SHANGHAI INDUSTRIAL

563
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Shanghai Industrial Urban Development : INTERIM REPORT 2020

09/10/2020 | 04:45am

Perfection through

SUPERIOR CRAFTSMANSHIP

and REFINEMENT

Shanghai Industrial Urban Development Group Limited ("SIUD") currently has 26 real estate projects in 11 major cities in China, mainly located at Shanghai, Kunshan, Wuxi, Beijing, Shenyang, Tianjin, Xi'an, Chongqing, Changsha, Yantai and Shenzhen. Most of the projects are mid- to high-end residential projects which are under construction at full steam, presenting the Group with approximately 3.71 million square meters saleable floor areas and building a marvelous foundation for our long term development.

CONTENTS

  1. Corporate Information
  2. Financial Highlights
  3. Chairman's Statement

6 Management Discussion and Analysis

12 Details of Properties

14 Key Projects Introduction

23 Other Information

  1. Report on Review of Condensed Consolidated Financial Statements
  2. Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

32 Condensed Consolidated Statement of Financial Position

34 Condensed Consolidated Statement of Changes in Equity

36 Condensed Consolidated Statement of Cash Flows

38 Notes to the Condensed Consolidated Financial Statements

2 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CORPORATE INFORMATION

BOARD OF DIRECTORS

HONG KONG BRANCH SHARE

Executive Directors

REGISTRAR AND TRANSFER OFFICE

Huang Haiping (Chairman)

Tricor Secretaries Limited

Zhou Xiong (Vice Chairman and President)

Level 54, Hopewell Centre,

Lou Jun

183 Queen's Road East,

Ye Weiqi

Hong Kong.

Zhong Tao

REGISTERED OFFICE

Independent Non-Executive Directors

Clarendon House,

Doo Wai-Hoi, William, J.P.

2 Church Street,

Fan Ren Da, Anthony

Hamilton, HM11,

Li Ka Fai, David

Bermuda.

Qiao Zhigang

PRINCIPAL PLACE OF BUSINESS IN

AUTHORIZED REPRESENTATIVES

HONG KONG

Huang Haiping

11/F, Henley Building,

Chan Kin Chu, Harry

No. 5 Queen's Road Central, Hong Kong

BOARD COMMITTEES

Telephone: (852) 2544 8000

Facsimile: (852) 2544 8004

Audit Committee

WEBSITE

Li Ka Fai, David (Committee Chairman)

Doo Wai-Hoi, William, J.P.

http://www.siud.com

Fan Ren Da, Anthony

PRINCIPAL BANKERS

Remuneration Committee

Agricultural Bank of China Limited

Doo Wai-Hoi, William, J.P. (Committee Chairman)

China Construction Bank Corporation

Fan Ren Da, Anthony

China Everbright Bank

Ye Weiqi

Shanghai Pudong Development Bank Company Limited

Nomination Committee

Bank of China Limited

AUDITOR

Huang Haiping (Committee Chairman)

Doo Wai-Hoi, William, J.P.

Deloitte Touche Tohmatsu

Fan Ren Da, Anthony

Registered Public Interest Entity Auditors

Investment Appraisal Committee

35/F., One Pacific Place,

88 Queensway, Hong Kong.

Fan Ren Da, Anthony (Committee Chairman)

LISTING INFORMATION

Zhou Xiong

Zhong Tao

The Stock Exchange of Hong Kong Limited

Qiao Zhigang

Ordinary Shares

COMPANY SECRETARY

(Stock Code: 563)

Chan Kin Chu, Harry

PRINCIPAL SHARE REGISTRAR AND

TRANSFER OFFICE

Conyers Corporate Services (Bermuda) Limited

Clarendon House,

2 Church Street,

Hamilton, HM11,

Bermuda.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

3

FINANCIAL HIGHLIGHTS

For the six

For the six

months ended

months ended

30 June 2020

30 June 2019

Financial Highlights (HK$'000)

Revenue

3,172,823

4,603,326

Profit attributable to equity owners of the Company

151,041

310,678

Financial Information per share (HK cent)

Earnings per share

- Basic

3.14

6.46

- Diluted

3.14

6.46

As at

As at

30 June

31 December

2020

2019

Pre-sale proceeds received on sales of properties (HK$'000)

6,297,051

6,004,601

Financial Ratios

Net debt to total equity (%)

42.5%

29.1%

Current ratio

1.8

1.9

Note: Net debt = total borrowings (including bank borrowings, other borrowings and bonds) less cash and cash equivalents and pledged bank deposits.

ANALYSIS ON PRESALE PROCEEDS RECEIVED ON SALES OF PROPERTIES

DEBT MATURITY PROFILE

HK$ million

2,500

2,000 1,817

1,500

1,000

500

HK$ million

8,691

939

5,411

2,936

0

Shangtou

West

Contemporary

Shangtou

Urban

Originally

Others

Baoxu

Diaoyutai

Splendour Villa

Xinhong

Cradle

Emperor

Seal

30.1%

Less than one year

16.3%

From the first year to the second year

48.4%

From the second year to the fifth year

5.2%

Beyond the fifth year

4 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CHAIRMAN'S STATEMENT

During the first half of 2020, the global pandemic of the novel coronavirus ("COVID-19") brought widespread enormous economic losses with economic depression prevailing in a number of countries and regions, which also affected the economic growth of the PRC. The gross domestic product (GDP) of the PRC shrank 6.8% year-on-year. In response to the slowdown, the central government rolled out a series of policies to stimulate consumption and drive domestic demand. Such measures contributed to the robust economic recovery in the second quarter, which was out of market expectations. During the first half, the PRC's GDP dropped slightly by 1.6% year-on-year to RMB45.6614 trillion based on comparable prices. With the primary goal of consolidating industrial development, the central government continued to strengthen its control of the property sector by upholding the position that "houses are built to be inhabited, not for speculation" and following a "non-stimulating" principle with an aim of "stabilising land premium, property prices and market expectations". The government carried out the "One Policy for One City" and "City-based Policy" in order to maintain a sufficient and stable supply in tough economic conditions and implement a long-standing market mechanism. As for the regional market, first- and second-tier key cities rebound gradually with relatively steady housing prices, while third- and fourth-tier cities were under the pressure of mild adjustments. During the period under review, in face of the challenging environment, the Group posted an overall revenue of HK$3.173 billion and contract sales of RMB3.706 billion. The Group realised after tax profit of HK$355 million. The profit attributable to owners of the Company was HK$151 million with a higher than industry-average gross profit margin of 45.1%, which demonstrated the higher profitability of the Group.

As a China-first operator in key urban areas with a sound foothold in Shanghai, SIUD developed its operations in core cities across the country and kept expanding its own operations with a focus on innovating and transforming urban lifestyle and facilitating comprehensive urban development. The Group continued to enhance city-industry integration by developing the residential leasing and commercial property operations with a view to quickening its steps in industrial upgrading and fully covering the demand for quality housing and commercial development of mainstream urban dwellers. In response to the pressure brought by the outbreak on the general market, the Group adopted a versatile approach in various cities, such as Shanghai, by providing "online property viewing" service as part of its online sales practices, which received favourable responses from the market. High-end flagship projects, including Contemporary Splendour Villa in Shanghai, West Diaoyutai in Beijing, Urban Cradle in Shanghai, Contemporary Art Villa in Shanghai and Originally in Xi'an, continued to contribute impressive contract sales for the Group.

During the epidemic peak, SIUD supported its tenants to overcome the hardship by taking the initiative to offer a rental waiver. Moreover, the Group also stepped up efforts to develop and upgrade the commercial projects in prime sites. In particular, the completion of certain office buildings under Binjiang U Center in Shanghai during the period has added approximately 26,000 sq.m. of commercial area to the investment property portfolio of SIUD and will drive the rental revenue of the Group in the future.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

5

CHAIRMAN'S STATEMENT

SIUD sought to refine its land bank through different channels, including participation in bidding, auction and listing-for-sale, acquisition, urban renewal and redevelopment, in order to identify quality land resources in Shanghai and other key cities. During the period, the Group successfully bid for the land plot (no. xh221-01) situated at Hong Mei Block, Xuhui District, Shanghai together with Shanghai Aerospace and Hongyi Group at a total price of RMB4,628,000,000. The land had a total site area of 91,100 sq.m. with 260,000 sq.m., 90,000 sq.m. and 60,000 sq.m. being planned to be developed for scientific research, residential leasing and below-ground commercial purposes, respectively. This initiative was consistent with the Group's development strategy of achieving progress steadily and actively exploring diversified operations.

In the first half of 2020, despite numerous hardships and challenges, the Group managed to outcompete its industry peers with its extensive development experience in the industry and sound development model. SIUD secured the 18th place in the Top 100 Commercial Property Developers in China for 2020, while its U Plaza project, U Time and Binjiang U Center in Shanghai received the awards of "Top 10 Outstanding Commercial Property Product Lines", "Top

10 Model Long-term Rental Apartments" and "Top 10 Popular New Commercial Landmarks", respectively. These awards proved that the remarkable performance of SIUD in building for the cities, servicing the clients and improving the living standard of residents had won the appreciation and recognition of the industry and clientele as a whole.

Looking ahead, as the epidemic curve is flattening in the PRC, SIUD will play an active role in driving sales and persist in the brand positioning of value creation so as to realise the mission of "people orientation, honesty and integrity, market inclusion, value creation, win-win cooperation and community contribution". SIUD will adopt a pragmatic yet aggressive approach in assessing the situations, exploring different development models and catering to customer needs, in the hope of becoming an outstanding national brand and a high-quality property operator and maximising the value and returns for its shareholders and clients.

Finally, for the progress and achievements gained by the Group over the years, we must thank all our shareholders, customers and business partners for their unfading support and all staff members for their contribution and dedication. On behalf of the Board, I would like to express my sincere gratitude to all of them. With concerted efforts, I am confident that we can rise to the challenges ahead and achieve steady progress in the future.

Huang Haiping

Chairman

27 August 2020

Note:

The gross domestic product and growth rate data of China for the first half of 2020 is gathered from the information published by the National Bureau of Statistics on 17 July 2020.

6 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

PROPERTY MARKET REVIEW

Looking back to the first half of 2020, the aftershock of COVID-19 still lingered subsequent to the first quarter. Amidst the global economic slowdown, suppressed domestic property market and further polarised regional development, the growth trend slightly slackened on the whole. On the policy side, the central government persisted in the guiding principle that "houses are built to be inhabited, not for speculation" while repeatedly reiterating the idea of "not resorting to real estates as a short-term economic stimulus measure". Local authorities implemented city-based policies tailored to specific circumstances by relaxing certain policies on an appropriate scale to stabilise the property market and proposing favourable measures, including allowing developers to postpone the delivery of properties and land premium payment and to launch the pre-sale process in advance, as well as granting tax and fee remission. The government spared no effort in conducting the supply-side reform while strengthening its support to the market in view of the COVID-19 situation. On the supply side, the restrictions on purchase, loans and sale were relaxed on an appropriate scale. On the demand side, the supporting measures included adjusting and increasing the withdrawal amount of housing provident fund and lowering the threshold for home purchases. With the joint efforts of the central and local governments in stabilising the economy, the property market in first- and second-tier cities picked up quickly in the second quarter, demonstrating its strong resilience.

BUSINESS REVIEW

Overview

In the first half of 2020, in face of the outbreak of COVID-19, SIUD adopted a versatile approach by providing online property viewing and online sale services, etc. The outstanding sales performance of flagship projects, including Contemporary Splendour Villa in Shanghai, West Diaoyutai in Beijing and Urban Cradle in Shanghai, continued to bring in loads of stable revenue for the Group. During the period, as an operator in key urban areas, the Group remained focused on the metropolitan areas in Shanghai as well as other core first- and second-tier cities and kept capitalizing on its core development projects and strategic advantages in first- and second-tier cities. It also facilitated the co-development of a diversified business portfolio by focusing on four core business segments, namely, "residential property development + investment property development services + capital cooperation between industry and finance". During the period, SIUD paid continuous effort to refine the investment and operation of commercial assets in core urban areas and adhered to the policy of dual focus on leasing and sale in order to see stable increase in the rental income from its residential leasing operation. SIUD played an active role in facilitating the transformation and industrial upgrading of the Group and strove to diversify its operations in a sound manner with a view to fully covering the demand for quality housing of mainstream urban dwellers.

Contract Sales

During the six months ended 30 June 2020, benefited from the strong sales performance of Contemporary Splendour Villa, a newly launched high-end project in Shanghai, the contract sales from commodity housing of the Group increased 8.5% year-on-year to RMB3,706,390,000 (six months ended 30 June 2019: RMB3,414,670,000).

Total contract sales in terms of G.F.A. were 64,000 sq.m. during the period, down 35.4% year-on-year. The average selling price rose 67.8% to approximately RMB57,900 per sq.m. The Group took advantage of the market window to develop its WeChat mini programme, "U LIFE", as its online property sale office and quickened its pace in sales launches. Key projects such as Contemporary Splendour Villa in Shanghai, West Diaoyutai in Beijing, Urban Cradle and Contemporary Art Villa in Shanghai and Originally in Xi'an performed well in sales and became impressive principal sources of revenue of the Group, which delivered sales of RMB1,501,640,000, RMB1,024,060,000, RMB471,580,000, RMB316,280,000 and RMB303,100,000 respectively, accounting for approximately 40.5%, 27.6%, 12.7%, 8.5% and 8.2% of the total contract sales respectively.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

7

MANAGEMENT DISCUSSION AND ANALYSIS

Property Development

During the six months ended 30 June 2020, the Group had 11 projects with a total G.F.A. of 2,767,000 sq.m. under construction, which primarily included TODTOWN, Binjiang U Center in Shanghai, Originally in Xi'an and Shangtou Baoxu in Shanghai. During the period, the Group delivered a total G.F.A of approximately 110,300 sq.m., which mainly came from Urban Cradle in Shanghai, Originally in Xi'an and Contemporary Art Villa in Shanghai.

Many of the Group's residential projects rolled out new housing units for sale, and the transaction volume and prices both went up. Not only did Contemporary Splendour Villa, a high-endlow-density villa project located in Minhang District, Shanghai, serve as an important driver for the development of SIUD in Shanghai, it also represented another milestone of SIUD's dual-focus strategy of developing residential as well as commercial properties. During the period, by virtue of its high reputation for quality, Contemporary Splendour Villa was well received by the market and sold out soon after being launched in January. Besides, Courtyard Villa, a classic project under this project, also ranked first in terms of total transaction volume among all the villa projects in Shanghai from January to May 2020. During the pre-sale of Emperor Seal (phase 3 of the West Diaoyutai project in Beijing) in the first half of 2020, its pre-sale price reached record high among all pre-sale properties in Beijing since 2016. This project brought steady sales and cashflows for the Group.

Investment Properties

As at 30 June 2020, the Group had several completed commercial projects in seven major developed cities, including Shanghai, Beijing, Tianjin, Chongqing, Shenyang, Kunshan and Shenzhen. The investment projects held by the Group had a total G.F.A. of approximately 816,000 sq.m. During the period, the overall rental income of the Group decreased 22.9% year-on-year to HK$290,288,000 (as at 30 June 2019: HK$376,670,000), which was mainly attributable to the drop in rental income during the period due to the rent remission policy adopted by local governments to remit rent of tenants for two to four months in response to the impact of COVID-19 during the first quarter. The completion of one of the land parcels under Binjiang U Center in Shanghai during the period brought approximately 26,000 sq.m. to the investment property portfolio of SIUD and the business solicitation and operation of its commercial and office areas progressed robustly. The project will drive the rental income of the Group in the future. The commercial asset efficiency of the Group went up steadily. More than one million sq.m. of commercial areas are expected to be completed in the next three to five years.

Besides, under the policy of dual focus on leasing and sale, the Group continued to enhance its residential leasing operation. The Group currently has three residential leasing projects on hand, namely Shanghai Shenzhicheng, Jinxiang and Chenglong, representing a total area of approximately 295,000 sq.m.. In the future, the Group will further develop more diversified strategic cooperation initiatives and expand its commercial property portfolio.

8 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

Revenue

During the six months ended 30 June 2020, the Group's revenue decreased by 31.1% year-on-year to HK$3,172,823,000 (six months ended 30 June 2019: HK$4,603,326,000), primarily due to the inability of the Group in settling the sales of certain properties during the period because of the impact of the outbreak of COVID-19 pandemic as implementation of quarantine and social distancing measures in the mainland China resulted in limitation on contract sales and delay in property delivery, coupled with a decrease in revenue from leasing. During the period, property sales remained as the Group's main source of revenue and amounted to HK$2,829,760,000 (six months ended 30 June 2019: HK$4,085,037,000), accounting for 89.2% (six months ended 30 June 2019: 88.7%) of the Group's total revenue. The revenue contribution from Urban Cradle in Shanghai, Originally in Xi'an and Contemporary Art Villa in Shanghai accounted for 47.9%, 33.3% and 16.1% of property sales, respectively.

Due to the impact of the COVID-19 outbreak, the Group's revenue from leasing, property management and services, and hotel operations recorded a decline. These three operations contributed a revenue of HK$290,288,000, HK$2,515,000 and HK$50,260,000 (six months ended 30 June 2019: HK$376,670,000, HK$3,377,000 and HK$138,242,000) respectively and accounted for 9.1%, 0.1% and 1.6% (six months ended 30 June 2019: 8.2%, 0.1% and 3.0%) of the total revenue, respectively.

Gross Profit and Gross Profit Margin

For the six months ended 30 June 2020, the Group's gross profit amounted to HK$1,432,178,000, down by 27.0% as compared to that of the same period in 2019. The gross profit margin rose 2.5 percentage points from 42.6% for the same period last year to 45.1%. The decrease in gross profit was mainly due to the decline in sales revenue under the impact of COVID-19 during the period. But since the sales came from high-margin projects in Shanghai, such as Urban Cradle and Contemporary Art Villa, the gross profit margin went up slightly.

Investment Property Revaluation

For the six months ended 30 June 2020, the Group recorded a net gain on revaluation of investment properties of approximately HK$173,682,000, which was mainly attributable to the revaluation gains arising from the transfer of certain properties held-for-sale under Binjiang U Center to investment properties.

Distribution and Selling Expenses

For the six months ended 30 June 2020, the Group's distribution and selling expenses decreased by 28.4% year-on-year to HK$99,200,000 (six months ended 30 June 2019: HK$138,506,000), which was mainly attributable to the drop in property sales and decrease in marketing expenses caused by the development of online property sales during the period.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

9

MANAGEMENT DISCUSSION AND ANALYSIS

General and Administrative Expenses

For the six months ended 30 June 2020, the Group's general and administrative expenses increased by 12.5% year-on-year to HK$187,727,000 (six months ended 30 June 2019: HK$166,938,000), which was mainly attributable to the increase in expenses related to the increase in new investment property projects during the period.

Other Expenses, Gains and Losses, Net

For the six months ended 30 June 2020, the Group recorded a net loss of approximately HK$10,937,000 in other expenses, gains and losses (six months ended 30 June 2019: net gain of HK$2,218,000), which was mainly due to the change in exchange rates of Renminbi during the period.

Profit

During the six months ended 30 June 2020, the Group's profit decreased year-on-year by 53.6% to HK$355,072,000 (six months ended 30 June 2019: HK$765,162,000). During the first half of the year, profit attributable to owners of the Company was approximately HK$151,041,000 (six months ended 30 June 2019: HK$310,678,000), and the basic and diluted earnings per share amounted to 3.14 HK cents (six months ended 30 June 2019: basic and diluted earnings per share of 6.46 HK cents).

Liquidity and Capital Resources

The Group manages its capital to ensure that entities within the Group will be able to operate on a going concern while maximising the return to shareholders through optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from prior year.

The capital structure of the Group consists of net debt, which includes bank and other borrowings, cash and cash equivalents, and equity attributable to owners of the Company (comprising issued share capital and reserves).

In mid-June 2020, a non-wholly owned subsidiary of SIUD, Shanghai Urban Development (Holdings) Co., Ltd., was permitted by the China Securities Regulatory Commission to issue corporate bonds amounting to not more than RMB1.7 billion. In June 2020, Shanghai Urban Development (Holdings) Co., Ltd. completed the public issuance of the corporate bonds (phase 1) with a term of three years at a coupon rate of 3.49%. The issuance successfully raised RMB550 million, which was intended to be used for the repayment of corporate bonds.

As at 30 June 2020, bank balances and cash of the Group were HK$7,740,449,000 (31 December 2019: HK$9,111,782,000). The net debt to total equity of the Group (net debt (total bank and other borrowings less bank balances and cash and restricted and pledged bank deposits) to total equity) increased from 29.1% as at the end of last year to 42.5% as at the period end. Current ratio dropped slightly to 1.8 times (31 December 2019: 1.9 times).

As at 30 June 2020, the total borrowings of the Group including bank borrowings, other borrowings and advanced bonds amounted to approximately HK$17,977,324,000 (31 December 2019: HK$16,712,302,000).

The Group maintained sufficient cash balance during the period. The management believes that the Group's financial resources and future revenue will be sufficient to support the current working capital requirements and future expansion of the Group.

10 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Foreign Exchange Risks

During the period, most of the Group's revenue and operating costs were denominated in Renminbi. Except for certain bank deposits and other borrowings denominated in foreign currencies, the Group's operating cash flow or liquidity is not directly subject to any other material exchange rate fluctuations. The Group did not enter into any foreign exchange hedging arrangements to control its exposure to exchange rate fluctuations as at 30 June 2020. However, the Group will adopt necessary measures whenever appropriate to minimise the impact arising from exchange rate fluctuations.

HUMAN RESOURCES AND REMUNERATION POLICIES

As at 30 June 2020, the Group employed 785 employees (including Hong Kong and PRC offices). The remuneration policies for the employees of the Group are determined according to the performance, qualification, experience and competence of the employees. The emoluments of the directors of the Company (the "Directors") are determined by the remuneration committee of the Company, having regard to the operating results of the Group, individual performance and comparable market statistics. Staff benefits include discretionary bonus payments which are linked to the profitability of the Group and individual performances and contributions to the Mandatory Provident Fund Schemes.

The Group had adopted a share option scheme as an incentive to the Directors and eligible employees. During the six months ended 30 June 2020, the Group provided training programs relating to work to employees. Activities aiming at building up team spirit were regularly organized for employees, so as to enhance the human capital of the Group and the sense of belonging of the staff.

LAND BANK

In the first half of 2020, SIUD continued with the expansion of its premium land bank. On 2 January 2020, SIUD successfully bid for the land plot (no. xh221-01) situated at Hong Mei Block, Xuhui District, Shanghai together with Shanghai Aerospace and Hongyi Group at a total price of RMB4,628,000,000. The land had a total site area of 91,100 sq.m. with 260,000 sq.m., 90,000 sq.m. and 60,000 sq.m. being planned to be developed for scientific research, residential leasing and below-ground commercial purposes, respectively. This move showed SIUD's persistence in the strategic development direction of joining forces to concentrate in the core areas in Shanghai and to prosper together with the city.

During the six months ended 30 June 2020, the Group's land bank was developed into 26 highly competitive property projects with great development potential located in 11 major cities in China, including Shanghai, Beijing, Tianjin, Xi'an, Chongqing, Kunshan, Wuxi, Shenyang, Yantai, Changsha and Shenzhen, and comprised medium to high class residential and commercial properties, most of which were under construction and development. The Group has a land bank with a future saleable planned G.F.A. of approximately 3,710,000 sq.m. to support its development plan for the next three to five years.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 11

MANAGEMENT DISCUSSION AND ANALYSIS

OUTLOOK

Looking ahead to the second half of 2020, the national economy is expected to further turn around as the situation of the pandemic in the PRC improves. Guided by the "six stabilities and six guarantees" promulgated by the National Committee of the Chinese People's Political Consultative Conference and National People's Congress, the property market will stay on the track of stable and orderly development. The financial environment for the property market will remain relatively relaxing, which will be beneficial to the investment and financing of property developers. The policy effort will remain unchanged and the central and local governments will stay focused on the regulation of the property financing sector and supply-side adjustments. As the polarisation of urban and regional developments intensifies, the investment focus will be moved further to the core areas in popular cities and the housing improvement demand is expected to be released at a quicker pace. Against this background, the Group will take advantage of the sales window period to actively promote sales and enhance turnover strategy in the second half, in a bid to fulfil its annual performance target.

Looking forward, the Group will maintain its steadily progressing development strategy and its competitive strengths in developing high-quality medium to high end residence while actively exploring different types of operations and innovating its development path. During the challenging market window period, the Group will gear itself up and gain insights into market trends with an aim of expanding into the investment and operation of property financing and commercial asset sectors, which will provide an impetus for the sustainable high quality growth of the Group in the future. By taking advantage of its years of development experience and its diversified product strategy adopted in recent years, SIUD will continue to create greater value and returns for the shareholders.

12 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

DETAILS OF PROPERTIES

The Group has 26 projects in 11 cities, comprising mid- to high-end residential units, serviced apartments, commercial and office buildings. As at 30 June 2020, the total GFA of the future saleable land bank of the Group was approximately 3.71 million sq.m.

The Group has restructured its projects and will adopt

prudent strategies in future land acquisition.

As at 30 June 2020

Saleable

1H2020

Future

Saleable

G.F.A. for

Planned

Saleable

pre-sold

Accumulated

saleable

G.F.A. under

future

Site area

G.F.A.

G.F.A.

G.F.A.

G.F.A. sold

G.F.A.

construction

development

Ownership

Project

City

(sq.m.)

(sq.m.)

(sq.m.)

(sq.m.)

(sq.m.)

(sq.m.)

(sq.m.)

(sq.m.)

Expected Completion Date

(%)

Urban Cradle

Shanghai

943,000

1,226,298

909,054

6,256

818,727

90,327

86,330

-

Complete by phase from 2007 to 2022

53.1%

Binjiang U Center

Shanghai

77,371

525,888

324,600

-

-

324,600

290,830

-

Complete by phase from 2020 to 2022

35.4%

Shanghai Youth City

Shanghai

57,944

212,130

164,688

-

139,840

24,848

-

-

Completed

100.0%

Shanghai Jing City

Shanghai

301,908

772,885

609,488

-

560,409

49,079

-

-

Completed

59.0%

TODTOWN

Shanghai

117,825

605,000

385,300

-

56,205

329,095

277,396

107,904

Complete by phase from 2020 to 2022

20.7%

Contemporary Art Villa

Shanghai

116,308

83,622

83,622

6,120

67,803

15,819

-

6,060

Complete by phase from 2018 to 2022

100.0%

(Jade Villa)

Contemporary Splendour

Shanghai

120,512

191,636

68,404

23,148

26,288

42,116

68,404

-

Complete by phase from 2020 to 2022

100.0%

Villa (Courtyard Villa)

Shangtou Xinhong

Shanghai

69,495

212,347

145,719

-

-

145,719

145,719

-

Complete by 2021

90.0%

Shangtou Baoxu

Shanghai

118,880

306,167

230,142

5,860

104,109

126,033

222,501

7,641

Complete by phase from 2020 to 2021

100.0%

Chenghang Project

Shanghai

20,572

60,195

60,195

-

-

60,195

60,195

-

Complete by 2021

80.0%

Jinxiang Project

Shanghai

17,161

48,050

48,050

-

-

48,050

48,050

-

Complete by 2022

59.0%

Shenzhicheng Project

Shanghai

47,435

128,075

128,075

-

-

128,075

128,075

-

Complete by 2022

29.5%

Chenglong Project

Shanghai

47,383

118,458

118,458

-

-

118,458

-

118,458

Complete by 2023

59.0%

American Rock

Beijing

121,499

523,833

454,610

-

454,610

-

-

-

Completed

100.0%

Youngman Point

Beijing

112,700

348,664

295,114

-

258,814

36,300

-

-

Complete by phase from 2007 to 2021

100.0%

West Diaoyutai • Emperor

Beijing

42,541

250,930

230,801

8,726

196,753

34,048

50,445

-

Complete by phase from 2007 to 2021

90.0%

Seal

Laochengxiang

Tianjin

244,252

752,883

613,357

-

582,478

30,879

-

-

Completed

100.0%

Yoooou.net

Kunshan

34,223

129,498

112,812

-

63,021

49,791

-

-

Completed

30.7%

Royal Villa

Kunshan

205,017

267,701

222,666

-

222,666

-

-

-

Completed

53.1%

Urban Development Int'l

Wuxi

24,041

193,368

143,862

-

41,900

101,962

-

-

Completed

59.0%

Center

Originally

Xi'an

2,101,967

3,899,867

3,202,324

13,639

2,456,442

745,882

232,420

381,520

Complete by phase from 2008 to 2022

71.5%

Shenyang U Center

Shenyang

22,651

228,768

176,315

-

71,660

104,655

-

-

Completed

80.0%

Top City

Chongqing

120,014

786,233

616,122

-

376,095

240,027

-

-

Completed

100.0%

Forest Sea

Changsha

679,620

1,032,534

1,016,765

119

305,008

711,757

-

704,553

Complete by phase from 2007 to 2025

67.0%

China Phoenix Tower

Shenzhen

11,038

106,190

79,391

-

78,343

1,048

-

-

Completed

91.0%

Yantai Project

Yantai

77,681

159,100

154,300

-

-

154,300

-

154,300

Complete between 2022 and 2023

100.0%

Total

5,853,038

13,170,320

10,594,234

63,868

6,881,171

3,713,063

1,610,365

1,480,436

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 13

DETAILS OF PROPERTIES

MAJOR INVESTMENT PROPERTIES

Project

City

Property Category

Lease Term

Planned G.F.A.

(sq.m.)

Shanghai Youth City

Shanghai

Commercial

Medium-term lease

16,349

1

ShanghaiMart2

Shanghai

Exhibition, transaction market,

Medium-term lease

284,651

office building and parking lot

Urban Development Int'l Tower3

Shanghai

Office building

Medium-term lease

45,239

YOYO Tower4

Shanghai

Commercial

Medium-term lease

13,839

Plot No. 1 of Binjiang U Center

Shanghai

Office building

Medium-term lease

25,845

1

Top City

Chongqing

Commercial, office building and

Medium-term lease

285,264

1

parking lot

China Phoenix Tower

Shenzhen

Office building

Medium-term lease

1,048

1

Youngman Point

Beijing

Commercial

Medium-term lease

19,7681

Shenyang U Center

Shenyang

Commercial and office building

Medium-term lease

30,3321

Others

Shanghai, Tianjin

Commercial, office building and

Medium-term lease

93,196

and Kunshan

parking lot

Total

815,531

Notes:

  1. Included in page 12 of this interim report.
  2. Address: Yan'an West Road No. 2299 of Changning District, Shanghai
  3. Address: Hongqiao Road No. 355 of Xuhui District, Shanghai
  4. Address: Tianyaoqiao Road No.123 of Xuhui District, Shanghai

CHINA

BREAKDOWN OF G.F.A. FOR FUTURE SALE

1 S h e n y a n g

AS AT 30 JUNE 2020

3 B e i j i n g

1

T i a n j i n

Shenyang

Beijing

1 Y a n t a i

2.8%

1.9%

Tianjin

Yantai

4.2%

0.8%

1 W u x i

Chongqing

1 X I 'A N

6.5%

Yangtze

2 K u n s h a n

13 S h a n g h a i

River Delta

Changsha

44.5%

1 C h o n g q i n g

19.2%

1 C h a n g s h a

1

Xi'an

1 S h e n z h e n

20.1%

14 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

KEY PROJECTS INTRODUCTION

SIUD SHANGHAI PROJECTS

JadeVilla

CourtyardVilla

URBAN CRADLE

Address:

Category:

588 Gulong Road,

Residence/

Minhang District, Shanghai

Commerce

Feature:

The project is located in Gumei, Minhang District, Shanghai,

west of Lianhua Road, east of Hechuan Road, north of

Gudai Road and south of Pingnan Road, less than 700

meters from the middle ring line. The area is a major focal

Expressway Ring Outer

Road Hechuan

Road Lianhua

Pingnan Road

Ring Middle

point for large scale residential development in the "10th

Urban

Five-Year Plan" of Shanghai. The

project spans a total site

Cradle

Gulong Road

area of about 943,000 sq.m. with a total construction area of

about 1.3 million sq.m., including

about 770,000 sq.m. of

Pingji Road

Road

Wanyuan

residences,

close

to nearly 400,000 sq.m. of underground

space and

more

than 100,000 sq.m. for

accommodating

Metro Line

Gudai Road

No.12

Road

amenities for the

estimated over

20,000

residents. Urban

Gudai Road Station

Cradle is an all-engulfing showcase of architectural forms and brilliant products including international-grade apartments,

standalone villas, garden houses, deluxe mansions, modern commercial premises and green landscapes, bringing comfortable and stylish living together with commerce, entertainment, culture, education, and business and leisure pursuits.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 15

KEY PROJECTS INTRODUCTION

BINJIANG U CENTER

Address:

Category:

Xuhui Binjiang,

Office/

Shanghai

Commerce

Feature:

Facing Huangpu River in Shanghai, Binjiang U Center is situated at the business hub of Binjiang, Xuhui District and is planned for composite commercial usage, which will be built as property partly for sales and held for rental respectively. The surrounding view of the project is glorious. Also, the transportation network is well established as the project is adjacent to Longyao Road Tunnel that leads to Pudong, coupled with the Yunjin Road Station of Metro Line No. 11 is now in use.

Artist Impression

Huangpu River Offshoot

Inner Ring

Middle

11.NoLineMetro RoadYunjin

AvenueLongteng

Elevated Road

M

e

t

r

o

L

i

n

e

N

o

RoadRing

Station

Huangpu

.7

Fenggu Road

Yunjin Road

Binjiang

River

U Center

Longyao Road

Longyao Road

Tunnel

TODTOWN

Address:

Category:

Xinzhuang Town,

Residence/

Minhang District, Shanghai

Commerce/Hotel/

Office/Apartment office

Feature:

Located at the southern and northern squares of the

Artist Impression

Xinzhuang station, the secondary city center of Shanghai,

with Guangtong Road on its north, West Meilong Road on its

Road1

east and Xinzhu Road

and Dushi

Road on its south,

C

u

t

e

TODTOWN will be served by an overpass bridge conveniently

r

ElevatedLine

.

No

R

linking Shuiqing Road at the northern square and Dushi Road

i

n

g

at the southern square.

E

HuminMetro

l

e

v

a

t

e

d

R

As one of the most

advanced

TOD (Transit-oriented

oad

TODTOWN

Hujing

Development) projects in Shanghai, TODTOWN covers a total

Road

site area of approximately 118,000 sq.m. with a total G.F.A.

Humin

XinzhuangExpresswcy

of 605,000 sq.m., of which 100,000 sq.m. is transport-

Station

related. Upon completion, TODTOWN will be connected to

Metro Line No. 5

Metro Line No. 1 and

5, Shanghai-Hangzhou Highspeed

Railway and numerous public bus routes, as well as the station to be established for the Jinshan sub-line. Different modes of transport operated by different departments, such as metro lines, public buses and commuter rail services, will be blended into the project to achieve seamless and convenient transition. TODTOWN will be a "city in the sky" encompassing residential, commercial and leisure functions. As a complex equipped with comprehensive systems and facilities, TODTOWN will offer 50,000 sq.m. of offices, 140,000 sq.m. of shopping mall, 20,000 sq.m. of hotel, 90,000 sq.m. of residential units, 85,000 sq.m. of serviced apartments and 20,000 sq.m. of ancillary public facilities.

Hechuan Road
Artist Impression

16 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

KEY PROJECTS INTRODUCTION

CONTEMPORARY ART VILLA (JADE VILLA)

Address:

Category:

Minhang District,

Residence

Shanghai

Feature:

Contemporary Art Villa (Jade Villa) is situated in Minhang

District in the southwest of Shanghai. The project is adjacent

Middle

to the

outer

ring road

in

the

east

and

adjoins

the

ground

Qibao

Outer

satellite

communication

station

of

Shanghai

in

the

west. It

School

MinhangRing

extends to Gudai Road in the north and connects Zhandou

River

in the south. The

traffic is

convenient

as

the

straight-

Sports

Hongxin

Expressway

line

distance

from

the

entrance

to

the

community

to

Park

Road

Hongshen Road Station of Metro Line No. 12 in the east is

.12

Station

about 390m. It is opposite to Minhang Sports Park on the

No

Line

Gudai

other

side of

Gudai

Road

in the

north

and

Li'an Park with

Metro

excellent ecological

environment

on the opposite

bank

of

Road

Road

Jade Villa

Qixin

Zhandou River in the south. The project covers an area of

Station

approximately

11.63

hectares

and

the

land's

plot

ratio

is

0.5. The planned aboveground G.F.A. is approximately 58,100 sq.m., including planned residential approximately 48,700 sq.m. and planned public supporting building of approximately 9,300 sq.m. residences of the project are villas.

CONTEMPORARY SPLENDOUR VILLA (COURTYARD VILLA)

Address:

Category:

Minhang District,

Residence

Shanghai

Gudai

Road

Station

floor area of The planned

Feature:

Contemporary Splendour Villa (Courtyard Villa) is situated in

Artist Impression

Zhuanqiao Town, Minhang District, Shanghai, with Shanghai-

North Bridge

Jinshan Expressway (S4) in the east and Dushi Road in the

Station

west. It connects the branch of Wujing-Minhang Railway in

MetroLine

Shanghai - Jiaxing - Huzhou Expressway

the south and adjoins Denghui Road in the north. The project

Shanghai

enjoys good traffic conditions and cultural environment as the

Courtyard

straight-line distance is approximately 1.1 km from the west

No.

Villa

-

side of the project to Jianchuan Road Station of rail transit line

Jian

Jinshan

5

chuan

#5 and approximately 1.8 km from the east side of the project

Road

Jianchuan Road

Station

Expressway

to rail transit line #15 (under construction), and, to the south

Shanghai Jiao Tong

of the project, there are Shanghai Jiaotong University and

Dongchuan

University

Minhang Campus of East China Normal University. The project

Road

Station

covers an area of 12.05 hectares and the land's plot ratio is

0.6. It is planned to be a low-density residential community with the building height of not more than 10m. The aboveground G.F.A. of the project is approximately 72,300 sq.m., and the plot's ratio of green space is more than 35% and the ratio of concentrated green space is above 15%. The project is planned to be built into premium low-

density villas.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 17

SHANGHAIMART

Address:

Category:

2299 West

Exhibition/

Yan'an Road, Shanghai

Commerce/Office

Feature:

Located in the emerging Shanghai Hongqiao Economic and Technological Development Zone, ShanghaiMart is uniquely positioned with Gubei Road and Hongqiao Road on its west, Yan'an Road on its south as well as the Hongqiao consulate area on its north. Situated next to the Inner Ring Road and the exit of an elevated expressway, ShanghaiMart is only a 10-minute drive to the "Hongqiao Comprehensive Transportation Hub", which is a convenient transport network assembling numerous transportation routes, including intercity high speed railway, maglev trains, metro lines, airport and city buses.

KEY PROJECTS INTRODUCTION

ConsulateInner

Area

Ring

ShanghaiMart

ShanghaiMiddle

Gubei

Elevated

Zoo

Shuicheng

Elevated

RingRoad Station

Road

Yan'an

Galaxy

Metro Line

Road

HotelRoad

No.

10

Road

Yili Road

Hongqiao

Station

Road

With a total G.F.A. of 285,000 sq.m., ShanghaiMart comprises three main buildings: the Mart, Expo and Tower. As a super trading market integrating the exhibition, trades, office and information functions, ShanghaiMart offers excellent world-class facilities and services to domestic and international merchants and professional buyers.

SHANGHAI JING CITY (Including "Grand Mansion")

Address:

Category:

Lane 266,

Residence/Commerce

Zhumei Road, Shanghai

Feature:

The project is an affordable housing project approved by Shanghai Bureau of Housing Security and Housing Administration. It is a large scale indemnificatory housing project on the list of major construction projects of Shanghai in 2009. In Meilong Town, Minhang District, the project is on an about 302,000 sq.m. site with a planned G.F.A. totaling about 611,000 sq.m. It will consist of high-rise buildings of

18 to 33 floors and become a major all-encompassing affordable housing community with educational, medical and health care and other community service facilities. Grand Mansion is located at Section 5 of Shanghai Jing City and is a commodity housing project.

Elevated

Road

Humin

Artist Impression

Middle Ring Elevated Road

RoadLongzhou

Dianpu River

RoadLaohumin

Xinzhu Road

Shanghai

Jing City Zhumei Road Outer Ring Expressway

Xingfu
Road West Zhuji
Xingfu
Road MeiSouth
Lake Chunshen

18 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

KEY PROJECTS INTRODUCTION

CHENGHANG PROJECT

Address:

Category:

Hongmei South Road

Commerce/Office

(near Mei South Road),

Minhang District, Shanghai

Feature:

Situated west to Hongmei South Road, north to the planned Mei South Road, east to the boundary of the planned site and south to the boundary of the planned site, the project encompasses office and commercial functions with a site area of approximately 20,000 sq.m. and a total G.F.A. of approximately 60,000 sq.m. Occupying the heart of Meilong Town, Minhang District, which is the redevelopment area in Meilong Town, the project will play a forward-looking, leading and representative role with certain potentials in the region.

Pule Road

Artist Impression

Road

Hongmei

Xingmei

South

Chenghang

Road

Project

The project is a commercial and office complex composed of six buildings and connecting corridors. In the future, the commercial portion will be built into a social experience

space under the theme of "sporty, healthy and delicate lifestyle". Made up of standalone buildings with high privacy as well as highly integrative standard offices, the office portion will be linked organically to the commercial portion by making use of an uneven design and connecting corridors. The project is targeted to mid to high end enterprises and will form a unique commercial and office area in the region.

YANTAI

YANTAI PROJECT

Address:

Category:

Southwest to the intersection of

Residence/

Fuyuan Road and Xingfu 12 Village

Commerce

East Street, Zhifu District, Yantai

Artist Impression

Feature:

Located east to Zhuji West Road, north to Fuyuan South Road, south to Fuyuan Road and west to Guihua Road, the project encompasses residential and commercial functions and certain ancillary public service facilities with a site area of approximately 7.77 hectares and a total G.F.A. of approximately 220,000 sq.m. The project is situated in the core area of Xingfu New Town in close proximity to the central business district of the town, with the shoreline just

1.5 km away in the north. According to the general plan of the new town, the project will be surrounded with abundant commercial, educational, medical, transport and scenic resources in the

mover advantage, the project has immense growth potential.

North

Road

Yantai

Project

Central Road

Road

South

Huanhai

Xingfu

Zhifutun

Road

Road

Yantai Station

Zhichu Road

North Street

Downtown

future. Enjoying a significant second-

Positioned as a residential product targeted at upgraders, the project mainly offers three- to four- room apartments with attractive decoration. The project plans to provide steward property services, nature-themed scenery and smart community management to create a high-quality living environment integrated with dignity, ecology and technology.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 19

KEY PROJECTS INTRODUCTION

BEIJING

YOUNGMAN POINT

Address:

Category:

No. 2, Middle Lane Ganluyuan,

Residence/

Qingnian Road,

Commerce

Chaoyang District, Beijing

Feature:

At the intersection of Qingnian Road and North Chaoyang Road in Chaoyang District, the project stands opposite Chaoyang Joy City - a major commercial complex in Chaoyang, and is only 3.8 km away from the CBD. With green belts on the north and a stretch of quiet water on the south, the project presents unique scenic pleasures to its inhabitants. The project has three phases. Phases I and II have been completed and sold out and phase III has begun development.

Chaoyang

Qingnian Road

Metro Line No.6

Park

Station

North Chaoyang Road

RoadQingnian

RoadRing 4th East

Youngman

Point

Middle

Chaoyang Road

WEST DIAOYUTAI • EMPEROR SEAL

Address:

Category:

No. 1 and No. 2 Section,

Residence

West Diaoyutai Village,

Haidian District, Beijing

Feature:

Located in the west third ring, on the east and north side of Kunyu River and west to the 137-hectare Yuyuantan Park, the project enjoys a 67-hectare expanse of magnificent aquatic scenes, the largest in Beijing where water is a scarce resource, giving it uniqueness and a touch of supremacy. The project has deluxe apartments with river views as its core products aiming to appeal to the affluent on the high-end. The project has three phases. Phases I and

  1. have been completed and sold out, while the demolition work of phase III has been finished more than a half.

Artist Impression

ChangLandianSouth AqueductJingmi RoadWanshou

West

No. 109

National Road

Diaoyutai •

Emperor

Kun Yu River

Seal

20 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

KEY PROJECTS INTRODUCTION

TIANJIN

LAOCHENGXIANG

Address:Category:

Laochengxiang,Residence/

Nankai District,

Commerce/

Tianjin

Office

Feature:

Laochengxiang is located in the traditional city center of

Tianjin with profound history. It is the cradle of culture and

economy for

Tianjin and also

the

only zenithal

region

in

LineMetro

Hebei Polytechnic

Tianjin.

As

the development

of

downtown

Tianjin

has

University

No

accelerated in recent years, Laochengxiang has

become

a

.

Xigu Park

North Tianjin

1

favorite

destination for

investors and

property

buyers

in

Station

Xiqing Avenue

Hebei

Hai

Tianjin.

West Tianjin

District

Station

Laochengxiang

River

Xinanjiao

The general

planning of

the

district is

divided

into

three

Station

Gulou

parts, namely the core, inner ring and outer ring, with Gulou

Station

Metro Line No.

2

Commercial and Cultural Street as the center. The project is

a large-scale

integrated community

well

served

by auxiliary

facilities, such as education and medical services, and comprises residences, commercial premises, offices and luxurious villas.

SHENYANG

SHENYANG U CENTER

Address:

Category:

South Taiyuan Street,

Commerce/Office/

Heping District,

Serviced Apartment

Shenyang

Feature:

The project is located in the most prosperous business district downtown Shenyang - Taiyuan Street, north of Zhonghua Road, south of Minzhu Road, west of South Taiyuan Street and east of South Tianjin Street, with profound history and an extensive commercial network covering Northeast Asia. Covering a total G.F.A. of 230,000 sq.m., the U Center comprises high-end offices, SOHO, boutique apartments and open commercial blocks with an integration of cultural and creative industries, food and beverage, leisure pleasure, entertainment, offices and luxurious apartments, making it an icon of the city.

Shengli North

RoadMetro Line No. 1

Shenyang

Station

Shengli South

Road

Street Taiyuan South Street Taiyuan North

Artist Impression

Nanjing North

Street

Taiyuan

Zhonghua Road

Street

Station

Shenyang

Nanjing South

Street

U Center

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 21

KEY PROJECTS INTRODUCTION

KUNSHAN

YOOOOU.NET

Address:

Category:

No. 258, Lvdi Avenue,

Commerce/

Huaqiao Town,

Office

Kunshan

Feature:

Located in the centre of Huaqiao International Commercial City and adjoining the west gate of Shanghai, the project is less than 25 km from downtown Shanghai and can be reached directly riding the Shanghai - Nanjing high-speed railway and Shanghai Metro Line No. 11. With four youthful components - commerce, SOHO studio, entrepreneur incubator and office, it stands out as a community where young and intellectual industries such as computer games, entertainment and e-commerce can thrive.

Artist Impression

Huaqiao

Station

Guangming

Road Station

Huaqiao

Town

Anting

Metro

Yoooou.net

Station

Line

No. 11

Shanghai

Shanghai-Beijing

Expressway

Expressway

Shanghai-Changzhou

Ring

Expressway

ROYAL VILLA

Address:

Category:

No. 859,

Residence

East Yingbin Road,

Kunshan (near Changjiang Road)

Feature:

The project is located in Zhoushi Town of Kunshan City, Jiangsu, the core of the administration center in northern Kunshan. Neighboring the Kunshan Ecological and Sports Park, it comprises 18 high-rise apartment buildings and 92 standalone villas.

Line Circle City Suzhou

East Yingbin Road

J

i

a

n

g

pu

Yushan

Road

Town

Road Changiang North

Royal

Villa

Kunshan

22 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

KEY PROJECTS INTRODUCTION

WUXI

URBAN DEVELOPMENT INTERNATIONAL CENTER

Address:

Category:

Intersection of Yinxiu Road and

Commerce/Hotel/

Taihu Avenue,

Office/Serviced

Binhu District, Wuxi, Jiangsu

Apartment

Feature:

The project is an icon at the heart of the Liyuan Economic Development Zone, the new axis of Wuxi. It is only 5 kilometers from the center of the city with Lihu Lake Scenic Spot, Lihu Central Park and Bogong Island in its vicinity to enjoy. The area is well developed, equipped with all essential facilities and convenient transportation choices. The integrated complex comprises an international five-star hotel, serviced apartments, a 5A-grade office building and a commercial center.

Artist Impression

Urban

West

Development

International

RingInner

Center

RoadHongqiao

RoadYinxiu

Taihu Avenue

Road Lixi

Yinxiu Road

XI'AN

ORIGINALLY

Address:

Category:

East to Chanhe River,

Residence/

Chanba Avenue,

Commerce/Hotel

Chanba Ecotope, Xi'an

Feature:

In the heart of Xi'an Chanba Ecotope, the project lies where

Artist Impression

the

Chan River

and

Ba

River meet. The project

with

more

-Kunming

than

2,000,000

square

meters

in

terms

of site

area

is the

Beijing

largest eco-district in northwest China. The area has been

Expressway

well

planned and is

developing

rapidly,

enjoying

convenient

Xi'an No. 17

access

to road

networks and

public

transports including

Middle School

Chan

Metro Line No. 3 which will soon commence operation.

Road Beichen

River

Circle City Expressway

It is the home of the Euro-Asia Economic Forum as well as

Originally

the Guangyuntan national wetland park and was where the

Ba

2011

International

Horticultural

Exposition took

place,

River

asserting its significance in the development of Xi'an. The project has 12 land parcels in the plan to cater to diverse

functions and related necessary facilities completed or soon to be completed to meet community business requirements and educational, medical and shopping needs.

To demonstrate the premium geographical location of the project, a new brand called "Originally" has been introduced into the project for sale as a new property project starting from the second half of 2014.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 23

OTHER INFORMATION

INTERIM DIVIDEND

The board of Directors (the "Board") does not recommend the payment of any interim dividend for the six months ended 30 June 2020 (for the six months ended 30 June 2019: Nil).

PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES

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

PREEMPTIVE RIGHTS

There are no provisions for pre-emptive rights under the Company's Bye-laws, or the laws of Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to the existing shareholders of the Company (the "Shareholders").

CORPORATE GOVERNANCE

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

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted its own code of conduct regarding dealings in the securities of the Company by the Directors and the relevant employees (who are likely to be in possession of inside information relating to the Company or its securities) (the "Guidelines for Securities Transactions by Relevant Employees") on terms no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules. All Directors have confirmed, following specific enquiry by the Company, that they have complied with the required standards as set out in the Model Code and its code of conduct regarding directors' securities transactions throughout the six months ended 30 June 2020.

In addition, no incident of non-compliance of the Guidelines for Securities Transactions by Relevant Employees by the relevant employees of the Group was noted by the Company throughout the six months ended 30 June 2020.

LOAN AGREEMENT WITH SPECIFIC PERFORMANCE COVENANT ON THE CONTROLLING SHAREHOLDER

As disclosed in the Company's announcement dated 31 January 2019, the Company (as the borrower) entered into a facility letter (the "Facility Letter") with a bank (as the lender) for a revolving loan facility of up to HKD500,000,000 with maturity date being the date falling one year from the acceptance date of the Facility Letter (the "RL Facility"). The Facility Letter contains an undertaking by the Company that so long as the RL Facility or any sum thereunder are outstanding, Shanghai Industrial Holdings Limited ("SIHL") and/or Shanghai Industrial Investment (Holdings) Company Limited ("SIIC") (both being controlling shareholders of the Company) shall collectively directly or indirectly own not less than 51% of the total share capital of the Company and maintain management control of the Company (the "Shareholding and Management Covenant"). A breach of the Shareholding and Management Covenant will constitute a default under the Facility Letter.

24 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

As disclosed in the Company's announcement dated 22 November 2019, the Company (as the borrower) entered into a loan agreement with a bank (as a lender) for a term loan facility in the amount of RMB1,690,000,000 for a term of eighteen months (the "Term Loan Facility"). The loan agreement provides that SIIC, being a controlling shareholder of the Company and SIHL, shall directly or indirectly own not less than 51% of the total share capital of the Company and maintain management control of the Company (the "Requisite Covenant"). A breach of the Requisite Covenant will constitute a default under the loan agreement.

As disclosed in the Company's announcement dated 17 June 2020, for the purpose of re-financing the Term Loan Facility, the Company (as the borrower) entered into a loan agreement with a bank as a lender (as a lender) for a term loan facility in the amount of RMB2,400,000,000 for a term of thirty-six months. The loan agreement provides for the Requisite Covenant and a breach of the Requisite Covenant will constitute a default under the loan agreement.

As at 30 June 2020, SIHL and SIIC are beneficially interested in approximately 48.45% and 64.63%, respectively, of the total issued share capital of the Company. Other than as disclosed above, there are no other events which are required to be disclosed by the Company under Rule 13.18 of the Listing Rules.

AUDIT COMMITTEE AND REVIEW OF INTERIM RESULTS

The audit committee of the Company (the "Audit Committee") currently consists of three independent non- executive Directors, namely Mr. Li Ka Fai, David (Committee Chairman), Mr. Doo Wai-Hoi, William, J.P. and Mr. Fan Ren Da, Anthony. The Audit Committee is primarily responsible for reviewing the accounting principles and practices adopted by the Group; reviewing the financial reporting process, risk management and internal controls system of the Group; and reviewing the independence and objectivity of the external auditor, the scope of audit services and related audit fees payable to the external auditor. During the six months ended 30 June 2020, the Audit Committee has reviewed the independence and objectivity of the external auditor, the scope of audit services and related audit fees payable to the external auditor for the Board's approval. The Audit Committee has also reviewed the unaudited interim financial statements of the Group for the six months ended 30 June 2020 and discussed with the management and the auditor of the Company on the accounting principles and practices adopted by the Group, risk management and internal controls matter, final results and financial statements and the terms of reference for the Audit Committee.

The Group's external auditor, Messrs. Deloitte Touche Tohmatsu, has reviewed the Company's unaudited condensed consolidated financial statements for the six months ended 30 June 2020 in accordance with the Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 25

OTHER INFORMATION

DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 30 June 2020, the interests and short positions of the Directors and chief executives of the Company 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")) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) and required to be entered in the register required to be kept by the Company pursuant to Section 352 of the SFO or which were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange, were as follows:

  1. Long positions in the shares and underlying shares of the Company

Number of

underlying

Approximate

Number of

shares

% of the

issued

subject to

issued share

ordinary

options

capital of the

Name of Directors

Capacity

shares held

granted1

Company

Ye Weiqi

Beneficial owner

-

6,000,000

0.12%

Zhong Tao

Beneficial owner

-

6,000,000

0.12%

Doo Wai-Hoi, William, J.P.

Beneficial owner

-

1,000,000

0.02%

Fan Ren Da, Anthony

Beneficial owner

-

1,000,000

0.02%

Li Ka Fai, David

Beneficial owner

-

1,000,000

0.02%

Notes:

1. These interests represent the interests in the underlying shares of the Company in respect of share options granted by the Company to these Directors as beneficial owners, details of which are set out in the section headed "SHARE OPTION SCHEME" of this interim report.

Save as disclosed herein, as at 30 June 2020, none of the Directors or chief executives of the Company had any interests or short positions in any shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of 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 Divisions 7 and 8 of Part XV of the SFO or pursuant to the Model Code.

SHARE OPTION SCHEME

Pursuant to ordinary resolutions passed by the Shareholders at its special general meeting held on 12 December 2002, the Company adopted a share option scheme (the "Share Option Scheme").

As at 30 June 2020, the Company granted 21,750,000 shares options to subscribe for up to a total of 21,750,000 ordinary shares of nominal value of HK$0.04 each in the capital of the Company under the Share Option Scheme, representing approximately 0.45% of the issued share capital of the Company as at 30 June 2020. The Share Option Scheme expired on 11 December 2012.

26 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

The particulars and movements of the share options to subscribe for the Company's shares under the Share Option Scheme during the six months ended 30 June 2020 (the "Period") were as follows:

Exercise

Exercised

Cancelled/

price

Outstanding

Granted during

during

Lapsed during

Outstanding

Name of categories

Date of grant

per share

Exercise period1

as at 1.1.2020

the Period

the Period

the Period

as at 30.6.2020

HK$

Directors

Ye Weiqi

24

September 2010

2.98

24

September 2010 to

6,000,000

-

-

-

6,000,000

23

September 2020

Zhong Tao

24

September 2010

2.98

24

September 2010 to

6,000,000

-

-

-

6,000,000

23

September 2020

Doo Wai-Hoi, William, J.P.

24

September 2010

2.98

24

September 2010 to

1,000,000

-

-

-

1,000,000

23

September 2020

Fan Ren Da, Anthony

24

September 2010

2.98

24

September 2010 to

1,000,000

-

-

-

1,000,000

23

September 2020

Li Ka Fai, David

24

September 2010

2.98

24

September 2010 to

1,000,000

-

-

-

1,000,000

23

September 2020

Senior management and

24

September 2010

2.98

24

September 2010 to

6,750,000

-

-

-

6,750,000

employees

23

September 2020

Total

21,750,000

-

-

-

21,750,000

Notes:

1. Share options granted in September 2010 under the Share Option Scheme are exercisable during the period from 24 September

2010 to 23 September 2020 in three batches, being:

  • 24 September 2010 to 23 September 2011 (up to 40% of the share options granted are exercisable)
  • 24 September 2011 to 23 September 2012 (up to 70% of the share options granted are exercisable)
  • 24 September 2012 to 23 September 2020 (all share options granted are exercisable)

Pursuant to ordinary resolutions passed by the Shareholders at its annual general meeting held on 16 May 2013 (the "Adoption Date"), the Company adopted a new share option scheme (the "New Share Option Scheme").

Reference was made to the circular of the Company dated 16 April 2013 in relation to the adoption of the New Share Option Scheme (the "Circular"). Unless the context requires otherwise, terms defined in the Circular shall have the same meanings when used in this interim report. As disclosed in the Circular, the New Share Option Scheme will be valid for ten years since the Adoption Date. The purpose of the New Share Option Scheme is to enable the Company to grant options to the eligible participants, as incentives and/or rewards for their contributions to the Group.

The eligible participants include the following classes of participants:

  1. any employee (whether full time or part time, including any executive Director and non-executive director but excluding any independent non-executive director and (if applicable) any supervisors) of any member of the Group or any invested entity;
  2. any independent non-executive directors and (if applicable) any supervisors of any member of the Group or any invested entity;

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 27

OTHER INFORMATION

  1. any supplier of goods or services to any member of the Group or any invested entity;
  2. any customer of any member of the Group or any invested entity;
  3. any person or entity that provides research, development or other support (technical or otherwise) to any member of the Group or any invested entity;
  4. any shareholder of any member of the Group or any invested entity or any holder of any securities issued by any member of the Group or any invested entity;
  5. any adviser or consultant (professional or otherwise) to any area of business or business development of any member of the Group or any invested entity; and
  6. any other group or classes of participants who have contributed or may contribute by way of joint venture, business alliance or other business arrangement to the development and growth of the Group.

For the purposes of the New Share Option Scheme, an offer may be made to any company wholly-owned by one or more eligible participants.

The Board considers that the New Share Option Scheme will provide the eligible participants with the opportunity to acquire shares of the Company and to encourage the eligible participants to work towards enhancing the value of the Company and for the benefit of the Company and its shareholders as a whole. The provisions of the New Share Option Scheme comply with the requirements of Chapter 17 of the Listing Rules. Further details of the New Share Option Scheme can be found in the Circular.

The Company had not granted any share options under the New Share Option Scheme since the Adoption Date up to 30 June 2020.

Save as disclosed herein, the Company had not granted any share options to any persons as required to be disclosed under Rule 17.07 of the Listing Rules during the six months ended 30 June 2020.

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS IN THE SHARES AND UNDERLYING SHARES

As at 30 June 2020, substantial shareholders and other persons (other than the Directors and chief executives of the Company) who had interests or short positions in the shares and underlying shares of the Company which were notified to the Company and the Stock Exchange pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO and entered in the register required to be kept by the Company pursuant to Section 336 of the SFO, or otherwise notified to the Company were as follows:

Ordinary shares of HK$0.04 each of the Company

Approximate% of the

Name of substantial

Number of shares of

issued share capital of

shareholders

Capacity

the Company held

the Company

SIHL

Held by controlled corporation

2,328,671,400(L)1,2,3

48.45%

SIIC

Held by controlled corporation

3,106,296,148(L)1,2,3,4

64.63%

28 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

OTHER INFORMATION

Notes:

  1. L denotes long positions.
  2. These include 2,278,671,400 shares of the Company held by S.I. Smart Charmer Limited and 50,000,000 shares of the Company that are deemed to be held by Novel Good Limited under the pledge described in note 3 below. As S.I. Smart Charmer Limited and Novel Good Limited are both wholly-owned subsidiaries of SIHL, which is in turn controlled by SIIC, SIHL and SIIC are deemed or taken to be interested in the interests in the shares of the Company held by S.I. Smart Charmer Limited and Novel Good Limited.
  3. These interests include 50,000,000 shares of the Company (short positions) held by Invest Gain Limited (a company beneficially and wholly owned by Mr. Li Song Xiao who ceased to be a substantial shareholder of the Company during the year ended 31 December 2011) which was pledged to Novel Good Limited. Therefore, SIHL and SIIC are deemed or taken to be interested in these 50,000,000 shares of the Company.
  4. SIIC, through Shanghai Investment Holdings Limited (a subsidiary of SIIC) held approximately 55.13% of the shares of SIHL. Therefore, SIIC is deemed or taken to be interested in the 2,328,671,400 shares of the Company held by SHIL for the purpose of the SFO. On the other hand, SIIC is also deemed or taken to be interested in the 779,024,748 shares of the Company held by its subsidiaries, namely SIIC Trading Company Limited, Shanghai Industrial Financial Holdings (Hong Kong) Company Limited, SIIC CM Development Limited, SIIC Capital (B.V.I.) Limited and Shanghai Investment Holdings Limited.

Save as disclosed herein, as at 30 June 2020, the Company had not been notified by any persons (other than the Directors and chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company which fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

CHANGES IN INFORMATION OF DIRECTORS

Pursuant to Rule 13.51B(1) of the Listing Rules, changes in information of directors of the Company are set out as follows:

Mr. Zeng Ming resigned as the chairman of the Board, an executive director and the chairman of the nomination committee of the Company with effect from 18 May 2020.

Mr. Fei Zuoxiang resigned as an executive director of the Company with effect from 18 May 2020.

Mr. Huang Haiping was appointed as the chairman of the Board, an executive director and the chairman of the nomination committee of the Company with effect from 18 May 2020.

Save as disclosed above, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

APPRECIATION

I would like to express my sincere gratitude to the Board, our management and all our staff for their dedicated efforts as well as to our customers, suppliers, business partners and shareholders for their continued enthusiastic support to our Group.

By order of the Board of

Shanghai Industrial Urban Development Group Limited

Huang Haiping

Chairman

Hong Kong, 27 August 2020

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 29

REPORT ON REVIEW OF CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED 上海實業城市開發集團有限公司

(incorporated in Bermuda with limited liability)

INTRODUCTION

We have reviewed the condensed consolidated financial statements of Shanghai Industrial Urban Development Group Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 30 to 56, which comprise the condensed consolidated statement of financial position as of 30 June 2020 and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

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 Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, 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.

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

27 August 2020

30 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

NOTES

HK$'000

HK$'000

(unaudited)

(unaudited)

Revenue

Goods and services

3A

2,882,535

4,226,656

Leases

290,288

376,670

Total revenue

3,172,823

4,603,326

Cost of sales

(1,740,645)

(2,641,563)

Gross profit

1,432,178

1,961,763

Other income

64,749

78,891

Other expenses, gains and losses, net

(10,937)

2,218

Fair value gain on investment properties, net

173,682

201,921

Distribution and selling expenses

(99,200)

(138,506)

General and administrative expenses

(187,727)

(166,938)

Finance costs

4

(323,259)

(314,501)

Share of results of associates

889

1,813

Profit before tax

1,050,375

1,626,661

Income tax

5

(695,303)

(861,499)

Profit for the period

6

355,072

765,162

Other comprehensive income (expense) for the period

Items that will not be reclassified to profit or loss:

Exchange differences arising on translation from functional

currency to presentation currency

(453,884)

(5,359)

Fair value gain on equity instruments at fair value through

other comprehensive income, net of tax

17,587

15,693

Total comprehensive (expense) income for the period

(81,225)

775,496

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 31

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Six months ended 30 June

2020

2019

NOTE

HK$'000

HK$'000

(unaudited)

(unaudited)

Profit for the period attributable to:

- Owners of the Company

151,041

310,678

- Non-controlling interests

204,031

454,484

355,072

765,162

Total comprehensive (expense) income attributable to:

- Owners of the Company

(87,246)

314,564

- Non-controlling interests

6,021

460,932

(81,225)

775,496

Earnings per share

7

- Basic (HK cents)

3.14

6.46

- Diluted (HK cents)

3.14

6.46

32 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

30 June

31 December

2020

2019

NOTES

HK$'000

HK$'000

(unaudited)

(audited)

Non-current assets

Investment properties

8

16,102,337

14,803,258

Property, plant and equipment

2,231,765

2,105,869

Right-of-use assets

227,930

246,768

Intangible assets

55,939

57,047

Interests in associates

1,218,218

1,241,434

Interests in joint ventures

2,278,710

615,213

Equity instruments at fair value through

other comprehensive income

178,588

160,208

Pledged bank deposits

241,860

176,749

Other receivables and prepayment

10

721,027

735,302

Deferred tax assets

302,948

394,706

23,559,322

20,536,554

Current assets

Inventories

2,066

2,497

Properties under development for sale and properties

held-for-sale

27,490,440

28,952,836

Trade and other receivables

10

750,300

674,933

Amounts due from related companies

9

1,547

336,499

Prepaid income tax and land appreciation tax

337,825

320,841

Financial assets at fair value through profit or loss

3,118

3,342

Restricted and pledged bank deposits

111,461

504,740

Bank balances and cash

7,740,449

9,111,782

36,437,206

39,907,470

Current liabilities

Trade and other payables

11

5,598,827

5,900,740

Amounts due to related companies

9

657,168

689,723

Pre-sale proceeds received on sales of properties

6,297,051

6,004,601

Bank and other borrowings

12

5,411,120

5,426,344

Lease liabilities

58,813

67,385

Income tax and land appreciation tax payables

2,413,173

2,840,367

Dividend payable

23,450

14,169

Dividend payable to non-controlling shareholders

-

284,081

20,459,602

21,227,410

Net current assets

15,977,604

18,680,060

Total assets less current liabilities

39,536,926

39,216,614

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 33

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June

31 December

2020

2019

NOTES

HK$'000

HK$'000

(unaudited)

(audited)

Non-current liabilities

Deferred revenue

11

4,423

4,853

Amounts due to related companies

9

61,305

285,508

Bank and other borrowings

12

12,566,204

11,285,958

Lease liabilities

134,402

161,201

Deferred tax liabilities

3,532,081

3,697,468

16,298,415

15,434,988

23,238,511

23,781,626

Capital and reserves

Share capital

13

192,253

192,253

Reserves

12,771,883

13,057,300

Equity contributable to owners of the Company

12,964,136

13,249,553

Non-controlling interests

10,274,375

10,532,073

23,238,511

23,781,626

34 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

Attributable to owners of the Company

Shareholder's

Share-based

Other

Property

Investment

contribution/

Non-

Share

Share

Contributed

payments

revaluation

revaluation

revaluation

Statutory

merger

Other

Exchange

Retained

controlling

Total

capital

premium

surplus

reserve

reserve

reserve

reserve

reserve

reserve

reserve

reserve

profits

Total

interests

equity

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(note (i))

(note (ii))

(note (iii))

(note (iv))

At 1 January 2020 (audited)

192,253

9,509,949

69,086

31,892

52,526

(13,813)

39,401

655,290

2,159,430

(47,317)

(98,347)

699,203

13,249,553

10,532,073

23,781,626

Profit for the period

-

-

-

-

-

-

-

-

-

-

-

151,041

151,041

204,031

355,072

Exchange differences arising on translation

from functional currency to

presentation currency

-

-

-

-

-

-

-

-

-

-

(248,663)

-

(248,663)

(205,221)

(453,884)

Fair value gain on equity instruments at fair

value through other comprehensive

income, net of tax

-

-

-

-

-

-

10,376

-

-

-

-

-

10,376

7,211

17,587

Total comprehensive expense for the period

-

-

-

-

-

-

10,376

-

-

-

(248,663)

151,041

(87,246)

6,021

(81,225)

Transfer to distributable reserve (note (v))

-

(600,000)

600,000

-

-

-

-

-

-

-

-

-

-

-

-

Release upon liquidation of a subsidiary

-

-

-

-

-

-

-

(2,714)

-

-

-

1,601

(1,113)

1,113

-

Dividends recognised as distributions

(Note 18)

-

-

(197,058)

-

-

-

-

-

-

-

-

-

(197,058)

-

(197,058)

Dividends declared to non-controlling

interests

-

-

-

-

-

-

-

-

-

-

-

-

-

(264,832)

(264,832)

At 30 June 2020 (unaudited)

192,253

8,909,949

472,028

31,892

52,526

(13,813)

49,777

652,576

2,159,430

(47,317)

(347,010)

851,845

12,964,136

10,274,375

23,238,511

At 1 January 2019 (audited)

192,439

9,514,684

266,336

31,892

52,526

-

36,045

543,398

2,159,430

(47,317)

108,443

202,816

13,060,692

10,315,114

23,375,806

Profit for the period

-

-

-

-

-

-

-

-

-

-

-

310,678

310,678

454,484

765,162

Exchange differences arising on translation

from functional currency to

presentation currency

-

-

-

-

-

-

-

-

-

-

(5,373)

-

(5,373)

14

(5,359)

Fair value gain on equity instruments at fair

value through other comprehensive

income, net of tax

-

-

-

-

-

-

9,259

-

-

-

-

-

9,259

6,434

15,693

Total comprehensive income for the period

-

-

-

-

-

-

9,259

-

-

-

(5,373)

310,678

314,564

460,932

775,496

Reduction of share capital of a subsidiary

-

-

-

-

-

-

-

-

-

-

-

-

-

(18,911)

(18,911)

Dividends recognised as distributions

(Note 18)

-

-

(197,250)

-

-

-

-

-

-

-

-

-

(197,250)

-

(197,250)

Dividends declared to non-controlling

interests

-

-

-

-

-

-

-

-

-

-

-

-

-

(237,003)

(237,003)

At 30 June 2019 (unaudited)

192,439

9,514,684

69,086

31,892

52,526

-

45,304

543,398

2,159,430

(47,317)

103,070

513,494

13,178,006

10,520,132

23,698,138

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 35

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes:

  1. Contributed surplus, serving as a distributable reserve, represents an amount transferred from the share premium account to contributed surplus account which gives the Company a greater flexibility in its dividend policy and making distributions to the shareholders.
  2. Other revaluation reserve comprises the difference between the fair value, net of deferred tax, and the carrying amount of additional interest in associates being acquired and become subsidiaries of Shanghai Industrial Urban Development Group Limited (the "Company"). This reserve will be recognised in the profit or loss upon the earlier of the disposal of the subsidiaries or the disposal by the subsidiaries of the assets to which it relates.
  3. Merger reserve comprises of (i) the difference in the fair value of the consideration paid to the intermediate holding company of the Company, Shanghai Industrial Holdings Limited ("SIHL"), for the acquisition of subsidiaries controlled by SIHL (the "Acquiree") and the fair value of net assets of the Acquiree at the date of the Company and its subsidiaries (collectively referred to as the "Group") and the Acquiree became under common control in year 2011; and (ii) the difference between the consideration paid to Shanghai Shangtou Assets Operation Company Limited 上海上投資產經營有限公司 ("Shangtou Assets"), to which Shanghai Industrial Investment (Holdings) Company Limited ("SIIC"), being the ultimate holding company of the Company, exercises the authority as a state-owned shareholder, for acquisition of Shanghai Shangtou Real Estate Investment Company Limited 上海市上 投房地產投資有限公司 ("Shangtou Real Estate") and its subsidiaries (collectively referred to as "Shangtou Real Estate Group") (after carving out certain assets and liabilities upon completion of acquisition) controlled by Shangtou Assets and fair value of net assets of Shangtou Real Estate Group at the date of the Group and Shangtou Real Estate Group became under common control.
    Shareholder's contribution represents capital contribution from SIHL and State-owned Assets Supervision and Administration Commission of Shanghai Xuhui District ("Xuhui SASAC"), being non-controlling interest (based on their respective percentage of equity interest), to a subsidiary of the Group, Shanghai Urban Development (Holdings) Co., Ltd. ("SUD"), as paid-in capital in April 2011. Xuhui SASAC holds 41% interests in SUD.
  4. Other reserve represents a premium contributed by the owners of the Company on acquiring the remaining 1.0% interests of 上 海世界貿易商城有限公司 ("Shanghai World Trade") from a non-controlling shareholder subsequent to the acquisition of Continental Land Development Limited and its partially owned subsidiary, namely Shanghai World Trade, in the People's Republic of China (the "PRC"). This acquisition, without changing the Group's control over Shanghai World Trade, was accounted for as an equity transaction. The difference between the cash consideration of approximately HK$92,274,000 and share of 1% fair value of net assets held by the non-controlling shareholder of approximately HK$44,957,000 amounting to approximately HK$47,317,000 was recognised directly in equity as other reserve and attributable to owners of the Company.
  5. Pursuant to the special resolution passed on 18 May 2020, the Company transferred an amount of HK$600,000,000 from the share premium account to the contributed surplus account which increased the distributable reserve of the Company for making distributions to shareholders.

36 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2020

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

OPERATING ACTIVITIES

Profit before tax

1,050,375

1,626,661

Adjustments for:

Finance costs

323,259

314,501

Fair value gain on investment properties, net

(173,682)

(201,921)

Other non-cash items

77,765

36,510

Operating cash flows before movements in working capital

1,277,717

1,775,751

(Increase) decrease in inventories, properties under development

for sale and properties held-for-sale

(452,923)

539,835

Increase in trade and other receivables

(89,008)

(38,327)

Increase (decrease) in pre-sale proceeds received on sales of properties

411,507

(588,864)

Decrease in trade and other payables

(252,178)

(85,034)

Other working capital items

(1,545)

(10,609)

Cash from operations

893,570

1,592,752

Income tax paid

(1,112,437)

(1,626,852)

Net cash used in operating activities

(218,867)

(34,100)

INVESTING ACTIVITIES

Proceeds from disposal of property, plant and equipment

401

12,838

Purchase of property, plant and equipment

(34,946)

(31,312)

Development costs paid for investment properties

(85,673)

(20,566)

Investments in joint ventures

(1,680,104)

-

Prepayment for acquisition of a parcel of land

-

(600,254)

Decrease (increase) in restricted and pledged bank deposits

316,850

(673,224)

Advances to related companies

(11)

(1,235)

Repayment from related companies

338,541

310,087

Dividends received from equity instruments at fair value through other

comprehensive income

-

30,859

Dividend received from an associate

-

4,248

Interest received

46,492

40,575

Net cash used in investing activities

(1,098,450)

(927,984)

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 37

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

FINANCING ACTIVITIES

Dividends paid to non-controlling interests

(545,088)

(116,822)

Dividends paid

(187,777)

(195,173)

Distribution to a non-controlling shareholder after reduction of

share capital of a subsidiary

-

(18,911)

Proceeds from new bank and other borrowings

6,617,943

3,366,855

Repayments of bank and other borrowings

(5,044,313)

(773,113)

Transaction costs attributable to the issue of medium term corporate

bonds

(2,276)

-

Repayments of lease liabilities

(34,106)

(36,625)

Advances from related companies

56,595

8,878

Repayments to related companies

(297,709)

(3,816)

Interest paid

(467,971)

(419,326)

Net cash from financing activities

95,298

1,811,947

Net (decrease) increase in cash and cash equivalents

(1,222,019)

849,863

Cash and cash equivalents as at 1 January

9,111,782

9,127,828

Effect of foreign exchange rate changes

(149,314)

(26,963)

Cash and cash equivalents as at 30 June,

represented by bank balances and cash

7,740,449

9,950,728

38 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

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 34 ("HKAS 34") "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants ("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 "Listing Rules").

1A. SIGNIFICANT EVENTS AND TRANSACTIONS IN THE CURRENT INTERIM PERIOD

The outbreak of Covid-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impacts to the global economy, business environment and directly and indirectly affect the operations of the Group. The Group stopped its on-sitepre-sale activities of the properties, limited its hotel operations and slowed down the delivery of completed properties from January 2020 to March 2020 due to the mandatory government quarantine measures imposed by the PRC government in an effort to constrain the spread of the pandemic. On the other hand, the PRC government has announced some financial measures and supports for corporates to overcome the negative impact arising from the pandemic to the Group and it has also requested lessors to reduce or waive the rentals to tenants for the purpose of relieving their financial pressure. Since the second quarter of 2020, the operations of the Group have been resumed gradually due to the continuous improvement of the pandemic in the PRC. As such, the financial position and performance of the Group were affected to certain extent in different aspects, including decrease in revenue from sales of properties, hotel operations and leases.

During the six months ended 30 June 2020, the Group injected capitals with an aggregate amount of RMB1,527,500,000 (equivalent to approximately HK$1,680,104,000) into joint ventures, namely 上海諾卓企 業管理有限公司 ("Shanghai Nuozhuo") and 上海天宇實宏企業發展有限公司 ("Shanghai Tianyu"). The Group holds 5% equity interest in Shanghai Tianyu directly and 27.5% equity interest in Shanghai Tianyu indirectly through Shanghai Nuozhuo. Shanghai Tianyu is the project company for the acquisition of a parcel of land situated at Xuhui District in Shanghai of the PRC at a consideration of RMB4,628,000,000 during the period.

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.

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

Application of amendments to HKFRSs

In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatorily effective for the annual period beginning on or after 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 HKFRS 7

Interest Rate Benchmark Reform

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 39

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. PRINCIPAL ACCOUNTING POLICIES CONTINUED

Application of amendments to HKFRSs (continued)

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.

2.1 Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"

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

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

3A. REVENUE FROM GOODS AND SERVICES

Disaggregation of revenue from contracts with customers

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Types of goods or services

Sales of properties

2,829,760

4,085,037

Hotel operations

50,260

138,242

Property management

2,515

3,377

Total

2,882,535

4,226,656

Timing of revenue recognition

A point in time

2,829,760

4,085,037

Over time

52,775

141,619

Total

2,882,535

4,226,656

All the revenue of the Group generated from contracts with customers are originated from operations in the PRC.

40 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3B. SEGMENT INFORMATION

Information reported to the directors of the Company, being the chief operating decision maker, for the purposes of resource allocation and performance assessment focuses on revenue analysis. No other discrete financial information is provided other than the Group's result and financial position as a whole. Accordingly, only entity-wide disclosures, major customers and geographic information are presented.

The Group's operations are located in the PRC. All revenue and non-current assets, except for certain property and equipment, of the Group are generated from and located in the PRC. No revenue from a single customer contributed 10% or more of the Group's revenue for the six months ended 30 June 2020 and 2019.

4. FINANCE COSTS

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Interests on bank and other borrowings

529,215

541,632

Interests on lease liabilities

2,103

2,518

Total finance costs

531,318

544,150

Less: Amount capitalised in properties under development for sale

(208,059)

(229,649)

323,259

314,501

During the six months ended 30 June 2020, borrowing costs arising from the general borrowing pool are capitalised to the expenditure on qualifying assets by applying a capitalisation rate of 3.33% (six months ended 30 June 2019: 5.18%) per annum.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 41

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. INCOME TAX

Six months ended 30 June

2020

2019

HK$'000

HK$'000

(unaudited)

(unaudited)

Current tax:

PRC Enterprise Income Tax ("EIT")

318,653

499,848

PRC Land Appreciation Tax ("LAT")

393,717

668,705

PRC withholding tax on dividend income

8,775

-

721,145

1,168,553

Deferred tax

(25,842)

(307,054)

Income tax for the period

695,303

861,499

Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the tax rate of the PRC subsidiaries is 25% from 1 January 2008 onwards.

Under the Provisional Regulations of LAT ( 中華人民共和國土地增值稅暫行條例》) effective on 1 January 1994, and the Detailed Implementation Rules on the Provisional Regulations of the PRC on LAT ( 中華人民 共和國土地增值稅暫行條例實施細則》) effective from 27 January 1995, all income from the sale or transfer of state-owned land use rights, buildings and their attached facilities in the PRC is subject to LAT at progressive rates ranging from 30% to 60% of the appreciation value, being the proceeds of sales of properties less deductible expenditures including borrowing costs and property development expenditures in relation to the gains arising from sales of properties in the PRC effective from 1 January 2004, with an exemption provided for property sales of ordinary residential properties (普通標準住宅) if their appreciation values do not exceed 20% of the sum of the total deductible items.

No provision for Hong Kong Profits Tax has been made as the Group's income neither arises in, nor is derived from, Hong Kong.

Pursuant to the rules and regulations of Bermuda and the British Virgin Islands ("BVI"), the Group is not subject to any income tax in Bermuda and the BVI in respect of the six months ended 30 June 2020 and 2019.

42 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. PROFIT FOR THE PERIOD

Six months ended 30 June

20202019

HK$'000 HK$'000

(unaudited) (unaudited)

Profit for the period has been arrived at after charging

(crediting) the following items:

Depreciation of property, plant and equipment

98,123

62,054

Depreciation of right-of-use assets

19,591

18,018

Interest income on bank deposits (included in other income)

(46,492)

(40,575)

Net foreign exchange loss (gain) (included in other expenses,

gains and losses, net)

10,952

(3,221)

7. EARNINGS PER SHARE

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

Six months ended 30 June

20202019

HK$'000 HK$'000

(unaudited) (unaudited)

Earnings:

Earnings for the purposes of calculating basic and

diluted earnings per share

Profit for the period attributable to owners of the Company

151,041

310,678

Six months ended 30 June

2020

2019

'000

'000

Number of shares:

Weighted average number of ordinary shares for the purposes of

calculating basic and diluted earnings per share

4,806,323

4,810,973

The calculation of diluted earnings per share in current interim period and comparative prior interim period does not assume the exercise of the Company's share options because the exercise price of the share options was higher than the average market price for both interim periods.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 43

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. MOVEMENTS IN INVESTMENT PROPERTIES

The fair values of the Group's investment properties as at 30 June 2020 have been arrived at on the basis of a valuation carried out by Cushman & Wakefield Limited ("CWL"), an independent qualified professional valuer not connected to the Group. CWL has appropriate qualification and recent experience in the valuation of similar properties in the relevant locations. The address of CWL is 16/F, 1063 Kings Road, Quarry Bay, Hong Kong. The Group's investment properties are valued individually on market value basis, which conforms to HKIS Valuation Standards 2017 Edition published by Hong Kong Institute of Surveyors. The fair value is arrived at by reference to comparable sales transactions available in the relevant markets and, where appropriate, using investment approach which capitalises the net rental income derived from existing tenancies with due allowance for the reversionary potential of the properties. The resulting net increase in fair values of the Group's investment properties of approximately HK$173,682,000 (six months ended 30 June 2019: HK$201,921,000) is recognised directly in profit or loss for the six months ended 30 June 2020.

During the six months ended 30 June 2020, the Group has subsequent expenditures on certain investment properties of approximately HK$85,673,000 (six months ended 30 June 2019: HK$20,566,000).

During the six months ended 30 June 2020, the management of the Group changed the intention from selling the apartments and commercial units of several residential property projects to lease them out for rentals. Accordingly, properties held-for-sale with carrying amount of approximately HK$1,336,003,000 was transferred to investment properties upon inception of lease agreements with the tenants during the period. A fair value gain of approximately HK$253,146,000 in respect of these properties is recognised in the profit or loss during the period.

The Group did not dispose of any investment properties during the six months ended 30 June 2020.

44 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. AMOUNTS DUE FROM TO RELATED COMPANIES

The Group has the following balances with related parties:

30 June

31 December

2020

2019

NOTES

HK$'000

HK$'000

(unaudited)

(audited)

Amounts due from related companies recognised in

current assets:

- Joint ventures

(ii)(a)

11

336,499

- Entities controlled by Xuhui SASAC

(i)(a)

1,536

-

1,547

336,499

Amounts due to related companies recognised in current

liabilities:

- Xuhui SASAC and entities controlled by Xuhui

SASAC

(i)(b)

436,963

220,605

- A non-controlling shareholder

(i)(c)

-

41,539

- Non-controlling shareholders

(ii)(b)

188,617

386,224

- SIHL

(iii)

25,990

26,505

- Associates

(iv)

5,598

14,850

657,168

689,723

Amounts due to related companies recognised in

non-current liabilities:

- Entities controlled by Xuhui SASAC

(i)(a)

-

223,714

- A non-controlling shareholder

(i)(c)

61,305

61,794

61,305

285,508

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 45

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. AMOUNTS DUE FROM TO RELATED COMPANIES CONTINUED

Notes:

(i)(a)

The entire amounts due from entities controlled by Xuhui SASAC are trade in nature, unsecured, interest-free and repayable

within one year.

(i)(b)

The entire amounts due to Xuhui SASAC and entities controlled by Xuhui SASAC are non-trade in nature and unsecured.

Included in the amounts due to Xuhui SASAC and entities controlled by Xuhui SASAC as at 30 June 2020, there is an

aggregated amount of RMB200,000,000 (equivalent to approximately HK$219,370,000) (31 December 2019:

RMB200,000,000 (equivalent to approximately HK$223,714,000)), which represents loans advanced from entities controlled

by Xuhui SASAC through entrusted loan agreements administrated by banks, carrying fixed interest ranging 7.5% per

annum to 9.0% per annum and are repayable in June 2021.

The remaining balance is interest-free and repayable on demand.

(i)(c)

The entire amount due to a non-controlling shareholder is non-trade in nature and unsecured.

Included in the amount due to a non-controlling shareholder as at 30 June 2020, there is an amount of RMB55,892,000

(equivalent to approximately HK$61,305,000)

(31

December

2019:

RMB55,243,000

(equivalent

to

approximately

HK$61,794,000)), which represents a loan advanced from a non-controlling shareholder. This loan carries a fixed interest

at 108% of three year's People's Bank of China Benchmark Lending Rate per annum at the date of borrowing and it is

repayable on 12 July 2021.

As at 31 December 2019, the remaining balance was interest-free and repayable within one year.

(ii)(a)

The amounts are due from joint ventures and they are non-trade in nature, interest free and unsecured.

During the year ended 31 December 2019, the Group established joint ventures, namely Shanghai Nuozhuo and Shanghai

Tianyu, with other investors for the purpose of bidding a parcel of land situated at Xuhui District in Shanghai of the PRC.

Shanghai Tianyu is the project company for the bidding. The Group holds 5% equity interest in Shanghai Tianyu directly

and 27.5% equity interest in Shanghai Tianyu indirectly through Shanghai Nuozhuo. A refundable guarantee deposit of

RMB925,600,000 was required to secure for the bidding and it was contributed by the shareholders of Shanghai Tianyu

according to their respective shareholdings. Accordingly, the Group advanced RMB46,280,000 (equivalent to approximately

HK$51,767,000) and RMB254,540,000 (equivalent to approximately HK$284,732,000) to Shanghai Tianyu and Shanghai

Nuozhuo respectively. Shanghai Tianyu successfully bidded the land and the amounts were repaid to the Group during the

six months ended 30 June 2020.

(ii)(b)

The amounts are due to non-controlling shareholders of the Group's subsidiaries and they are non-trade in nature and

unsecured.

Included in the amounts due to non-controlling shareholders as at 30 June 2020, there is an amount of RMB150,086,000

(equivalent to approximately HK$164,623,000)

(31

December

2019:

RMB104,486,000

(equivalent

to

approximately

HK$116,875,000)), which represents interest-free loans advanced from a non-controlling shareholder and repayable in a year by batches with last payments in June 2021 (31 December 2019: in December 2020).

The remaining balance is interest-free and repayable on demand.

  1. The amounts are due to the Group's intermediate holding company (i.e. SIHL) and they are non-trade in nature, interest- free and repayable on demand.
  2. The amounts are trade in nature, unsecured and interest-free. The Group is granted an average credit period of 30 days for the balances.

46 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. TRADE AND OTHER RECEIVABLES AND PREPAYMENT

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Other receivables and prepayment recognised as non-

current assets

Loan receivables (note (ii))

9,060

9,239

Prepayment for acquisition of land parcels (note (iii))

711,967

726,063

721,027

735,302

Trade and other receivables recognised as current assets

Trade receivables

- Contracts with customers

1,668

2,236

- Lease receivables

19,767

14,019

21,435

16,255

Less: Loss allowance

(710)

(271)

20,725

15,984

Other receivables (note (i))

330,473

226,832

Advance payments to contractors

33,713

26,173

Prepaid other taxes

327,323

364,719

Deposits and prepayments

38,066

41,225

750,300

674,933

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 47

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. TRADE AND OTHER RECEIVABLES AND PREPAYMENT CONTINUED

Notes:

  1. Other receivables mainly comprise of various warranty deposits placed with the relevant government bodies in respect of properties under development for sale, properties held-for-sale and properties being sold. Included in current other receivable as at 30 June 2020, there is an amount of RMB8,000,000 (equivalent to approximately HK$8,775,000) (31 December 2019: RMB8,000,000 (equivalent to approximately HK$8,949,000)) which represents current portion of loans advanced to a subsidiary of a former tenant of one of the Group's investment properties (the "Borrower") through an entrusted loan agreement administrated by a trust company, and the amount is repayable on 31 December 2020. The loan carries fixed interest at a rate of 5% per annum.
  2. As at 30 June 2020, included in non-current other receivables, there are loan receivables of RMB8,260,000 (equivalent to approximately HK$9,060,000) (31 December 2019: RMB8,260,000 (equivalent to approximately HK$9,239,000)) which represent non-current portion of loans advanced to the Borrower. RMB8,260,000 of the loan receivables is repayable on 31 December 2021. The loans carry fixed interest at a rate of 5% per annum. The loans are secured by the registered share capital of the immediate and intermediate holding companies of the Borrower and loans are also guaranteed by the entity controlled by the beneficial owner of the Borrower for a maximum amount of RMB25,000,000. These companies are principally engaged in commercial properties management.
  3. In previous year, the Group entered into a land use right transfer contract with Shanghai Minhang Land Bureau to acquire a parcel of land in Shanghai in the PRC for the development of residential properties held for earning rentals at a consideration of RMB649,100,000 (equivalent to approximately HK$711,967,000) (31 December 2019: RMB649,100,000 (equivalent to approximately HK$726,063,000)). The Group paid the entire amount as a prepayment for the acquisition of which RMB129,820,000 was paid during the year ended 31 December 2018 and RMB519,280,000 was paid during the year ended 31 December 2019.

The Group allows an average credit period of 90 days to its corporate hotel customers and generally grants no credit period to property buyers and tenants unless it is specifically approved.

The following is an ageing analysis of trade receivables, net of loss allowance, presented based on the date of billing at the end of the reporting period:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

0-90 days

13,557

1,348

91-180 days

76

1,138

Over 180 days

7,092

13,498

20,725

15,984

48 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND OTHER PAYABLES AND DEFERRED REVENUE

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Trade and other payables recognised as current liabilities

Trade payables

1,342,121

1,236,195

Bills payables

92,043

632,627

Accrued expenditure on properties under development for sale

2,435,916

2,595,930

Amounts due to former shareholders of the Company's

former subsidiaries (note (i))

155,714

158,364

Rental deposits and receipt in advance from tenants

215,720

239,239

Interest payable

154,271

90,924

Payables to the Shanghai government department (note (ii))

194,045

197,887

Deposit received for disposal of a subsidiary (note (iii))

209,608

213,758

Accrued charges and other payables

455,976

459,012

Other taxes payables (note (iv))

343,413

76,804

5,598,827

5,900,740

Deferred revenue recognised as non-current liabilities

Deferred revenue

4,423

4,853

Notes:

  1. The amounts are non-trade in nature, interest-free and repayable on demand.
  2. The amount represents the receipts of approximately HK$1,354,623,000 (31 December 2019: HK$1,376,684,000) from the purchasers of affordable housings which are collected on behalf of Shanghai government department but are not repaid at the end of the reporting period, net of receivable of approximately HK$1,160,578,000 (31 December 2019: HK$1,178,797,000) for the construction and other related costs and the agreed profit margin of the affordable housings. The amount is repayable on demand. During the six months ended 30 June 2020, none (31 December 2019: HK$340,329,000) was repaid to Shanghai government department.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 49

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. TRADE AND OTHER PAYABLES AND DEFERRED REVENUE CONTINUED

Notes: (continued)

  1. The amount represents deposit of RMB191,100,000 (equivalent to approximately HK$209,608,000) (31 December 2019: RMB191,100,000 (equivalent to approximately HK$213,758,000)) received about disposal of Hunan Qianshuiwan Xiangya Garden Co., Ltd 湖南淺水灣湘雅溫泉花園有限公司 ("Hunan Qianshuiwan"), a partially owned subsidiary of the Group. On 8 April 2018, the Group entered into an equity transfer agreement (the "Agreement") with Hengda Real Estate Group Changsha Zhiye Company Limited 恒大地產集團長沙置業有限公司 ("Hengda Changsha"), being a non-controlling shareholder of Hunan Qianshuiwan, in relation to the disposal of the Group's entire equity interest in Hunan Qianshuiwan, at a cash consideration of RMB637,000,000 (equivalent to approximately HK$755,008,000) which comprises RMB191,100,000 (the "Initial Payment") for disposal of the equity interest in Hunan Qianshuiwan and RMB445,900,000 for settlement of intercompany balances. According to the terms set out in the Agreement, completion would take place when the consideration was fully settled. Following the completion of this transaction, the Group will cease to have control in Hunan Qianshuiwan. Hengda Changsha is a non-controlling shareholder of Hunan Qianshuiwan and this transaction is a related party transaction.
    The transaction was not completed and a consideration of RMB445,900,000 remains outstanding. As disclosed in the Company's announcement on 2 November 2018, the Group received a summons issued by a court in the PRC that Hengda Changsha pleaded with the court to grant orders to rescind the Agreement and enforced the Group to return the Initial Payment and the earnest money of RMB10,000,000 to Hengda Changsha due to the potential substantial loss that Hengda Changsha would suffer in relation to potential compensation as result of a decision handed down by a court in the PRC against Hunan Qianshuiwan. The Group, after taking the advice from the PRC's legal advisor, initiated respective legal actions against Hengda Changsha, during the year ended 31 December 2019. On 4 March 2020, the Group received the judgment from Hunan Higher People's Court 湖南省高級人民法院 (the "Higher Court") which was favourable to the Group. After that, Hengda Changsha has submitted the appeal (the "Appeal") to The Supreme People's Court of the PRC 中華人民共和國最高人民法院 (the "SPC").
    Subsequent to six months ended 30 June 2020, the Group and Hengda Changsha have reached settlement in respect of the Appeal and have entered into a settlement agreement (the "Disposal Settlement Agreement"), pursuant to which Hengda Changsha undertakes, among others, to continue to perform the Agreement on or before 30 October 2020. On 25 August 2020, the SPC issued a consent judgment (the "Disposal Consent Judgment") in respect of the Disposal Settlement Agreement in accordance with the stipulations of the Civil Procedure Law of the PRC 中華人民共和國民事訴 訟法 (the "Civil Procedure Law"). Immediately after the Disposal Consent Judgment took effect after being signed by both parties, the Appeal shall terminate accordingly. In addition, the Group has also entered into a settlement agreement with Evergrande Real Estate Group Limited 恒大地產集團有限公司 ("Evergrande Holdco") (the "Evergrande Settlement Agreement"), being the sole shareholder of Hengda Changsha, pursuant to which Evergrande Holdco, agrees, among others, to guarantee the payment obligations of Hengda Changsha under the Disposal Consent Judgment. Details of the terms included in the Disposal Settlement Agreement and the Evergrande Settlement Agreement are set out in the Company's announcement on 26 August 2020.
  2. Other taxes payables comprise urban real estate tax payable, city maintenance, construction tax payable, business tax payable and value-added tax payable.

The following is an ageing of analysis of the Group's trade and bills payables presented based on the invoice date at the end of reporting period:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

0-30 days

355,705

805,946

31-180 days

358,215

631,708

181-365 days

483,568

276,219

Over 365 days

236,676

154,949

1,434,164

1,868,822

50 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12. BANK AND OTHER BORROWINGS

During the six months ended 30 June 2020, the Group obtained new bank and other borrowings of approximately HK$6,617,943,000, of which HK$660,000,000 is denominated in foreign currency of the related entity (six months ended 30 June 2019: HK$3,366,855,000) of which HK$423,000,000 is denominated in foreign currency of the related entity). As at 30 June 2020, the banks and other borrowings carry variable interest ranging from 3.80% to 6.51% (31 December 2019: 3.80% to 6.51%) per annum and are payable from one to over five years (31 December 2019: one to over five years). The borrowings are obtained for the purpose of property development projects and general working capitals of the Group.

During the six months ended 30 June 2020, the Group also repaid the bank and other borrowings of approximately HK$5,044,313,000 (six months ended 30 June 2019: HK$773,113,000).

13.

SHARE CAPITAL

Ordinary shares of HK$0.04 each

Issued and fully paid

Number

Share

of shares

capital

'000

HK$'000

As at 1 January 2019 and 30 June 2019

4,810,973

192,439

Shares repurchased and cancelled

(4,650)

(186)

As at 31 December 2019, 1 January 2020 and 30 June 2020

4,806,323

192,253

14.

CAPITAL COMMITMENTS

Capital expenditure in respect of properties under development for sale:

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Expenditure contracted for but not provided for in the

condensed consolidated financial statements

- additions in properties under development for sale

6,976,682

8,826,760

- capital contribution into joint ventures

-

1,708,613

6,976,682

10,535,373

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 51

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. CONTINGENT LIABILITIES

(a) Corporate guarantees

30 June

31 December

2020

2019

HK$'000

HK$'000

(unaudited)

(audited)

Guarantees given to banks in respect of banking

facilities utilised by:

- property buyers

2,570,188

3,055,182

- an associate

391,576

399,329

2,961,764

3,454,511

Guarantees given to banks in respect of banking facilities utilised by property buyers

The Group entered into agreements with certain banks with respect to mortgage loans provided to buyers of the Group's property units and made deposits as security to and gave guarantees on mortgage loans provided to the buyers by these banks under the agreements. The management of the Group considers that the possibility of default of repayment of the mortgage loans by the relevant buyers is remote and, in case of default, the net realisable value of the related properties withheld by the Group can recover the repayment of the outstanding mortgage principals together with the accrued interests and penalties. Accordingly, no expected credit loss under HKFRS 9 has been made in the condensed consolidated financial statements for these guarantees.

Guarantee given to banks in respect of banking facilities utilised by an associate of the Group The Group entered into an agreement with a bank to provide a corporate guarantee with respect to the bank loan granted to an associate of the Group. As at 30 June 2020, the maximum liability of the Company under such guarantee was the outstanding amount of the bank loan to the associate of RMB357,000,000 (equivalent to approximately HK$391,576,000) (31 December 2019: RMB357,000,000 (equivalent to approximately HK$399,329,000)).

In the opinion of the management of the Group, the fair values of the aforementioned financial guarantee contracts of the Group are insignificant at initial recognition.

52 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

15. CONTINGENT LIABILITIES CONTINUED

  1. Litigation
    As set out in the Company's announcement dated 1 October 2018, Hunan Qianshuiwan, being a non-wholly owned subsidiary of the Group, commenced legal proceedings against XiangYa School of Medicine, Central South University 中南大學湘雅醫學院 ("Xiangya") and Hunan Shangdi Property Development Co., Ltd. 湖南上地置業發展有限公司 ("Shangdi") (Xiangya and Shangdi collectively referred to as the "Defendants") (the "Litigation") in previous years claiming, among others, the return of the surety money to the Group and damages and to seek a ruling from the court to release the parties from a series of agreements entered into between the Group and the Defendants in relation to a proposed residential real estate development on a parcel of land (the "Land") located in Changsha (the "Land Development Agreements"). In the course of proceedings, the Group received counterclaims from the Defendants. The Litigation was conducted at different levels of court in the PRC during the years 2010 to 2017 and the judgment rulings were generally in favour of the Group. However, the judgment handed down by the court on 25 September 2018, after the Defendant's appeal, was unfavourable to the Group and the Group was required, among others, to make a compensation of RMB402.8 million to the Defendants, of which RMB22.8 million relating to the developed part of the Land and RMB380 million relating to the undeveloped part of the Land. The Group made appeal to the Higher Court and it was heard on 7 June 2019.

The judgment received from the Higher Court on 4 March 2020 (the "Appeal Judgment") was unfavourable to the Group. The Higher Court ruled that the Land Development Agreements can no longer be performed and while there were breaches committed by both Hunan Qianshuiwan and Shangdi, the fundamental cause was that Hunan Qianshuiwan had changed the development plan without having properly notified the other parties of the termination of the Land Development Agreements, and thereby violating the original intent of the joint development. Pursuant to the Appeal Judgment, (i) the Land Development Agreements should be released with effect from 6 January 2009;

  1. Shangdi shall return to Hunan Qianshuiwan the surety money in the sum of RMB20 million (together with interest accrued from year 2009 to the date of payment); (iii) Hunan Qianshuiwan shall return to Shangdi the earnest money in the sum of RMB10 million (together with interest accrued from 2009 to the date of payment); (iv) Hunan Qianshuiwan is required to pay Shangdi damages in the amount of RMB122 million (together with interest accrued from year 2007 to the date of payment) as compensation for loss of land use rights in respect of the Land.

The Group, after obtaining opinions from the PRC's legal advisors, considered that it had a good ground to make an application for a retrial to repeal the judgment made by the Higher Court and obtain a favourable result to the Group. Accordingly, during the six months ended 30 June 2020, Hunan Qianshuiwan, commenced the process to pursue civil procuratorial protest against the judgment to the People's Procuratorates 人民檢察院 for a retrial. In July 2020, the People's Procuratorates has accepted the application. As a result, no provision has been made in the condensed consolidated financial statements for the amounts ruled by the Higher Court. Details of this case are set out in the Company's announcement dated 13 March 2020.

During the six months ended 30 June 2020, Shangdi applied for enforcement of the Appeal Judgment and sealing of the land use rights of the Land. The Intermediate People's Court of Changsha Municipality Hunan 湖南省長沙市中級人民法院 issued an execution judgment on 15 July 2020. After that, Hengda Changsha has reached a settlement guarantee performance agreement with Shangdi whereby (i) Hengda Changsha shall provide an irrevocable guarantee in favour of Shangdi in respect of Hunan Qianshuiwan's payment obligations of the judgment sum under the Appeal Judgment, (ii) Hengda Changsha agrees to provide an irrevocable guarantee to Hunan Qianshuiwan regarding the payment of an aggregate amount of approximately RMB385.9 million by installments to Shangdi, and (iii) Shangdi shall not in any way obstruct the construction of the development project on the Land. Details of above are set out in the Company's announcement on 26 August 2020.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 53

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. RELATED PARTY TRANSACTIONS

  1. Save as disclosed elsewhere in these condensed consolidated financial statements, during the period, the Group had the following significant transactions with related parties:

Six months ended 30 June

2020

2019

HK$'000

HK$'000

Related party

Nature of transactions

(unaudited)

(unaudited)

Entities controlled by SIHL

Management fee

(941)

-

Associates

Property agency fee

(10,956)

(10,224)

Rental income

463

-

Management fee

(340)

-

Non-controlling shareholders

Interest expenses

-

(8,803)

of a subsidiary

Management fee

(3,132)

(3,462)

An entity controlled by Xuhui

Interest expenses

(10,097)

(10,866)

SASAC

  1. Compensation of key management personnel
    The remuneration of key management personnel of the Group, including amounts paid to the directors of the Company during the period, is as follows:

Six months ended 30 June

20202019

HK$'000 HK$'000

(unaudited) (unaudited)

Short-term employee benefits

3,836

6,299

Post-employment benefits

36

-

3,872

6,299

The remuneration of key management personnel is determined by the remuneration committee having regard to the performance of individuals and market trends.

54 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  1. RELATED PARTY TRANSACTIONS CONTINUED
    1. Government-relatedentities
      The Group itself is part of a larger group of companies under SIIC Group (SIIC and its subsidiaries are collectively referred to as "SIIC Group") which is controlled by the PRC government. The management of the Group considers that the Company is ultimately controlled by the PRC government and the Group operates in an economic environment currently predominated by entities controlled, jointly controlled or significantly influenced by the PRC government ("PRC Government Related Entities"). Apart from the transactions with the SIIC Group and Xuhui SASAC which have been disclosed above and in other notes to the condensed consolidated financial statements, the Group also conducts businesses with other PRC Government Related Entities in the ordinary course of business. The Group's saving deposits, borrowings and other general banking facilities are placed or entered into with certain banks which are PRC Government Related Entities in its ordinary course of business. In view of the nature of those banking transactions, the management of the Group is of the opinion that separate disclosures would not be meaningful.
      In addition, the Group has entered into various transactions, including sales, purchases and other operating expenses with other PRC Government Related Entities. In the opinion of the management of the Group, these transactions are considered as individually and collectively insignificant to the operation of the Group during the six months ended 30 June 2020 and 2019.
  2. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

This note provides information about how the Group determines fair values of various financial assets.

Some of the Group's financial instruments are measured at fair value for financial reporting purposes. In estimating the fair value, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages an independent qualified professional valuer to perform the valuation. The management of the Group works closely with the valuer to establish the appropriate valuation techniques and inputs to the model.

SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020 55

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS CONTINUED

  1. Fair value of the Group's financial assets that are measured at fair value on a recurring basis
    The Group's financial assets at fair value through profit through profit or loss ("FVTPL") and equity instruments at fair value through other comprehensive income ("FVTOCI") are measured at fair value at the end of the reporting period. The following table gives information about how the fair values of these financial assets are determined.

Significant

Fair value as at

Fair value

Valuation techniques

unobservable

Financial assets

30 June 2020

31 December 2019

hierarchy

and key inputs

inputs

(unaudited)

(audited)

Financial assets at FVTPL

Listed equity securities

in the PRC -

HK$3,118,000

Equity instruments at

Listed equity securities

FVTOCI

in the PRC -

HK$122,922,000

Unlisted equity securities in the PRC - HK$55,666,000

Listed equity securities

Level 1

Quoted bid prices in an

N/A

in the PRC -

active market

HK$3,342,000

Listed equity securities

Level 1

Quoted bid prices in an

N/A

in the PRC -

active market

HK$101,588,000

Unlisted equity securities

Level 3

Adjusted net asset

Discount factor of 9%

in the PRC -

value method under

(31 December 2019:

HK$58,620,000

cost approach

4.6%)

  1. Reconciliation of Level 3 fair value measurement

Unlisted equity

securities

classified as

equity

instruments at

FVTOCI

HK$'000

As at 1 January 2020

58,620

Exchange realignment

(2,954)

As at 30 June 2020 (unaudited)

55,666

In the opinion of the management of the Group, there is no material change in fair value of unlisted equity instruments at FVTOCI during the six months ended 30 June 2020 and there is no material impact on the fair value of these instruments given 5% increase or decrease of the discount factor. Therefore, no sensitivity analysis for these Level 3 instruments are presented.

There were no transfer between instruments in Level 1, 2 and 3 in both years.

56 SHANGHAI INDUSTRIAL URBAN DEVELOPMENT GROUP LIMITED INTERIM REPORT 2020

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  1. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS CONTINUED
    1. Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis
      The fair value of other financial assets and financial liabilities is determined in accordance with generally accepted pricing models based on discounted cashflow analysis.
      The management of the Group considers that the carrying amounts of other financial assets and financial liabilities carried at amortised cost approximate their respective fair values.
  2. DIVIDENDS

Dividends recognised as distribution during the period:

Six months ended 30 June

20202019

HK$'000 HK$'000

(unaudited) (unaudited)

2019

final dividend declared - HK1.8 cents

(2019: HK1.8 cents for year

2018)

86,514

86,598

2019

special dividend declared - HK2.3 cents

(2019: HK2.3 cents for year

2018)

110,544

110,652

A final dividend and a special dividend of HK1.8 cents (2019: HK1.8 cents) per ordinary share and HK2.3

cents (2019: HK2.3 cents) per ordinary share respectively, in an aggregate amount of approximately

HK$197,058,000 (six months ended 30 June 2019: HK$197,250,000), were declared and an amount of approximately HK$187,777,000 was paid during the six months ended 30 June 2020 (six months ended 30 June 2019: HK$195,173,000).

No 2020 interim dividends were proposed during the six months ended 30 June 2020, nor has any dividend been proposed since the end of the reporting period.

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Shanghai Industrial Urban Development Group Ltd. published this content on 10 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 September 2020 08:44:09 UTC

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