TIDMAGP
RNS Number : 7333C
Asian Growth Properties Limited
19 March 2014
19 March 2014
Asian Growth Properties Limited
Immediate Release
Results for the year ended 31 December 2013
Asian Growth Properties Limited (the "Company") (AIM Stock Code:
AGP), the Hong Kong based China property development and investment
company, announces its audited consolidated results for the year
ended 31 December 2013 as follows:
Financial Highlights
n Profit attributable to the Company's shareholders of HK$474.5
million (GBP37.0 million) (2012: HK$1,326.4 million (GBP105.8
million))
n Profit attributable to the Company's shareholders (excluding
revaluation surplus net of deferred tax) was HK$205.0 million
(GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million))
n Earnings per share for profit attributable to the Company's
shareholders of HK53.5 cents (4.2 pence) (2012: HK149.7 cents (11.9
pence))
n Net asset value per share attributable to the Company's
shareholders as at 31 December 2013 of HK$14.1 (110.0 pence) (31
December 2012: HK$13.4 (106.9 pence))
n Geographical location of the Group's property assets were as follow:
31 December 2013 31 December 2012
---------- ---------------------- ----------------------
Hong Kong HK$9,637.8 million HK$9,385.0 million
(GBP751.9 million) (GBP748.9 million)
Mainland HK$4,355.5 million HK$4,046.1 million
China (GBP339.8 million) (GBP322.8 million)
---------- ---------------------- ----------------------
Total HK$13,993.3 million HK$13,431.1 million
(GBP1,091.7 million) (GBP1,071.7 million)
========== ====================== ======================
n Gearing ratio of 8.9% (31 December 2012: 9.9%)
Operational Highlights
n Increased gross rental income generated from Dah Sing
Financial Centre in Hong Kong and its occupancy rate remains
high.
n The commercial podium, all public car parking spaces and all
the remaining residential units of The Forest Hills were sold, with
only the resident's car parking spaces to be sold.
n The hotel operation results of Crowne Plaza Hong Kong Causeway Bay were satisfactory.
n Major mixed use development projects in Chengdu and Kaifeng,
Mainland China are progressing. Site formation works for Phase I of
Chengdu project and superstructure works for Phase I of Kaifeng
project are in progress.
Notes:
1. Figures in Pounds Sterling are translated from Hong Kong
dollars based upon the exchange rates prevailing on the latest
practicable business day of the respective accounting years. The
relevant exchange rates adopted are stated as follows:
For 31 December GBP1 = HK$12.8184; and
2013:
For 31 December GBP1 = HK$12.5323
2012:
2. For Shareholders' information, the exchange rate on 18 March
2014 was GBP1 = HK$12.8934
Miscellaneous
The results included in this announcement are extracted from the
audited consolidated financial statements of the Company for the
year ended 31 December 2013, which have been approved by the Board
of Directors on 19 March 2014.
The 2013 Annual Report is expected to be posted to shareholders
and holders of depositary interests in late April 2014.
For further information, please contact:
Lu Wing Chi TEL: +852 2828
6363
Executive Director
Asian Growth Properties
Limited
Richard Gray TEL: +44 207 886
2500
Andrew Potts
Panmure Gordon (UK) Limited
(Nominated Advisor)
Attached:-
1. Chairman's Review;
2. Executive Directors' Review;
3. Consolidated Statement of Profit or Loss;
4. Consolidated Statement of Profit or Loss and Other Comprehensive Income;
5. Consolidated Statement of Financial Position;
6. Consolidated Statement of Changes in Equity;
7. Consolidated Statement of Cash Flows; and
8. Notes to the Consolidated Financial Statements.
This announcement can also be viewed on the Company's website
at:
http://www.asiangrowth.com/html/eng/news.asp
CHAIRMAN'S REVIEW
I am pleased to present the audited consolidated financial
results of Asian Growth Properties Limited ("AGP" or the "Company",
together with its subsidiaries, the "Group") for the year 2013 to
the shareholders of the Company.
Results
AGP reported a profit attributable to the Company's shareholders
of HK$474.5 million (GBP37.0 million) for the year ended 31
December 2013 (2012: HK$1,326.4 million (GBP105.8 million)). The
reported profit included a revaluation surplus on investment
properties net of deferred taxation of HK$269.5 million (GBP21.0
million) (2012: HK$1,297.1 million (GBP103.5 million)). By
excluding the net effect of such surplus, the Group's net profit
attributable to the Company's shareholders was HK$205.0 million
(GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million)).
As at 31 December 2013, the Group's equity attributable to the
Company's shareholders amounted to HK$12,458.7 million (GBP971.9
million), representing an increase of HK$597.3 million (GBP25.4
million) over 31 December 2012. The net asset value per share as at
31 December 2013 was HK$14.1 (110.0 pence) as compared with HK$13.4
(106.9 pence) as at 31 December 2012.
Figures in Pounds Sterling are translated from Hong Kong dollars
based upon the exchange rates prevailing on the latest practicable
business day of the respective accounting years.
Operations
During the year 2013, the Group has continued the development of
various property projects in Hong Kong and Mainland China.
The rental income from investment properties situated in both
Hong Kong and Mainland China continue to provide stable returns to
the Group. Turnover for the year has included the sale of the
commercial podium, all public car parking spaces and five
residential units of The Forest Hills. Crowne Plaza Hong Kong
Causeway Bay has also performed satisfactorily with improvements in
room rate as compared with last year.
For details of the Group's operations, please refer to the
Executive Directors' Review.
Outlook
With the pick up of trade in the second half of 2013, the
International Monetary Fund (the "IMF") is predicting that economic
global activity is expected to improve further in 2014 with an
anticipated growth rate of 3.7%. The growth rate in China is
anticipated to be around 7.5% while in Hong Kong is estimated to be
3.5%. The IMF also stated in their report published in January 2014
that in advanced economies, output gaps generally remain large and,
given the risks, the monetary policy stance should stay
accommodative while fiscal consolidation continues. However, the
global political and economic landscape continues to be uncertain
in this year.
Based on the recent reforms in Mainland China aimed at private
investment in State-owned enterprises, crackdown on corruption and
spending on infrastructure, the Boston Consulting Group forecasts
that Mainland China will grow faster in 2014 than 2013. China's
largest stockbroker has recently revised upwards the property price
growth figure in Mainland China from 3% to 8%.
In conclusion, we are of the opinion that 2014 will continue to
see recovery in many of the world's economies and the more advanced
nations are unlikely to see economic recovery snuffed out by
premature acceleration of tapering and raising of interest
rates.
During the year under review, the Group continues to dispose of
the remaining properties held for sale and focus on those
development projects that the Board believes are capable of
generating significant profits in the coming years.
Final Dividend
The Board does not propose the payment of a final dividend for
the year ended 31 December 2013 (2012: Nil).
Acknowledgement
The Board would like to take this opportunity to thank the
executive and management team for the execution of the Board's
strategy and their ongoing support.
Richard Prickett
Non-Executive Chairman
England, 19 March 2014
EXECUTIVE DIRECTORS' REVIEW
FINANCIAL SUMMARY
Turnover for the year ended 31 December 2013 amounted to
HK$878.6 million (GBP68.5 million) (2012: HK$594.8 million (GBP47.5
million)). The turnover was principally attributable to the
recognition of rental income from investment properties, revenue
from hotel operation and the sales of commercial podium, all public
car parking spaces and all the remaining residential units of The
Forest Hills.
Profit attributable to the Company's shareholders for the year
amounted to HK$474.5 million (GBP37.0 million) (2012: HK$1,326.4
million (GBP105.8 million)), equivalent to a basic earnings per
share of HK53.5 cents (4.2 pence) (2012: HK149.7 cents (11.9
pence)). The reported profit included a revaluation surplus on
investment properties net of deferred taxation of HK$269.5 million
(GBP21.0 million) (2012: HK$1,297.1 million (GBP103.5 million)). By
excluding the effect of such surplus, the Group's net profit
attributable to the Company's shareholders was HK$205.0 million
(GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million)),
equivalent to HK23.1 cents (1.8 pence) (2012: HK3.3 cents (0.3
pence)) per share.
As at 31 December 2013, the Group's equity attributable to the
Company's shareholders amounted to HK$12,458.7 million (GBP971.9
million) (31 December 2012: HK$11,861.4 million (GBP946.5
million)). The net asset value per share attributable to the
Company's shareholders as at 31 December 2013 was HK$14.1 (110.0
pence) as compared with HK$13.4 (106.9 pence) as at 31 December
2012.
For Shareholders' information, figures in Pounds Sterling are
translated from Hong Kong dollars based upon the exchange rates
prevailing on the latest practicable business day of the respective
accounting years and the relevant exchange rates adopted are stated
as follows:
For 31 December 2013: GBP1 = HK$12.8184; and
For 31 December 2012: GBP1 = HK$12.5323
BUSINESS REVIEW
Property Investment and Development
The Group continues to focus on development and investment
projects in Hong Kong and Mainland China. It is the Group's
approach to review and optimise the project portfolios from time to
time. The Group's core projects located in Hong Kong and Mainland
China are listed below.
Hong Kong
The office leasing market was stable during the year. With
several tenancies of Dah Sing Financial Centre, a 39-storey
commercial building, being renewed at market rates, rental income
received during the year increased. The occupancy rate of Dah Sing
Financial Centre remains at a high level of approximately 92% as at
31 December 2013.
The Group has sold the commercial podium, all public car parking
spaces and all the remaining residential units of The Forest Hills
for the year under review. The sale of the residents' car parking
spaces are continuing.
The negotiation of the land premium with the Government for the
development project at Fo Tan is in progress. This development
project has a site area of approximately 20,000 square metres and
envisages, among other facilities, residential units, car parks,
educational facilities and a bus terminus. The foundation work of
the project has been completed and the amended building plans were
approved by the Buildings Department.
Mainland China
Chengdu, Sichuan Province
During the year, the occupancy rate for the two 30-storey office
towers of Plaza Central remained at a high level and its retail
podium with a gross floor area of about 29,000 square metres is
fully let principally to Chengdu New World Department Store on a
long-term lease. As at 31 December 2013, the aggregate occupancy
rate for the two office towers and the retail podium was
approximately 93%. Leasing activities for the remaining areas of
Plaza Central continue.
The shopping arcade of New Century Plaza with a gross floor area
of about 16,300 square metres is fully let to a furniture retailer
on a medium-term lease.
The master layout plan of the Longquan project, which has a site
area of 506,000 square metres, was approved by the local government
in January 2014. Preliminary site works of the project have been
completed and site formation works for Phase I are in progress.
Kaifeng, Henan Province
The Kaifeng project, known as "Nova City", is situated in
Zheng-Kai District, a new town in Kaifeng and envisages shopping
mall, premium offices, exhibition hall, hotel, serviced apartments
and residential towers. This project has a site area of 735,000
square metres and in order to provide a better living environment,
the gross floor area of the development will vary from 2,000,000 to
2,500,000 square metres only. The master layout plan has been
approved by the local government and foundation work for Phase I of
the residential has been completed during the year under review.
The superstructure works for Phase I of the residential are in
progress and scheduled to be completed in the first quarter of
2015.
Guangzhou, Guangdong Province
As at 31 December 2013, the occupancy rate of the 14-storey
office tower of Westmin Plaza Phase II of about 16,100 square
metres was approximately 99% with more than one-third of the total
office space being leased to AIA. Leasing activities for the
3-storey shopping arcade of Westmin Plaza Phase II with a total
gross floor area of about 26,400 square metres are in progress.
Huangshan, Anhui Province
The project in Huangshan has a site area of about 337,000 square
metres comprising of development land of about 117,000 square
metres and landscape land of 220,000 square metres. The master
layout plan for the development of the project comprising a hotel,
serviced apartments and resort villas in the integrated resort site
has been approved by the local government and site formation work
for phase I of the project is in progress.
Chi Shan, Nanjing, Jiangsu Province
The Group has established two 51%-owned joint venture companies
to participate in the tenant relocation arrangements and excavation
and infrastructure works on certain pieces of land in Chi Shan. The
Group intends to acquire such lands through land auctions by
different stages.
Hotel Operation
Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star
hotel comprising 263 guest rooms with ancillary facilities and is
managed by the InterContinental Hotels Group. It has achieved
satisfactory occupancy and room rates for the year under
review.
Termination of Management Agreement and Lease Agreements with
related parties
On 18 September 2006, the Company entered into a management
agreement (the "Management Agreement") with South-East Asia
Investment And Agency Company, Limited ("SEAI"), a wholly-owned
subsidiary of S E A Holdings Limited (the holding company of the
Company), to appoint SEAI as manager for managing the Group's
property portfolio (which comprised of corporate and management
services of investment property and development project).
On 11 November, 2013, the Company and SEAI mutually agreed to
terminate the Management Agreement with effect from 1 January 2014.
From 1 January 2014, the Group's property portfolio is now managed
by the Group itself and all related staff costs and office
overheads are now borne by the Group directly. In addition, the
lease agreements for leasing the 25th and 26th floors of Dah Sing
Financial Centre to SEAI were also terminated with effect from 1
January 2014. It is expected that the overall costs incurred by the
Group for managing the Group's property portfolio will be reduced
after termination of the Management Agreement.
WORKING CAPITAL AND LOAN FACILITIES
As at 31 December 2013, the Group's total cash balance was
HK$1,766.4 million (GBP137.8 million) (31 December 2012: HK$1,389.3
million (GBP110.9 million)) and unutilised facilities were HK$855.0
million (GBP66.7 million) (31 December 2012: HK$910.0 million
(GBP72.6 million)).
The gearing ratio as at 31 December 2013, calculated on the
basis of net interest bearing debts minus cash and restricted and
pledged deposits as a percentage of total property assets, was 8.9%
(31 December 2012: 9.9%).
As at 31 December 2013, the maturity of the Group's outstanding
borrowings was as follows:
31 December 2013 31 December 2012
HK$' million HK$' million
---------------- ---------------------------- ----------------
Due
Within 1 year 1,291.8 388.9
1-2 years 395.2 1,035.3
3-5 years 1,082.9 1,015.4
Over 5 years 256.6 300.9
---------------- ---------------------------- ----------------
3,026.5 2,740.5
Less: Front-end
fee (13.7) (15.4)
---------------- ---------------------------- ----------------
3,012.8 2,725.1
================ ============================ ================
Pledge of Assets
For the Company's subsidiaries operating in Hong Kong and
Mainland China, the total bank loans drawn as at 31 December 2013
amounted to HK$3,012.8 million (31 December 2012: HK$2,725.1
million) which comprise secured bank loans of HK$2,894.8 million
(31 December 2012: HK$2,725.1) and unsecured bank loans of HK$118.0
million (31 December 2012: Nil). The secured bank loans were
secured by properties valued at HK$11,343.7 million and note
receivable of HK$54.3 million (31 December 2012: secured by
properties valued at HK$10,872.8 million and fixed deposits of
HK$58.8 million).
Treasury Policies
The Group adheres to prudent treasury policies. As at 31
December 2013, all of the Group's borrowings were raised through
its wholly-owned or substantially controlled subsidiaries on a
non-recourse basis.
International Financial Reporting Standards ("IFRS")
The Group has adopted IFRS and the audited consolidated
financial statements accompanying this Review have been prepared in
accordance with IFRS.
OUTLOOK
The Mainland China property market continues to grow with the
100-cities index recording twenty months growth since June 2012.
However, the growth momentum continues to be slowing down in recent
months.
In Hong Kong, the property prices of residential properties have
declined slightly and there may be a further modest decline in
2014. It is believed that land supply continues to be a problem.
The Hong Kong Government's policy does not address the prompt
implementation of a comprehensive solution to the housing shortage
with insufficient housing stock being produced and an
administrative system which seems to have lost its way.
Negotiation of the land premium that would be paid by the Group
for our Fo Tan development project is a slow and painful process.
The Group is awaiting a more realistic revised land premium from
the Hong Kong Lands Department which should reflect the current
market circumstances. There has been some softening of rents from
the recent highs for our Dah Sing Financial Centre but pick up is
anticipated in the latter half of the year with an uptick in the
financial service market activity. Our hotel has firmly established
itself as the number one hotel in Causeway Bay recording high
occupancy rates which are predicted to continue. The hotel is
currently looking at growing its room rate by 5% in view of the
increased Chinese visitors.
In Mainland China, our investment properties remain
substantially let and generate steady cash flow whilst the two
major developments in Chengdu and Kaifeng are now under
construction. Pre-sales of the first phase of the Kaifeng project
will commence in the second quarter of this year while pre-sales of
the residential project in Chengdu will commence in the middle of
the year. Both cities are expected to see modest growth in sales
prices over the year and are unlikely to be so affected as the
first tier cities where further intervention could be imposed by
the Central Government. As cooling measures have resulted in a much
reduced number of apartments sold and thus such further
intervention may not be foreseen.
Notwithstanding an anticipated modest decline in property prices
for residential properties in Hong Kong, the outlook for the
markets in which the Group operate is expected to be relatively
stable in 2014.
On behalf of Executive Directors
Lu Wing Chi
Executive Director
Hong Kong, 19 March 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Revenue 7 878,597 594,756
Interest income 8 24,874 18,615
Other income 24,166 21,998
Costs:
Property and related costs 9 (160,091) (53,013)
Staff costs (82,291) (79,812)
Depreciation and amortisation (80,159) (80,955)
Other expenses 10 (278,509) (308,563)
-------------- --------------
(601,050) (522,343)
- - - - - -
- - - - - -
- - - - - -
Profit from operations
before fair value changes
on properties 326,587 113,026
Fair value changes on
investment properties 289,340 1,359,411
-------------- --------------
Profit from operations
after fair value changes
on properties 615,927 1,472,437
Gain on disposal of assets
classified as held for
sale 21,640 -
Share of results of joint
ventures - (2,667)
Finance costs 11 (80,994) (82,398)
---------------- --------------
Profit before taxation 12 556,573 1,387,372
Income tax expense 14 (81,313) (87,045)
---------------- --------------
Profit for the year 475,260 1,300,327
========= =========
Attributable to:
Company's shareholders 474,543 1,326,447
Non-controlling interests 717 (26,120)
---------------- --------------
475,260 1,300,327
========= =========
HK cents HK cents
Earnings per share for
profit attributable to
the Company's shareholders
- Basic 15 53.5 149.7
========= =========
Earnings per share excluding
fair value changes on
investment properties
net of deferred tax
* Basic 15 23.1 3.3
========= =========
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Profit for the year 475,260 1,300,327
-------------- --------------
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss:
Exchange differences arising
on translation of foreign operations 126,825 1,259
Release of translation reserve
upon disposal of assets classified
as held for sale (2,480) -
Share of exchange differences
of joint ventures - (250)
-------------- --------------
124,345 1,009
-------------- --------------
Total comprehensive income
for the year 599,605 1,301,336
========= =========
Total comprehensive income
(expense) attributable to:
Company's shareholders 597,328 1,327,552
Non-controlling interests 2,277 (26,216)
---------------- --------------
599,605 1,301,336
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Non-current assets
Investment properties 17 10,216,706 9,854,688
Property, plant and equipment 18 1,016,607 1,063,711
Properties for development 19 1,350,813 1,292,243
loans receivable 20 7,072 9,396
Note receivables 21 54,279 15,510
Other receivable 22 384,794 365,800
Pledged bank deposits 23 - 58,750
Restricted bank deposits 23 6,360 -
---------------- --------------
13,036,631 12,660,098
---------------- --------------
Current assets
Properties held for sale 24
Completed properties 484,531 574,197
Properties under development 966,684 707,889
Other inventories 1,119 935
loans receivable 20 463 642
Trade receivables, deposits
and prepayments 25 124,536 112,380
Tax recoverable 940 1,069
Amounts due from non-controlling
interests 26 265 1,270
Bank balances and cash 27 1,760,007 1,330,574
---------------- --------------
3,338,545 2,728,956
Assets classified as held
for sale 28 - 42,090
---------------- --------------
3,338,545 2,771,046
---------------- --------------
Current liabilities
Payables, deposits and
accrued charges 29 290,079 295,527
Tax liabilities 133,024 98,922
Amounts due to non-controlling
interests 26 96,985 93,478
bank borrowings - due
within one year 30 1,290,658 388,004
---------------- --------------
1,810,746 875,931
---------------- --------------
Net current assets 1,527,799 1,895,115
---------------- --------------
Total assets less current
liabilities 14,564,430 14,555,213
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued
AS AT 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Capital and reserves
Share capital 31 345,204 345,204
Reserves 12,113,481 11,516,153
---------------- --------------
Equity attributable to
the Company's shareholders 12,458,685 11,861,357
Non-controlling interests 57,706 57,995
---------------- --------------
Total equity 12,516,391 11,919,352
---------------- --------------
Non-current liabilities
Bank borrowings - due
after one year 30 1,722,108 2,337,119
Deferred taxation 32 325,931 298,742
---------------- --------------
2,048,039 2,635,861
---------------- --------------
14,564,430 14,555,213
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2013
Attributable to the Company's
shareholders
----------------------------------------------------------------------------------------------------------
Non-
Share Share Translation Other Retained controlling
capital premium reserve reserves profits Total interests Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 345,204 4,836,225 403,765 766,370 4,182,241 10,533,805 89,116 10,622,921
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Profit for
the year - - - - 1,326,447 1,326,447 (26,120) 1,300,327
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Exchange
differences
arising on
translation
of foreign
operations - - 1,355 - - 1,355 (96) 1,259
Share of
translation
differences
of
joint ventures - - (250) - - (250) - (250)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------
Other
comprehensive
income (expense)
for the year - - 1,105 - - 1,105 (96) 1,009
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Total
comprehensive
income
(expense)
for the year - - 1,105 - 1,326,447 1,327,552 (26,216) 1,301,336
Dividends paid
to
non-controlling
interests - - - - - - (4,905) (4,905)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- ------------
At 31 December
2012 345,204 4,836,225 404,870 766,370 5,508,688 11,861,357 57,995 11,919,352
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Profit for
the year - - - - 474,543 474,543 717 475,260
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Exchange
differences
arising on
translation
of foreign
operations - - 125,265 - - 125,265 1,560 126,825
Release of
translation
reserve
upon disposal
of assets
classified
as held for
sale - - (2,480) - - (2,480) - (2,480)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Other
comprehensive
income for
the year - - 122,785 - - 122,785 1,560 124,345
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Total
comprehensive
income for
the year - - 122,785 - 474,543 597,328 2,277 599,605
Dividends paid
to
non-controlling
interests - - - - - - (2,566) (2,566)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
At 31 December
2013 345,204 4,836,225 527,655 766,370 5,983,231 12,458,685 57,706 12,516,391
========= ========= ========= ========= ========= ========= ========= =========
Other reserves comprise (i) a discount on acquisition/assumption
of certain assets and liabilities from the intermediate holding
company, S E A Holdings Limited ("SEA"), and the excess of the
consideration over the market closing price of the shares issued
for the acquisition. The amounts attributable to those assets and
liabilities derecognised in subsequent years will be recognised in
profit or loss; and (ii) the excess of the consideration paid for
acquisition of additional interest in a subsidiary from
non-controlling interests over the carrying amount of
non-controlling interests acquired.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Operating activities
Profit before taxation 556,573 1,387,372
Adjustments for:
Interest expenses 74,711 76,972
Reversal of provision on relocation
compensation - (5,089)
Depreciation and amortisation 80,159 80,955
Fair value changes on investment
properties (289,340) (1,359,411)
Fair value adjustment on other
receivable (7,435) 14,706
Gain on disposal of assets (21,640) -
classified as held for sale
Share of results of joint ventures - 2,667
Interest income (24,874) (18,615)
Loss on disposal of property,
plant and equipment 41 80
Share options expense 217 102
---------------- --------------
Operating cash flows before
movements in working
capital 368,412 179,739
Increase in properties held
for sale (70,240) (77,921)
(Increase) decrease in other
inventories (184) 84
(Increase) decrease in trade
receivables, deposits and prepayments (2,037) 18,332
Increase in payables, deposits
and accrued charges 34,991 2,897
---------------- --------------
Cash generated from operations 330,942 123,131
Interest paid (72,489) (78,458)
Tax paid (31,031) (12,732)
---------------- --------------
Net cash from operating activities 227,422 31,941
---------------- --------------
Investing activities
Acquisition of and additional
costs on properties for development (125,038) (25,417)
Interest received 17,742 17,434
Decrease in loans receivable 2,503 7,851
Increase in note receivables (38,785) (15,510)
Increase in bank deposits (461,607) (94,964)
Pledged bank deposit refunded 59,295 -
Bank deposits refunded 36,999 -
Purchase of property, plant
and equipment (9,043) (3,249)
Additional costs of investment
properties - (9,482)
Net proceeds received on disposals
of property, plant and equipment 64 95
Increase in other receivable (7,459) (11)
Consideration/deposit received
on disposal of assets classified
as held for sale 21,250 40,000
---------------- --------------
Net cash used in investing
activities (504,079) (83,253)
---------------- ----------------
CONSOLIDATED STATEMENT OF CASH FLOWS - continued
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Financing activities
Draw down of bank loans 624,656 1,000,000
Repayments of bank loans (351,880) (1,666,952)
Payment of front-end fee (2,100) -
Advances from non-controlling
interests 574 7,682
Repayments from non-controlling
interests 1,005 114
Dividends paid to non-controlling
interests (2,566) (4,905)
---------------- --------------
Net cash from (used in) financing
activities 269,689 (664,061)
---------------- --------------
Net decrease in cash and cash
equivalents (6,968) (715,373)
Cash and cash equivalents at
beginning of the year 1,293,575 2,007,938
Effect of foreign exchange
rate changes 18,060 1,010
---------------- --------------
Cash and cash equivalents at
end of the year 1,304,667 1,293,575
========= =========
Represented by:
Bank balances and cash 1,760,007 1,330,574
Less: fixed deposits with original
maturity date more than
3 months (455,340) (36,999)
---------------- --------------
1,304,667 1,293,575
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2013
1. GENERAL
The Company is a public company incorporated in the British
Virgin Islands ("B.V.I.") with limited liability and its shares are
admitted for trading on the AIM Market of London Stock Exchange
plc. ("AIM Market"). The Company's immediate holding company is
Charm Action Holdings Limited, a company incorporated in the B.V.I.
One of the Company's intermediate holding companies is S E A
Holdings Limited ("SEA"), the shares of which are listed on The
Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The
directors of the Company consider that the Company's ultimate
holding company is JCS Limited. Both SEA and JCS Limited are
companies incorporated in Bermuda as exempted companies with
limited liability. The addresses of the registered office and
principal place of business of the Company are Portcullis TrustNet
Chambers, P.O. Box 3444, Road Town, Tortola, B.V.I. and 25th Floor,
Dah Sing Financial Centre, 108 Gloucester Road, Wanchai, Hong Kong,
respectively.
The consolidated financial statements are presented in Hong Kong
dollars, which is the functional currency of the Company.
The Company acts as an investment holding company. The
activities of its principal subsidiaries are set out in note
39.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs")
In the current year, the Group has applied the following new and
revised IFRSs issued by the International Accounting Standards
Board (the "IASB") and the IFRS Interpretations Committee of
IASB:
Amendments to IFRSs Annual improvements to IFRSs
2009 - 2011 cycle
Amendments to IFRS Disclosures - Offsetting
7 financial assets and
financial liabilities
Amendments to IFRS Consolidated financial statements,
10, joint
IFRS 11 and IFRS arrangements and disclosure
12 of interests in other
entities: Transition guidance
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in
other entities
IFRS 13 Fair value measurement
IAS 19 (as revised Employee benefits
in 2011)
IAS 27 (as revised Separate financial statements
in 2011)
IAS 28 (as revised Investments in associates
in 2011) and joint ventures
Amendments to IAS Presentation of items of
1 other comprehensive income
IFRIC 20 Stripping costs in the production
phase of a surface
mine
Except as described below, the application of the new and
revised IFRSs in the current year has had no material impact on the
Group's financial performance and positions for the current and
prior years and/or on the disclosures set out in these financial
statements.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the
guidance contained in a related interpretation, SIC 13 Jointly
Controlled Entities - Non-Monetary Contributions by Venturers, has
been incorporated in IAS 28 (as revised in 2011). Under IFRS 11,
joint arrangements are classified as joint operations or joint
ventures, depending on the rights and obligations of parties to the
joint arrangements. In contrast, under IAS 31, there were three
types of joint arrangements - jointly controlled entities, jointly
controlled operations and jointly controlled assets. The
classification of joint arrangements under IAS 31 was primarily
determined based on the legal form of the arrangement (e.g. a joint
arrangement that was established through a separate entity was
classified as a jointly controlled entity).
In addition, joint ventures under IFRS 11 are required to
account for using the equity method, whereas jointly controlled
entities under IAS 31 could be accounted for using the equity
method of accounting or proportionate consolidation.
The directors of the Company reviewed and assessed the
classification of the Group's investments in joint arrangements in
accordance with the requirements of IFRS 11. The directors
concluded that the Group's joint arrangements, which were
classified as jointly controlled entities under IAS 31 and were
accounted for using the equity method, should be classified as
joint ventures under IFRS 11 and continue to be accounted for using
the equity method up to the date the joint arrangements are
classified as assets held for sale.
IFRS 13 Fair Value Measurement
The Group has applied IFRS 13 for the first time in the current
year. IFRS 13 establishes a single source of guidance for, and
disclosures about, fair value measurements. The scope of IFRS 13 is
broad: the fair value measurement requirements of IFRS 13 apply to
both financial instrument items and non-financial instrument items
for which other IFRSs require or permit fair value measurements and
disclosures about fair value measurements, except for share-based
payment transactions that are within the scope of IFRS 2
Share-based Payment, leasing transactions that are within the scope
of IAS 17 Leases, and measurements that have some similarities to
fair value but are not fair value (e.g. net realisable value for
the purposes of measuring inventories or value in use for
impairment assessment purposes).
IFRS 13 defines the fair value of an asset as the price that
would be received to sell an asset (or paid to transfer a
liability, in the case of determining the fair value of a
liability) in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market
conditions. Fair value under IFRS 13 is an exit price regardless of
whether that price is directly observable or estimated using
another valuation technique. Also, IFRS 13 includes extensive
disclosure requirements.
IFRS 13 requires prospective application. In accordance with the
transitional provisions of IFRS 13, the Group has not made any new
disclosures required by IFRS 13 for the 2012 comparative period
(please see note 17 for the 2013 disclosures). Other than the
additional disclosures, the application of IFRS 13 has not had any
material impact on the amounts recognised in the consolidated
financial statements.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
Amendments to IAS 1 Presentation of items of other comprehensive
income
The Group has applied the amendments to IAS 1 Presentation of
items of other comprehensive income. Upon the adoption of the
amendments to IAS 1, the Group's 'statement of comprehensive
income' is renamed as the 'statement of profit or loss and other
comprehensive income' and the 'income statement' is renamed as the
'statement of profit or loss'. The amendments to IFRS 1 retain the
option to present profit or loss and other comprehensive income in
either a single statement or in two separate but consecutive
statements. Furthermore, the amendments to IAS 1 require additional
disclosures to be made in the other comprehensive income section
such that items of other comprehensive income are grouped into two
categories: (a) items that will not be reclassified subsequently to
profit or loss and (b) items that may be reclassified subsequently
to profit or loss when specific conditions are met. Income tax on
items of other comprehensive income is required to be allocated on
the same basis - the amendments do not change the option to present
items of other comprehensive income either before tax or net of
tax. The amendments have been applied retrospectively, and hence
the presentation of items of other comprehensive income has been
modified to reflect the changes. Other than the above mentioned
presentation changes, the application of the amendments to IAS 1
does not result in any impact on profit or loss, other
comprehensive income and total comprehensive income.
New and revised IFRSs issued but not yet effective
The directors of the Company expect that the application of the
new and revised standards, amendments or interpretations that were
issued but not yet effective will have no material impact on the
results and financial position of the Group. However, those which
may be relevant to the Group's consolidatedfinancial statements are
disclosed as below.
Annual Improvements to IFRSs 2010-2012 Cycle
The Annual Improvements to IFRSs 2010-2012 Cycle include a
number of amendments to various IFRSs, the amendments which may
relevant to the Group are summarised below.
The amendments to IFRS 2 (i) change the definitions of 'vesting
condition' and 'market condition'; and (ii) add definitions for
'performance condition' and 'service condition' which were
previously included within the definition of 'vesting condition'.
The amendments to IFRS 2 are effective for share-based payment
transactions for which the grant date is on or after 1 July
2014.
The amendments to IFRS 8 (i) require an entity to disclose the
judgements made by management in applying the aggregation criteria
to operating segments, including a description of the operating
segments aggregated and the economic indicators assessed in
determining whether the operating segments have 'similar economic
characteristics'; and (ii) clarify that a reconciliation of the
total of the reportable segments' assets to the entity's assets
should only be provided if the segment assets are regularly
provided to the chief operating decision-maker.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
Annual Improvements to IFRSs 2010-2012 Cycle - continued
The amendments to the basis for conclusions of IFRS 13 clarify
that the issue of IFRS 13 and consequential amendments to IAS 39
and IFRS 9 did not remove the ability to measure short-term
receivables and payables with no stated interest rate at their
invoice amounts without discounting, if the effect of discounting
is immaterial.
The amendments to IAS 24 clarify that a management entity
providing key management personnel services to a reporting entity
is a related party of the reporting entity. Consequently, the
reporting entity should disclose as related party transactions the
amounts incurred for the service paid or payable to the management
entity for the provision of key management personnel services.
However, disclosure of the components of such compensation is not
required.
The directors do not anticipate that the application of the
amendments included in the Annual Improvements to IFRSs 2010-2012
Cycle will have a material effect on the Group's consolidated
financial statements.
Amendments to IAS 32 Offsetting Financial Assets and Financial
Liabilities
The amendments to IAS 32 clarify existing application issues
relating to the offset of financial assets and financial
liabilities requirements. Specifically, the amendments clarify the
meaning of "currently has a legally enforceable right of set-off"
and "simultaneous realisation and settlement".
The amendments to IAS 32 are not effective until annual periods
beginning on or after 1 January 2014, with retrospective
application required.
The directors of the Company do not anticipate that the
application of these amendments to IAS 32 will have a significant
impact on the Group's consolidated financial statements as the
Group does not have any financial assets and financial liabilities
that qualify for offset.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
IFRS 9 Financial Instruments
IFRS 9 issued in 2009 introduces new requirements for the
classification and measurement of financial assets. IFRS 9 was
subsequently amended in 2010 to include the requirements for the
classification and measurement of financial liabilities and for
derecognition, and further amended in 2013 to include the new
requirements for hedge accounting.
Key requirements of IFRS 9 are described as follows:
-- All recognised financial assets that are within the scope of
IAS 39 Financial Instruments: Recognition and Measurement are
subsequently measured at amortised cost or fair value.
Specifically, debt investments that are held within a business
model whose objective is to collect the contractual cash flows, and
that have contractual cash flows that are solely payments of
principal and interest on the principal outstanding are generally
measured at amortised cost at the end of subsequent accounting
periods. All other debt investments and equity investments are
measured at their fair values at the end of subsequent reporting
periods. In addition, under IFRS 9, entities may make an
irrevocable election to present subsequent changes in the fair
value of an equity investment (that is not held for trading) in
other comprehensive income, with only dividend income generally
recognised in profit or loss.
-- With regard to the measurement of financial liabilities
designated as at fair value through profit or loss, IFRS 9 requires
that the amount of change in the fair value of the financial
liability that is attributable to changes in the credit risk of
that liability is presented in other comprehensive income, unless
the recognition of the effects of changes in the liability's credit
risk in other comprehensive income would create or enlarge an
accounting mismatch in profit or loss. Changes in fair value of
financial liabilities attributable to changes in the financial
liabilities' credit risk are not subsequently reclassified to
profit or loss. Under IAS 39, the entire amount of the change in
the fair value of the financial liability designated as fair value
through profit or loss was presented in profit or loss.
The new general hedge accounting requirements retain the three
types of hedge accounting. However, greater flexibility has been
introduced to the types of transactions eligible for hedge
accounting, specifically broadening the types of instruments that
qualify for hedging instruments and the types of risk components of
non-financial items that are eligible for hedge accounting. In
addition, the effectiveness test has been overhauled and replaced
with the principle of an 'economic relationship'. Retrospective
assessment of hedge effectiveness is also no longer required.
Enhanced disclosure requirements about an entity's risk management
activities have also been introduced.
The directors expect that the application of IFRS 9 will not
have a significant impact on amounts reported in respect of the
Group's financial assets and financial liabilities.
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared on the
historical cost basis except for investment properties and
derivative financial instruments, which are measured at fair
values, as explained in the accounting policies set out below.
Historical cost is generally based on the fair value of the
consideration given in exchange for goods.
The consolidated financial statements have been prepared in
accordance with IFRSs as issued by the IASB.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined
on such a basis, except for share-based payment transactions that
are within the scope of IFRS 2, leasing transactions that are
within the scope of IAS 17, and measurements that have some
similarities to fair value but are not fair value, such as net
realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
Going concern
The directors have at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. On this basis, they continue to adopt the
going concern basis of accounting in preparing the financial
statements.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
and its subsidiaries. Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its
involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains
control over the subsidiary and ceases when the Group loses control
of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss from the date the
Group gains control until the date when the Group ceases to control
the subsidiary.
Profit or loss and each item of other comprehensive income are
attributed to the owners of the Company and to the non-controlling
interests. Total comprehensive income of subsidiaries is attributed
to the owners of the Company and to the non-controlling interests
even if this results in the non-controlling interests having a
deficit balance.
When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with
the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses
and cash flows relating to transactions between members of the
Group are eliminated in full on consolidation.
Changes in the Group's ownership interests in existing
subsidiaries
Changes in the Group's ownership interests in existing
subsidiaries that do not result in the Group losing control over
the subsidiaries are accounted for as equity transactions. The
carrying amounts of the Group's interests and the non-controlling
interests are adjusted to reflect the changes in their relative
interests in the subsidiaries. Any difference between the amount by
which the non-controlling interests are adjusted and the fair value
of the consideration paid or received is recognised directly in
equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is
recognised in profit or loss and is calculated as the difference
between (i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and
liabilities of the subsidiary and any non-controlling interests.
All amounts previously recognised in other comprehensive income in
relation to that subsidiary are accounted for as if the Group had
directly disposed of the related assets or liabilities of the
subsidiary (i.e. reclassified to profit or loss or transferred to
another category of equity as specified/permitted by applicable
IFRSs). The fair value of any investment retained in the former
subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting under IAS
39, when applicable, the cost on initial recognition of an
investment in an associate or a joint venture.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in joint ventures
A joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement have rights to the net assets
of the joint arrangement. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent
of the parties sharing control.
The results and assets and liabilities of joint ventures are
incorporated in these consolidated financial statements using the
equity method of accounting, except when the investment, or a
portion thereof, is classified as held for sale, in which case it
is accounted for in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations. Under the equity method, an
investment in a joint venture is initially recognised in the
consolidated statement of financial position at cost and adjusted
thereafter to recognise the Group's share of the profit or loss and
other comprehensive income of the joint venture. When the Group's
share of losses of the joint venture exceeds the Group's interest
in that joint venture (which includes any long-term interests that,
in substance, form part of the Group's net investment in the joint
venture), the Group discontinues recognising its share of further
losses. Additional losses are recognised only to the extent that
the Group has incurred legal or constructive obligations or made
payments on behalf of the joint venture.
An investment in a joint venture is accounted for using the
equity method from the date on which the investee becomes a joint
venture. On acquisition of the investment in a joint venture, any
excess of the cost of the investment over the Group's share of the
net fair value of the identifiable assets and liabilities of the
investee is recognised as goodwill, which is included within the
carrying amount of the investment. Any excess of the Group's share
of the net fair value of the identifiable assets and liabilities
over the cost of the investment, after reassessment, is recognised
immediately in profit or loss in the period in which the investment
is acquired.
The requirements of IAS 39 are applied to determine whether it
is necessary to recognise any impairment loss with respect to the
Group's investment in a joint venture. When necessary, the entire
carrying amount of the investment (including goodwill) is tested
for impairment in accordance with IAS 36 Impairment of Assets as a
single asset by comparing its recoverable amount (higher of value
in use and fair value less costs of disposal) with its carrying
amount. Any impairment loss recognised forms part of the carrying
amount of the investment. Any reversal of that impairment loss is
recognised in accordance with IAS 36 to the extent that the
recoverable amount of the investment subsequently increases.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in joint ventures - continued
The Group discontinues the use of the equity method from the
date when the investment ceases to be a joint venture, or when the
investment (or a portion thereof) is classified as held for sale.
When the Group retains an interest in the former joint venture and
the retained interest is a financial asset, the Group measures the
retained interest at fair value at that date and the fair value is
regarded as its fair value on initial recognition in accordance
with IAS 39. The difference between the carrying amount of the
joint venture at the date the equity method was discontinued, and
the fair value of any retained interest and any proceeds from
disposing of a part interest in the joint venture is included in
the determination of the gain or loss on disposal of the joint
venture. In addition, the Group accounts for all amounts previously
recognised in other comprehensive income in relation to that joint
venture on the same basis as would be required if that joint
venture had directly disposed of the related assets or liabilities.
Therefore, if a gain or loss previously recognised in other
comprehensive income by that joint venture would be reclassified to
profit or loss on the disposal of the related assets or
liabilities, the Group reclassifies the gain or loss from equity to
profit or loss (as a reclassification adjustment) when the equity
method is discontinued.
The Group continues to use the equity method when an investment
in a joint venture becomes an investment in an associate. There is
no remeasurement to fair value upon such changes in ownership
interests.
When the Group reduces its ownership interest in a joint venture
but the Group continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss
that had previously been recognised in other comprehensive income
relating to that reduction in ownership interest if that gain or
loss would be reclassified to profit or loss on the disposal of the
related assets or liabilities.
When a group entity transacts with a joint venture of the Group
(such as a sale or contribution of assets), profits and losses
resulting from the transactions with the joint venture are
recognised in the Group's consolidated financial statements only to
the extent of interests in the joint venture that are not related
to the Group.
Assets classified as held for sale
Assets are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only
when the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary for
sales of such asset and its sale is highly probable. Management
must be committed to the sale, which should be expected to qualify
for recognition as a completed sale within one year from the date
of classification.
When the Group is committed to a sale plan involving disposal of
an investment, or a portion of an investment, in a joint venture,
the investment or the portion of the investment that will be
disposed of is classified as held for sale when the criteria
described above are met, and the Group discontinues the use of the
equity method in relation to the portion that is classified as held
for sale from the time when the investment (or a portion of the
investment) is classified as held for sale. Any retained portion of
an investment in a joint venture that has not been classified as
held for sale continues to be accounted for using the equity
method. The Group discontinues the use of the equity method at the
time of disposal when the disposal results in the Group losing
joint control over the joint venture.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Assets classified as held for sale - continued
After the disposal takes place, the Group accounts for any
retained interest in the joint venture in accordance with IAS 39
unless the retained interest continues to be a joint venture, in
which case the Group uses the equity method (see the accounting
policy regarding investments in joint ventures above).
Assets classified as held for sale are measured at the lower of
their previous carrying amount and fair value less costs of
disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated customer
returns, rebates and other similar allowances.
Revenue from sale of properties in the ordinary course of
business is recognised when the respective properties have been
completed and delivered to the buyers. Deposits and instalments
received from purchasers prior to meeting the revenue recognition
criteria are included in the consolidated statement of financial
position under current liabilities.
Rental income is recognised on a straight-line basis over the
term of the relevant lease. In the event that lease incentives are
provided to enter into operating leases, such incentives are
recognised as an asset. The aggregate benefit of incentives is
recognised as a reduction of rental income on a straight-line
basis, except where another systematic basis is more representative
of the time pattern in which economic benefits from the leased
asset are consumed.
Hotel operation and other service income are recognised when
services are provided.
Interest income from a financial asset is recognised when it is
probable that the economic benefits will flow to the Group and the
amount of income can be measured reliably. Interest income is
accrued on a time basis, by reference to the principal outstanding
and at the effective interest rate applicable, which is the rate
that exactly discounts the estimated future cash receipts through
the expected life of the financial asset to that asset's net
carrying amount on initial recognition.
Investment properties
investment properties are properties held to earn rentals and/or
for capital appreciation. Investment properties are initially
measured at cost, including any directly attributable expenditure.
Subsequent to initial recognition, investment properties are
measured at their fair values. Gains or losses arising from changes
in the fair value of investment properties are included in profit
or loss for the period in which they arise.
An investment property is derecognised upon disposal or when the
investment property is permanently withdrawn from use and no future
economic benefits are expected from its disposal. Any gain or loss
arising on derecognition of the property (calculated as the
difference between the net disposal proceeds and the carrying
amount of the asset) is included in the profit or loss in the
period in which the item is derecognised.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Property, plant and equipment
Leasehold land and building held for use in the supply of
services, or for administrative purpose and other property, plant
and equipment other than crockery, utensils and linens are stated
in the consolidated statement of financial position at cost less
subsequent accumulated depreciation and subsequent accumulated
impairment losses, if any.
Depreciation is recognised so as to write off the cost of items
of property, plant and equipment, other than crockery, utensils and
linen, less their residual values over their estimated useful
lives, using the straight-line method. The estimated useful lives,
residual values and depreciation method are reviewed at the end of
each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
Initial expenditure incurred for crockery, utensils and linens
is capitalised and no depreciation is provided thereon. The cost of
subsequent replacement for these items is recognised in profit or
loss when incurred.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in
profit or loss.
Properties under development
When buildings are in the course of development held for use, in
the supply of services or for administrative purposes, the
amortisation of prepaid lease payments, where the leasehold land is
classified as operating leases, provided during the construction
period is included as part of the cost of the building under
construction. Buildings under construction are carried at cost,
less any identified impairment losses. Cost comprises development
costs including attributable borrowing costs, prepaid lease
payments and directly attributable costs capitalised during the
development period. Depreciation of buildings commences when they
are available for use (i.e. when they are in the condition
necessary for them to be capable of operating in the manner
intended by management).
When leasehold land is intended for sale in the ordinary course
of business after completion of development, the leasehold land
component is included within the carrying amount of the properties
and is classified under current assets.
Properties for development
Properties for development represents consideration and other
direct costs for acquisition of leasehold interest in land held for
future development.
Properties for development are stated at cost and amortised to
profit or loss on a straight-line basis over the term of the
relevant lease until the commencement of development, upon which
the remaining carrying value of the properties will be transferred
to the appropriate categories according to the management's
intention of use of the properties after completion of
development.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Inventories
Properties held for sale
Completed properties for sale in the ordinary course of business
are stated at the lower of cost and net realisable value. Net
realisable value is determined by reference to estimated selling
price less selling expenses.
Properties for or under development intended for sale after
completion of development are stated at the lower of cost and net
realisable value. Net realisable value is determined by reference
to estimated selling price less anticipated costs to completion of
the development and costs to be incurred in marketing and selling
the completed properties.
Cost of properties comprises land cost, development costs and
other direct costs attributable to the development and borrowing
costs capitalised during the development period that have been
incurred in bringing the properties to their present condition.
Other inventories
Other inventories comprising food and beverage are stated at the
lower of cost and net realisable value. Cost is calculated using
the weighted average method.
Impairment of assets
At the end of the reporting period, the Group reviews the
carrying amounts of its assets to determine whether there is any
indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss,
if any. If the recoverable amount of an asset is estimated to be
less than its carrying amount, the carrying amount of the asset is
reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior years. A
reversal of an impairment loss is recognised immediately in profit
or loss.
Financial instruments
Financial assets and financial liabilities are recognised when a
group entity becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate,
on initial recognition.
Financial assets
The Group's financial assets are classified as either loans and
receivables or fair value through profit or loss ("FVTPL"). The
classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Subsequent to initial recognition, loans and receivables
(including loans receivable, note receivables, other receivable,
trade receivables, amounts due from non-controlling interests, bank
deposits and cash) are measured at amortised cost using the
effective interest method, less any impairment.
Financial assets at FVTPL
Financial assets at FVTPL has two subcategories, including
financial assets held for trading and those designated as at FVTPL
on initial recognition.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling in the near term; or
-- on initial recognition it is a part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognised in profit or
loss. The net gain or loss recognised in profit or loss excludes
any dividend or interest earned on the financial assets.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the debt
instrument, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
Interest income is recognised on an effective interest
basis.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the financial assets have been
affected.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Impairment of financial assets - continued
objective evidence of impairment could include:
-- significant financial difficulty of the issuer or counterparty; or
-- breach of contract, such as default or delinquency in
interest and principal payments; or
-- it becoming probable that the borrower will enter bankruptcy or financial
re-organisation; or
-- the disappearance of an active market for that financial
asset because of financial difficulties.
Financial assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis. Objective evidence of impairment for a portfolio
of receivables could include the Group's past experience of
collecting payments, as well as observable changes in national or
local economic conditions that correlate with default on
receivables.
The amount of the impairment loss recognised is the difference
between the asset's carrying amount and the present value of the
estimated future cash flows discounted at the financial asset's
original effective interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of loans receivable, other receivable and trade
receivables, where the carrying amount is reduced through the use
of an allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss. When a
receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously
written off are credited to profit or loss.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment loss was recognised, the previously
recognised impairment loss is reversed through profit or loss to
the extent that the carrying amount of the asset at the date the
impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
Financial liabilities and equity instruments
Debt and equity instruments issued by a group entity are
classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and
the definitions of a financial liability and an equity
instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recorded at
the proceeds received, net of direct issue costs.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial liabilities and equity instruments - continued
financial liabilities
financial liabilities including payables, amounts due to
non-controlling interests and bank borrowings are subsequently
measured at amortised cost, using the effective interest
method.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the
financial liability, or, where appropriate, a shorter period, to
the net carrying amount on initial recognition.
Interest expense is recognised on an effective interest
basis.
Derivative financial instruments
Derivatives are initially recognised at fair value at the date
when derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of the reporting period.
The resulting gain or loss is recognised in profit or loss
immediately unless the derivative is designated and effective as a
hedging instrument, in which case the timing of the recognition in
profit or loss depends on the nature of the hedge relationship.
Derivatives embedded in non-derivative host contracts are
treated as separate derivatives when they meet the definition of a
derivative, their risks and characteristics are not closely related
to those of the host contracts and the host contracts are not
measured at FVTPL.
Derecognition
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss.
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or expired.
The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable is
recognised in profit or loss.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
The Group as lessor
Rental income from operating leases is recognised in profit or
loss on a straight-line basis over the term of the relevant
lease.
The Group as lessee
Rentals payable under operating leases are recognised as an
expense on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed.
Leasehold land and building
When a lease includes both land and building elements, the Group
assesses the classification of each element as a finance or an
operating lease separately based on the assessment as to whether
substantially all the risks and rewards incidental to ownership of
each element have been transferred to the Group, unless it is clear
that both elements are operating leases in which case the entire
lease is classified as an operating lease. Specifically, the
minimum lease payments (including any lump-sum upfront payments)
are allocated between the land and the building elements in
proportion to the relative fair values of the leasehold interests
in the land element and building element of the lease at the
inception of the lease.
To the extent the allocation of the lease payments can be made
reliably, interest in leasehold land that is accounted for as an
operating lease is presented as "prepaid lease payments" in the
consolidated statement of financial position and is amortised over
the lease term on a straight-line basis except for those that are
classified and accounted for as investment properties under the
fair value model.
Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets
until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Foreign currencies
In preparing the financial statements of each individual group
entity, transactions in currencies other than the functional
currency of that entity (foreign currencies) are recognised at the
rates of exchanges prevailing on the dates of the transactions. At
the end of the reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items carried at fair value that are denominated
in foreign currencies are retranslated at the rates prevailing on
the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences on monetary items are recognised in profit
or loss in the period in which they arise except for exchange
differences on monetary items receivable from or payable to a
foreign operation for which settlement is neither planned nor
likely to occur (therefore forming part of the net investment in
the foreign operation), which are recognised initially in other
comprehensive income and reclassified from equity to profit or loss
on repayment of the monetary items.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated into the presentation currency of the Group (i.e. Hong
Kong dollars) using exchange rates prevailing at the end of each
reporting period. Income and expenses items are translated at the
average exchange rates for the year, unless exchange rates
fluctuate significantly during the period, in which case, the
exchange rates prevailing at the dates of transactions are used.
Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity under the heading of
translation reserve (attributed to non-controlling interest as
appropriate).
Share-based payment transactions
The fair value of services received determined by reference to
the fair value of share options granted under the share option
scheme and share award scheme of the Company and the holding
company at the grant date is expensed on a straight-line basis over
the vesting period, with a corresponding increase in equity.
At the end of the reporting period, the Group revises its
estimates of the number of options that are expected to ultimately
vest. The impact of the revision of the original estimates, if any,
is recognised in profit or loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to
equity. At the time when the share options are exercised, forfeited
after the vesting date or are still not exercised at the expiry
date, the amount previously recognised will continue to be held in
equity.
Retirement benefit costs
Payments to defined contribution retirement benefit plans,
including state-managed retirement benefit scheme and the Mandatory
Provident Fund Scheme, are charged as an expense when employees
have rendered service entitling them to the contributions.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from "profit before taxation" as
reported in the consolidated statement of profit or loss because of
income or expenses that are taxable or deductible in other years
and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill
or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that
affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
interests in joint arrangements, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset is realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by
the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
For the purposes of measuring deferred tax liabilities for
investment properties that are measured using the fair value model,
the carrying amount of such properties are presumed to be recovered
entirely through sale, unless the presumption is rebutted. The
presumption is rebutted when the investment property is depreciable
and is held within a business model whose objective is to consume
substantially all of the economic benefits embodied in the
investment property over time, rather than through sale.
Current and deferred tax is recognised in profit or loss, except
when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are
described in note 3, the directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying accounting policies
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
management has made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the consolidated financial
statements.
Deferred tax
For the purposes of measuring deferred tax liabilities or
deferred tax assets arising from investment properties that are
measured using the fair value model, the directors have determined
that the Group's investment properties situated in Hong Kong are
held under a business model whose objective is to recover the value
through sale rather than to consume substantially all of the
economic benefits embodied in the investment properties over time,
whereas those situated in the People's Republic of China ("PRC")
are held under a business model whose objective is to consume
substantially all of the economic benefits embodied in the
investment properties over time, rather than through sale.
Therefore, the presumption that the carrying amounts of investment
properties are recovered entirely through sale is not rebutted for
properties situated in Hong Kong. As a result, the Group has not
recognised any deferred taxes on changes in fair value of the
Group's investment properties situated in Hong Kong as the Group is
not subject to any income taxes on disposal of these investment
properties. The presumption that the carrying amounts of the
Group's investment properties situated in the PRC are recovered
entirely through sale has been rebutted and the deferred tax on the
changes in fair value of these investment properties is recognised
according to the relevant tax rules.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the end of reporting period, that have
a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Income tax
No deferred tax asset has been recognised in respect of tax
losses of HK$41,282,000 (2012: HK$47,827,000) as it is not probable
that taxable profit will be available due to the unpredictability
of future profit streams. The realisability of the deferred tax
asset mainly depends on whether sufficient future profits will be
available in the future. In cases where the actual future profits
generated are more than expected, additional recognition of
deferred tax assets may arise, which would be recognised in the
consolidated statement of profit or loss for the period in which it
takes place.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY - continued
Key sources of estimation uncertainty - continued
Impairment of property, plant and equipment
The Group performs a review annually to determine whether its
hotel property with an aggregate carrying amount of HK$974,569,000
(2012: HK$1,002,086,000) has any indication of impairment by
considering the recoverable amount of the hotel building which has
been determined based on value in use. The calculation of value in
use requires an estimation of future profit generated from the
hotel's operating cash flows discounted to arrive at the present
value of the asset. Where the actual future cash flows are less
than expected, a material impairment loss may arise.
Fair value of investment properties
Investment properties with a carrying amount of
HK$10,216,706,000(2012: HK$9,854,688,000) are stated at fair value
based on the valuation performed by independent professional
valuers. In determining the fair value, the valuers have used a
method of valuation which involves certain assumptions of market
conditions. In relying on the valuation report or making their own
valuation, the directors of the Company have exercised their
judgment and are satisfied that the method of valuation is
reflective of the current market conditions.
Valuation of properties for development
The Group performs a review annually to determine whether
properties for development with an aggregate carrying amount of
HK$1,350,813,000(2012: HK$1,292,243,000) has any indication of
impairment by considering the recoverable amounts of the properties
which has been determined based on the current market price of
properties of comparable location. In case the recoverable amounts
of the properties are less than the carrying amount, a material
adjustment for an impairment loss may result.
Valuation of properties held for sale
Management's assessment of properties held for sale with an
aggregate carrying amount of HK$1,451,215,000 (2012:
HK$1,282,086,000) is based on an estimation of the net realisable
value of these properties which involves, inter-alia, considerable
analyses of the recent transacted prices of the respective
properties held for sale, the current market price of properties of
comparable standard and location, the estimated costs to complete
the development, where appropriate, and a forecast of future sales
based on available market data and statistics. If the actual net
realisable values of the properties held for sale are (more) less
than expected as a result of change in market condition and/or
significant variation in the budgeted development cost, a material
adjustment for (reversal of)
write-down of the properties held for sale may result.
Impairment of other receivable
In determining whether there is any impairment loss on the
carrying amount of the other receivable of HK$384,794,000 (2012:
HK$365,800,000) in relation to costs incurred on certain pieces of
land as detailed in note 22, the Group takes into consideration
objective evidence in the estimation of future cash flows. Where
the actual future cash flows are less than expected, a material
impairment loss, which is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows, may arise.
5. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders through the optimisation of the debt and
equity balances. The Group's overall strategy remains unchanged
from the prior year.
The capital structure of the Group consists of net debt, which
includes bank borrowings net of bank deposit, and bank balances and
cash, and equity attributable to the Company's shareholders,
comprising issued share capital, retained profits and reserves.
The directors of the Company review the capital structure
periodically and maintain a low gearing. The Group's percentage of
net debt to carrying value of properties (comprising investment
properties, hotel property, properties for development and
properties held for sale) at the end of the reporting period is as
follows:
2013 2012
HK$'000 HK$'000
Bank borrowings 3,012,766 2,725,123
Pledged bank deposits - (58,750)
Restricted bank deposits (6,360) -
Bank balances and cash (1,760,007) (1,330,574)
---------------- --------------
Net debt 1,246,399 1,335,799
========= =========
Total carrying value of
properties 13,993,303 13,431,103
========= =========
Percentage of net debt to
carrying value of
properties 8.9% 9.9%
========= =========
6. SEGMENT INFORMATION
Information reported to the executive directors of the Company,
being the chief operating decision makers, for the purposes of
resource allocation and assessment of segment performance is mainly
focused on the property development, property investment and hotel
operation. No operating segments identified by the chief operating
decision makers have been aggregated in arriving at the reportable
segments of the Group.
Property investment and development activities are in Hong Kong
and the PRC whereas the hotel operation is in Hong Kong.
The following is an analysis of the Group's revenue and results
by reportable segment:
Segment revenues and results
For the year ended 31 December 2013
Property Property Hotel
development investment operation Eliminations Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External sales 235,465 385,983 257,149 - 878,597
Inter-segment
sales - 498 - (498) -
--------------- --------------- --------------- --------------- ---------------
Total 235,465 386,481 257,149 (498) 878,597
========= ========= ========= ========= =========
SEGMENT RESULTS
Segment profit 57,006 507,768 50,256 615,030
========= ========= =========
Interest income 24,874
Corporate
income less
expenses (2,337)
Finance costs (80,994)
---------------
Profit before
taxation 556,573
=========
For the year ended 31 December 2012
Property Property Hotel
development investment operation Eliminations Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External sales 36,998 309,552 248,206 - 594,756
Inter-segment
sales - 1,185 - (1,185) -
--------------- --------------- --------------- --------------- ---------------
Total 36,998 310,737 248,206 (1,185) 594,756
========= ========= ========= ========== =========
SEGMENT RESULTS
Segment (loss)
profit (91,356) 1,508,338 35,390 1,452,372
========= ========= =========
Interest income 18,615
Corporate
income less
expenses 1,450
Share of results
of joint ventures (2,667)
Finance costs (82,398)
---------------
Profit before
taxation 1,387,372
=========
6. SEGMENT INFORMATION - continued
Inter-segment sales are at mutually agreed terms.
The Group does not allocate interest income, corporate income
less expenses, share of results of joint ventures and finance costs
to individual reportable segment profit or loss for the purposes of
resource allocation and performance assessment by the chief
operating decision makers.
The accounting policies adopted in preparing the reportable
segment information are the same as the Group's accounting policies
described in note 3.
Other segment profit or loss information
The following charges (credits) are included in the measurement
of segment profit or loss:
For the year ended 31 December 2013
Property Property Hotel Consolidated
development investment operation
HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and
depreciation
* Properties for development 24,124 - - 24,124
* Depreciation of property, plant and equipment 1,745 2,493 51,797 56,035
Fair value changes
on investment
properties - (289,340) - (289,340)
Fair value adjustment
on other receivable (7,435) - - (7,435)
Loss on disposal
of property, plant
and equipment - 41 - 41
========= ========= ========= =========
For the year ended 31 December 2012
Property Property Hotel Consolidated
development investment operation
HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and
depreciation
* Properties for development 21,533 - - 21,533
* Depreciation of property, plant and equipment 1,521 1,424 56,477 59,422
Fair value changes
on investment
properties - (1,359,411) - (1,359,411)
Fair value adjustment
on other receivable 14,706 - - 14,706
Loss on disposal
of property, plant
and equipment - 33 47 80
Reversal of provision
on relocation
compensation (5,089) - - (5,089)
========= ========= ========= =========
6. SEGMENT INFORMATION - continued
Geographical information
The Group operates in two principal geographical areas, being
Hong Kong (country of domicile) and the PRC.
The Group's revenue from external customers by geographical
location of properties is detailed below.
2013 2012
HK$'000 HK$'000
Hong Kong 737,833 469,160
PRC 140,764 125,596
---------------- --------------
878,597 594,756
========= =========
No single customer contributes over 10% of the total revenue of
the Group for both years.
The Group's information about its non-current assets, excluding
financial assets, by geographical location are detailed below.
2013 2012
HK$'000 HK$'000
Hong Kong 8,783,264 8,624,866
PRC 3,800,862 3,585,776
---------------- --------------
12,584,126 12,210,642
========= =========
No segment assets and liabilities are presented as the
information is not reportable to the chief operating decision
makers in the resource allocation and assessment of
performance.
7. REVENUE
The following is an analysis of the Group's revenue from its
major business activities.
2013 2012
HK$'000 HK$'000
Sale of properties 235,465 36,998
Renting of investment properties 385,983 309,552
Hotel operation 257,149 248,206
---------------- --------------
878,597 594,756
========= =========
8. OTHER INCOME
2013 2012
HK$'000 HK$'000
Included in other income
is:
Net exchange gain 6,642 9,624
Rental income from properties
held for sale temporarily
leased 4,223 6,369
========= =========
9. PROPERTY AND RELATED COSTS
2013 2012
HK$'000 HK$'000
Changes in completed properties
held for sale 103,493 16,268
Reversal of provision on
relocation compensation - (5,089)
Selling and marketing expenses 6,472 2,949
Direct operating expenses
on investment properties 50,126 38,885
---------------- --------------
160,091 53,013
========= =========
10. OTHER EXPENSES
2013 2012
HK$'000 HK$'000
Included in other expenses
are:
Management fees paid to
a related company
(note 38) 148,087 141,846
Less: Amount capitalised
to property development
project (3,797) (3,797)
---------------- --------------
144,290 138,049
Hotel operating expenses 63,661 63,277
legal and professional fees 6,056 3,594
========= =========
11. FINANCE COSTS
2013 2012
HK$'000 HK$'000
Interest on:
Bank borrowings wholly repayable
within 5 years 41,417 41,296
bank borrowings not wholly
repayable within 5 years 37,427 38,387
---------------- --------------
78,844 79,683
Less: Amount capitalised
to property development
project (4,133) (2,711)
---------------- --------------
74,711 76,972
Front end fee 4,005 3,463
other charges 2,278 1,963
---------------- --------------
80,994 82,398
========= =========
12. Profit before taxation
2013 2012
HK$'000 HK$'000
Profit before taxation has
been arrived at after charging
(crediting):
Auditor's remuneration 2,359 2,253
Directors' emoluments (note
13) 2,935 5,516
Fair value adjustment on
other receivable (7,435) 14,706
Loss on disposal of property,
plant and equipment 41 80
Depreciation and amortisation 80,487 81,231
Less: Amount capitalised
to property development
projects (328) (276)
---------------- --------------
80,159 80,955
- - - - - -
- - - - - -
- - - - - -
-
Interest income from second
mortgage loans (418) (791)
Interest earned on bank
deposits (24,000) (17,392)
Imputed interest income
on loans to joint ventures - (432)
Other interest income (456) -
--------------- --------------
(24,874) (18,615)
- - - - - -
- - - - - -
- - - - - -
-
Gross rental income from
investment properties (385,983) (309,552)
Less: Direct operating expenses 50,126 38,885
---------------- --------------
Net rental income (335,857) (270,667)
- - - - - -
- - - - - -
- - - - - -
-
13. DIRECTORS' EMOLUMENTS
The emoluments paid or payable to each of the directors are as
follows:
Mr. Mr. Mr.
Mr. Mr. David Donald Richard
Lu Wing Lambert Andrew Ian Öther
Chi Lu Runciman Fletcher Prickett Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
2013
Fee 244 244 - 244 486 1,218
Other
emoluments
Salaries
and other
benefits - - 1,320 - - 1,320
Retirement
benefits
scheme
contribution 24 24 132 - - 180
Share-based
payment
expenses - - 217 - - 217
--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
Total
emoluments 268 268 1,669 244 486 2,935
============ ============ ============ ============ ============ ============
2012
Fee 245 245 - 245 494 1,229
Other
emoluments
Salaries
and other
benefits - - 1,320 - - 1,320
Retirement
benefits
scheme
contribution 24 24 132 - - 180
Share-based
payment
expenses - - 102 - - 102
Share awards
expense - - 2,685 - - 2,685
--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
Total
emoluments 269 269 4,239 245 494 5,516
============ ============ ============ ============ ============ ============
14. INCOME TAX EXPENSE
2013 2012
HK$'000 HK$'000
The charge comprises:
Current tax
Hong Kong Profits Tax 51,091 12,877
PRC Enterprise Income Tax 11,232 8,963
---------------- --------------
62,323 21,840
---------------- --------------
Underprovision in prior
years
Hong Kong Profits Tax 135 1,017
---------------- --------------
Deferred tax 18,855 64,188
---------------- --------------
81,313 87,045
========= =========
Hong Kong Profits Tax is calculated at 16.5% of the estimated
assessable profits for both years.
PRC Enterprise Income Tax is calculated at 25% of the estimated
assessable profits for both years.
Details of deferred taxation are set out in note 32.
Income tax expense for the year can be reconciled from profit
before taxation per the consolidated statement of profit or loss as
follows:
2013 2012
HK$'000 HK$'000
Profit before taxation 556,573 1,387,372
========= =========
Tax charge at Hong Kong
income tax rate of 16.5% 91,835 228,916
Tax effect of share of results
of joint ventures - 440
Tax effect of expenses not
deductible for tax
purposes 25,606 24,874
Tax effect of income not
taxable for tax purposes (44,366) (187,827)
Tax effect of tax losses
not recognised 2,661 4,138
Tax effect of deductible
temporary differences not
recognised 224 -
Utilisation of tax losses
previously not recognised (3,753) (11,095)
Effect of different tax
rates of subsidiaries operating
in other jurisdiction 10,750 24,437
Underprovision in prior
years 135 1,017
Others (1,779) 2,145
---------------- --------------
Income tax expense for the
year 81,313 87,045
========= =========
15. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to
the Company's shareholders is based on the following data:
2013 2012
HK$'000 HK$'000
Earnings for the purpose
of basic earnings per share:
Profit for the year attributable
to the Company's shareholders 474,543 1,326,447
========= =========
2013 2012
number of ordinary shares
for the purpose of basic
earnings per share 886,347,812 886,347,812
========= =========
No diluted earnings per share is presented as the Company did
not have any potential ordinary share in issue during both years or
at the end of each reporting period.
For the purpose of assessing the performance of the Group, the
directors are of the view that the profit for the year should be
adjusted for the fair value changes on investment properties
recognised in profit or loss and the related deferred taxation in
arriving at the "adjusted profit attributable to the Company's
shareholders". A reconciliation of the adjusted earnings is as
follows:
2013 2012
HK$'000 HK$'000
Profit for the year attributable
to the Company's shareholders
as shown in the consolidated
statement of profit or
loss 474,543 1,326,447
Fair value changes on investment
properties (289,340) (1,359,411)
Deferred tax thereon 19,835 62,223
------------------ ------------------
Adjusted profit attributable
to the Company's shareholders 205,038 29,259
========== ==========
Basic earnings per share
excluding fair value changes
on investment properties
net of HK23.1
deferred tax cents HK3.3 cents
========== ==========
The denominators used in the calculation of adjusted earnings
per share are the same as those detailed above.
16. DIVIDENDS
No dividend was paid, declared or proposed during the reported
period. The directors do not recommend the payment of any final
dividend.
17. INVESTMENT PROPERTIES
Hong Kong PRC
----------------- ------------------------------------
Medium- Medium-
term leases Long leases term leases Total
HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 6,450,000 1,768,839 266,436 8,485,275
Additions 9,482 - - 9,482
Fair value changes 1,110,518 229,227 19,666 1,359,411
Exchange adjustments - 496 24 520
----------------- ----------------- ----------------- -----------------
At 31 December
2012 7,570,000 1,998,562 286,126 9,854,688
Fair value changes 210,000 60,539 18,801 289,340
Exchange adjustments - 63,445 9,233 72,678
----------------- ----------------- ----------------- -----------------
At 31 December
2013 7,780,000 2,122,546 314,160 10,216,706
========== ========== ========== ==========
All of the Group's property interests are held under operating
leases to earn rentals and/or for capital appreciation purposes.
These properties are measured using the fair value model and are
classified and accounted for as investment properties.
In estimating the fair value of investment properties, the Group
uses market-observable data to the extent it is available. The
Group engages third party qualified valuers to perform the
valuation of the Group's investment properties. At the end of each
reporting period, the Group works closely with the qualified
external valuers to establish and determine the appropriate
valuation techniques and inputs to the model.
The fair values of investment properties as at 31 December 2013
and 31 December 2012 were arrived at on the basis of valuations
carried out at those dates by Savills Valuation and Professional
Services Limited ("Savills"), a firm of Chartered Surveyors not
connected to the Group, recognised by The Hong Kong Institute of
Surveyors, that has appropriate qualifications and recent
experience in the valuation of properties in the relevant
locations.
The valuation, which conforms to the appropriate sections of
both the current Practice Statements, and United Kingdom Practices
Statements contained in the RICS Valuation Standards published by
the Royal Institution of Chartered Surveyors in the United Kingdom
(the "Red Book"), was arrived at by reference to market evidence of
transaction prices or by capitalisation of future rental which is
estimated by reference to comparable rental as available in the
relevant markets. In the valuation, which falls under Level 3 of
the fair value hierarchy, the market rentals of all lettable units
as well as those of similar properties are made by reference to the
rentals achieved by the Group in the lettable units as well as
those of similar properties in the neighbourhood. The
capitalisation rate adopted is by reference to the yield rates
observed by the valuer for similar properties in the locality and
adjusted for the valuer's knowledge of factors specific to the
respective properties. These has been no change from the valuation
technique used in the prior year.
In estimating the fair value of the properties, the highest and
best use of the properties is their current use.
17. INVESTMENT PROPERTIES - continued
The key inputs used in valuing the investment properties under
the income capitalisation approach were the capitalisation rates
used and monthly unit rent. A slight increase in the capitalisation
rate used would result in a significant decrease in the fair value
measurement of the investment properties, and vice versa. The
higher the monthly unit rent, the higher the fair value and vice
versa.
Details of the significant unobservable input under the income
capitalisation approach are as follows:
Class of property Capitalisation rates
Office units and shops in Hong Kong 3.75% per annum
Car parking spaces in Hong Kong 5.5% per annum
Shops in the PRC 6.75% per annum to 9.0% per annum
Office units in the PRC 6.0% per annum to 6.5% per annum
Car parking spaces in the PRC were valued under the direct
comparison approach. The market unit rate is one of the key inputs.
The higher the market unit rate the higher the fair value, and vice
versa. The adopted market unit rates range from RMB115,000 to
RMB150,000 per unit.
Details of the Group's investment properties which falls under
Level 3 of the fair value hierarchy as at 31 December 2013 are as
follows:
Fair value
as at
2013
HK$'000
Commercial property located in
Hong Kong 7,780,000
Commercial properties located in
the PRC 2,436,706
----------------------
10,216,706
=============
There were no transfers into or out of Level 3 during the
year.
18. PROPERTY, PLANT AND EQUIPMENT
Land
in
Hong
Kong
under
medium-term
lease Furniture, Crockery,
and Plant fixtures utensils
hotel and and Motor Leasehold and
building machinery equipment vehicles improvements linen Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
COST
At 1 January
2012 1,089,727 39,175 33,985 6,418 73,189 5,051 1,247,545
Additions - - 2,095 669 485 - 3,249
Disposals (55) - (190) (75) (17) - (337)
Exchange
adjustments - - 3 (1) 1 - 3
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2012 1,089,672 39,175 35,893 7,011 73,658 5,051 1,250,460
Additions - 5,910 1,627 701 805 - 9,043
Disposals - - (619) (47) - - (666)
Exchange
adjustments - 88 120 166 193 - 567
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2013 1,089,672 45,173 37,021 7,831 74,656 5,051 1,259,404
------------ ------------- ------------- ----------- --------------- ----------- ------------
DEPRECIATION
At 1 January
2012 60,072 9,167 17,017 2,043 38,905 - 127,204
Provided
for the
year 27,518 3,918 8,460 1,315 18,487 - 59,698
Eliminated
on disposals (4) - (147) - (11) - (162)
Exchange
adjustments - - 2 2 5 - 9
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2012 87,586 13,085 25,332 3,360 57,386 - 186,749
Provided
for the
year 27,517 5,153 7,535 1,213 14,945 - 56,363
Eliminated
on disposals - - (557) (4) - - (561)
Exchange
adjustments - 19 40 76 111 - 246
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2013 115,103 18,257 32,350 4,645 72,442 - 242,797
------------ ------------- ------------- ----------- --------------- ----------- ------------
CARRYING
VALUES
At 31 December
2013 974,569 26,916 4,671 3,186 2,214 5,051 1,016,607
======== ======== ======== ======= ======== ======= ========
At 31 December
2012 1,002,086 26,090 10,561 3,651 16,272 5,051 1,063,711
======== ======== ======== ======= ======== ======= ========
The above items of property, plant and equipment are depreciated
on a straight-line basis after taking into account their estimated
residual values at the following rates per annum:
Leasehold land Over the lease terms ranging from 42 years
to 45.5 years
Completed hotel building 40 years
Plant and machinery 10%
Furniture, fixtures and equipment 25%
Motor vehicles 25%
Leasehold improvements 25%
19. PROPERTIES FOR DEVELOPMENT
2013 2012
HK$'000 HK$'000
COST
At 1 January 1,336,169 1,310,596
Additions 125,366 25,693
Transfer to properties held (86,436) -
for sale
Exchange adjustments 41,934 (120)
---------------- --------------
At 31 December 1,417,033 1,336,169
---------------- --------------
AMORTISATION
At 1 January 43,926 22,324
Provided for the year 24,124 21,533
Transfer to properties held (3,455) -
for sale
Exchange adjustments 1,625 69
---------------- --------------
At 31 December 66,220 43,926
---------------- --------------
CARRYING VALUE
At 31 December 1,350,813 1,292,243
========= =========
The carrying amount represents the Group's interest in certain
pieces of land located in the PRC to be held for future
development.
The carrying amount is amortised on a straight-line basis over
the lease terms ranging from 40 to 70 years.
20. LOANS RECEIVABLE
2013 2012
HK$'000 HK$'000
Second mortgage loans 7,535 10,038
========= =========
Analysed for reporting purposes:
Non-current assets 7,072 9,396
Current assets 463 642
---------------- --------------
7,535 10,038
========= =========
The loans bear interest at Hong Kong Prime Rate and are
repayable by monthly installments over a period of 20 years or as
stipulated in the respective agreements.
The second mortgage loans are secured by the leasehold
properties of the borrowers.
The effective interest rate of the loans receivable is 5.0%
(2012: 5.0%) per annum.
Loans receivable balances which are past due at the end of the
reporting period are minimal and are not considered impaired. In
determining the recoverability of the loans receivable, the Group
considers, among other factors, any change in value of the
properties securing the loans.
The concentration of credit risk is limited due to the customer
base being large and unrelated. No single loan receivable is
individually material.
21. NOTE RECEIVABLES
The amount represents (i) the carrying value of a five-year zero
coupon principal protected index-linked note with principal amount
of US$2,000,000 (equivalent to HK$15,508,000) (2012: US$2,000,000
(equivalent to HK$15,510,000) maturing on 7 February 2017; and (ii)
the carrying value of a five-year zero coupon principal protected
index-linked note with a principal amount of US$5,000,000
(equivalent to HK$38,771,000) (2012: nil) maturing on 9 August
2018. The index is a proprietary index named Forex Yield
Differential Accrual Perpetual Index, which is a proprietary
non-discretionary algorithm to calculate the risk filter multiple
of non-discretionary trading that observes a basket of ten
currencies.
The host contracts of the note are measured at amortised cost.
The index-linked feature is regarded as a derivative embedded in
but not closely related to the host contract in accordance with IAS
39 Financial Instruments: Recognition and Measurement. However, in
the opinion of the directors, the fair values of the embedded
derivatives at the end of the reporting period are insignificant
and therefore they have not been accounted for as a separate
component in the consolidated financial statements.
22. OTHER RECEIVABLE
At 31 December 2013, the Group had incurred a total amount of
RMB321,052,000 (2012: RMB321,052,000), equivalent to HK$408,346,000
(2012: HK$395,954,000), for the tenant relocation arrangements,
excavation and infrastructure work on certain pieces of land in
Nanjing, the PRC. The amount, together with further costs to
complete the work, are wholly refundable from the relevant PRC
local government either by deduction against the consideration
payable if the Group is successful in bidding for the land or out
of the proceeds received by the relevant PRC local government from
another successful tenderer. The directors estimate that, based on
the Group's development plan, the time schedule for auction of the
relevant land will be initiated before the end of 2016 and by then
the full amount will be recovered.
The balance of HK$384,794,000 (2012: HK$365,800,000) represents
the Hong Kong dollar equivalent of the present value of the
original amount of RMB321,052,000 expected to be recovered in 2016
discounted at the rate of 2% per annum.
23. PLEDGED BANK DEPOSITS/RESTRICTED BANK DEPOSITS
Pledged bank deposits carried interest at fixed rates ranging
from 0.1% to 2.9% per annum at 31 December 2012. All pledged bank
deposits were refunded to the Group during the year upon full
repayment of the relevant bank borrowings.
Restricted bank deposits carry interest at a fixed rate of 0.35%
per annum and were placed with a bank in relation to long-term bank
borrowings.
24. PROPERTIES HELD FOR SALE
Properties under development are expected to be realised in more
than twelve months after the end of the reporting period.
25. TRADE RECEIVABLES, DEPOSITS AND PREPAYMENTS
2013 2012
HK$'000 HK$'000
Trade receivables 9,114 11,638
Accrued income 92,234 85,407
Deposits and prepayments 23,188 15,335
---------------- --------------
124,536 112,380
========= =========
Trade receivables mainly represent rental receivable from
tenants for the use of the Group's properties and receivables from
corporate customers and travel agents for the use of hotel
facilities. No credit is allowed to tenants. Rentals are payable
upon presentation of demand notes. An average credit period of 30
days is allowed to corporate customers and travel agents.
All trade receivables at the end of the reporting period are
aged less than 60 days. The Group does not hold any collateral over
these balances.
Before granting credit to any customer, the Group uses an
internal credit assessment policy to assess the potential
customers' credit quality and defines credit limit by customer.
trade receivables of HK$940,000 (2012: HK$2,088,000) at the end of
the reporting period are past due but are not considered impaired
as these debtors have good repayment history. The Group does not
hold any collateral over these balances.
26. AMOUNTS DUE FROM/TO NON-CONTROLLING INTERESTS
The balances are unsecured, interest-free and repayable on
demand.
27. Bank balances and CASH
Bank balances and cash comprise cash and short-term bank
deposits which carry fixed interest rates ranging from 0.1% to 3.3%
(2012: 0.1% to 3.1%) per annum. Included in bank balances and cash
is fixed deposits of HK$455,340,000 (2012: HK$36,999,000) with an
original maturity period of more than three months.
The Group's bank balances and cash that are denominated in
currencies other than the functional currencies of the relevant
group entities are set out below:
2013 2012
HK$'000 HK$'000
Hong Kong dollars 23 100
========= =========
United States dollars 15,994 76,470
========= =========
Renminbi 184,118 554,661
========= =========
28. ASSETS CLASSIFIED AS HELD FOR SALE
2013 2012
HK$'000 HK$'000
Cost of unlisted investment
in joint ventures - 3,994
Share of post-acquisition
reserves - (5,929)
---------------- --------------
- (1,935)
Loans to joint ventures - 44,025
---------------- --------------
- 42,090
========= =========
On 7 March 2012, the Group entered into an agreement to dispose
of its entire equity interest, together with the assignment of the
loans to the joint ventures, to the joint venture partner for a
total cash consideration of HK$61,250,000. The disposal was
completed in May 2013.
29. PAYABLES, DEPOSITS AND ACCRUED CHARGES
2013 2012
HK$'000 HK$'000
Trade payables 2,609 2,720
Rental deposits 113,185 93,539
Rental received in advance 12,052 8,590
Other payables, other deposits
and accrued charges 162,233 190,678
---------------- --------------
290,079 295,527
========= =========
Included in other payables is an aggregate amount of
HK$87,876,000 (2012: HK$85,761,000) payable to contractors for the
cost in relation to the tenant relocation arrangements, excavation
and infrastructure work on certain pieces of land as detailed in
note 22. Included in other deposits at 31 December 2012 is an
amount of HK$40,000,000 received on disposal of the interests in
joint ventures as detailed in note 28.
Rental deposits to be settled after twelve months from the end
of the reporting period based on the respective lease terms
amounted to HK$87,302,000 (2012: HK$61,667,000).
30. BANK BORROWINGS
2013 2012
HK$'000 HK$'000
Secured 2,908,463 2,740,500
Unsecured 118,000 -
---------------- --------------
3,026,463 2,740,500
Less: Front-end fee (13,697) (15,377)
---------------- --------------
3,012,766 2,725,123
========= =========
Analysed for reporting purpose
as:
Current liabilities 1,290,658 388,004
Non-current liabilities 1,722,108 2,337,119
---------------- --------------
3,012,766 2,725,123
========= =========
The bank borrowings are
repayable as follows:
On demand or within one
year 1,291,791 388,848
More than one year, but
not exceeding two years 395,152 1,035,297
More than two years, but
not exceeding five years 1,082,914 1,015,430
More than five years 256,606 300,925
---------------- --------------
3,026,463 2,740,500
========= =========
All bank borrowings are denominated in the functional currencies
of the relevant group entities and carry interest at floating
rates, the principal amounts of which are analysed below:
Denominated Interest rates 2013 2012
in
HK$'000 HK$'000
Hong Kong Interbank
Offered Rate ("HIBOR")
plus 1% to 2.75%
Hong Kong (2012: HIBOR plus
dollars 1% to 2.75%) 2,480,182 2,173,182
95% to 125% of
People's Bank of
China ("PBOC")
Prescribed Interest
Rates (2012: 95%
to 110% of PBOC
Prescribed Interest
Renminbi Rates) 546,281 567,318
---------------- --------------
3,026,463 2,740,500
========= =========
The effective interest rates of these variable-rate borrowings
range from 1.5% to 8.2% (2012: 1.5% to 7.8%) per annum.
31. SHARE CAPITAL
2013 2012
US$'000 HK$'000 HK$'000
Authorised:
1,300,000,000 ordinary
shares of US$0.05 each 65,000 506,313 506,313
========= ========= =========
Issued and fully paid:
886,347,812 ordinary
shares of US$0.05 each 44,317 345,204 345,204
========= ========= =========
32. DEFERRED TAXATION
The following are the major deferred tax liabilities (assets)
recognised and movements thereon during the current and prior
reporting periods:
Fair
value Effective
Accelerated of investment rental Tax
tax depreciation properties income losses Others Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 19,356 202,876 17,867 (10,217) 4,489 234,371
Exchange
adjustments - 184 1 (2) - 183
(Credit)
charge
to profit
or
loss (4,527) 62,223 1,274 5,745 (527) 64,188
---------------- ----------------- ---------------- ---------------- ---------------- ----------------
At 31
December
2012 14,829 265,283 19,142 (4,474) 3,962 298,742
Exchange
adjustments - 7,791 617 (74) - 8,334
(Credit)
charge
to profit
or
loss (871) 19,835 1,169 1,774 (3,052) 18,855
---------------- ----------------- ---------------- ---------------- ---------------- ----------------
At 31
December
2013 13,958 292,909 20,928 (2,774) 910 325,931
========= ========== ========= ========= ========= =========
For the purpose of presentation of the consolidated statement of
financial position, deferred tax assets and liabilities have been
offset and shown under non-current liabilities.
At 31 December 2013, the Group has unused tax losses of
HK$52,375,000 (2012: HK$70,645,000) available to offset against
future profits. A deferred tax asset has been recognised in respect
of HK$11,093,000 (2012: HK$22,818,000) of such losses. No deferred
tax asset has been recognised in respect of the remaining
HK$41,282,000 (2012: HK$47,827,000) as it is not probable that
taxable profit will be available to offset against the tax losses
due to the unpredictability of future profit streams. The
unrecognised tax losses will expire in the following years ending
31 December:
2013 2012
HK$'000 HK$'000
2013 - 1,699
2014 605 586
2015 2,129 2,064
2016 1,562 1,514
2017 3,574 3,467
2018 5,111 -
---------------- --------------
12,981 9,330
========= =========
32. DEFERRED TAXATION - continued
Other tax losses may be carried forward indefinitely.
At 31 December 2013, the Group has deductible temporary
differences in respect of property, plant and equipment of
HK$1,360,000 (2012: nil). No deferred tax asset has been recognised
in respect of such deductible temporary differences as it is not
probable that taxable profit will be available against which the
deductible temporary differences can be utilised.
33. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
2013 2012
HK$'000 HK$'000
Financial assets
Loans and receivables
(including cash and cash
equivalents) 2,222,354 1,794,281
========= =========
Financial liabilities
Financial liabilities
at amortised cost 3,267,050 2,966,656
========= =========
(b) Financial risk management objectives and policies
The directors of the Company have overall responsibility for the
establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls to monitor risks and adherence
to market conditions and the Group's activities. The Group, through
its training and management standards and procedures, aims to
develop a constructive control environment in which all employees
understand their roles and obligations. The directors of the
Company monitor and manage the financial risks relating to the
operations of the Group to ensure appropriate measures are
implemented on a timely and effective manner. These risks include
market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk.
The Group's overall strategy remains unchanged from prior
year.
Market risk
(i) Foreign currency risk
Certain subsidiaries of the Company have foreign currency
denominated monetary assets, which expose the Group to foreign
currency risk. The Group currently does not have a policy to hedge
the foreign currency exposure. However, the management monitors the
related foreign currency fluctuation closely and will consider
entering into foreign exchange forward contracts to hedge
significant portion of the foreign currency risk should the need
arise.
33. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk - continued
(i) Foreign currency risk - continued
The carrying amounts of the foreign currency denominated
monetary assets at the end of the reporting period in the
respective group entities are as follows:
2013 2012
HK$'000 HK$'000
Hong Kong dollars 23 100
United States dollars 70,274 76,470
Renminbi 184,118 554,661
========= =========
The loans for foreign operations within the Group that form part
of the Group's net investment in foreign operations, and are
denominated in foreign currency, other than the functional currency
of the respective foreign entities, the Hong Kong dollars and
United States dollars,
at the end of the reporting period amounted to
HK$208,904,000
(2012: HK$207,908,000) and HK$92,420,000 (2012: HK$92,387,000)
respectively.
Sensitivity analysis
The following table details the Group's sensitivity to a 5%
(2012: 5%) appreciation in the functional currencies of the
relevant subsidiaries, Renminbi and Hong Kong dollars, relative to
the foreign currencies of the relevant subsidiaries, the Hong Kong
dollars, United States dollars and Renminbi. There would be an
equal and opposite impact where Renminbi and Hong Kong dollars
weaken 5% (2012: 5%) against the relevant currencies.
Decrease in
profit for the
year Increase in equity
2013 2012 2013 2012
HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong
dollars 1 5 10,445 10,395
United
States
dollars 3,514 3,824 4,621 4,619
Renminbi 9,206 27,733 - -
======== ======== ======== ========
In management's opinion, the sensitivity analysis is
unrepresentative of the inherent foreign currency risk as the year
end exposure does not reflect the exposure during the year.
Since the Hong Kong dollar is pegged to the United States dollar
under the Linked Exchange Rate System, management does not expect
any significant foreign currency exposure in relation to the
exchange rate fluctuations between the Hong Kong dollar and the
United States dollar.
33. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk - continued
(ii) Interest rate risk
The Group is exposed to cash flow interest rate risk in relation
to variable-rate borrowings, loans receivable, bank balances and
deposits. The directors consider that the interest rate risk on
bank balances and deposits are insignificant as they are subject to
minimal interest rate fluctuation, accordingly, no sensitivity
analysis is presented. The Group's cash flow interest rate risk is
mainly concentrated on the fluctuation of HIBOR and the PBOC
Prescribed Interest Rates on the bank borrowings, and Hong Kong
Prime Rate on the loans receivable.
The Group currently does not have an interest rate swap hedging
policy. However, management monitors the interest exposure and will
consider hedging interest rate risk exposure should the need
arise.
Sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to interest rates in relation to the Group's variable-rate
bank borrowings and loans receivable at the end of the reporting
period. The analysis is prepared assuming the amount of asset and
liability outstanding at the end of the reporting period was
outstanding for the whole year. A 50 basis points increase or
decrease represents management's assessment of the reasonably
possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all
other variables were held constant, the Group's profit for the year
ended 31 December 2013 would decrease/increase by HK$15,095,000
(2012: HK$13,575,000).
Credit risk
The Group's maximum exposure to credit risk in the event of the
counterparties' failure to perform their obligations at the end of
the reporting period in relation to each class of recognised
financial assets is the carrying amount of those assets as stated
in the consolidated statement of financial position. In order to
minimise the credit risk, management of the Group has monitoring
procedures to ensure that follow-up action is taken to recover
overdue debts. In addition, the Group reviews the recoverable
amount of each individual debt at the end of each reporting period
to ensure that adequate impairment losses are made for
irrecoverable amounts. In this regard, the directors of the Company
consider that the Group's credit risk is significantly reduced.
At 31 December 2013, the Group has concentration of credit risk
on other receivable from two counterparties.
Although the placing of deposits and notes subscribed are
concentrated on certain banks, the credit risk on these financial
assets is limited because the counterparties are licensed
banks.
The Group has no other significant concentration of credit risk
with exposure spread over a number of counterparties and
customers.
33. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Liquidity risk
Ultimate responsibility for liquidity risk management rests with
the directors of the Company, which have built an appropriate
liquidity risk management framework for the management of the
Group's short, medium and long-term funding and liquidity
management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities, and by
continuously monitoring forecast and actual cash flows. As at 31
December 2013, the Group has available unutilised bank loan
facilities of approximately HK$855,000,000 (2012:
HK$910,000,000).
The following table details the Group's remaining contractual
maturity for its financial liabilities based on the agreed
repayment terms. The table has been drawn up based on the
undiscounted cash flows of financial liabilities and on the
earliest date on which the Group can be required to pay. The table
includes both interest, estimated based on interest rate at the end
of the reporting period, and principal cash flows.
Weighted
average 9 months Total
effective Within 3 months 6 months to undiscounted
interest 3 to to 12 Over cash Carrying
rate months 6 months 9 months months 1 year flows amount
% HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 31.12.2013
Payables
and rental
deposits
received - 167,597 8,478 3,743 3,364 87,302 270,484 270,484
Amounts
due to
non-controlling
interests - 96,985 - - - - 96,985 96,985
Variable
rates
bank borrowings 2.6 351,334 395,361 42,965 568,450 1,911,451 3,269,561 3,012,766
------------ ------------- ------------- ------------- -------------- -------------- --------------
615,916 403,839 46,708 571,814 1,998,753 3,637,030 3,380,235
======== ======== ======== ======== ======== ======== ========
At 31.12.2012
Payables
and rental
deposits
received - 157,171 3,967 9,631 9,158 61,667 241,594 241,594
Amounts
due to
non-controlling
interests - 93,478 - - - - 93,478 93,478
Variable
rates
bank borrowings 2.7 40,606 41,100 40,946 335,477 2,549,370 3,007,499 2,725,123
------------- ------------- ------------- ------------- -------------- ---------------- ---------------
291,255 45,067 50,577 344,635 2,611,037 3,342,571 3,060,195
======== ======== ======== ======== ======== ======== ========
The amounts included above for variable rate bank borrowings are
subject to change if changes in variable interest rates differ to
those estimates of interest rates determined at the end of the
reporting period.
(c) Fair value measurement of financial instruments
the fair value of financial assets and financial liabilities are
determined in accordance with generally accepted pricing models
which is based on discounted cash flows analysis using the relevant
prevailing market rates as input.
The directors consider that the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
consolidated financial statements approximate their fair
values.
34. OPERATING LEASE ARRANGEMENTS
The Group as lessee
Minimum lease payments paid under operating leases during the
year are HK$1,045,000 (2012: HK$792,000).
At the end of the reporting period, the Group had commitments
for future minimum lease payments under non-cancellable operating
leases in respect of rented premises which fall due as follows:
2013 2012
HK$'000 HK$'000
Within one year 477 567
In the second to fifth years
inclusive 993 87
---------------- --------------
1,470 654
========= =========
Leases are negotiated for the range of 1 to 2 years (2012: 1 to
2 years) with fixed monthly rentals.
The Group as lessor
The majority of the Group's investment properties were leased
out under operating leases.
At the end of the reporting period, the Group had contracted
with tenants for the following future minimum lease payments:
2013 2012
HK$'000 HK$'000
Within one year 365,017 333,429
In the second to fifth years
inclusive 636,653 585,789
Over five years 489,571 498,327
---------------- --------------
1,491,241 1,417,545
========= =========
In addition to the annual minimum lease payments, the Group is
entitled to, in respect of leases, in addition to committed rent,
additional rental based on a specified percentage of revenue, if
achieved, earned by the tenant. No such additional rental was
received during the year and the preceding year.
The lease terms of the remaining leased properties range from 1
to 18 years (2012: 1 to 19 years).
35. PLEDGE OF ASSETS
At the end of the reporting period, the Group had pledged the
following assets to secure banking facilities granted to the
Group:
(a) Fixed charges on investment properties with an aggregate
carrying value of HK$9,486,635,000 (2012: HK$9,162,807,000)
together with a floating charge over all the assets of the
properties owning subsidiaries and benefits accrued to the relevant
properties.
(b) Fixed charges on hotel properties with aggregate carrying values of HK$974,569,000(2012: HK$1,002,086,000) together with a floating charge over all the assets of the properties owning subsidiaries and benefits accrued to the relevant properties.
(c) Fixed charges on properties under development held for sale
with an aggregate carrying value of HK$882,479,000 (2012:
HK$707,889,000).
(d) Note receivable of HK$54,279,000 (2012: Nil).
(e) Bank deposits amounting to HK$58,750,000 at 31 December 2012.
36. SHARE-BASED PAYMENTS
Share Option Scheme of the Company
The share option scheme of the Company (the "Share Option
Scheme") was approved by the shareholders of SEA on 27 May 2010 and
by the board of directors of the Company (the "Board") on 28 May
2010. The Share Option Scheme came into effect on 16 August 2010
(the "Adoption Date") upon fulfillment of the conditions contained
in the Share Option Scheme. Unless terminated earlier by the Board,
the Share Option Scheme shall be valid and effective for a term of
10 years until 15 August 2020.
The purpose of the Share Option Scheme is to provide a flexible
means to recognise and acknowledge the performance and/or
contribution of any (i) director or employee of the Company or any
of its affiliates; (ii) representative, manager, agent, contractor,
advisor, consultant, distributor or supplier engaged by the Company
or any of its affiliates; (iii) customer, promoter, business ally
or joint-venture partner of the Company or any of its affiliates;
or (iv) trustee of any trust established for the benefit of
employees of the Company or any of its affiliates.
Under the Share Option Scheme, the Board (or any committee
delegated by the Board) may offer to the eligible participants
options to subscribe for shares of the Company at a price at least
the highest of (i) the closing price of the share of the Company on
the AIM Market on the date of grant of the option; (ii) the average
of the closing price of the share of the Company on the AIM Market
for the five business days immediately preceding the date of grant
of the option; and (iii) the par value of the share of the
Company.
36. SHARE-BASED PAYMENTS - continued
Share Option Scheme of the Company - continued
Without prior approval of the shareholders of SEA in general
meetings, (a) no option may be granted to an eligible participant
which, if exercised in full, would result in the total number of
shares issued and to be issued upon exercise of the options already
granted or to be granted to such eligible participant in any
12-month period, exceeding 1% of the shares of the Company then in
issue; and (b) any grant of options to a substantial shareholder
and/or an independent non-executive director of the Company or SEA
or any of their respective associates, would result in the total
number of shares issued and to be issued upon exercise of all
options granted or to be granted to such person in any 12-month
period exceeding 0.1% of the shares of the Company then in issue
and with an aggregate value exceeding HK$5 million (or its
equivalent amount in British Pound).
Options granted must be taken up within 28 days from the date of
grant upon payment of HK$10 (or its equivalent amount in British
Pound or United States dollars). The period during which an option
may be exercised is determined by the Board (or any committee
delegated by the Board) at its absolute discretion, save that no
option may be exercised more than 10 years after it has been
granted. Unless otherwise determined by the Board (or any committee
delegated by the Board) at its sole discretion, there is no minimum
period for which an option must be held before it can be
exercised.
No option was granted since the Adoption Date of the Share
Option Scheme.
Share Award Scheme of the Company
The share award scheme of the Company (the "Share Award Scheme")
was approved by the shareholders of SEA on 27 May 2010 and by the
Board on 28 May 2010 and came into effect on the Adoption Date.
Unless terminated earlier by the Board, the Share Award Scheme
shall be valid and effective for a term of 15 years until 15 August
2025.
The purpose of the Share Award Scheme is to provide a flexible
means to recognise and acknowledge the performance and/or
contribution of the eligible participants. Under the Share Award
Scheme, the Board (or any committee delegated by the Board) may at
its absolute discretion grant awards, which may comprise (a) new
shares of the Company; (b) existing shares of the Company in issue
and is listed on the AIM Market from time to time; (c) cash in lieu
of the shares of the Company; or (d) a combination of (a), (b) and
(c), to any eligible participants as it thinks fit and appropriate
and subject to the terms and conditions of the Share Award Scheme.
No award may be granted under the Share Award Scheme if the
aggregate number of shares which may be issued and/or transferred
upon vesting of all outstanding awards granted under the Share
Award Scheme and any other share award scheme of the Company and
which may be issued upon exercise of all outstanding options
granted and yet to be exercised under any share option scheme of
the Company exceed 30% of the shares of the Company in issue from
time to time.
No award was granted since the Adoption Date of the Share Award
Scheme.
36. SHARE-BASED PAYMENTS - continued
Share Option Scheme of SEA
SEA approved and adopted an employee share option scheme (the
"SEA Share Option Scheme") on 19 August 2005 for the primary
purpose of providing incentive to directors and eligible employees.
The SEA Share Option Scheme shall be valid and effective for a term
of 10 years until 24 August 2015.
Under the SEA Share Option Scheme, the board of directors of SEA
may offer to any director or full time employee/chief executive of
SEA, or any of its subsidiaries, options to subscribe for shares in
SEA at a price at least the highest of (i) the nominal value of the
share of SEA; (ii) the average of the closing price of the share of
SEA on the Stock Exchange for the five business days immediately
preceding the date of grant of the option; and (iii) the closing
price of the share of SEA on the Stock Exchange on the date of
grant of the option.
Without prior approval of the shareholders of SEA in general
meeting, (a) no option may be granted to an eligible participant
which, if exercised in full, would result in the total number of
shares issued and to be issued upon exercise of the options already
granted or to be granted to such eligible participant in any
12-month period, exceeding 1% of the shares of SEA then in issue;
and (b) any grant of options to a substantial shareholder and/or an
independent non-executive director of SEA or its subsidiaries or
any of their respective associates, would result in the total
number of shares issued and to be issued upon exercise of all
options granted or to be granted to such person in any 12-month
period exceeding 0.1% of the shares of SEA then in issue and with
an aggregate value exceeding HK$5 million.
Options granted must be taken up within 28 days from the date of
grant upon payment of HK$10. The period during which an option may
be exercised is determined by the board of directors of SEA at its
absolute discretion, save that no option may be exercised more than
10 years after it has been granted. Unless otherwise determined by
the board of directors of SEA at its sole discretion, there is no
minimum period for which an option must be held before it can be
exercised.
On 31 December 2008, SEA granted share options to a director of
the Company entitling the holder to subscribe for 2,000,000 shares
of SEA at an exercise price of HK$2.262 per share with an exercise
period of 2 years from 31 December 2010 to 30 December 2012. The
directors determined the fair value of the share options with
reference to the calculation made by an independent professional
valuer to be HK$592,000. 1,000,000 share options were exercised in
January 2011 and the remaining were exercised in September
2012.
On 12 July 2012, SEA granted share options to a director of the
Company entitling the holder to subscribe for 1,000,000 shares of
SEA at an exercise price of HK$3.454 per share with an exercise
period of 2 years from 1 July 2015 to 30 June 2017. The directors
determined the fair value of the share options with reference to
the calculation made by an independent professional valuer to be
HK$643,300. None of the options were lapsed or exercised up to the
end of the reporting period.
36. SHARE-BASED PAYMENTS - continued
Share Award Scheme of SEA
The share award scheme of SEA (the "SEA Share Award Scheme") was
approved by the shareholders of SEA on 27 May 2010. The SEA Share
Award Scheme came into effect on 15 June 2010 upon fulfillment of
the conditions contained in the SEA Share Award Scheme. Unless
terminated earlier by the board of directors of SEA, the SEA Share
Award Scheme shall be valid and effective for a term of 15 years
until 14 June 2025.
The purpose of the SEA Share Award Scheme is to provide a
flexible means to recognise and acknowledge the performance and/or
contribution of the eligible participants. Under the SEA Share
Award Scheme, the board of directors of SEA (or any committee
delegated by the board of directors of SEA) may at its absolute
discretion grant awards, which may comprise (a) new shares of SEA;
(b) existing shares of SEA in issue and is listed on the Stock
Exchange from time to time; (c) cash in lieu of the shares of SEA;
or (d) a combination of (a), (b) and (c), to any eligible
participants as it thinks fit and appropriate and subject to the
terms and conditions of the SEA Share Award Scheme. No award may be
granted under the SEA Share Award Scheme if the aggregate number of
shares which may be issued and/or transferred upon vesting of all
outstanding awards granted under the SEA Share Award Scheme and any
other share award scheme of SEA and which may be issued upon
exercise of all outstanding options granted and yet to be exercised
under any share option scheme of SEA exceed 30% of the shares of
SEA in issue from time to time.
SEA has appointed trustee to acquire shares of SEA in the open
market with funds provided by the SEA group and to hold the shares
of SEA before they are vested and transferred to the selected
participants. On 12 July 2012, 500,000 shares of SEA were awarded
to a director of the Company and vested immediately.
37. RETIREMENT BENEFIT PLANS
The Group participates in a defined contribution scheme which is
registered under a Mandatory Provident Fund Scheme (the "MPF
Scheme") established under the Mandatory Provident Fund Schemes
Ordinance of Hong Kong in December 2000 for eligible employees in
Hong Kong. The assets of the MPF Scheme are held separately from
those of the Group, in funds under the control of trustees. The
Group contributes 5% to 15% of relevant payroll costs per month to
the scheme for members of the MPF Scheme, depending on the length
of service with the Group.
The employees of the Group's subsidiaries in the PRC are members
of state-managed retirement benefit scheme operated by the
government of the PRC.
The total contribution paid to the retirement benefit schemes by
the Group charged to profit or loss for the year amounted to
HK$3,474,000 (2012: HK$3,531,000).
38. RELATED PARTY TRANSACTIONS
(a) The Group had the following transactions with fellow
subsidiaries, which are wholly-owned subsidiaries of SEA, during
the year:
(i) Rental income of HK$14,304,000 (2012: HK$11,110,000) from
the renting of the Group's premises; and
(ii) Management fees of HK$148,087,000 (2012: HK$141,846,000) in
respect of the provision of property development and management
services to the Group on the Group's property portfolio.
(b) Details of loans to joint ventures are disclosed in note 28.
(c) The remuneration of directors who are the Group's key management was set out in note 13.
39. PRINCIPAL SUBSIDIARIES
Effective
% of
issued
share
Place/country Issued capital/registered
of and paid
incorporation/ up share capital
capital/ held
Name of subsidiary operation registered by the Principal
capital Company activities
2013 2012
Direct subsidiary
1 ordinary
Benefit Strong B.V.I./Hong share Investment
Group Limited Kong of HK$1 100 100 holding
Indirect subsidiaries
2 ordinary
shares
AGP (Diamond of HK$1 Property
Hill) Limited Hong Kong each 100 100 development
1 ordinary
AGP (Sha Tin) share Property
Limited Hong Kong of HK$1 100 100 development
Chengdu Huashang
House RMB200,000,000
Development registered Property
Co., Ltd.* PRC capital 100 100 investment
Chengdu Yulong
No. 1 RMB275,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
Chengdu Yulong
No. 2 RMB80,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
Chengdu Yulong
No. 3 RMB450,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
100 ordinary
shares
Concord Way of HK$1 Hotel
Limited Hong Kong each 100 100 operation
Giant Well 1 ordinary
Enterprises B.V.I./Hong share Investment
Limited Kong of US$1 100 100 holding
1 ordinary
Grace Art Development share Treasury
Limited Hong Kong of HK$1 100 100 services
Guangzhou Yingfat
House US$20,110,000 Property
Property Development registered development
Co., Ltd.** PRC capital 100 100 and investment
39. PRINCIPAL SUBSIDIARIES - continued
Effective
% of
issued
share
Place/country Issued capital/registered
of and paid
incorporation/ up share capital
capital/ held
Name of subsidiary operation registered by the Principal
capital Company activities
2013 2012
Indirect subsidiaries
- continued
2 ordinary
shares
Harvest Hill of HK$1
Limited Hong Kong each 100 100 Financing
Huangshan City
Huizhou Property
District Feng and
Dan Bailu tourist
Investment RMB35,000,000 leisure
and Development registered facilities
Company Limited* PRC capital 100 100 development
Kaifeng International
City
No. 1 Realty US$76,500,000
Development registered Property
Company Limited* PRC capital 100 100 development
Kaifeng International
City
No. 5 Realty US$42,450,000
Development registered Property
Company Limited* PRC capital 100 100 development
100 ordinary
Kingston Pacific shares
Investment B.V.I./Hong of US$1 Property
Limited Kong each 55 55 development
Leighton Road
Hotel 1 ordinary
Management share Hotel
Services Limited Hong Kong of HK$1 100 100 operation
Nanjing Hushu Property,
Ecology RMB100,000,000 cultural
Travel Development registered and tourism
Co., Ltd.(@) PRC capital 51 51 development
Nanjing Taligang Property,
Tourist RMB35,000,000 cultural
Leisure Facilities registered and tourism
Company Limited(@) PRC capital 51 51 development
Shine Concord 1 ordinary
Investments share Hotel
Limited Hong Kong of HK$1 100 100 operation
Sino Harvest
Real Estate
Development US$3,000,000
(Chengdu) registered Property
Company Limited* PRC capital 100 100 Investment
2 ordinary
shares
Sky Trend Investments of HK$1 Hotel
Limited Hong Kong each 100 100 operation
1 ordinary
Sunfold Development share Hotel
Limited Hong Kong of HK$1 100 100 operation
2 ordinary
shares
Wing Siu Company of HK$1 Property
Limited Hong Kong each 100 100 Investment
* Wholly foreign owned enterprise
** The Group is entitled to the remaining profit/asset after the
PRC partner's entitlement which is the higher of a fixed sum of
return or 5% of the profit generated from the related property
development project
(@) Sino-foreign equity joint venture
The directors of the Company are of the opinion that a complete
list of the particulars of all subsidiaries of the Company will be
of excessive length and therefore the above list contains only the
particulars of subsidiaries which principally affect the results or
assets of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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