermal power amounted to HK$127,226,000 and HK$550,010,000 respectively (six months ended 30 June 2019: HK$166,526,000 and HK$579,705,000 respectively).
   The above revenue included government supplemental income of HK$93,520,000 (six months ended 30 June 2019: HK$90,173,000).
2. These principally include (a) results of the Group's other non-core businesses which are not categorised as reportable segments; and (b) corporate level activities including central treasury management, administrative function and exchange gain or loss.
3. For the purposes of impairment testing, non-current assets including property, plant and equipment and land use rights have been allocated to the respective cash-generating units ("CGUs"), which operate under the electrical and mechanical segment. The basis of the recoverable amount of the respective CGUs and their major underlying assumptions were summarised below:
   As at 30 June 2020, the recoverable amount of the respective CGUs which is the higher of value in use and fair value less costs of disposal, is determined from value in use calculation. The calculation uses cash flow projections based on the most recent financial budgets provided by the management for the coming five years and discount rate ranging from 8% to 9% (31 December 2019: 8%). The cash flows beyond the budget years are extrapolated using a steady 3% (31 December 2019: 3%) growth rate. Another key assumption for the value in use calculation related to the estimation of cash inflows which include budgeted sales and gross margins, such estimation is based on the respective CGUs' past performance and the management's expectations of the market development.
   During the current interim period, the management of the Group did not recognise any impairment loss on property, plant and equipment (six months ended 30 June 2019: recognised an impairment loss of HK$60,005,000) based on such assessments to one of the CGUs under the electrical and mechanical segment.

20	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

5.	OTHER INCOME
			Six months ended 30 June
			2020	2019
			HK$'000	HK$'000
				(unaudited &
			(unaudited)	restated)
	Continuing operations
	Interest income	96,453	63,778
	Government grants	949	-
	Rental income, net of negligible outgoings	963	2,801
	Sales of scrap materials	280	-
	Dividend income from equity instruments at fair value
		through other comprehensive income	2,096	10,313
	Sundries	11,162	3,970
			111,903	80,862

6.	OTHER (LOSSES) GAINS, NET
			Six months ended 30 June
			2020	2019
			HK$'000	HK$'000
				(unaudited &
			(unaudited)	restated)
	Continuing operations		-
	Impairment loss on property, plant and equipment	(457)
	Impairment loss on intangible assets	(22)	-
	Impairment loss on inventories	(3,331)	-
	(Allowance for) reversal of impairment losses
		- trade receivables	(24,019)	5,904
		- other receivables	12,930	-
	Net loss on disposal/written off of property,
		plant and equipment	(1,160)	(948)
	Net gain on financial assets at fair value through
		profit or loss
		- listed	1,265	15
		- unlisted	22,484	20,947
	Decrease in fair value of investment properties	(9,934)	-
	Net exchange (loss) gain	(34,229)	3,388
			(36,473)	29,306

Tianjin Development Holdings Limited Interim Report 2020 21

Notes to the Condensed Consolidated Financial Statements

7. TAX EXPENSE

Six months ended 30 June

2020 2019

HK$'000 HK$'000 (unaudited &

(unaudited) restated)

Continuing operations
Current taxation
PRC Enterprise Income Tax ("EIT")	27,148	32,983
Deferred taxation	(3,427)	(34)
	23,721	32,949

No provision for Hong Kong profits tax has been made as there was no estimated assessable profit derived from Hong Kong during the current interim period (six months ended 30 June 2019: Nil).

The Group's PRC subsidiaries are subject to EIT at a rate of 25% except for certain subsidiaries which are subject to a preferential EIT rate of 15% as they are qualified as High and New Technology Enterprises.

8. ASSETS HELD FOR SALE

1. Electrical and mechanical business
   During the period under review, the management determined that the Group would not have continuing involvement in the electrical and mechanical business and resolved to dispose of the Group's entire interest in Tianjin Tianfa Heavy Machinery & Hydro Power Equipment Manufacture Co., Ltd. (天津市天發重型 水電設備製造有限公司) ("Tianfa Equipment") and Tianjin Tianduan Press Co., Ltd. (天津市天鍛壓力機有限公司) ("Tianduan"), both are non-wholly owned subsidiaries of the Group, by way of public listing-for-sale process on the Tianjin Property Rights Exchange Centre (天津產權交易中心) in accordance with the relevant requirements governing the transfer of state-owned assets of enterprise in the PRC on 30 March 2020 and 12 June 2020, respectively ("Potential Disposals"). The assets and liabilities attributable to both Tianfa Equipment and Tianduan, which are expected to be sold within twelve months, have been classified as a disposal group held for sale and are presented separately in the condensed consolidated statement of financial position.
   As at the date of the Group's condensed consolidated financial statements authorised for issue by the Board, the Group has not entered into any formal agreements regarding the Potential Disposals. Details of the Potential Disposals were disclosed in the Company's announcements dated 27 March 2020 and 11 June 2020, respectively. Upon completion of the Potential Disposals, Tianfa Equipment and Tianduan ceased to be subsidiaries of the Group thereafter.

22	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

8. ASSETS HELD FOR SALE (continued)

1. Electrical and mechanical business (continued)
   The loss for the period from electrical and mechanical business is set out below. The comparative figures in the condensed consolidated statement of profit or loss have been restated to re-present electrical and mechanical business as a discontinued operation.

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(unaudited)
Revenue	271,764	444,858
Cost of sales	(254,837)	(372,478)
Gross profit	16,927	72,380
Other income	3,120	75,737
Other losses, net	(11,535)	(110,894)
Selling and distribution expenses	(22,366)	(46,040)
General and administrative expenses	(46,125)	(36,230)
Other operating expenses	(34,000)	(43,862)
Finance costs	(6,932)	(8,902)
Loss before tax	(100,911)	(97,811)
Tax credit	925	765
Loss for the period	(99,986)	(97,046)
Attributable to:
Owner of the Company	(78,504)	(73,656)
Non-controlling interests	(21,482)	(23,390)
	(99,986)	(97,046)
Loss for the period from electrical and
mechanical business includes:
Auditor's remuneration	155	471

Tianjin Development Holdings Limited Interim Report 2020 23

Notes to the Condensed Consolidated Financial Statements

8. ASSETS HELD FOR SALE (continued)

1. Electrical and mechanical business (continued)
   For the period ended 30 June 2020, the electrical and mechanical business contributed HK$55 million (six months ended 30 June 2019: HK$72 million) to the Group's net operating cash flows, contributed HK$3 million (six months ended 30 June 2019: HK$50 million) in respect of investing activities and did not arise cash flows contribution (six months ended 30 June 2019: paid HK$50 million) in respect of financing activities.
   The major classes of assets and liabilities of the business classified as held for sale are as follows:

			30 June 2020
			HK$'000
			(unaudited)
Property, plant and equipment	655,272
Land use rights	161,121
Deferred tax assets	7,008
Inventories		753,194
Contract assets	199,118
Trade receivables	296,560
Notes receivables	115,102
Other receivables, deposits and prepayments	78,315
Restricted bank balances	34,731
Cash and cash equivalents	181,651
Total assets classified as held for sale	2,482,072
Trade payables	661,364
Notes payables	86,060
Other payables and accruals	78,823
Amount due to an investment accounted
for using the equity method	1,336
Amounts due to related parties	95,173
Contract	liabilities	647,938
Bank borrowings	274,918
Current	tax	liabilities	27,219
Deferred	tax	liabilities	22,186
Total liabilities classified as held for sale	1,895,017

24	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

8. ASSETS HELD FOR SALE (continued)

1. Electricity business
   On 6 December 2018, TEDA Power and Tianjin TEDA Tsinlien Electric Power Co., Ltd. (天津泰達津聯電力有限公司) ("Tsinlien Electric"), a non-wholly owned subsidiary of the Group, entered into the absorption and merger agreement, pursuant to which, TEDA Power would absorb and merge with Tsinlien Electric, and TEDA Power would be the surviving company upon completion of the merger and would take up and assume all the assets, liabilities and business operations of Tsinlien Electric, which would then be deregistered and cease to exist as a legal entity (the "Merger"). Upon the completion of the Merger, the equity interest of TEDA Power is owned as to approximately 47.09% and 52.91% by the Group and Tianjin TEDA Investment Holding Co., Ltd. (天津泰 達投資控股有限公司), respectively.
   The Merger was completed on 22 April 2019 and the Group recognised a disposal gain of HK$136,016,000. The Group's 47.09% equity interest in TEDA Power was recognised as an investment accounted for using the equity method with the amount of HK$1,284,683,000.
   The net assets of Tsinlien Electric at the date of disposal were as follows:

	HK$'000
	(audited)
Analysis of assets and liabilities:
Property, plant and equipment	465,585
Land use rights	12,243
Deferred tax assets	30,950
Inventories	23
Amounts due from related parties	149,513
Trade and other receivables	516,378
Cash and cash equivalents	229,311
Trade and other payables	(99,503)
Contract liabilities	(66,394)
Dividend payable	(52,378)
Current tax liabilities	(18,706)
Net assets disposed of	1,167,022

Tianjin Development Holdings Limited Interim Report 2020 25

Notes to the Condensed Consolidated Financial Statements

8.	ASSETS HELD FOR SALE (continued)
	(b)	Electricity business (continued)
			HK$'000
			(audited)
		Gain on disposal of a subsidiary:
		Net assets disposed of	(1,167,022)
		An investment accounted for using the equity method	1,284,683
		Non-controlling interests	65,813
		Capital gain tax provision	(45,870)
		Transaction costs	(1,588)
		Gain on disposal	136,016
		Net cash outflow arising on disposal:
		Bank balances and cash disposed of	(229,311)

The results from electricity business for the preceding interim period were set out below.

	For the
	period from
	1 January to
	22 April 2019
	HK$'000
	(audited)
Revenue	499,190
Cost of sales	(497,510)
Gross profit	1,680
Other income	3,754
Selling and distribution expenses	(3,732)
General and administrative expenses	(2,414)
Other operating expenses	(46)
Loss before tax	(758)
Tax expense	(612)
Loss for the period	(1,370)
Attributable to:
Owners of the Company	(1,293)
Non-controlling interests	(77)
	(1,370)

26	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

8. ASSETS HELD FOR SALE (continued)

1. Tianjin Heavenly Palace Winery Co., Ltd.
   On 18 June 2020, the Company entered into a conditional state-owned equity transfer agreement with Tianjin Food Group Co., Ltd. (天津食品集團有限公司) ("Tianjin Food"), a fellow subsidiary of Tsinlien (as defined in Note 23), pursuant to which, the Company had conditionally agreed to sell the entire equity interest of Tianjin Heavenly Palace Winery Co., Ltd. (天津天宮葡萄釀酒有限公司) ("Heavenly Palace"), a direct wholly-owned subsidiary of the Company, to Tianjin Food at a cash consideration of RMB331,922,200 (equivalent to approximately HK$360,785,000) (the "Disposal"). The consideration was determined with reference to the appraised net asset value of Heavenly Palace and the dividend receivable by the Company in an aggregate sum of RMB149,955,090 (equivalent to approximately HK$162,994,663) payable by Heavenly Palace. The assets and liabilities attributable to Heavenly Palace and its investments accounted for using the equity method, which is expected to be sold within twelve months, have been classified as a disposal group held for sale and are presented separately in the condensed consolidated statement of financial position. As Heavenly Palace does not represent a major line of business or geographical area of operation, the Disposal does not constitute a discontinued operation. The net proceeds of the Disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognised. The Disposal has been approved by the shareholders of the Company at an extraordinary general meeting held on 17 August 2020. Upon completion of the Disposal, Heavenly Palace ceased to be a subsidiary of the Group thereafter.
   The major classes of assets and liabilities of Heavenly Palace classified as held for sale are as follows:

	30 June 2020
	HK$'000
	(unaudited)
Property, plant and equipment	94
Investments accounted for using the equity method	26,304
Inventories	1,057
Amounts due from investments accounted
for using the equity method	48,441
Trade receivables	4,056
Other receivables, deposits and prepayments	53,414
Cash and cash equivalents	216,098
Total assets classified as held for sale	349,464
Trade payables	759
Other payables and accruals	18,638
Current tax liabilities	26
Total liabilities classified as held for sale	19,423

Tianjin Development Holdings Limited Interim Report 2020 27

Notes to the Condensed Consolidated Financial Statements

9. PROFIT FOR THE PERIOD

Six months ended 30 June

2020 2019

HK$'000 HK$'000 (unaudited &

(unaudited) restated)

Profit for the period from continuing operations is

arrived at after charging:
Employees' benefits expense
(including directors' emoluments)	185,276	219,405
Cost of inventories recognised as an expense	761,474	776,994
Depreciation of property, plant and equipment	69,722	73,807
Depreciation of land use rights	2,277	2,379
Amortisation of intangible assets	121	583
Short-term lease expenses on
- plants, pipelines and networks	17,891	30,962
- land and buildings	3,617	4,954
Research and development costs charged to
other operating expenses	46,374	79,777

10. EARNINGS PER SHARE

For continuing operations, electrical and mechanical business and electricity business

The calculation of the basic and diluted earnings per share from continuing operations, electrical and mechanical business and electricity business attributable to owners of the Company is based on the following data:

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
Earnings	(unaudited)	(unaudited)

Profit attributable to owners of the Company for the purpose of basic earnings per share

- from continuing operations, electrical and mechanical business and electricity business

Effect of dilutive earnings per share:

• adjustment in relation to share options issued by an investment accounted for using the equity method of the Group

114,549 360,640

--

Profit attributable to owners of the Company for
the purpose of diluted earnings per share
- from continuing operations, electrical and
mechanical business and electricity business	114,549	360,640

28	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

10. EARNINGS PER SHARE (continued)

For continuing operations, electrical and mechanical business and electricity business (continued)

	Six months ended 30 June
	2020	2019
Number of shares	Thousand	Thousand
Number of ordinary shares for the purpose of
basic and diluted earnings per share	1,072,770	1,072,770

For continuing operations

The calculation of the basic and diluted earnings per share from continuing operations attributable to owners of the Company is based on the following data:

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
		(unaudited &
Earnings	(unaudited)	restated)

Profit attributable to owners of the Company for the purpose of basic earnings per share

• from continuing operations Effect of dilutive earnings per share:
• adjustment in relation to share options issued by an investment accounted for using
  the equity method of the Group

193,053 299,573

--

Profit attributable to owners of the Company for
the purpose of diluted earnings per share
- from continuing operations	193,053	299,573
Number of shares	Thousand	Thousand
Number of ordinary shares for the purpose of
basic and diluted earnings per share	1,072,770	1,072,770

Tianjin Development Holdings Limited Interim Report 2020 29

Notes to the Condensed Consolidated Financial Statements

1. EARNINGS PER SHARE (continued)
   The computation of diluted earnings per share does not assume the exercise of the share options issued by an investment accounted for using the equity method of the Group and the Company because the exercise price of those options were higher than the average market price for the shares of an investment accounted for using the equity method of the Group and the Company, respectively, for both interim periods.
   For electrical and mechanical business
   Basic losses per share for the electrical and mechanical business is HK7.32 cents per share (six months ended 30 June 2019: HK6.87 cents) and diluted losses per share for the electrical and mechanical business is HK7.32 cents per share (six months ended 30 June 2019: HK6.87 cents) based on the losses for the period attribute to owners of the Company from the electrical and mechanical business of HK$78,504,000 (six months ended 30 June 2019: HK$73,656,000) and the denominators detailed above for both basic and diluted losses per share.
   For electricity business
   During the six months ended 30 June 2019, basic earnings per share for the electricity business was HK12.56 cents and diluted earnings per share for the electricity business was HK12.56 cents based on the profit for the period attribute to owners of the Company from the electricity business of HK$134,723,000 and the denominators detailed above for both basic and diluted earnings per share.
2. DIVIDENDS

Six months ended 30 June

2020 2019

HK$'000 HK$'000

(unaudited) (unaudited)

Dividends recognised as distribution during the period:
- 2019 final dividend, paid HK4.78 cents per share
(2018: HK4.78 cents per share)	51,278	51,278

Subsequent to the end of the reporting period, the board of directors has declared an interim dividend of HK3.00 cents per share (six months ended 30 June 2019: HK3.26 cents per share), amounting to approximately HK$32,183,000 (six months ended 30 June 2019: HK$34,972,000) in total, to the shareholders of the Company whose names appear on the Company's register of members on 30 September 2020.

30	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

1. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT, LAND USE RIGHTS AND INVESTMENT PROPERTIES
   During the current interim period, the Group acquired property, plant and equipment and land use rights of HK$30,852,000 (six months ended 30 June 2019: HK$36,972,000) for the purpose of expanding its businesses.
   In addition, neither acquisition nor disposal of investment properties was carried out by the Group during the current interim period (six months ended 30 June 2019: Nil).
   For investment properties, the fair value at the end of the reporting period has been arrived at based on a valuation carried out by Vigers Appraisal and Consulting Limited, an independent valuer not connected with the Group. The valuation was determined either on the basis of capitalisation of net rental income derived from existing tenancies or by reference to comparable market transactions. There has been no change from the valuation technique used in the prior year. During the six months ended 30 June 2020, a decrease in fair value of investment properties of HK$9,934,000 was recognised (six months ended 30 June 2019: Nil).
2. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

	30 June	31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
The Group's interests in associates and joint ventures
- Listed shares in Hong Kong
- Tianjin Port	3,345,961	3,387,904
- Unlisted shares in the PRC
- Otis China	894,961	746,406
- Research Institute	803,797	830,323
- TEDA Power	1,233,200	1,244,313
- Others	320,050	349,531
	6,597,969	6,558,477
Market value of listed shares
- Tianjin Port	698,317	1,021,612

Interests in Tianjin Port at the end of the reporting period included goodwill of HK$520,729,000, net of impairment losses (31 December 2019: HK$520,729,000, net of impairment losses).

Tianjin Development Holdings Limited Interim Report 2020 31

Notes to the Condensed Consolidated Financial Statements

14. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

		30 June	31 December
		2020	2019
		HK$'000	HK$'000
	notes	(unaudited)	(audited)
Equity securities
Listed, at market value	(i)	84,444	98,135
Unlisted	(ii)	1,597,511	1,584,923
		1,681,955	1,683,058

notes:

1. The listed securities mainly represent the Group's 4.07% (31 December 2019: 4.69%) equity interest in Binhai Investment Company Limited ("Binhai Investment") which is listed on the Main Board of the Stock Exchange.
   As at 30 June 2020, the market value of the Group's equity interest in Binhai Investment was HK$63,354,000 (31 December 2019: HK$80,433,000) and the unrealised fair value loss of HK$17,079,000 (six months ended 30 June 2019: unrealised fair value gain of HK$551,000) was recognised in other comprehensive income.
2. The unlisted equity securities mainly represented the Group's investment in 12.15% (31 December 2019: 12.15%) equity interest in Tasly Holding Group Co., Ltd. ("Tasly Holding"). Tasly Holding is a conglomerate in the PRC and its main asset is investment in Tasly Pharmaceutical Group Co., Ltd., which is listed on the Shanghai Stock Exchange and is principally engaged in research and development, manufacturing and distribution of pharmaceutical products in the PRC.
   Other unlisted equity securities are principally equity instruments in certain entities established and operated in the PRC. They are mainly denominated in Renminbi. The unlisted equity instruments are measured at fair value and details of fair value measurements are disclosed in Note 22.

32	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

15. TRADE RECEIVABLES, NOTES RECEIVABLES AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

		30 June	31 December
		2020	2019
		HK$'000	HK$'000
	notes	(unaudited)	(audited)
Trade receivables - gross	(i)	623,723	721,595
Less: allowance for impairment		(38,815)	(32,528)
Trade receivables - net		584,908	689,067
Notes receivables		285,871	437,757
	(ii)	870,779	1,126,824
Other receivables, deposits and prepayments		136,325	465,848

notes:

1. Various group companies have different credit policies which are dependent on the practice of the markets and the businesses in which they operate. In general, credit periods of (a) 30 days are granted to corporate customers of the Group's hotel business; (b) 90 to 180 days are granted to customers in the electrical and mechanical segment; and (c) 30 to 180 days are granted to customers in the pharmaceutical segment. No credit terms are granted to customers in the utilities segment.
2. The ageing analysis of the Group's trade and notes receivables (net of allowance for impairment) is as follows:

	30 June	31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
Within 30 days	353,888	914,947
31 to 90 days	160,935	42,722
91 to 180 days	144,234	50,953
181 to 365 days	195,464	112,353
Over 1 year	16,258	5,849
	870,779	1,126,824

Tianjin Development Holdings Limited Interim Report 2020 33

Notes to the Condensed Consolidated Financial Statements

16. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	30 June	31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
Investments held for trading:
Listed shares in Hong Kong	5,359	5,359
Listed shares in the PRC	370	451
Listed funds in the PRC	12,388	11,775
Unlisted funds in the PRC	7,081	6,974
Unlisted trust funds in the PRC	137,496	410,420
	162,694	434,979

During the current interim period, the Group had net cash flow from investments held for trading of HK$268,353,000 (six months ended 30 June 2019: HK$191,099,000).

17. STRUCTURED DEPOSITS

As at 30 June 2020, the Group placed with four licensed commercial banks (31 December 2019: one) in the PRC for principal-protectedRMB-denominated structured deposits with maturity within 12 months (31 December 2019: 6 months) after the end of the reporting period of HK$247,535,000 (31 December 2019: HK$33,482,000). The expected annual interest rate for the structured deposits is indicated at 2.03% to 4.40% (31 December 2019: 4.40%), however, the actual interest to be received is uncertain until maturity. Such structured deposits were accounted for as financial assets at fair value through profit or loss.

18. ENTRUSTED DEPOSITS

As at 30 June 2020, the entrusted deposits were placed in seven financial institutions (31 December 2019: seven financial institutions) in the PRC, with maturity from 4 to 15 months (31 December 2019: 1 to 6 months) after the end of the reporting period. The deposits carry the expected rates of return ranging from 6.0% to 8.7% (31 December 2019: 6.0% to 8.5%) per annum.

Deposits with maturity over one year confer the Group rights of early redemption before the maturity date. Accordingly, those deposits were classified as current assets. The entrusted deposits were accounted for as financial assets at fair value through profit or loss.

34	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

1. BANK BORROWINGS
   During the current interim period, the Group did not obtain new bank borrowings (six months ended 30 June 2019: HK$57,803,000) and repaid bank borrowings of HK$90,088,000 (six months ended 30 June 2019: HK$127,168,000).
   At the end of the reporting period, the bank borrowings carry effective interest rate at 3.03% (31 December 2019: 3.95% to 5.66%) per annum.
2. TRADE PAYABLES AND NOTES PAYABLES
   The ageing analysis of the Group's trade and notes payables, based on invoice date, is as follows:

		30 June	31 December
		2020	2019
		HK$'000	HK$'000
		(unaudited)	(audited)
Within 30 days	37,446	338,984
31	to 90 days	41,592	163,061
91	to 180 days	81,272	207,305
Over 180 days	322,085	366,230
		482,395	1,075,580

21. CAPITAL COMMITMENTS

	30 June	31 December
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(audited)
Contracted but not provided for in respect of acquisition
of property, plant and equipment	157,405	207,574

Tianjin Development Holdings Limited Interim Report 2020 35

Notes to the Condensed Consolidated Financial Statements

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Fair value of the Group's financial assets that are measured at fair value on a recurring basis

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 of these financial assets are determined (in particular, the valuation technique(s) 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); and
• 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).

	Fair value as at			Significant	Relationship of
	30 June	31 December	Fair value	Valuation technique(s) and	unobservable	unobservable inputs
Financial assets	2020	2019	hierarchy	key inputs	input(s)	to fair value
	HK$'000	HK$'000
	(unaudited)	(audited)
Equity instruments at fair
value through other
comprehensive income
- listed equity securities	84,444	98,135	Level 1	Quoted bid price in active	N/A	N/A
				markets
- unlisted equity securities	1,495,245	1,473,361	Level 3	Dividend yield model which	Dividend yield of 0.9%	An increase in the
- a private company				uses expected maintainable	(31 December 2019:	dividend yield would
in the PRC				dividend income and	0.9%) (note (i))	result in a decrease
				market dividend yield		in fair value, and
						vice versa

- other unlisted equity	102,266	111,562	Level 3	Market approach which uses
securities				enterprise multiples of
				comparable companies and a
				marketability discount

Marketability discount of	An increase in the
7.24%	- 9.96%	marketability
(31 December 2019:	discount would result
5.08%	- 7.04%)	in a decrease in fair
(note (ii))	value, and vice versa

1,681,955 1,683,058

36	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

Fair value of the Group's financial assets that are measured at fair value on a recurring basis (continued)

	Fair value as at			Significant	Relationship of
	30 June	31 December	Fair value	Valuation technique(s) and	unobservable	unobservable inputs
Financial assets	2020	2019	hierarchy	key inputs	input(s)	to fair value
	HK$'000	HK$'000
	(unaudited)	(audited)
Financial assets at fair
value through profit
or loss
- listed equity securities	5,729	5,810	Level 1	Quoted bid price in active	N/A	N/A
				markets
- listed funds	12,388	11,775	Level 1	Quoted bid price in active	N/A	N/A
				markets
- unlisted funds	7,081	6,974	Level 2	Redemption value quoted by	N/A	N/A
				the relevant investment
				trust with reference to
				the underlying assets
				(mainly listed securities) of
				the trust
- unlisted trust funds	137,496	410,420	Level 2	Redemption value quoted	N/A	N/A
				by banks or financial
				institutions with reference
				to the underlying assets
				(mainly listed securities and
				government bonds) of the
				trust fund
- structured deposits	247,535	33,482	Level 2	Redemption value quoted by	N/A	N/A
				banks with reference to
				the expected return of the
				underlying assets
- entrusted deposits	1,030,668	1,283,035	Level 2	Redemption value quoted by	N/A	N/A
				financial institutions with
				reference to the expected
				return of the underlying
				assets
	1,440,897	1,751,496

notes:

1. As at 30 June 2020, a 1% increase in the dividend yield holding all other variables constant would decrease the carrying amount of the unlisted equity securities by HK$14,719,000 (31 December 2019: HK$14,837,000) and a 1% decrease in the dividend yield holding all other variables constant would increase the carrying amount of the unlisted equity securities by HK$16,419,000 (31 December 2019: HK$15,136,000).
2. As at 30 June 2020, a 5% increase/decrease in the marketability discount holding all other variables constant would decrease/increase the carrying amount of the unlisted equity securities by HK$4,915,000, (31 December 2019: HK$6,277,000).

Tianjin Development Holdings Limited Interim Report 2020 37

Notes to the Condensed Consolidated Financial Statements

22. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)

Reconciliation of Level 3 fair value measurements of financial assets

	Unlisted
	equity
	securities
	HK$'000
At 1 January 2019	2,029,492
Fair value change recognised in other comprehensive income	(252,452)
Exchange differences	(4,922)
At 30 June 2019	1,772,118
At 1 January 2020	1,584,923
Addition	827
Fair value change recognised in other comprehensive income	41,596
Exchange differences	(29,835)
At 30 June 2020	1,597,511

All gains and losses included in other comprehensive income relate to equity instruments at fair value through other comprehensive income held at the end of the reporting period and are reported as changes of "fair value through other comprehensive income reserve".

Fair value measurements and valuation processes

Some of the Group's assets and liabilities are measured at fair value for financial reporting purposes. Management of the Group is responsible for determination of the appropriate valuation techniques and inputs for fair value measurements.

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments.

Detailed information about the valuation techniques, inputs and key assumptions used in the determination of the fair value of various assets and liabilities are disclosed above.

There were no transfers between Levels 1, 2 and 3 during the period.

38	Tianjin Development Holdings Limited Interim Report 2020

Notes to the Condensed Consolidated Financial Statements

1. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS (continued)
   Fair value of the Group's financial assets and financial liabilities that are measured at fair value on a non-recurring basis
   The directors of the Company consider that the carrying amounts of trade receivables, notes receivables, other receivables, restricted bank balances, time deposits with maturity over three months, cash and cash equivalents, trade payables, notes payables, other payables, short-term bank borrowings and balances with investments accounted for using the equity method, ultimate holding company and related companies that are recorded at amortised cost in these condensed consolidated financial statements approximate their fair values due to the short-term maturities of these assets and liabilities.
   The fair values of the financial assets and financial liabilities recorded at amortised cost have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis.
2. RELATED PARTY DISCLOSURES
   The Group is controlled by Tsinlien Group Company Limited ("Tsinlien"), which owns approximately 62.81% (31 December 2019: approximately 62.81%) of the Company's shares as at 30 June 2020. The remaining approximately 37.19% (31 December 2019: approximately 37.19%) of the Company's shares are widely held.
   Tsinlien is a state-owned enterprise and ultimately controlled by Tianjin Municipal People's Government of the PRC. In accordance with HKAS 24 (Revised) "Related Party Disclosures", entities directly or indirectly controlled, jointly controlled or significantly influenced by the PRC government are defined as related parties of the Group. On that basis, related parties include Tsinlien, its subsidiaries and associates, other state- owned enterprises and their subsidiaries directly or indirectly controlled by the PRC government, and other entities and corporations in which the Company is able to exercise joint control or significant influence, and key management personnel of the Company and Tsinlien as well as their close family members.
   During the current interim period, except for the government supplemental income, the Group's significant transactions with entities that are controlled, jointly controlled or significantly influenced by the PRC government (the "other government-related entities") mainly include majority of its cash at banks and time deposits in banks and the corresponding interest income and part of sales and purchases of goods and services (such as purchase of utilities including electricity and water and sales of pharmaceutical products which constituted the majority of the Group's purchases and sales). The price and other terms of such transactions are set out in the agreements governing these transactions or as mutually agreed, as appropriate.

Tianjin Development Holdings Limited Interim Report 2020 39

Notes to the Condensed Consolidated Financial Statements

23. RELATED PARTY DISCLOSURES (continued)

Apart from the above-mentioned transactions with the other government-related entities and the related party transactions and balances set out in note 8(c) of these condensed consolidated financial statements, the following is a summary of the significant related party transactions and balances arising in the normal course of the Group's business:

1. Related party transactions
2. 1. Transactions with related parties of the Group (note)

	Six months ended 30 June
	2020	2019
	HK$'000	HK$'000
	(unaudited)	(unaudited)
Lease expenses for land	-	1,447
Lease expenses for plant,	17,342
pipelines and networks	30,961
Purchase of materials	2,626	-
Purchase of steam for sale of heat and	513,477
thermal power	504,948
Sales of goods	10,773	33,327

note: The related parties are entities controlled by non-controlling interests of the Company's non-wholly owned subsidiaries.

1. Key management compensation

Six months ended 30 June

2020 2019

HK$'000 HK$'000

(unaudited) (unaudited)

Fees	1,272	1,272
Salaries and other emoluments	1,051	2,315
Retirement benefits scheme contribution	18	56
	2,341	3,643

During the current interim period, the emoluments of certain executive directors and senior management were borne by Tianjin Tsinlien Investment Holdings Co., Ltd. (天津津聯投資控股有限公司).

1. Related party balances
   Details of the related party balances are set out in the condensed consolidated statement of financial position.

40	Tianjin Development Holdings Limited Interim Report 2020

Management Discussion and Analysis

BUSINESS REVIEW

Utilities

The Group's utility businesses are mainly operated in the Tianjin Economic and Technological Development Area ("TEDA") through supplying water, heat and thermal power as well as electricity to industrial, commercial and residential customers.

TEDA, located at the centre of Bohai economic rim and also at the intersection of Beijing- Tianjin-Hebei metropolitan regions, is a national development zone and an ideal place for manufacturing and R&D developments. TEDA plays a leading role over the past three decades in Tianjin's economic development.

Water

Tianjin TEDA Tsinlien Water Supply Co., Ltd. ("Water Company") is principally engaged in supply of tap water in TEDA. It is also engaged in installation and maintenance of water pipes, technical consultancy, retail and wholesale of water pipes and related parts. The daily water supply capacity of the Water Company is approximately 425,000 tonnes.

For the six months ended 30 June 2020, revenue from the Water Company declined by HK$39.3 million compared with that of the same period last year to approximately HK$127.2 million. Profit increased from HK$6.3 million in the six months ended 30 June 2019 to approximately HK$9.8 million in the six months ended 30 June 2020, primarily attributable to lower operating costs and higher interest income, partially offset by the lower volumes of water sold during the period. The total quantity of water sold for the period was approximately 21,089,000 tonnes, a decline of 18% over the same period last year.

Heat and Thermal Power

Tianjin TEDA Tsinlien Heat & Power Co., Ltd. ("Heat & Power Company") is principally engaged in distribution of steam and heat for industrial, commercial and residential customers within TEDA. The Heat & Power Company has steam transmission pipelines of approximately 462 kilometres and more than 120 processing stations in TEDA. The daily distribution capacity is approximately 30,000 tonnes of steam.

During the period under review, revenue from the Heat & Power Company was approximately HK$550 million, a 5.1% below that of the same period last year. Profit increased from HK$23.1 million in the six months ended 30 June 2019 to approximately HK$29.4 million in the six months ended 30 June 2020. The result was mainly attributable to increase in ancillary services income and higher interest income, partly offset by lower volumes of steam sold during the period. The total quantity of steam sold for the period was approximately 2,004,000 tonnes, a decrease of 3.5% over the same period last year.

Tianjin Development Holdings Limited Interim Report 2020 41

Management Discussion and Analysis

BUSINESS REVIEW (continued)

Utilities (continued)

Electricity

In December 2018, pursuant to an absorption and merger agreement dated 6 December 2018 entered into between Tianjin TEDA Tsinlien Electric Power Co., Ltd. ("Electricity Company") and Tianjin TEDA Electric Power Co., Ltd. (天津泰達電力有限公司) ("TEDA Power"), TEDA Power absorbed and merged with Electricity Company while TEDA Power was the surviving company upon completion of the merger and assumed all the assets, liabilities and business operations of Electricity Company which was subsequently dissolved and deregistered (the "Merger"). Upon the completion of Merger on 22 April 2019, TEDA Power was owned as to approximately 47.09% and 52.91% equity interest respectively by the Group and Tianjin TEDA Investment Holding Co., Ltd. (天津泰達投資控股有限公司), and became an investment accounted for using the equity method of the Group thereafter. As a result of the Merger, the Group recognised a gain, together with the result from Electricity Company up to the date of Merger, amounted in aggregate to approximately HK$134.6 million, which has been disclosed and presented as profit from Electricity Business in the Group's condensed consolidated statement of profit or loss.

TEDA Power is principally engaged in supply of electricity in TEDA. It also provides services in relation to construction of electricity supply network, application of technology related to new energy and renewable energy, electricity construction and related technical services. Currently, the installed transmission capacity of TEDA Power is approximately 946,000 kVA. During the period under review, TEDA Power contributed to the Group a profit of approximately HK$12.1 million.

Pharmaceutical

Pharmaceutical segment is principally engaged in the manufacture and sale of chemical drugs as well as design, manufacture and printing for pharmaceutical packaging in the PRC, and also participates in the business of research and development of new medicine technology and new products through its 35% equity interest in Tianjin Institute of Pharmaceutical Research Co., Ltd. (天津藥物研究院有限公司) ("Research Institute").

42	Tianjin Development Holdings Limited Interim Report 2020

Management Discussion and Analysis

BUSINESS REVIEW (continued)

Pharmaceutical (continued)

During the period under review, the segment revenue was approximately HK$738 million, a decline of 29.8% from HK$1,050.9 million in the same period last year. Of the total segment revenue, revenue from sale of pharmaceutical products was approximately HK$667.4 million, a decline of 31.7% from HK$976.8 million in the corresponding period last year. Revenue from sale of packaging materials amounted to approximately HK$70.6 million, a decrease of 4.7% over the corresponding period last year. Profit from pharmaceutical segment was approximately HK$62.9 million compared to HK$112.7 million in the same period last year. The results was primarily due to lower revenue from sale of pharmaceutical products due to weaker demand as a result of the outbreak of the novel coronavirus (the "Coronavirus") at the beginning of the year and the increasingly fierce competition in the pharmaceutical industry arising from gradual implementation of centralised drug procurement program, partially offset by lower of selling and distribution expenses as well as general and administrative expenses. During the period under review, pharmaceutical segment shared a loss from Research Institute of approximately HK$12.5 million.

Hotel

Courtyard by Marriott Hong Kong ("Courtyard Hotel"), situated in a prime location on the Hong Kong Island, is a 4-star hotel with 245 guest rooms. It is positioned as an ideal lodge for business and leisure travellers.

For the six months ended 30 June 2020, revenue from Courtyard Hotel declined by HK$48.6 million to approximately HK$14.4 million compared with that of the same period last year and it reported a loss of approximately HK$14.4 million compared to a profit of HK$15.8 million in the corresponding period last year. The result was mainly due to the ongoing Coronavirus situation and its adverse impact on cross border and international travel. The average occupancy rate was 26.6% compared with 91.4% for the corresponding period last year, and the average room rate was declined.

Electrical and Mechanical

Electrical and mechanical segment is principally engaged in the manufacture and sale of presses, mechanical and hydroelectric equipment as well as large scale pump units in the PRC.

For the six months ended 30 June 2020, revenue from electrical and mechanical segment was approximately HK$271.8 million, a decrease of 38.9% over the same period last year. Loss from electrical and mechanical segment was approximately HK$100 million compared to a loss of HK$97 million in the same period last year. The segment loss stemmed from lower revenue due to the slowdown in the sector as a result of the outbreak of Coronavirus during the period under review.

Tianjin Development Holdings Limited Interim Report 2020 43

Management Discussion and Analysis

BUSINESS REVIEW (continued)

Electrical and Mechanical (continued)

During the period under review, the management determined that the Group would not have continuing involvement in the electrical and mechanical business and resolved to dispose of the Group's entire interest in Tianjin Tianfa Heavy Machinery & Hydro Power Equipment Manufacture Co., Ltd. (天津市天發重型水電設備製造有限公司) ("Tianfa Equipment") and Tianjin Tianduan Press Co., Ltd. (天津市天鍛壓力機有限公司) ("Tianduan") by way of public listing-for-sale process on the Tianjin Property Rights Exchange Centre (天津產權交易中心) in accordance with the relevant requirements governing the transfer of state-owned assets of enterprise in the PRC on 30 March 2020 and 12 June 2020, respectively ("Potential Disposals"). The assets and liabilities attributable to both Tianfa Equipment and Tianduan, which are expected to be sold within twelve months, have been classified as a disposal group held for sale and are presented separately in the condensed consolidated statement of financial position.

Up to the date of this report, the Group has not entered into any formal agreements regarding the Potential Disposals. Details of the Potential Disposals were disclosed in the Company's announcements dated 27 March 2020 and 11 June 2020, respectively.

Strategic and Other Investments

Port Services

During the period under review, the revenue of Tianjin Port Development Holdings Limited ("Tianjin Port") (stock code: 3382) decreased by 10.8% to approximately HK$6,323.4 million and profit attributable to owners of Tianjin Port was approximately HK$219.8 million, compared with HK$273.3 million in the same period last year.

Tianjin Port contributed to the Group a profit of approximately HK$46.2 million, representing a decline of 26.5% over the corresponding period last year.

Elevators and Escalators

During the period under review, the revenue of Otis Elevator (China) Investment Company Limited ("Otis China") amounted to approximately HK$9,564.5 million, representing an increase of 1.4% over the corresponding period last year.

Otis China contributed to the Group a profit (after non-controlling interests) of approximately HK$138.8 million, representing a decrease of 9% over the same period in 2019.

44	Tianjin Development Holdings Limited Interim Report 2020

Management Discussion and Analysis

BUSINESS REVIEW (continued)

Strategic and Other Investments (continued)

Investment in Binhai Investment Company Limited

During the period under review, the Group had 4.07% interest in Binhai Investment Company Limited ("Binhai Investment") (stock code: 2886). As at 30 June 2020, the market value of the Group's interest in Binhai Investment was approximately HK$63.4 million (31 December 2019: approximately HK$80.4 million) and the unrealised fair value loss of approximately HK$17.1 million was recognised in other comprehensive income.

Investment in Tasly Holding Group Co., Ltd.

During the period under review, the Group had 12.15% equity interest in Tasly Holding Group Co., Ltd. (天士力控股集團有限公司) ("Tasly Holding"), a non-core passive investment in relation to the Group's pharmaceutical segment which was acquired indirectly from the controlling shareholder in 2015 by using merger accounting and is now held by Tianjin Central Pharmaceutical Co., Ltd. (天津市中央藥業有限公司), a wholly-owned subsidiary of Tianjin Lisheng Pharmaceutical Co., Ltd. (天津力生製藥股份有限公司). Tasly Holding is a conglomerate established under the laws of the PRC on 30 March 2000 and its principal asset includes the holding of 683,481,524 A shares in Tasly Pharmaceutical Group Co., Ltd. (天士力醫藥集團股份有限公司) ("Tasly Pharmaceutical"), representing approximately 45.18% of its total issued A shares. Tasly Pharmaceutical is principally engaged in the research and development, manufacturing and distribution of pharmaceutical products in the PRC.

At the date of initial application of the Hong Kong Financial Reporting Standard 9 - Financial Instruments on 1 January 2018, the carrying amount of investment in Tasly Holding was HK$191.5 million and was reclassified from available-for-sale financial assets to equity instruments at fair value through other comprehensive income. As at 30 June 2020, the fair value of investment in Tasly Holding was approximately HK$1,495.2 million (31 December 2019: HK$1,473.4 million), accounting for approximately 6.7% of the Group's total assets, and on that date the fair value gain of approximately HK$49.7 million has been recognised in other comprehensive income. During the period under review, the Group did not received dividend income from Tasly Holding for the year ended 31 December 2019 (2019: HK$13.8 million). The holding of 12.15% equity interest in Tasly Holding is not held for trading and not expected to be sold in the foreseeable future.

Tianjin Development Holdings Limited Interim Report 2020 45

Management Discussion and Analysis

PROSPECT

The ongoing global spread of novel coronavirus has led to an unprecedented contraction in global economic activities. The global economy is experiencing a profound adjustment and sluggish recovery. The external environment continues to face numerous heightened uncertainties. China's epidemic prevention and control measures have achieved positive results. As the internal and external economic conditions remain complicated and unpredictable, China's economic development will face significant challenges in the short term. However, with the gradual implementation of various economic measures, it will help China achieve steady progress towards economic recovery.

The Company will continue to pursue a strategy of stable growth. While solidifying its existing businesses and strengthening financial position, the Company will dedicate to internal reorganisation. Meanwhile, the Company will also actively involve in the reform and promotion of a new era of high-quality development in Tianjin City so as to seize the new development opportunities ahead and lay a solid foundation for its steady and sustainable development.

LIQUIDITY, CAPITAL RESOURCES AND PRINCIPAL RISK

As at 30 June 2020, the Group's total cash on hand and total bank borrowings, including both continuing and discontinued operations, stood at approximately HK$5,997.8 million and approximately HK$2,261.6 million respectively (31 December 2019: approximately HK$5,684.9 million and HK$2,356.6 million respectively).

The Group's sources of funding comprise cash flow generated from operations and loan facilities. The bank borrowings, including both continuing and discontinued operations, of HK$274.9 million (31 December 2019: approximately HK$371.2 million) will mature within one year.

The gearing ratio as measured by total borrowings to shareholders' funds was at approximately 20.1% as at 30 June 2020 (31 December 2019: approximately 20.7%).

Of total HK$2,261.6 million bank borrowings outstanding as at 30 June 2020, HK$1,986.7 million were subject to floating rates with a spread of 1.6% over HIBOR of relevant interest periods and RMB251 million (equivalent to approximately HK$274.9 million) were fixed-rate debts with annual interest rates at 4.35% to 5.66%.

As at 30 June 2020, 87.8% (31 December 2019: 84.2%) of the Group's total bank borrowings

was denominated in Hong Kong dollar, 12.2% (31 December 2019: 15.8%) was denominated in Renminbi.

46	Tianjin Development Holdings Limited Interim Report 2020

Management Discussion and Analysis

LIQUIDITY, CAPITAL RESOURCES AND PRINCIPAL RISK (continued)

The Group's activities expose it to a variety of financial risks. The major financial assets and financial liabilities of the Group include cash and cash equivalents, entrusted deposits, other financial assets and bank borrowings. The Group's financial risk management is aimed at mitigating the impact of fluctuations in interest rates and exchange rates on the Group's overall financial position and to minimise the Group's interest rate, foreign currency and credit risk exposures. The Group regularly reviews its liquidity and financing requirements to ensure that sufficient financial resources are maintained to cover the funding needs.

During the period under review, the Group has not entered into any derivative contracts or hedging transactions. The Group manages its foreign currency risk by closely reviewing the movement of the foreign currency rate and shall consider hedging foreign currency exposure should the need arise.

EMPLOYEES AND REMUNERATION POLICIES

During the period under review, the Group had a total of approximately 3,630 employees of which approximately 382 were management personnel and 1,240 were technical staff, with the balance being production workers.

The Group contributes to the employee pension scheme established by the PRC Government which undertakes to assume the retirement benefit obligations of all existing and future retired employees of the Group in the PRC. The Group also contributes to the mandatory provident fund scheme for its Hong Kong employees. The contributions are based on a fixed percentage of the members' salaries.

CHARGE ON ASSETS

As at 30 June 2020, restricted bank balances, land use rights and buildings of HK$216.2 million, HK$63.9 million and HK$161.8 million were respectively pledged to financial institutions by the Group to secure general banking facilities.

Tianjin Development Holdings Limited Interim Report 2020 47

Other Information

DIRECTORS' INTERESTS

As at 30 June 2020, none of the directors or chief executive of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register required to be kept under section 352 of the SFO; or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for the Securities Transactions by Directors of Listed Issuers (the "Model Code").

DIRECTORS' RIGHT TO ACQUIRE SHARES OR DEBENTURES

At no time during the period ended 30 June 2020 was the Company or any of its subsidiaries a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

SUBSTANTIAL SHAREHOLDERS' INTERESTS

As at 30 June 2020, the following persons or corporations, other than the directors or chief executive of the Company, had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO:

				Approximate
				percentage
			Number of	of total
Name of shareholder	notes	Capacity	shares held	issued shares
Tianjin Tsinlien Investment Holdings Co., Ltd.	1&2	Interest of controlled corporation	673,759,143	62.81%
(天津津聯投資控股有限公司)
("Tsinlien Investment Holdings")
Tianjin Bohai State-owned Assets	1&2	Interest of controlled corporation	673,759,143	62.81%
Management Co., Ltd. (天津渤海國有資產
經營管理有限公司) ("Bohai")
Tsinlien Group Company Limited	1&3	Direct beneficial interest and	673,759,143	62.81%
(津聯集團有限公司) ("Tsinlien")		interest of controlled corporation

48	Tianjin Development Holdings Limited Interim Report 2020

Other Information

SUBSTANTIAL SHAREHOLDERS' INTERESTS (continued)

notes:

1. All interests stated above represent long positions.
2. Tsinlien is a direct wholly-owned subsidiary of Bohai and an indirect wholly-owned subsidiary of Tsinlien Investment Holdings. By virtue of the SFO, Tsinlien Investment Holdings and Bohai are deemed to be interested in the same parcel of shares of the Company in which Tsinlien is interested.
3. As at 30 June 2020, Tsinlien directly held 22,960,000 shares of the Company and its wholly-owned subsidiaries, namely Tianjin Investment Holdings Limited, Tsinlien Venture Capital Company Limited and Tsinlien Investment Limited held 568,017,143 shares, 2,022,000 shares and 80,760,000 shares of the Company respectively. By virtue of the SFO, Tsinlien is deemed to have an interest in the shares of the Company in which Tianjin Investment Holdings Limited, Tsinlien Venture Capital Company Limited and Tsinlien Investment Limited are interested.

Save as disclosed above, as at 30 June 2020, the Company had not been notified by any person or corporation, other than the directors or chief executive of the Company, who had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO.

CORPORATE GOVERNANCE

The Company has complied with the code provisions as set out in the Corporate Governance Code contained in Appendix 14 of the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") throughout the six months ended 30 June 2020.

The Board will continue to monitor and review the Company's corporate governance practices and procedures and make necessary changes when it considers appropriate.

COMPLIANCE WITH THE MODEL CODE

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules as its own code of conduct for directors' securities transactions. Having made specific enquiry, all the directors have confirmed that they have complied with the required standard as set out in the Model Code throughout the six months ended 30 June 2020.

The Company has also established written guidelines regarding securities transaction on terms no less exacting than the Model Code for senior management and specific individuals who may have access to price sensitive information in relation to the securities of the Company.

Tianjin Development Holdings Limited Interim Report 2020 49

Other Information

CHANGES IN DIRECTORS' INFORMATION

Pursuant to Rule 13.51B of the Listing Rules, changes in the information of directors of the Company subsequent to the date of the 2019 annual report of the Company are as follows:

1. Dr. Chan Ching Har, Eliza has resigned as non-executive director and ceased to be a member of the investment committee of the Company with effect from 15 April 2020 and the Company has retained her as senior advisor.
2. Mr. Wong Shiu Hoi, Peter has been appointed as a member of the investment committee of the Company with effect from 15 April 2020.
3. Dr. Loke Yu has resigned as independent non-executive director of Tianhe Chemical Group Limited (Stock Code: 1619) with effect from 31 May 2020.

REVIEW BY AUDIT COMMITTEE

At the request of the Audit Committee of the Company, the Group's independent auditor has carried out a review of the unaudited condensed consolidated financial statements 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 HKICPA. The Audit Committee had reviewed the accounting principles and practices adopted by the Group and discussed with the management the effectiveness of the Company's risk management and internal control systems, auditing and financial reporting matters including the review of unaudited condensed consolidated financial statements for the six months ended 30 June 2020.

The Audit Committee is chaired by Ms. Ng Yi Kum, Estella and includes four other members, Dr. Cheng Hon Kwan, Mr. Mak Kwai Wing, Alexander, Mr. Wong Shiu Hoi, Peter and Dr. Loke Yu.

50	Tianjin Development Holdings Limited Interim Report 2020

Other Information

DISCLOSURE PURSUANT TO RULE 13.18 OF THE LISTING RULES

On 3 December 2019, the Company entered into a facility agreement (the "Facility Agreement") with a syndicate of banks as lenders (the "Lenders") in respect of a HK$2,000 million term loan facility for a period of 36 months commencing from the date of utilisation.

Pursuant to the Facility Agreement, it will be an event of default, inter alia, if: (i) the State- owned Assets Supervision and Administration Commission of the Tianjin Municipal People's Government ceases to maintain a majority shareholding ownership directly or indirectly in the Company of more than 50%, or (ii) the Company ceases to be under the direct or indirect management control of Tsinlien.

If any of the abovementioned events of default occurs, the Lenders may by notice to the Company: (a) cancel the total commitments or any part thereof; (b) declare that the loan or any part relevant thereof together with accrued interest, and all other amounts accrued or outstanding be immediately due and payable; and/or (c) declare that the loan or any relevant part thereof be payable on demand.

INTERIM DIVIDEND

The Board has declared an interim dividend of HK3.00 cents per share for the six months ended 30 June 2020 (30 June 2019: HK3.26 cents per share) to the shareholders whose names appear on the Company's register of members on 30 September 2020. The interim dividend will be paid on 30 October 2020.

CLOSURE OF REGISTER OF MEMBERS

The register of members of the Company will be closed from 28 September 2020 (Monday) to 30 September 2020 (Wednesday), both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the interim dividend, all completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's share registrar, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong, not later than 4:30 p.m. on 25 September 2020 (Friday).

Tianjin Development Holdings Limited Interim Report 2020 51

Other Information

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 June 2020.

By Order of the Board

Wang Zhiyong

Chairman and Executive Director

Hong Kong, 28 August 2020

52	Tianjin Development Holdings Limited Interim Report 2020

Report on Review of Condensed Consolidated Financial Statements

TO THE BOARD OF DIRECTORS OF

TIANJIN DEVELOPMENT HOLDINGS LIMITED 天津發展控股有限公司

(incorporated in Hong Kong with limited liability)

INTRODUCTION

We have reviewed the condensed consolidated financial statements of Tianjin Development Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 5 to 40, which comprise the condensed consolidated statement of financial position as of 30 June 2020 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 "HKICPA"). 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.

SCOPE OF REVIEW

We conducted our review 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 HKICPA. A review of these condensed consolidated financial statements consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Tianjin Development Holdings Limited Interim Report 2020 53

Report on Review of Condensed Consolidated Financial Statements

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

28 August 2020

54	Tianjin Development Holdings Limited Interim Report 2020