TIDMAGP
RNS Number : 8663Z
Asian Growth Properties Limited
17 March 2017
17 March 2017
Asian Growth Properties Limited
Results for the year ended 31 December 2016
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 2016 as follows:
Financial Highlights
n Profit attributable to the Company's shareholders of HK$425.4
million (GBP44.4 million) (2015: HK$1,336.7 million (GBP116.4
million)).
n Profit attributable to the Company's shareholders (excluding
revaluation deficit net of deferred tax) was HK$500.9 million
(GBP52.3 million) (2015: HK$355.9 million (GBP31.0 million)). The
increment was a result of the combined net effect of the
following:
(i) the increase of HK$184.0 million (GBP19.2 million) as a
result of total net realized gain of HK$615.8 million (GBP64.3
million) arising from the sale of Dah Sing Financial Centre, the
Projects of Chengdu Nova City, the Kaifeng Nova City and Huangshan
during the year as compared with the realized gain on the sale of
the Fo Tan Project of HK$431.8 million (GBP37.6 million) in
2015;
(ii) write-off of other receivables net of overprovision for
relocation costs of the Nanjing Project of HK$157.0 million
(GBP16.4 million) after net of the minority interest's 49% share of
such loss; and
(iii) the decrease of HK$77.0 million (GBP8.0 million) in
management fee paid to 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), pursuant to
a cost sharing agreement made between the Company, its various
subsidiaries and SEAI in 2014 for the use of SEAI's personnel and
facilities on a cost-sharing basis for the Company to carrying its
business activities.
n Earnings per share for profit attributable to the Company's
shareholders of HK48.0 cents (5.0 pence) (2015: HK150.8 cents (13.1
pence)).
n Net asset value per share attributable to the Company's
shareholders as at 31 December 2016 of HK$14.4 (150.5 pence) (31
December 2015: HK$16.0 (139.3 pence)).
n Geographical location of the Group's property assets were as follows:
31 December 2016 31 December 2015
---------- -------------------- ----------------------
Hong Kong HK$892.2 million HK$10,298.3 million
(GBP93.2 million) (GBP896.7 million)
---------- -------------------- ----------------------
United HK$1,494.1 million -
Kingdom (GBP156.1 million)
---------- -------------------- ----------------------
Mainland HK$2,413.1 million HK$4,534.2 million
China (GBP252.1 million) (GBP394.9 million)
---------- -------------------- ----------------------
Total HK$4,799.4 million HK$14,832.5 million
(GBP501.4 million) (GBP1,291.6 million)
========== ==================== ======================
n As at 31 December 2016, bank balances and cash of the Group
amounted to HK$9,778.9 million (GBP1,021.7 million). After netting
off bank borrowings of HK$3,458.6 million (GBP361.4 million), the
Group had a net cash position of HK$6,320.3 million (GBP660.4
million) at year end date, compared to a net debt position of
HK$342.3 million (GBP29.8 million) with gearing ratio of 2.3% as at
31 December 2015.
n The Board has declared a special cash dividend of HK$2.25 per
common share to the shareholders of the Company, payable on
Thursday, April 13 2017 on the share register on Friday, 31 March
2017.
Operational Highlights
n Prior to the completion of the disposal of Dah Sing Financial
Centre in May 2016, stable gross rental income was generated from
this property in Hong Kong with a high occupancy rate.
n The hotel operation results of Crowne Plaza Hong Kong Causeway
Bay were in general in line with the weaker hotel business
environment in 2016.
n Sale of Dah Sing Financial Centre was completed in May 2016
and realised a gain on disposal of HK$611.5 million (GBP63.9
million) and generated net cash after repayment of bank loans of
approximately HK$8,019 million (approximately GBP837.8
million).
n On 19 April 2016, the Group entered into a sale and purchase
agreement in relation to the disposal of the Kaifeng Nova City
Project for a consideration of HK$900 million (GBP94.0 million) in
cash. Completion of the disposal took place on 26 April 2016.
n On 22 August 2016, the Group entered into a sale and purchase
agreement in relation to the disposal of Chengdu Nova City Project
for a consideration of HK$890 million (GBP93.0 million) in cash.
Completion of the disposal took place on 29 August 2016.
n On 7 November 2016, the Group entered into a sale and purchase
agreement to acquire the entire issued units in a trust that owns
the property known as 20 Moorgate, London, EC2R 6DA for a total
consideration of approximately GBP154.0 million (approximately
HK$1,473.9 million). Completion of the acquisition took place on 7
November 2016.
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$9.571
2016:
For 31 December GBP1 = HK$11.4841
2015:
2. For the Company's shareholders' information, the exchange
rate on 15 March 2017 was GBP1 = HK$9.4701
Miscellaneous
The results included in this announcement are extracted from the
audited consolidated financial statements of the Company for the
year ended 31 December 2016, which have been approved by the Board
of Directors on 17 March 2017.
The 2016 Annual Report is expected to be posted to the Company's
shareholders and holders of depositary interests in late April
2017.
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
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 2016 year to
the shareholders of the Company.
Results
AGP reported a profit attributable to the Company's shareholders
of HK$425.4 million (GBP44.4 million) for the year ended 31
December 2016 (2015: HK$1,336.7 million (GBP116.4 million)). The
reported profit included a revaluation deficit on investment
properties net of deferred taxation of HK$75.5 million (GBP7.9
million) (2015: revaluation surplus of HK$980.8 million (GBP85.4
million)). By excluding the net effect of such deficit, the Group's
net profit attributable to the Company's shareholders was HK$500.9
million (GBP52.3 million) (2015: HK$355.9 million (GBP31.0
million)), including a realised gain of HK$611.5 million (GBP63.9
million) and HK$127.1 million (GBP13.3 million) in relation to the
sale of the property of Dah Sing Financial Centre and Chengdu Nova
City Project respectively and a realized loss of HK$90.5 million
(GBP9.5 million) and HK$32.3 million (GBP3.4 million) in relation
to the sale of the Kaifeng Nova City and Huangshan Projects
respectively.
As at 31 December 2016, the Group's equity attributable to the
Company's shareholders amounted to HK$12,789.5 million (GBP1,336.3
million) (31 December 2015: HK$14,218.8 million (GBP1,238.1
million)). The net asset value per share attributable to the
Company's shareholders as at 31 December 2016 was HK$14.4 (150.5
pence) as compared with HK$16.0 (139.3 pence) as at 31 December
2015.
The Group's hotel property is stated at cost less accumulated
depreciation charges at a carrying value of HK$892.2 million
(GBP93.2 million), whereas the market value as at 31 December 2016
as determined by an independent professional market valuation
carried out by CBRE Limited is HK$3,500.0 million (GBP365.7
million). For the purpose of providing supplementary information,
if the carrying value of the Group's hotel property was restated to
its market value as at 31 December 2016, the adjusted net asset
value and adjusted net asset value per share attributable to the
Company's shareholders would be HK$15,397.3 million (GBP1,608.7
million) and HK$17.4 (181.8 pence) respectively.
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 ended 31 December 2016, the rental income from
investment properties situated in Mainland China continue to
provide stable returns to the Group. Crowne Plaza Hong Kong
Causeway Bay's performance dropped compared to 2015, which was a
result in line with the weaker hotel business market, and the
one-trip-per-week policy and the depreciation of the yuan will
continue to affect Hong Kong's attractiveness to Mainland China
visitors.
The Group completed the sale of Dah Sing Financial Centre in May
2016. The sale realised a gain on disposal of HK$611.5 million
(GBP63.9 million) and generated net cash after repayment of bank
loans of approximately HK$8,019 million (approximately GBP837.8
million). The Board believes that the disposal of Dah Sing
Financial Centre provided an optimum opportunity for the Company to
realise cash and unlock the value of its investment in the property
at fair market value.
The Group completed the sale of Kaifeng Nova City Project in
April 2016. The sale realised a loss on disposal of HK$90.5 million
(GBP9.5 million) and generated a net cash amount of approximately
HK$889.1 million (GBP92.9 million) which is available for future
investment into the Company's other development and investment
projects and other potential real estate projects and as general
working capital for the Group.
The Group completed the sale of Chengdu Nova City Project in
August 2016. The sale realised a gain on disposal of HK$127.1
million (GBP13.3 million) and will in total generate a net cash
amount of approximately HK$886.9 million (GBP92.7 million) which
will be available for future investment into its other development
and investment projects and other potential real estate projects
and as general working capital for the Group, of which HK$445.0
million (GBP46.5 million) has been received to date with the
balance due in August 2017.
On 7 November 2016, the Group entered into a sale and purchase
agreement in relation to acquire the entire issued units in a trust
that owns the property known as 20 Moorgate, London, EC2R 6DA at a
total consideration of approximately GBP154.0 million. Completion
of the acquisition took place on 7 November 2016.
For details of the Group's operations, please refer to the
Executive Directors' Review.
Outlook
The global economy and political environment continue to be
clouded with uncertainties and rapid changes, as a result of the
decision by Britain to leave the European Union (Brexit), the new
president of the United States of America, the recovery pace of the
Eurozone economies, the strengthening of US dollar and the upward
pressure on US interest rates. It is widely expected that market
volatility will increase over time. The Group are closely
monitoring the evolving market developments and has equipped itself
to face the various challenges ahead by adopting a prudent and
effective policy in managing risks.
China was able to achieve 6.7% GDP growth rate in 2016 by
implementing a proactive fiscal policy and prudent monetary policy,
which was within the Central Government's targeted range. Moreover,
"The Belt and Road initiative" has continued to promote development
and business co-operation among the participating regions and
nations, which should benefit Hong Kong and China.
Special Dividend
The Board has declared a special cash dividend of HK$2.25 per
common share for the year ended 31 December 2016 to shareholders of
the Company whose names appear on the register of members of the
Company at the close of business on Friday, 31 March 2017. The
relevant dividend warrants are expected to be despatched on or
before Thursday, 13 April 2017.
Dividend payments will be converted to Pound Sterling at the
spot rates sourced from the Hong Kong Association of Banks on the
ex-dividend date (i.e. Thursday, 30 March 2017) and paid to the
shareholders on the payment date. Shareholders who elect to receive
the special dividend in Hong Kong Dollars should notify the Company
in writing at least 5 business days prior to the payment date.
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
Hong Kong, 17 March 2017
EXECUTIVE DIRECTORS' REVIEW
FINANCIAL SUMMARY
Turnover for the year ended 31 December 2016 amounted to
HK$539.6 million (GBP56.4 million) (2015: HK$715.8 million (GBP62.3
million)). The turnover was principally attributable to the
recognition of rental income from investment properties, revenue
from hotel operations, the sales of residential units in Kaifeng
Nova City and the income from financial investment.
Profit attributable to the Company's shareholders for the year
amounted to HK$425.4 million (GBP44.4 million) (2015: HK$1,336.7
million (GBP116.4 million)), equivalent to a basic earnings per
share of HK48.0 cents (5.0 pence) (2015: HK150.8 cents (13.1
pence)). The reported profit included a revaluation deficit on
investment properties net of deferred taxation of HK$75.5 million
(GBP7.9 million) (2015: revaluation surplus of HK$980.8 million
(GBP85.4 million)). By excluding the net effect of such deficit,
the Group's net profit attributable to the Company's shareholders
was HK$500.9 million (GBP52.3 million) (2015: HK$355.9 million
(GBP31.0 million)), equivalent to HK56.5 cents (5.9 pence) (2015:
HK40.2 cents (3.5 pence)) per share.
As at 31 December 2016, the Group's equity attributable to the
Company's shareholders amounted to HK$12,789.5 million (GBP1,336.3
million) (31 December 2015: HK$14,218.8 million (GBP1,238.1
million)). The net asset value per share attributable to the
Company's shareholders as at 31 December 2016 was HK$14.4 (150.5
pence) as compared with HK$16.0 (139.3 pence) as at 31 December
2015.
For the Company's 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 2016: GBP1 = HK$9.571
For 31 December 2015: GBP1 = HK$11.4841
BUSINESS REVIEW
Property Investment and Development
The Group continues to focus on property development and
property investment projects. 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, United Kingdom and Mainland
China are listed below.
Following the disposal of certain properties projects as
summarized in these results, the Group principally owns one
property in Hong Kong (Crowne Plaza Hong Kong Causeway Bay), one
property in United Kingdom (20 Moorgate, London) and four
properties in Mainland China (three investment properties and one
property held for sales).
Hong Kong
The Group entered into an agreement in February 2016 to
conditionally dispose of its entire interest in companies which
beneficially owned the property of Dah Sing Financial Centre, for a
consideration of approximately HK$10,000 million (approximately
GBP1,044.8 million), subject to adjustment. The disposal was
completed in May 2016 and generated a net cash consideration (after
repayment of bank loans) of approximately HK$8,019 million
(approximately GBP837.8 million).
United Kingdom
On 7 November 2016, the Group entered into a sale and purchase
agreement in relation to acquire the entire issued units in a trust
that owns the property known as 20 Moorgate, London, EC2R 6DA at a
total consideration of approximately GBP154.0 million. The
acquisition was funded by a GBP100 million five year term loan
facility secured by a mortgage over the property and its existing
cash resources. Completion of the acquisition took place on 7
November 2016.
The property is a seven-storey office with approximately 154,854
square feet (approximately 14,386.3 square metres) and is fully
occupied mostly by the Prudential Regulatory Authority (a
regulatory body of the Bank of England) until 30 June 2027. The
property currently generates a net rental income of GBP6.8 million
(approximately HK$65.1 million) per annum with the net yield of
4.4%.
Mainland China
Chengdu, Sichuan Province
During the year under review, 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 2016, the
aggregate occupancy rate for the two office towers and the retail
podium was approximately 79% (31 December 2015: 84%). 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 hotel on a
long-term lease.
On 22 August 2016, the Group entered into a sale and purchase
agreement in relation to the disposal of Chengdu Nova City Project
for a consideration of HK$890 million (GBP93.0 million) in cash.
Completion of the disposal took place on 29 August 2016, of which
HK$445 million has been received to date with the balance due in
August 2017.
Kaifeng, Henan Province
On 19 April 2016, the Group entered into a sale and purchase
agreement in relation to the disposal of Kaifeng Nova City Project
for a consideration of HK$900 million (GBP94.0 million) in cash.
Completion of the disposal took place on 26 April 2016.
Guangzhou, Guangdong Province
As at 31 December 2016, the occupancy rate of the 14-storey
office tower of Westmin Plaza Phase II of about 16,100 square
metres was 95% with more than one-third of the total office space
being leased to AIA (31 December 2015: 100%). 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
On 3 August 2016, the Group entered into a sale and purchase
agreement with an independent third party to sell the entire
interest in companies which beneficially own the properties under
development in Huangshan City, Anhui Province, the PRC, for a
consideration of HK$2 million (GBP0.2 million). The disposal was
completed on the same date.
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. The Group's hotel
property is stated at cost less accumulated depreciation charges at
carrying value of HK$892.2 million (GBP93.2 million), whereas their
fair values as at 31 December 2016 based on an independent
professional market valuation carried out by CBRE Limited is
HK$3,500.0 million (GBP365.7 million). Its performance steadied
compared to 2015, which was a result in line with the weakening
hotel business market. The hotel will strive to gain further market
share and look for cost saving measures in the challenging market
conditions.
WORKING CAPITAL AND LOAN FACILITIES
As at 31 December 2016, the Group's total cash balance was
HK$9,778.9 million (GBP1,021.7 million) (31 December 2015:
HK$3,671.2 million (GBP319.7 million)) and unutilised facilities
were HK$627.4 million (GBP65.6 million) (31 December 2015: HK$370.2
million (GBP32.2 million)).
As at 31 December 2016, after netting off bank borrowings of
HK$3,458.6 million (GBP361.3 million), the Group had a net cash
position of HK$6,320.3 million (GBP660.4 million), compared to a
net debt position of HK$342.3 million (GBP29.8 million) with
gearing ratio of 2.3% as at 31 December 2015.
As at 31 December 2016, the maturity of the Group's outstanding
borrowings was as follows:
31 December 31 December 2015
2016 HK$' million
HK$' million
---------------- ------------------------- ----------------
Due
Within 1 year 1,467.8 1,136.2
1-2 years 97.6 164.1
3-5 years 1,887.1 1,795.8
Over 5 years 23.5 939.5
---------------- ------------------------- ----------------
3,476.0 4,035.6
Less: Front-end
fee (17.4) (22.1)
---------------- ------------------------- ----------------
3,458.6 4,013.5
================ ========================= ================
Pledge of Assets
For the Company's subsidiaries operating in Hong Kong, United
Kingdom and Mainland China, the total bank loans drawn as at 31
December 2016 amounted to HK$3,476.0 million (GBP363.2 million) (31
December 2015: HK$4,035.6 million (GBP351.4 million)) which
comprised secured bank loans of HK$3,396.0 million (GBP354.8
million) and unsecured bank loans of HK$80.0 million (GBP8.4
million) (31 December 2015: secured bank loans of HK$4,035.6
million (GBP351.4 million)). The secured bank loans were secured by
properties valued at HK$3,747.0 million (GBP391.5 million), listed
debt securities of HK$882.1 million (GBP92.2 million), pledged cash
of HK$533.1 million (GBP55.7 million) and note receivables of
HK$54.3 million (GBP5.7 million) (31 December 2015: properties
valued at HK$12,237.5 million (GBP1,065.6 million) and note
receivables of HK$54.3 million (GBP4.7 million)).
Treasury Policies
The Group adheres to prudent treasury policies. As at 31
December 2016, 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 Hong Kong economy picked up slightly in the third quarter of
2016 with GDP up by 1.9% year-on-year, an improvement relative to
the 1.7% year-on-year growth in the preceding quarter. As one of
the international financial centers in the world, Hong Kong will
inevitably be affected by global economic factors. The growth of
the Hong Kong economy will be dominated by Mainland China's policy
and performance and the pace of US interest rate hikes.
Mainland China buyers were active in Hong Kong's property market
in 2016 given ongoing depreciation of the renminbi and shrinking
profits in the Mainland, and these buyers are expected to continue
to invest in the local Hong Kong property market. We have noted
signs of a pick-up in the primary sales market and a sustained
increase in residential prices. We therefore expect a highly
competitive land sales market in the near term will remain.
Amid an uncertain global economy and a strong Hong Kong dollar,
the tourism in Hong Kong is expected to remain weak. The
one-trip-per-week policy and the depreciation of the yuan will
continue to affect the number of Mainland China visitors. With the
challenging hotel business environment in Hong Kong, Crown Plaza
Causeway Bay was able to maintain the market share among the
primary competitors. We will continue to strive for market share,
improve hotel operation's efficiency and at the same time look for
cost saving measures, so as to maintain the return of the
operations.
The Group's office properties in Mainland China are facing a
challenging environment arising from increasing supply and
depreciation of RMB. Having said that, our office properties in
Mainland China have been maintaining a relatively high occupancy
rate and rent as compared with the market and provides stable cash
flows to the Group. We will continue to build on the strong
foundation of our leasing portfolio, execute an effective leasing
strategy and add value on our properties through asset enhancement
initiative.
As for the office market in the UK, despite global political
events of the past year with more European elections to come, the
attractiveness of properties in London with prime location still
remain, given the deprecation of sterling, a low interest rate
environment and stable income and cash flows generated from long
leases with tenants.
The Group has significant funds for future investments after the
disposal of Dah Sing Financial Centre and various Mainland China
property development projects in prior year. The Group will remain
sceptically proactive and continue to monitor the property markets
of Hong Kong, Mainland China and overseas closely in order to
identify potential acquisition targets at opportune times.
On behalf of the Executive Directors
Lu Wing Chi
Executive Director
Hong Kong, 17 March 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEARED 31 December 2016
NOTES 2016 2015
HK$'000 HK$'000
Revenue 7 539,643 715,770
Other income 8 17,435 52,270
Costs:
-------------------- --------------------
Property and related costs 9 (41,480) (136,268)
Staff costs (89,026) (84,266)
Depreciation and amortisation (47,040) (77,242)
Other expenses (313,756) (420,280)
-------------------- --------------------
(491,302) (718,056)
-------------------- --------------------
Profit from operations before
fair value changes
on investment properties 65,776 49,984
Fair value changes on investment
properties (100,671) 949,107
-------------------- --------------------
(Loss) profit from operations
after fair value changes
on investment properties (34,895) 999,091
Other gains and losses 11 334,398 431,826
Finance costs 12 (78,562) (109,504)
-------------------- --------------------
Profit before taxation 13 220,941 1,321,413
Income tax credit 15 80,031 4,765
-------------------- --------------------
Profit for the year 300,972 1,326,178
============ ============
Attributable to:
Company's shareholders 425,378 1,336,728
Non-controlling interests (124,406) (10,550)
-------------------- --------------------
300,972 1,326,178
============ ============
HK cents HK cents
Earnings per share for profit
attributable to the
Company's shareholders - Basic 16 48.0 150.8
============ ============
Earnings per share excluding
fair value changes
on investment properties net
of deferred tax - Basic 16 56.5 40.2
============ ============
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEARED 31 December 2016
2016 2015
HK$'000 HK$'000
Profit for the year 300,972 1,326,178
-------------------- --------------------
Other comprehensive (expense)
income:
Items that may be subsequently
reclassified to
profit or loss:
Fair value loss on available-for-sale
investments (6,551) -
Exchange differences arising
on translation of
foreign operations (162,989) (268,641)
Reclassification adjustments
for amounts transferred
to profit or loss:
* upon disposal of subsidiaries (notes 42(b),(c) and
(d)) 1,848 -
-------------------- --------------------
Other comprehensive expense
for the year (167,692) (268,641)
-------------------- --------------------
Total comprehensive income
for the year 133,280 1,057,537
============ ============
Total comprehensive income
attributable to:
Company's shareholders 254,816 1,070,630
Non-controlling interests (121,536) (13,093)
-------------------- --------------------
133,280 1,057,537
============ ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 December 2016
NOTES 2016 2015
HK$'000 HK$'000
Non-current assets
Investment properties 18 3,445,337 11,169,317
Property, plant and equipment 19 951,687 1,386,227
Properties for development 20 - 1,200,180
loan receivables 21 3,160 3,789
Note receivables 22 38,773 54,256
Other receivables 23 - 361,114
Available-for-sale investments 24 1,253,243 11,648
Restricted bank deposits 25 5,589 5,613
-------------------- --------------------
5,697,789 14,192,144
-------------------- --------------------
Current assets
Properties held for sale
Completed properties 423,061 873,987
Properties under development 26 - 231,667
Inventories 1,196 1,251
loan receivables 21 376 371
Note receivables 22 15,509 -
Available-for-sale investments 24 137,204 -
Receivables, deposits and prepayments 27 585,379 125,844
Tax recoverable 3,088 17,782
Amounts due from non-controlling
interests 28 38 -
Pledged bank deposits 25 533,105 -
Bank balances and cash 29 9,240,168 3,665,582
-------------------- --------------------
10,939,124 4,916,484
-------------------- --------------------
Current liabilities
Payables, rental deposits and
accrued charges 30 157,629 370,719
Sales deposits - 13,064
Tax liabilities 7,424 82,675
Amounts due to non-controlling
interests 28 87,754 93,696
bank borrowings - due within
one year 31 1,464,928 1,133,781
-------------------- --------------------
1,717,735 1,693,935
-------------------- --------------------
Net current assets 9,221,389 3,222,549
-------------------- --------------------
Total assets less current liabilities 14,919,178 17,414,693
============ ============
NOTES 2016 2015
HK$'000 HK$'000
Capital and reserves
Share capital 32 345,204 345,204
Reserves 12,444,309 13,873,554
-------------------- --------------------
Equity attributable to the
Company's shareholders 12,789,513 14,218,758
Non-controlling interests (80,244) 41,639
-------------------- --------------------
Total equity 12,709,269 14,260,397
-------------------- --------------------
Non-current liabilities
Bank borrowings - due after
one year 31 1,993,705 2,879,704
Deferred taxation 33 216,204 274,592
-------------------- --------------------
2,209,909 3,154,296
-------------------- --------------------
Total equity and non-current
liabilities 14,919,178 17,414,693
============ ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 December 2016
Attributable to the Company's
shareholders
----------------------------------------------------------------------------------------------------------------------------------------------
Investment Non-
Share Share Contributed Translation Other Revaluation Retained Controlling
capital Premium Surplus Reserve Reserves Reserves Profits Total Interests Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
(note (note (note
iii) i) ii)
At 1 January
2015 345,204 4,836,225 - 513,997 766,370 - 6,686,332 13,148,128 55,540 13,203,668
Profit for
the year - - - - - - 1,336,728 1,336,728 (10,550) 1,326,178
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Exchange
differences
arising on
translation
of foreign
operations - - - (266,098) - - - (266,098) (2,543) (268,641)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Other comprehensive
expense for
the year - - - (266,098) - - - (266,098) (2,543) (268,641)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total comprehensive
income for
the year - - - (266,098) - - 1,336,728 1,070,630 (13,093) 1,057,537
Dividends paid
to non-controlling
interests - - - - - - - - (808) (808)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
At 31 December
2015 345,204 4,836,225 - 247,899 766,370 - 8,023,060 14,218,758 41,639 14,260,397
Profit for
the year - - - - - - 425,378 425,378 (124,406) 300,972
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Exchange
differences
arising on
translation
of foreign
operations - - - (165,859) - - - (165,859) 2,870 (162,989)
Disposal of
subsidiaries - - - 1,848 (504,822) - 504,822 1,848 - 1,848
Fair value
change on
available-for-sale
investments - - - - - (6,551) - (6,551) - (6,551)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Other comprehensive
(expense) income
for the year - - - (164,011) (504,822) (6,551) 504,822 (170,562) 2,870 (167,692)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total comprehensive
(expense) income
for the year - - - (164,011) (504,822) (6,551) 930,200 254,816 (121,536) 133,280
Transfer from
share premium
to
contribution
surplus - (4,836,225) 4,836,225 - - - - - - -
Dividends paid
to non-controlling
interests - - - - - - - - (347) (347)
Dividend paid - - - - - - (1,684,061) (1,684,061) - (1,684,061)
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
At 31 December
2016 345,204 - 4,836,225 83,888 261,548 (6,551) 7,269,199 12,789,513 (80,244) 12,709,269
========== ========== ========== ========== ========== ========== ========== ========== ========== ==========
Notes:
(i) 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 transferred to retained profits; 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.
(ii) Based on the cooperation agreement, profit and loss of the
subsidiaries should be shared by the Group and the counterparties
in proportion to the capital contribution of respective parties.
Thus, the deficit balance represents the losses attributable to the
non-controlling interest.
(iii) Pursuant to a special resolution passed on 10 November
2016, the Company has changed its domicile from the British Virgin
Islands to Bermuda with effect from 5 December 2016. The balance of
approximately HK$4,836 million, which was formerly known as "Share
Premium" has been transferred to "Contributed Surplus" under the
Laws of Bermuda, Amended Bye-laws and the Companies Act.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 December 2016
NOTES 2016 2015
HK$'000 HK$'000
Operating activities
Profit before taxation 220,941 1,321,413
Adjustments for:
Interest expenses 71,610 100,071
Depreciation and amortisation 47,040 77,242
Fair value changes on investment
properties 100,671 (949,107)
Write off of bad debts from
tenants 14,115 -
Write off of other receivables 353,127 -
Reversal of relocation costs (71,721) -
Fair value adjustment on other
receivables - 7,521
Gain on disposal of subsidiaries (615,804) (431,826)
Write-down of properties held
for sales - 2,418
Interest income (5,169) (23,552)
Loss on disposal of property,
plant and equipment 41 32
-------------------- --------------------
Operating cash flows before
movements in
working capital 114,851 104,212
Decrease (increase) in properties
held for sale 195 (311,800)
Decrease in inventories 55 82
(Increase) decrease in receivables,
deposits and prepayments (56,959) 16,991
Decrease in guaranteed bank
balances 3,094 31,374
increase in payables, rental
deposits and accrued charges 151,128 69,960
Increase (decrease) in sales
deposits 4,507 (49,531)
-------------------- --------------------
Cash generated from (used in)
operations 216,871 (138,712)
Interest paid (82,364) (92,871)
Tax paid (4,093) (50,788)
-------------------- --------------------
Net cash from (used in) operating
activities 130,414 (282,371)
-------------------- --------------------
Investing activities
Acquisition of and additional
costs on properties for development (45,759) (51,285)
Interest received 7,605 24,379
Decrease in loan receivables 624 320
Increase in fixed deposits (4,460,201) (364,048)
Increase in restricted bank
deposits (347) -
Increase in pledged bank deposits (533,105) -
Restricted bank deposits refunded - 370
Fixed deposits refunded 364,048 309,380
Purchase of investment properties 41 (1,505,213) -
Purchase of property, plant
and equipment (1,840) (2,156)
Net proceeds received on disposals
of property,
plant and equipment - 18
Purchase of available-for-sale
investments (1,387,803) (3,884)
Net consideration received
on disposal of subsidiaries 42 10,995,075 1,382,500
-------------------- --------------------
Net cash from investing activities 3,433,084 1,295,594
-------------------- --------------------
NOTES 2016 2015
HK$'000 HK$'000
Financing activities
Draw down of bank loans 2,324,015 1,278,032
Repayments of bank loans (2,695,024) (1,240,302)
Payment of front-end fee (9,716) (7,000)
Advances to non-controlling
interests (38) -
Repayments from non-controlling
interests - 70
Dividends paid to non-controlling
interests (347) (808)
Dividend paid (1,684,061) -
-------------------- --------------------
Net cash (used in) from financing
activities (2,065,171) 29,992
-------------------- --------------------
Net increase in cash and cash
equivalents 1,498,327 1,043,215
Cash and cash equivalents at
beginning of the year 3,298,440 2,296,618
Effect of foreign exchange
rate changes (16,800) (41,393)
-------------------- --------------------
Cash and cash equivalents at
end of the year 4,779,967 3,298,440
============ ============
Represented by:
Bank balances and cash 29 9,240,168 3,665,582
Less: Fixed deposits with original
maturity date more than 3 months
and not exceeding 1 year (4,460,201) (364,048)
Less: Guarantee bank balances - (3,094)
-------------------- --------------------
4,779,967 3,298,440
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 December 2016
1. GENERAL
The Company is a public company incorporated in the British
Virgin Islands ("B.V.I.") and migrated to Bermuda on 5 December
2016 with limited liability and its shares are admitted for trading
on the AIM Market of The 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 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 Clarendon House, 2
Church Street, Hamilton HM 11, Bermuda 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
43.
2. APPLICATION OF NEW AND AMMENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs")
The Group has applied the following new and amendments to IFRSs
issued by the International Accounting Standards Board (the "IASB")
and the IFRS Interpretations Committee of IASB for the first time
in the current year:
Amendments to IFRS 11 Accounting for Acquisitions of Interests
in Joint Operations
Amendments to IAS 1 Disclosure Initiative
Amendments to IAS 16 and IAS 38 Clarification of Acceptable
Methods of Depreciation and Amortisation
Amendments to IFRSs Annual Improvements to IFRSs 2012 - 2014 Cycle
Amendments to IAS 16 Agriculture: Bearer Plants
and IAS 41
Amendments to IFRS 10, Investment Entities: Applying the Consolidation
IFRS 12 and IAS 28 Exception
The application of the new and amendments to 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 consolidated financial
statements.
2. APPLICATION OF NEW AND AMMENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
New and amendments to IFRSs issued but not yet effective
IFRS 9 Financial Instruments(1)
IFRS 15 Revenue from Contracts with Customers(1)
IFRS 16 Leases(2)
IFRIC 22 Foreign Currency Transactions and Advance
Consideration(1)
Amendments to IFRS 2 Classification and Measurement of Share-based Payment
Transactions(1)
Amendments to IFRS 4 Applying IFRS 9 Financial Instruments with IFRS 4
Insurance Contracts(1)
Amendments to IFRS 15 Clarifications to IFRS 15 Revenue from Contracts with
Customers(1)
Amendments to IFRS 10 Sale or Contribution of Assets between an Investor and
and IAS 28 its Associate or Joint Venture(3)
Amendments to IAS 7 Disclosure Initiative(4)
Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised
Losses(4)
Amendments to IAS 40 Transfers of Investment Property(1)
Amendments to IFRSs Annual Improvements to IFRS Standards 2014 - 2016
Cycle(5)
(1) Effective for annual periods beginning on or after 1 January 2018
(2) Effective for annual periods beginning on or after 1 January 2019
(3) Effective for annual periods beginning on or after a date to be determined
(4) Effective for annual periods beginning on or after 1 January 2017
(5) Effective for annual periods beginning on or after 1 January
2017 or 1 January 2018, as appropriate
The directors of the Company expect that the application of the
new and amendments to IFRS 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
consolidated financial statements are disclosed as below.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 was issued which establishes a single comprehensive
model for entities to use in accounting for revenue arising from
contracts with customers. IFRS 15 will supersede the current
revenue recognition guidance including IAS 18 Revenue, IAS 11
Construction Contracts and the related interpretations when it
becomes effective.
The core principle of IFRS 15 is that an entity should recognise
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. Specifically, the standard introduces a 5-step approach
to revenue recognition.
The directors of the Company anticipate that the application of
IFRS 15 in the future may result in more disclosures, however, the
directors of the Company do not anticipate that the application of
IFRS 15 will have a material impact on the timing and amounts of
revenue recognised in the respective reporting periods.
2. APPLICATION OF NEW AND AMMENTS TO INTERNATIONAL FINANCIAL
REPORTING STANDARDS ("IFRSs") - continued
IFRS 9 Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial assets, financial liabilities, general
hedge accounting and impairment requirements for financial
assets.
Key requirements of IFRS 9 are described below:
-- 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. Debt instruments that are held within a business model
whose objective is achieved both by collecting contractual cash
flows and selling financial assets, and that have contractual terms
that give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount
outstanding, are measured at FVTOCI. All other debt investments and
equity investments are measured at their fair value at the end of
subsequent accounting 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 is presented in profit or loss.
-- In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model, as opposed to an incurred
credit loss model under IAS 39. The expected credit loss model
requires an entity to account for expected credit losses and
changes in those expected credit losses at each reporting date to
reflect changes in credit risk since initial recognition. In other
words, it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
-- 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 of the Company do not anticipate that the
application of IFRS 9 in future may have a material 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,
available-for-sale investments 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.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
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 of the Company 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
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
carrying amount of the assets (including goodwill), and liabilities
of the subsidiary attributable to owners of the Company. 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
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 is recognised when the amount of revenue can be reliably
measured; when it is probable that future economic benefits will
flow to the Group and when specific criteria have been met for each
of the Group's activities, as described below.
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 the heading of sales deposits.
Hotel operation and other service income are recognised when
services are provided.
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.
The Group's policy for recognition of revenue from operating
leases is described in the accounting policy below.
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. All of the Group's property
interests held under operating leases to earn rentals or for
capital appreciation purposes are classified and accounted for as
investment properties and are measured using the fair value model.
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.
If an investment property becomes property, plant and equipment
because its use has changed as evidenced by the commencement of
owner-occupation, any difference between the carrying amount and
the fair value of the property at the date of transfer is
recognised in profit or loss. Subsequent to the transfer, the
property is stated at deemed cost, equivalent to the fair value at
the date of transfer, less subsequent accumulated depreciation and
accumulated impairment losses.
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 linen 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 linen 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 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 management's intention
of use of the properties after completion of development.
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.
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.
Inventories
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.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
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.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial assets
The Group's financial assets are classified as either loans and
receivables or available-for-sale ("AFS"). The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
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 loan receivables, note receivables, other receivables,
restricted bank deposits, receivables, amounts due from
non-controlling interests, bank deposits and cash) are measured at
amortised cost using the effective interest method, less any
impairment.
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.
AFS financial assets
AFS financial assets are non-derivatives that are either
designated as available-for-sale or are not classified as (a) loans
and receivables, (b) held-to-maturity investments or (c) financial
assets at fair value through profit or loss. The Group designated
certain debt investments as set out in note 24 as
available-for-sale investments.
Equity and debt securities held by the Group that are classified
as AFS financial assets and are traded in an active market are
measured at fair value at the end of each reporting period. Changes
in the carrying amount of AFS monetary financial assets relating to
interest income calculated using the effective interest method, and
changes in foreign exchange rates, if applicable are recognised in
profit or loss. Dividends on AFS equity instruments are recognised
in profit or loss when the Group's right to receive the dividends
is established. Other changes in the carrying amount of AFS
financial assets are recognised in other comprehensive income and
accumulated under the heading of investments revaluation reserve.
When the investment is disposed of or is determined to be impaired,
the cumulative gain or loss previously accumulated in the
investment revaluation reserve is reclassified to profit or loss
(see the accounting policy in respect of impairment loss on
financial assets below).
AFS equity investments that do not have a quoted market price in
an active market and whose fair value cannot be reliably measured
and derivatives that are linked to and must be settled by delivery
of such unquoted equity investments are measured at cost less any
identified impairment losses at the end of each reporting period
(see the accounting policy in respect of impairment of financial
assets below).
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Impairment of financial assets
Financial assets 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.
For AFS equity investments, a significant or prolonged decline
in the fair value of the security below its cost is considered to
be objective evidence of impairment.
for all other financial assets, 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.
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.
For financial assets that are carried at amortised cost, the
amount of the impairment loss recognised is the difference between
the asset's carrying amount and the present value of estimated
future cash flows, discounted at the financial asset's original
effective interest rate.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. The impairment loss will not be reversed in
subsequent periods.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of loan receivables, other receivables 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.
When an AFS financial asset is considered to be impaired,
cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the
period.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Impairment of financial assets - continued
For financial assets that are carried at amortised cost, 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.
In respect of AFS equity securities, impairment losses
previously recognised in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income and
accumulated under the heading of investment revaluation reserve. In
respect of AFS debt investments, impairment losses are subsequently
reversed through profit or loss if an increase in the fair value of
the investment can be objectively related to an event occurring
after the recognition of the impairment loss.
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 a group entity are
recognised at the proceeds received, net of direct issue costs.
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.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial guarantee liabilities
Financial guarantee liabilities are recognised in respect of the
financial guarantee provided by the Group for the property
purchasers. Financial guarantee liabilities are recognised
initially at fair value that are directly attributable to the issue
of the financial guarantee liabilities. After initial recognition,
such liabilities are measured at the higher of the present value of
the best estimate of the expenditure required to settle the present
obligation and the amount initially recognised less cumulative
amortisation.
Financial guarantee liabilities are derecognised when, and only
when, the obligation specified in the contract is discharged,
cancelled or expired.
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 have
expired. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.
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.
Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased
asset.
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.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Leasing - continued
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.
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 arising on settlement of monetary items,
and on the retranslation of 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 disposal or partial disposal of the Group's interests.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's 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 interests as
appropriate).
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Share-based payment arrangements
Equity-settled share-based payment transactions
Share options granted to employees
Equity-settled share-based payments to employees are measured at
the fair value of the equity instruments at the grant date. Details
regarding the determination of the fair value of equity-settled
share-based transactions are set out in note 37 to the Group's
consolidation financial statements.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest, with a corresponding
increase in equity (share options reserve). At the end of each
reporting period, the Group revises its estimate of the number of
equity instruments expected to 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 the equity-settled employee
benefits reserve.
When share options are exercised, the amount previously
recognised in share options reserve will be transferred to equity.
When the share options are forfeited after the vesting date or are
still not exercised at the expiry date, the amount previously
recognised in share options reserve will be transferred to retained
profits. For share option granted by the holding company to the
Group's employee, a liability is recognised for the options granted
which are measured initially at the fair value of the liability. At
the end of each reporting period until the liability is settled,
and at the date of settlement, the fair value of the liability is
remeasured, with any changes in fair value recognised in profit or
loss for the year.
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.
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 current
tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Taxation - continued
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 deferred tax assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination)
of assets and liabilities in a transaction that affects neither the
taxable profit nor the accounting profit. In addition, deferred tax
liabilities are not recognised if the temporary difference arises
from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries, 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 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.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Taxation - continued
For the purposes of measuring deferred taxes 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.
Provision
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation, and a reliable estimate can be made of the amount of
the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is
material).
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received and the amount of the
receivable can be measured reliably.
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 of the Company 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.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY - continued
Critical judgements in applying accounting policies -
continued
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 of the Company
have determined that the Group's investment properties situated in
the United Kingdom ("UK") 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 the UK. As a
result, the Group has not recognised any deferred taxes on changes
in fair value of the Group's investment properties situated in the
UK as the Group is not subject to any income taxes on disposal of
those 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 those 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$36,901,000 (2015: HK$66,639,000) 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.
Fair value of investment properties
Investment properties with a carrying amount of HK$3,445,337,000
(2015: HK$11,169,317,000) are stated at fair value based on the
valuation performed by independent qualified external valuers. In
determining the fair value, the valuers have used a method of
valuation which involves certain assumptions of market conditions.
In relying on the valuation report or making their own valuation,
the directors of the Company have exercised their judgment and are
satisfied that the method of valuation is reflective of the current
market conditions.
5. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the
Group will be able to continue as a going concern while maximising
the return to shareholders through the optimisation of the debt and
equity balances. The Group's overall strategy remains unchanged
from the prior year.
The capital structure of the Group consists of net cash (debt),
which includes bank borrowings net of bank deposits, and bank
balances and cash, and equity attributable to the Company's
shareholders, comprising issued share capital, retained profits and
reserves.
The directors of the Company review the capital structure
periodically and maintain a low gearing. The Group's percentage of
net cash (debt) to the carrying value of properties (comprising
investment properties, properties included in property, plant and
equipment, properties for development and properties held for sale)
at the end of the reporting period is as follows:
2016 2015
HK$'000 HK$'000
Bank balances and cash 9,240,168 3,665,582
Pledged bank deposits 533,105 -
Restricted bank deposits 5,589 5,613
Bank borrowings (3,458,633) (4,013,485)
-------------------- --------------------
Net cash (debt) 6,320,229 (342,290)
============ ============
Total carrying value of properties 4,799,420 14,832,503
============ ============
Percentage of net debt to carrying
value of properties Net cash 2.3%
============ ============
6. SEGMENT INFORMATION
Information reported to the executive directors of the Company,
being the chief operating decision makers ("CODM"), for the
purposes of resource allocation and assessment of segment
performance is mainly focused on the property development, property
investment and hotel operation. No operating segments identified by
the CODM have been aggregated in arriving at the reportable
segments of the Group.
The Group disposed of certain property development projects in
the PRC during the year as set out in notes 42(b), (c) and (d).
Property investment activity is in the PRC and the United
Kingdom ("UK"). The Group has acquired an investment property in
the United Kingdom ("UK") as set out in note 41 and disposed of an
investment property in Hong Kong as set out in note 42 (a) during
the year.
The hotel operation is in Hong Kong.
During the year, a new operating segment - financial investment
- has been established. The directors of the Company are seeking
potential investment opportunities for their investment portfolio,
consisting mainly of investment in debt and/or equity investments
and bank deposits. The investment income from the investment
portfolio will be included in the financial investment segment.
6. SEGMENT INFORMATION - continued
The following is an analysis of the Group's revenue and results
by reportable segment:
Segment revenues and results
For the year ended 31 December 2016
Property Property Hotel Financial
Development Investment Operation Investment Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External revenue 9,281 240,293 228,985 61,084 539,643
========== ========== ========== ========== ==========
SEGMENT RESULTS
Segment (loss) profit (382,864) 609,021 34,511 52,407 313,075
========== ========== ========== ==========
Unallocated interest
income 5,169
Corporate income
less expenses (18,741)
Finance costs (78,562)
-----------------
Profit before taxation 220,941
==========
For the year ended 31 December 2015
Property Property Hotel
Development Investment Operation Consolidated
HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External revenue 94,285 392,062 229,423 715,770
========== ========== ========== ==========
SEGMENT RESULTS
Segment profit 239,914 1,160,651 16,049 1,416,614
========== ========== ==========
Interest income 23,552
Corporate income
less expenses (9,249)
Finance costs (109,504)
-----------------
Profit before taxation 1,321,413
==========
The Group does not allocate general interest income, corporate
income less expenses and finance costs to individual reportable
segment profit or loss for the purposes of resource allocation and
performance assessment by the CODM.
The accounting policies adopted in preparing the reportable
segment information are the same as the Group's accounting policies
described in note 3.
6. SEGMENT INFORMATION - continued
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 2016
Property Property Hotel Financial
Development Investment Operation Investment Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and
depreciation
- Properties for
development 6,472 - - - 6,472
* Depreciation of property, plant and equipme
nt 376 8,026 32,166 - 40,568
Fair value changes
on investment properties - 100,671 - - 100,671
Write off of bad
debts from tenants - 14,115 - - 14,115
Write off of other
receivables 353,127 - - - 353,127
Reversal of relocation
costs (71,721) - - - (71,721)
Gain on disposal
of subsidiaries (4,305) (611,499) - - (615,804)
Loss on disposal
of property, plant
and equipment - 17 24 - 41
========== ========== ========== ========== ==========
For the year ended 31 December 2015
Property Property Hotel
Development Investment Operation Consolidated
HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and depreciation
- Properties for development 27,488 - - 27,488
- Depreciation of property,
plant and equipment 1,378 16,224 32,152 49,754
Fair value changes on
investment properties - (949,107) - (949,107)
Fair value adjustment
on other receivables 7,521 - - 7,521
Gain on disposal of subsidiaries (431,826) - - (431,826)
Loss on disposal of property,
plant and equipment - 32 - 32
========== ========== ========== ==========
No segment asset and segment liabilities are presented as the
information is not reported to the CODM in the resource allocation
and assessment of performance.
6. SEGMENT INFORMATION - continued
Geographical information
The Group operates in three principal geographical areas, being
Hong Kong (country of domicile), the PRC and the UK.
The Group's revenue from external customers by the geographical
location of its properties or the principal place of business of
the Company is detailed below.
2016 2015
HK$'000 HK$'000
Hong Kong 396,211 481,857
PRC 131,645 233,913
UK 11,787 -
-------------------- --------------------
539,643 715,770
============ ============
No single customer contributes over 10% of the total revenue of
the Group for both years.
The Group's information about its non-current assets, excluding
financial assets, by geographical location are detailed below.
2016 2015
HK$'000 HK$'000
Hong Kong 910,613 10,319,411
PRC 1,992,312 3,436,313
UK 1,494,099 -
-------------------- --------------------
4,397,024 13,755,724
============ ============
The total assets of the Group by geographical location which is
determined by reference to the location of the asset or the
principal place of business of the Company are detailed below.
2016 2015
HK$'000 HK$'000
Hong Kong 12,028,650 13,354,478
PRC 3,090,200 5,754,150
UK 1,518,063 -
-------------------- --------------------
16,636,913 19,108,628
============ ============
7. REVENUE
The following is an analysis of the Group's revenue from its
major business activities.
2016 2015
HK$'000 HK$'000
Sale of properties 9,281 94,285
Renting of investment properties 240,293 392,062
Hotel operation 228,985 229,423
Financial investment 61,084 -
-------------------- --------------------
539,643 715,770
============ ============
8. OTHER INCOME
2016 2015
HK$'000 HK$'000
Included in other income is:
Rental income from properties
held for sale
temporarily leased 7,126 6,114
Interest earned on bank deposits 4,935 23,252
============ ============
9. PROPERTY AND RELATED COSTS
2016 2015
HK$'000 HK$'000
Cost of properties sold 5,436 76,699
Selling and marketing expenses 2,917 9,909
Write down of properties held
for sale - 2,418
Direct operating expenses on
investment properties 33,127 47,242
-------------------- --------------------
41,480 136,268
============ ============
10. OTHER EXPENSES
2016 2015
HK$'000 HK$'000
Included in other expenses
are:
Management fees paid to a related
company (note 39) 188,174 272,611
Less: Amount capitalised to
property development project - (7,389)
-------------------- --------------------
188,174 265,222
Hotel operating expenses 62,358 62,733
legal and professional fees 14,786 9,043
Fair value adjustment on other
receivables - 7,521
Net exchange loss 17 2,241
Write off of bad debts from
tenants 14,115 -
============ ============
11. OTHER GAINS AND LOSSES
2016 2015
HK$'000 HK$'000
Gain on disposal of subsidiaries
(note 42) 615,804 431,826
Write off of other receivables
(note 23) (353,127) -
Reversal of relocation costs
(note 30) 71,721 -
-------------------- --------------------
334,398 431,826
============ ============
12. FINANCE COSTS
2016 2015
HK$'000 HK$'000
Interest on bank borrowings 71,986 119,595
Less: Amount capitalised to
property development project (376) (19,524)
-------------------- --------------------
71,610 100,071
Front end fee 3,236 6,966
other charges 3,716 2,467
-------------------- --------------------
78,562 109,504
============ ============
13. Profit before taxation
2016 2015
HK$'000 HK$'000
Profit before taxation has
been arrived at after
charging (crediting):
Auditor's remuneration 1,856 2,540
Directors' emoluments (note
14) 12,531 6,151
Loss on disposal of property,
plant and equipment 41 32
Depreciation and amortisation 47,166 77,670
Less: Amount capitalised to
property
development projects (126) (428)
-------------------- --------------------
47,040 77,242
-------------------- --------------------
Interest income from second
mortgage loans (187) (234)
Gross rental income from investment
properties (240,293) (392,062)
Less: Direct operating expenses 33,127 47,242
-------------------- --------------------
Net rental income (207,166) (344,820)
-------------------- --------------------
14. DIRECTORS' EMOLUMENTS
The emoluments paid or payable to each of the directors of the
Company are as follows:
Mr.
Mr. Mr. Mr. Mr. John
Richard Lu Mr. David Mr. Lam David
Öther Wing Lambert Andrew Lincoln Sing Orchard
Prickett Chi Lu Runciman Lu Tai Fulton Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
2016
Fees 422 210 210 - 210 210 211 1,473
Other emoluments
Salaries and
other benefits - - - 1,440 - - - 1,440
Retirement
benefits
scheme
contributions - - - 177 - - - 177
Share-based
payment
expenses - - - 9,441 - - - 9,441
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total emoluments 422 210 210 11,058 210 210 211 12,531
========== ========== ========== ========== ========== ========== ========== ==========
2015
Fees 477 237 237 - 237 237 238 1,663
Other emoluments
Salaries and
other benefits - - - 1,440 - - - 1,440
Retirement
benefits
scheme
contributions - - - 144 - - - 144
Share-based
payment
expenses - - - 2,904 - - - 2,904
---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Total emoluments 477 237 237 4,488 237 237 238 6,151
========== ========== ========== ========== ========== ========== ========== ==========
15. INCOME TAX CREDIT
2016 2015
HK$'000 HK$'000
The credit (charge) comprises:
Current tax
Hong Kong Profits Tax (12,238) (19,450)
PRC Enterprise Income Tax (15,036) (14,933)
Other jurisdictions (266) -
-------------------- --------------------
(27,540) (34,383)
-------------------- --------------------
Overprovision in prior years
Hong Kong Profits Tax 98 3,940
PRC Enterprise Income Tax 1,879 6,666
PRC Land Appreciation Tax 79,420 -
-------------------- --------------------
81,397 10,606
-------------------- --------------------
Deferred tax
- current year 28,552 28,542
- underprovision in prior year (2,378) -
-------------------- --------------------
26,174 28,542
-------------------- --------------------
80,031 4,765
============ ============
Hong Kong Profits Tax is calculated at 16.5% of the estimated
assessable profits for both years.
PRC Enterprise Income Tax is calculated at 25% of the estimated
assessable profits for both years.
UK Profit Tax is calculated at 20% of the estimated assessable
profits during the year.
Details of deferred taxation are set out in note 33.
15. INCOME TAX CREDIT - continued
Income tax credit for the year can be reconciled to profit
before taxation in the consolidated statement of profit or loss as
follows:
2016 2015
HK$'000 HK$'000
Profit before taxation 220,941 1,321,413
============ ============
Tax charge at Hong Kong income
tax rate of 16.5% (36,455) (218,033)
Tax effect of expenses not
deductible for tax purposes (101,862) (43,979)
Tax effect of income not taxable
for tax purposes 133,048 250,561
Tax effect of tax losses not
recognised (2,277) (4,376)
Utilisation of tax losses previously
not recognised 406 751
Effect of different tax rates
of subsidiaries
operating overseas 6,812 5,483
Overprovision in prior years 79,019 10,606
Others 1,340 3,752
-------------------- --------------------
Income tax credit for the year 80,031 4,765
============ ============
16. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to
the Company's shareholders is based on the following data:
2016 2015
HK$'000 HK$'000
Earnings for the purpose of
basic earnings per share:
Profit for the year attributable
to the
Company's shareholders 425,378 1,336,728
============ ============
2016 2015
number of common shares for
the purpose
of basic earnings per share
(note: changed from ordinary
shares to common shares after
migration on 5 December 2016) 886,347,812 886,347,812
============ ============
No diluted earnings per share is presented as the Company did
not have any potential ordinary shares in issue during both
years.
16. EARNINGS PER SHARE - continued
For the purpose of assessing the performance of the Group, the
directors of the Company are of the view that the profit for the
year should be adjusted for the fair value changes on investment
properties recognised in profit or loss and the related deferred
taxation in arriving at the "adjusted profit attributable to the
Company's shareholders". A reconciliation of the adjusted earnings
is as follows:
2016 2015
HK$'000 HK$'000
Profit for the year attributable
to the Company's shareholders
as shown in the consolidated
statement of profit or loss 425,378 1,336,728
Fair value changes on investment
properties 100,671 (949,107)
Deferred tax thereon (25,168) (31,725)
-------------------- --------------------
Adjusted profit attributable
to the Company's shareholders 500,881 355,896
============ ============
Basic earnings per share excluding
fair value
changes on investment properties
net
of deferred tax HK56.5 cents HK40.2 cents
============ ============
The denominators used in the calculation of adjusted earnings
per share are the same as those detailed above.
17. DIVIDS
The Board has declared a special cash dividend of HK$2.25 (2015: HK$1.9) per common share for the year ended 31 December 2016 to shareholders of the Company whose names appear on the register of members of the Company at the close of business on Friday, 31 March 2017. The relevant dividend
warrants are expected to be despatched on or before Thursday, 13 April 2017.
18. INVESTMENT PROPERTIES
Hong Kong PRC UK Total
HK$'000 HK$'000 HK$'000 HK$'000
At 1 January 2015 7,907,000 2,451,285 - 10,358,285
Cost adjustment on additions (8) - - (8)
Fair value changes 1,076,008 (126,901) - 949,107
Exchange adjustments - (138,067) - (138,067)
----------------- ----------------- ----------------- -----------------
At 31 December 2015 8,983,000 2,186,317 - 11,169,317
Addition (note 41) - - 1,505,213 1,505,213
Fair value changes - (100,671) - (100,671)
Disposal of subsidiaries
(note 42(a)) (8,983,000) - - (8,983,000)
Exchange adjustments - (134,408) (11,114) (145,522)
----------------- ----------------- ----------------- -----------------
At 31 December 2016 - 1,951,238 1,494,099 3,445,337
========== ========== ========== ==========
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 independent qualified external valuers to perform the
valuation of the Group's investment properties. At the end of each
reporting period, the Group works closely with the independent
qualified external valuers to establish and determine the
appropriate valuation techniques and inputs to the model.
As at 31 December 2016, the fair values of the Group's
investment properties in the PRC mainly comprise car parking
spaces, shop and office portion of the properties. As at 31
December 2015, the fair values of the Group's investment properties
in both Hong Kong and the PRC mainly comprise car parking spaces,
shop and office portion of the properties. The valuations were
arrived at on the basis of valuations carried out at those dates by
Savills Valuation and Professional Services Limited, 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 for investment properties
in Hong Kong and the PRC were arrived in accordance with the "The
HKIS Valuation Standard (2012 Edition)" published by the Hong Kong
Institute of Surveyors.
The fair value of the investment property comprising mainly
office units in the UK as at 31 December 2016 was arrived at on the
basis of a valuation carried out by Savills (UK) Limited, a firm of
chartered surveyors not connected to the Group, regulated by the
Royal Institution of Chartered Surveyors ("RICS"), a subsidiary of
Savills Plc., that has appropriate qualifications and recent
experience in the valuation of properties in the relevant
locations. The valuation has been prepared in accordance with RICS
Valuation - Professional Standards January 2014 (the "RICS Red
Book") published in November 2013 and effective from 6 January
2014.
18. INVESTMENT PROPERTIES - continued
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.
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 valuation methodology and the significant inputs
are as follows:
Key inputs to
the valuation
(including capitalisation
rates and market Fair value
Class of property Valuation methodology value) hierarchy
2016 2015
Car park, shop Income capitalisation Not applicable Hong Kong Level 3
and office portion approach whereby office
the rental incomes 3.25%-3.75%
of contractual per annum
tenancies are
capitalised
for the unexpired
terms of tenancies.
The valuers
have
also taken into
account the
reversionary
market rents
after the expiry
of tenancies
in capitalisation.
PRC shop PRC shop
7.0% - 7.0% -
9.0% 9.0%
per annum per annum
PRC office PRC office
6.0% - 6.0% -
6.5% 6.5%
per annum per annum
Not applicable Hong Kong
Car park
4.5% per
annum
The valuers UK office Not applicable
have used the 4.17%
traditional per annum
"all risk" yield
investment method
of valuation,
having regard
to comparable
evidence.
Car park portion Sales comparison PRC PRC Level 3
approach comparable comparable
and made reference ranging ranging
to from RMB131,000 from RMB135,000
the sales of to RMB140,000 to RMB200,000
comparable per space per space
properties as
available
in the market.
There were no transfers between Level 1, 2 and 3 in both years
presented.
19. PROPERTY, PLANT AND EQUIPMENT
Hotel Other
property properties Properties Furniture, Crockery,
in in in Plant Fixtures Utensils
Hong Hong the and and Motor Leasehold and
Kong Kong PRC Machinery equipment Vehicles Improvements linen Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
COST
At 1 January
2015 1,089,672 421,000 47,272 45,563 38,831 8,504 73,593 5,051 1,729,486
Additions - - - 693 1,210 253 - - 2,156
Disposals (353) - - (1,692) (295) - (827) - (3,167)
Exchange
adjustments - - (2,761) (399) (360) (346) (331) - (4,197)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 31
December
2015 1,089,319 421,000 44,511 44,165 39,386 8,411 72,435 5,051 1,724,278
Additions - - - 6 1,819 - - 15 1,840
Disposals (11) - - (29) (597) (17) (123) - (777)
Disposal
of
subsidiaries
(note 42) - (421,000) - (489) (4,262) (3,291) (3,056) - (432,098)
Exchange
adjustments - - (2,823) (406) (132) (171) (153) - (3,685)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 31
December
2016 1,089,308 - 41,688 43,247 36,214 4,932 69,103 5,066 1,289,558
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
DEPRECIATION
At 1 January
2015 142,619 12,923 1,034 23,627 33,864 5,773 72,190 - 292,030
Provided
for the year 27,362 12,923 1,071 5,122 1,733 1,203 768 - 50,182
Eliminated
on disposals (353) - - (1,679) (258) - (827) - (3,117)
Exchange
adjustments - - (101) (211) (194) (258) (280) - (1,044)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 31
December
2015 169,628 25,846 2,004 26,859 35,145 6,718 71,851 - 338,051
Provided
for the year 27,507 5,142 1,006 4,910 1,272 434 423 - 40,694
Eliminated
on disposals (2) - - (21) (590) - (123) - (736)
Disposal
of
subsidiaries
(note 42) - (30,988) - (424) (2,324) (2,509) (3,057) - (39,302)
Exchange
adjustments - - (169) (269) (106) (159) (133) - (836)
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
At 31
December
2016 197,133 - 2,841 31,055 33,397 4,484 68,961 - 337,871
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
CARRYING
VALUES
At 31
December
2016 892,175 - 38,847 12,192 2,817 448 142 5,066 951,687
============ ============ ============ ============ ============ ============ ============ ============ ============
At 31
December
2015 919,691 395,154 42,507 17,306 4,241 1,693 584 5,051 1,386,227
============ ============ ============ ============ ============ ============ ============ ============ ============
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 and properties Over the lease terms ranging from 42 years
to 45.5 years
Completed hotel building 40 years
Other properties 4%
Plant and machinery 10%
Furniture, fixtures and equipment 25%
Motor vehicles 25%
Leasehold improvements 25%
The carrying amounts of properties shown above comprise
properties situated in:
2016 2015
HK$'000 HK$'000
Hong Kong 892,175 1,314,845
============ ============
The PRC 38,847 42,507
============ ============
20. PROPERTIES FOR DEVELOPMENT
2016 2015
HK$'000 HK$'000
COST
At 1 January 1,304,937 1,332,112
Additions 46,261 51,713
Disposal of subsidiaries (notes
42 (b), (c) and (d)) (1,337,030) -
Exchange adjustments (14,168) (78,888)
-------------------- --------------------
At 31 December - 1,304,937
-------------------- --------------------
AMORTISATION
At 1 January 104,757 83,680
Provided for the year 6,472 27,488
Disposal of subsidiaries (notes
42 (b), (c) and (d)) (110,085) -
Exchange adjustments (1,144) (6,411)
-------------------- --------------------
At 31 December - 104,757
-------------------- --------------------
CARRYING VALUE
At 31 December - 1,200,180
============ ============
At 31 December 2015, the carrying amount represented the Group's
interest in certain pieces of land located in the PRC to be held
for future development.
The carrying amount was amortised on a straight-line basis over
the lease terms ranging from 40 to 70 years.
21. LOAN RECEIVABLES
2016 2015
HK$'000 HK$'000
Second mortgage loans 3,536 4,160
============ ============
Analysed for reporting purposes:
Non-current assets 3,160 3,789
Current assets 376 371
-------------------- --------------------
3,536 4,160
============ ============
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 loan receivables is 5.0%
(2015: 5.0%) per annum.
Loan receivables 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 loan receivables, 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 unrelated. No single loan receivable is individually
material.
22. NOTE RECEIVABLES
The amount represents (i) the carrying value of a five-year zero
coupon principal protected index-linked note with a principal
amount of US$2,000,000 (equivalent to HK$15,509,000) (2015:
US$2,000,000 (equivalent to HK$15,502,000)) already matured and
settled in 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$38,773,000) (2015:
US$5,000,000 (equivalent to HK$38,754,000)) 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 of the Company, 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.
23. OTHER RECEIVABLES
At 31 December 2016, the Group had incurred a total amount of
RMB321,060,000 (2015: RMB321,060,000), equivalent to HK$358,913,000
(2015: HK$383,217,000), for the tenant relocation arrangements,
excavation and infrastructure work on certain pieces of land in
Nanjing, the PRC. The amount is 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.
As at 31 December 2015, the balance of HK$361,114,000
represented the Hong Kong dollar equivalent of the present value of
the original amount of RMB321,060,000 expected to be recovered in
2018 discounted at the rate of 2% per annum.
During the year ended 31 December 2016, the Group recognised a
full impairment of other receivables. Management reviews the status
of the underlying project annually. Since there has been a
substantial delay of the time schedule from the original plan,
management is now of the view that the release of the land for
auction and amount to be recovered in the foreseeable future is
unlikely, and therefore a full impairment has been made for the
amounts already incurred.
24. AVAILABLE-FOR-SALE INVESTMENTS
2016 2015
HK$'000 HK$'000
Unlisted investments at cost:
- Equity securities (Note a) 5,817 5,824
- Convertible loan (Note b) 5,817 5,824
Unlisted investments at fair
value:
- Debt securities (Note c) 496,719 -
------------------ ------------------
508,353 11,648
Listed investments at fair
value:
* Debt securities maturing between January 2017 to
September 2019 with fixed interests ranging from 1.9%
to 8.0% per annum (Note d) 882,094 -
------------------ ------------------
Total 1,390,447 11,648
=========== ===========
Analysed for reporting purposes
as:
Current assets 137,204 -
Non-current assets 1,253,243 11,648
------------------ ------------------
1,390,447 11,648
=========== ===========
(a) At 31 December 2016, unlisted equity securities classified
as available-for sale held by the Group amounting to US$750,000
(equivalent to HK$5,817,000) (2015: US$750,000 (equivalent to
HK$5,824,000)), representing approximately 8% (2015: 8%) equity
interest of the investee company, were measured at cost less
impairment at the end of the reporting period because the range of
reasonable fair value estimates is so significant that the
directors of the Company were of the opinion that the fair value
cannot be measured reliably.
(b) The Group committed and contributed an unsecured
interest-free loan in the sum of US$750,000 (equivalent to
HK$5,817,000) (2015: US$750,000 (equivalent to HK$5,824,000)) to
the party set out in note (a) which was measured at cost less
impairment at the end of the reporting period.
The party is scheduled to repay the convertible loan at its
principal amount of US$500,000 on 14 October 2017 and US$250,000 on
30 July 2018 (the "Maturity date"). The Group has the right to
convert into shares representing not more than a 7% (2015: 7%)
equity interest of the investee company.
The conversion option feature is regarded as a derivative
embedded in but not closely related to the convertible loan in
accordance with IAS 39 Financial Instruments: Recognition and
Measurement. However, in the opinion of the directors of the
Company, the fair value of the embedded derivative at the end of
the reporting period is insignificant and therefore it has not been
accounted for it as a separate component in the consolidated
financial statements.
24. AVAILABLE-FOR-SALE INVESTMENTS - continued
(c) In December 2016, the Group subscribed for a note issued by
an independent third party in an aggregate principal amount of
HK$500 million with a maturity date in December 2018 at a coupon
rate of 7% per annum for the first year and 8% per annum for the
second year (the "Note"). The Note entitles the issuer to early
redeem on the first anniversary of the issue date of the Note, in
whole but not in part, at 100% of the principal amount outstanding,
together with the accrued and unpaid interest at the date fixed for
redemption. As at 31 December 2016, the Note is measured at fair
value determined based on the valuation conducted by an independent
professional valuer.
(d) At 31 December 2016, the Group's listed debt securities have
been pledged as security for the bank borrowings. (2015: nil).
The Group's listed investments are measured at fair value for
financial reporting purposes.
Details of fair value measurement are disclosed in note
34(c).
25. RESTRICTED BANK DEPOSITS/PLEDGED BANK DEPOSITS
Restricted bank deposits carry fixed interest rates at 1.6%
(2015: ranging from 0.4% to 1.9%) per annum and were placed with a
bank in relation to long-term bank borrowings.
Pledged bank deposits carry fixed interest at 0.1% (2015: nil)
and are placed with a bank to secure a revolving loan facility.
26. PROPERTIES HELD FOR SALE - PROPERTIES UNDER DEVELOPMENT
At 31 December 2015, the properties under development were
expected to be completed in more than twelve months after the end
of the reporting period. The entire amount of properties under
development were disposed through subsidiaries (note 42).
27. RECEIVABLES, DEPOSITS AND PREPAYMENTS
2016 2015
HK$'000 HK$'000
Trade receivables 8,001 10,000
Amount receivables from disposal 445,000 -
of subsidiaries
(note 42 (d))
Accrued income 72,366 99,159
Deposits and prepayments 60,012 16,685
------------------ ------------------
585,379 125,844
=========== ===========
Trade receivables mainly represent rental receivable from
tenants for the use of the Group's properties and receivables from
corporate customers and travel agents for the use of hotel
facilities. Rentals are payable upon presentation of demand notes.
An average credit period of 30 days is allowed to corporate
customers and travel agents.
The following is an aged analysis of trade receivables,
presented based on the invoice date, at the end of the reporting
period.
2016 2015
HK$'000 HK$'000
0 to 30 days 5,622 8,167
31 to 60 days 344 271
61 to 90 days 18 232
91 to 365 days 1,100 1,110
Over 365 days 917 220
------------------ ------------------
8,001 10,000
=========== ===========
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$2,513,000 (2015: HK$2,498,000) at the end
of the reporting period are past due but are not considered
impaired as most of them are sufficiently covered by rental
deposits received from respective tenants. The Group considers that
the amounts are still recoverable and no provision is required. The
Group does not hold any collateral over these balances.
28. AMOUNTS DUE FROM/TO NON-CONTROLLING INTERESTS
The balances are unsecured, interest-free and repayable on
demand.
29. Bank balances and CASH
2016 2015
HK$'000 HK$'000
Cash and cash equivalents 4,779,967 3,298,440
Fixed deposits with an original
maturity period more than 3
months 4,460,201 364,048
Guaranteed bank balances - 3,094
------------------ ------------------
9,240,168 3,665,582
=========== ===========
Bank balances and cash comprise cash and short-term bank
deposits which carry fixed interest rates ranging from 0.5% to 1.7%
(2015: 0.3% to 2.4%) per annum.
Guaranteed bank balances represent deposits placed by the Group
with banks which can only be applied to designated property
development projects of the Group. Guaranteed bank balances carry
interest at market rates ranging from 0.4% to 1.0% per annum as at
31 December 2015.
The Group's bank balances and cash that are denominated in
currencies other than the functional currencies of the relevant
group entities are set out below:
2016 2015
HK$'000 HK$'000
Hong Kong dollars 645,526 23
=========== ===========
United States dollars 4 1
=========== ===========
Renminbi 960 2,763
=========== ===========
30. PAYABLES, RENTAL DEPOSITS AND ACCRUED CHARGES
2016 2015
HK$'000 HK$'000
Trade payables 2,432 3,052
Rental deposits 37,739 113,764
Rental received in advance 30,657 13,463
Other payables, other deposits
and accrued charges 86,801 240,440
------------------ ------------------
157,629 370,719
=========== ===========
Included in other payables is an aggregate amount of (i)
HK$24,609,000 (2015: HK$93,010,000) 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 23 and; (ii) nil (2015: HK$67,436,000) payable to contractors
for properties held for sale. In 2016, management reviewed the
construction cost provision and reversed an amount of HK$71,721,000
which no longer probable to be paid by the Group.
Rental deposits to be settled after twelve months from the end
of the reporting period based on the respective lease terms
amounted to HK$25,610,000 (2015: HK$76,376,000).
31. BANK BORROWINGS
2016 2015
HK$'000 HK$'000
Secured 3,395,968 4,035,574
Unsecured 80,000 -
------------------ ------------------
3,475,968 4,035,574
Less: Front-end fee (17,335) (22,089)
------------------ ------------------
3,458,633 4,013,485
=========== ===========
Analysed for reporting purpose
as:
Current liabilities 1,464,928 1,133,781
Non-current liabilities 1,993,705 2,879,704
------------------ ------------------
3,458,633 4,013,485
=========== ===========
The bank borrowings are repayable
as follows:
On demand or within one year 1,467,756 1,136,239
Within a period of more than
one year, but not exceeding
two years 97,585 164,126
Within a period of more than
two years, but not exceeding
five years 1,887,151 1,795,734
Within a period of more than
five years 23,476 939,475
------------------ ------------------
3,475,968 4,035,574
=========== ===========
Except for the bank borrowing of HK$723,420,000 denominated in
Hong Kong dollars, being the foreign currency of the relevant group
entities with functional currency in USD, the remaining amounts are
denominated in the functional currencies of the relevant group
entities and carry interest at floating rates, the principal
amounts of which are analysed below:
Denominated in 2016 2015
HK$'000 HK$'000
Hong Kong dollars 1,115,000 3,459,000
Renminbi 140,017 576,574
Great Britain Pounds 1,497,531 -
------------------ ------------------
2,752,548 4,035,574
=========== ===========
The effective interest rates of these variable-rate borrowings
range from 1.2% to 5.4% (2015: 1.4% to 7.1%) per annum.
32. SHARE CAPITAL
2016 and
2015
US$'000
Authorised:
1,300,000,000 common shares (note: changed
from ordinary shares to common shares
after migration on 5 December 2016)
of US$0.05 each 65,000
-------------------
Issued and fully paid:
886,347,812 common shares (note: after
migration on 5 December 2016) of US$0.05
each 44,317
===========
HK$'000
Shown in the financial statements as 345,204
===========
33. DEFERRED TAXATION
The following are the major deferred tax liabilities (assets)
recognised and movements thereon during the current and prior
reporting periods:
Fair
value
Accelerated of Effective
tax investment rental Tax
depreciation properties income losses Others Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2015 16,540 283,851 22,006 (4,371) 1,477 319,503
Exchange
adjustments - (15,312) (1,339) 282 - (16,369)
Charge
(credit)
to profit or
loss 2,217 (31,725) 1,372 (708) 302 (28,542)
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2015 18,757 236,814 22,039 (4,797) 1,779 274,592
Exchange
adjustments (13) (13,956) (1,263) 197 - (15,035)
Charge
(credit)
to profit or
loss 2,826 (25,168) (3,191) 2,550 (3,191) (26,174)
Disposal of
subsidiaries (18,591) - - - 1,412 (17,179)
----------------- ----------------- ----------------- ----------------- ----------------- -----------------
At 31
December
2016 2,979 197,690 17,585 (2,050) - 216,204
========== ========== ========== ========== ========== ==========
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.
33. DEFERRED TAXATION - continued
At 31 December 2016, the Group has unused tax losses of
HK$45,100,000 (2015: HK$$85,823,000) available to offset against
future profits. A deferred tax asset has been recognised in respect
of HK$8,199,000 (2015: HK$19,184,000) of such losses. No deferred
tax asset has been recognised in respect of the remaining
HK$36,901,000 (2015: HK$66,639,000) as it is not probable that
taxable profit will be available to offset against the tax losses
due to the unpredictability of future profit streams. The tax
losses will expire in the following years ending 31 December:
2016 2015
HK$'000 HK$'000
2016 - 1,465
2017 1,092 3,354
2018 4,248 4,797
2019 11,967 39,316
2020 11,801 29,159
2021 13,159 -
-------------------- --------------------
42,267 78,091
============ ============
Other tax losses may be carried forward indefinitely.
34. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
2016 2015
HK$'000 HK$'000
Financial assets
Loans and receivables (including
cash and cash equivalents) 10,289,719 4,100,725
Available-for-sale investments
- listed 882,094 -
- unlisted 508,353 11,648
============ ============
Financial liabilities
Financial liabilities at
amortised cost 3,621,846 4,336,524
============ ============
(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 primarily foreign currency risk, interest
rate risk and price risk), credit risk and liquidity risk.
The Group's overall strategy remains unchanged from prior
year.
34. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk
(i) Foreign currency risk
Certain subsidiaries of the Company have foreign currency
denominated monetary assets/(liabilities), which expose the Group
to foreign currency risk. The Group currently does not have a
policy to hedge the foreign currency exposure. However, 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.
The carrying amounts of the foreign currency denominated net
monetary assets/(liabilities) at the end of the reporting period in
the respective group entities are as follows:
2016 2015
HK$'000 HK$'000
Hong Kong dollars (77,436) 23
United States dollars 65,891 65,905
Renminbi 2,235 2,763
============ ============
The loans for foreign operations within the Group that form part
of the Group's net investment in the foreign operations are
denominated in foreign currencies, other than the functional
currency of the foreign entities.
Sensitivity analysis
The following table details the Group's sensitivity to a 5%
(2015: 5%) depreciation in the functional currencies of the
relevant subsidiaries (i.e. Renminbi, United States dollars and
Hong Kong dollars), relative to the foreign currencies of the
relevant subsidiaries (i.e. Hong Kong dollars, United States
dollars and Renminbi). There would be an equal and opposite impact
where the Renminbi, United States dollars and Hong Kong dollars
weakens 5% (2015: 5%) against the relevant foreign currencies.
Increase (decrease)
in
profit for the year
2016 2015
HK$'000 HK$'000
Hong Kong dollars (3,872) 1
United States dollars 3,295 3,295
Renminbi 112 138
============ ============
34. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk - continued
(i) Foreign currency risk - continued
Sensitivity analysis - continued
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.
(ii) Interest rate risk
The Group is exposed to cash flow interest rate risk in relation
to variable-rate borrowings, loan receivables, bank balances and
deposits. The directors of the Company 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, LIBOR
and the PBOC Prescribed Interest Rates on the bank borrowings, and
Hong Kong Prime Rate on the loan receivables.
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 loan receivables 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 2016 would decrease/increase by HK$17,362,000
(2015: HK$19,426,000).
34. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk - continued
(iii) Price risk
The Group is exposed to price risk through its investments in
AFS investments. Management manages this exposure by maintaining a
portfolio of investments with different risks. In addition, the
Group has formed a special team to monitor the price risk and will
consider hedging the risk exposure should the need arise.
Sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to market price risk of listed AFS debt investments at the
reporting date. For sensitivity analysis purpose, if the prices of
the respective instruments had been 5% higher/lower, investments
revaluation reserve would increase/decrease by HK$44,105,000 for
the Group as a result of the changes in fair value of the listed
AFS investments.
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, which is
arising from the carrying amount of the respective recognised
financial 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 2016, the Group has concentration of credit risk
on receivables from disposal of subsidiaries as set out in note 42
and unlisted AFS debt investments. Management of the Group has
periodic communication with the counterparty and has monitored the
settlement regularly.
Although the placing of deposits, listed AFS debt investments
and notes subscribed are concentrated on certain banks or listed
issuers, the credit risk on these financial assets is limited
because the counterparties are with good reputation.
The Group has no other significant concentration of credit risk
with exposure spread over a number of counterparties and
customers.
34. FINANCIAL INSTRUMENTS - continued
(b) Financial risk management objectives and policies - continued
Market risk - 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 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 2016,
the Group has bank balances and cash of HK$9,778,862,000 (2015:
HK$3,671,195,000) and available unutilised bank loan facilities of
approximately HK$627,442,000 (2015: HK$370,248,000).
The following table details the Group's remaining contractual
maturity for its financial liabilities based on the agreed
repayment terms. The table has been drawn up based on the
undiscounted cash flows of financial liabilities and on the
earliest date on which the Group can be required to pay. The table
includes both interest and principal cash flows, estimated based on
interest rate at the end of the reporting period.
Weighted
average 9 months Total
effective 3 months 6 months to undiscounted
interest Within to to 12 Over cash Carrying
rate 3 months 6 months 9 months months 1 year flows amount
% HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 31.12.2016
Payables and
rental deposits
received - 82,054 1,855 762 2,917 25,610 113,198 113,198
Amounts due
to
non-controlling
interests - 87,754 - - - - 87,754 87,754
Variable rates
bank borrowings 2.1 1,406,933 31,508 31,260 55,013 2,261,705 3,786,419 3,458,633
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
1,576,741 33,363 32,022 57,930 2,287,315 3,987,371 3,659,585
======== ======== ======== ======== ======== ======== ========
At 31.12.2015
Payables and
rental deposits
received - 243,792 10,679 6,732 5,528 76,376 343,107 343,107
Amounts due
to
non-controlling
interests - 93,696 - - - - 93,696 93,696
Variable rates
bank borrowings 2.7 78,741 1,036,075 37,334 89,812 3,337,903 4,579,865 4,013,485
Financial
guarantees
liabilities - 43,382 - - - - 43,382 -
--------------- --------------- --------------- --------------- --------------- --------------- ---------------
459,611 1,046,754 44,066 95,340 3,414,279 5,060,050 4,450,288
======== ======== ======== ======== ======== ======== ========
The amounts of financial guarantee liabilities, as set out in
note 40, are the maximum amounts the Group could be required to
settle under the arrangement for the full guaranteed amount if that
amount is claimed by the counterparty to the guarantee. Based on
expectations at the end of the reporting period, the Group
considers that it is more likely than not that such an amount will
not be payable under the arrangement. However, this estimate is
subject to change depending on the probability of the counterparty
claiming under the guarantee which is a function of the likelihood
that the financial receivables held by the counterparty which are
guaranteed suffer credit losses.
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.
Bank loans with a repayment on demand clause are included in the
"within 3 months" time band in the above maturity analysis. As at
31 December 2016, the aggregate undiscounted principal amounts of
the bank loans amounted to HK$1,256,524,000. Taking into account
the Group's financial position, the directors of the Company do not
believe that it is probable that the banks will exercise their
discretionary rights to demand immediate repayment and the
principal and interest cash flows based on contractual repayment
terms amount to HK$ 1,257,597,000 reported under "within 3 months"
time band.
34. FINANCIAL INSTRUMENTS - continued
(c) Fair value measurement of financial instruments
the fair value of financial assets and financial liabilities
carried at amortised cost, 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 of the Company consider that the carrying amounts
of financial assets and financial liabilities recorded at amortised
cost in the consolidated financial statements approximate their
fair values.
The fair value of the listed available-for-sale investments is
determined by reference to the quoted bid prices in an active
market. This valuation falls under Level 1 of the fair value
hierarchy.
The following table gives information about how the fair values
of the unlisted available-for-sale debt investments are determined
(in particular, the valuation technique(s) and inputs used).
Financial Fair value Fair value Valuation technique(s)
assets as at 31/12/2016 hierarchy and key input(s)
Unlisted available- HK$496,719,000 Level 2 A discounted
for-sale debt cash flow analysis
investments is adopted to
as set out estimate the
in note 24 fair value of
(Note c) the Note.
A discounted
cash flow analysis
involves forecasting
the appropriate
cash flow stream
over an appropriate
period and then
discounting
it back to a
present value
at an appropriate
discount rate.
This discount
rate reflects
the time value
of money, inflation
and the risk
inherent in
ownership of
the asset or
security interest
being valued.
The key input
is the discount
rate which is
determined with
reference to
comparable bonds
as at 31 December
2016.
35. OPERATING LEASE ARRANGEMENTS
The Group as lessee
Minimum lease payments paid under operating leases during the
year are HK$36,000 (2015: HK$1,386,000).
At the end of the reporting period, the Group had commitments
for future minimum lease payments under non-cancellable operating
leases in respect of rented premises which fall due as follows:
2016 2015
HK$'000 HK$'000
Within one year 36 766
In the second to fifth years
inclusive 3 129
-------------------- --------------------
39 895
============ ============
Leases are negotiated for the range of 1 to 2 years (2015: 1 to
2 years) with fixed monthly rentals.
The Group as lessor
The majority of the Group's investment properties were leased
out under operating leases.
At the end of the reporting period, the Group had contracted
with tenants for the following future minimum lease payments:
2016 2015
HK$'000 HK$'000
Within one year 187,203 356,543
In the second to fifth years
inclusive 599,652 859,051
Over five years 690,624 750,243
-------------------- --------------------
1,477,479 1,965,837
============ ============
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 23 years (2015: 1 to 16 years).
36. 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 and property, plant
and equipment with an aggregate carrying value of HK$2,854,807,000
(2015: HK$10,934,981,000) 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$892,175,000 (2015: HK$919,691,000) 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$195,963,000 as at 31
December 2015, which were released in the current year.
(d) Fixed charge on properties for development with an aggregate
carrying value of HK$186,898,000 as at 31 December 2015, which were
released in the current year.
(e) Note receivables of HK$54,282,000 (2015: HK$54,256,000).
(f) Pledged cash of HK$533,105,000 (2015: nil).
(g) Listed debt securities of HK$882,094,000 (2015: nil).
37. 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.
37. SHARE-BASED PAYMENTS - continued
Share Option Scheme of the Company - continued
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.
Without prior approval of the shareholders of SEA in general
meetings, no option may be granted to (a) an eligible participant
which, if exercised in full, would result in the total number of
shares issued and to be issued upon exercise of all 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) a substantial shareholder and/or an independent
non-executive director of the Company or SEA or any of their
respective associates which, if exercised in full, 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 SEA Share
Award Scheme.
37. SHARE-BASED PAYMENTS - continued
Share Option Scheme of SEA
SEA adopted an employee share option scheme (the "2005 SEA Share
Option Scheme") on 25 August 2005 for the primary purpose of
providing incentive to directors and eligible employees. The 2005
SEA Share Option Scheme expired on 24 August 2015. Upon expiry of
the 2005 SEA Share Option Scheme, no further options should be
granted thereunder but the options granted and yet to be exercised
under the 2005 SEA Share Option Scheme shall remain in force and
effect.
SEA adopted a new share option scheme ("2015 SEA Share Option
Scheme") on 29 May 2015. Under the 2015 SEA Share Option Scheme,
the board of directors of SEA may offer to any (i) director or
employee of SEA or any of its affiliate; (ii) representative,
manager, agent, contractor, advisor, consultant, distributor or
supplier engaged by SEA or any of its affiliate; (iii) customer,
promoter, business ally or joint-venture partner of SEA or any of
its affiliate; or (iv) trustee of any trust established for the
benefit of employees of SEA or any of its affiliate. 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, no option may be granted to (a) an eligible participant
which, if exercised in full, would result in the total number of
shares issued and to be issued upon exercise of all 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) a substantial shareholder or an independent non-executive
director of SEA or any of their respective associates which, if
exercised in full, 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 12 July 2012, SEA granted share options under the 2005 SEA
Share Option Scheme 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 of SEA 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 and 500,000 share options of SEA granted
under the 2005 SEA Share Option Scheme were exercised by such
director during the reporting period.
On 2 July 2015, SEA granted share options under the 2015 SEA
Share Option Scheme to a director of the Company entitling the
holder to subscribe for 1,000,000 shares of SEA at an exercise
price of HK$6.302 per share with an exercise period of 2 years from
1 July 2018 to 30 June 2020. The directors of SEA determined the
fair value of the share options with reference to the calculation
made by an independent professional valuer to be HK$1,090,055. None
of the options lapsed or were exercised up to the end of the
reporting period.
37. 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.
No award was granted since the adoption date of the SEA Share
Award Scheme.
38. 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$3,485,000 (2015: HK$3,994,000). No forfeited contributions had
been used to reduce the level of contributions in either year.
39. RELATED PARTY TRANSACTIONS
(a) For the year ended 31 December 2016, the Group paid fees of
HK$188,174,000 (2015: HK$272,611,000) to South-East Asia Investment
and Agency Company, Limited ("SEAI"), a wholly-owned subsidiary of
SEA, pursuant to the agreement entered into between the Company,
certain subsidiaries of the Company and SEAI for using SEAI's
personnel and facilities on a cost-sharing basis to carry out the
Group's business activities in respect of the provision of property
development and management services to the Group on the Group's
property portfolio; and
(b) The remuneration of directors of the Company who are the
Group's key management is set out in note 14.
40. CONTINGENT LIABILITIES
At 31 December 2015, the Group had given guarantees to banks in
respect of mortgage loans provided to the Group's customers for the
purchase of the Group's properties located in Kaifeng, the PRC. The
total outstanding mortgage loans which were under the guarantee
were HK$43,382,000. This development project has been disposed
during the year as set out in note 42(b) and the contingent
liabilities therefore no longer exist at 31 December 2016.
41. ACQUISITIONS OF SUBSIDIARIES
On 7 November 2016, the Group entered into a sale and purchase
agreement with an independent third party to acquire indirectly the
entire issued units in a trust that owns the property known as 20
Moorgate, London, EC2R 6DA at a total consideration of
approximately GBP154 million (approximately HK$1,491 million) (the
"Acquisition"). The Acquisition was financed by (i) a bank facility
of GBP100.8 million secured by the property and (ii) a bank
facility of GBP57 million pledged by cash deposits.
Assets acquired and liabilities recognised at the date of
acquisition are as follows:
HK$'000
Investment properties 1,505,213
Other receivables and prepayments 1,030
Trade and other payables (12,310)
-------------------
1,493,933
===========
42. GAIN ON DISPOSAL OF SUBSIDIARIES
During the year ended 31 December 2016, the Group has disposed
of certain subsidiaries which owned the following
properties/projects:
(a) Dah Sing Financial Centre
On 25 February 2016, the Group entered into a sale and purchase
agreement, pursuant to which the Group agreed to sell the entire
issued shares of SEA (BVI) Limited, which wholly owns the issued
shares of Wing Siu Company Limited (the sole registered and
beneficial owner of Dah Sing Financial Centre), to an independent
third party at an aggregate consideration of HK$10,101 million in
cash. The disposal was completed on 24 May 2016.
(b) Kaifeng Nova City
On 19 April 2016, the Group entered into a sale and purchase
agreement, pursuant to which the Group agreed to sell the entire
issued share of New Insight Holdings Limited, which wholly owns the
issued shares of all investment companies (the beneficial owners of
a property development project at Kaifeng Nova City, Henan
Province, the PRC), to an independent third party at an aggregate
consideration of HK$900 million in cash. The disposal was completed
on 26 April 2016.
(c) Huangshan project
On 3 August 2016, the Group entered into a sale and purchase
agreement with an independent third party to sell the entire issued
share capital of Rich Motion Development Limited, which wholly owns
the entire registered capital of the investment company of a
property development project located at Huangshan, Anhui Province,
the PRC for a consideration of HK$2 million in cash. The disposal
was completed on the same date.
(d) Chengdu Nova City
On 22 August 2016, the Group entered into a sale and purchase
agreement with an independent third party to sell the entire issued
share capital of Healthy Time International Limited, which wholly
owns the beneficial interest in the property development project
located in Chengdu, Sichuan Province, the PRC for a consideration
of HK$890 million in cash. The disposal was completed on 29 August
2016.
42. GAIN ON DISPOSAL OF SUBSIDIARIES - continued
The major classes of assets and liabilities of the disposed
subsidiaries at the respective date of each disposal were as
follows:
Dah Sing
Financial Kaifeng Huangshan Chengdu
Centre Nova City project Nova City Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
Investment property 8,983,000 - - - 8,983,000
Property for
development - 531,322 85,338 610,285 1,226,945
Property, plant
and equipment 390,012 2,129 210 445 392,796
Properties held
for sale
Completed properties - 419,107 - - 419,107
Properties under
development - 148,832 - 86,879 235,711
Receivables, deposits
and prepayments 18,719 2,360 175 661 21,915
Tax recoverable
(tax liabilities) (4,130) 3,449 - 12 (669)
Bank balances and
cash 44,229 118,580 191 124,746 287,746
Payables, deposits
and accrued charges (86,256) (52,754) (61,552) (72,458) (273,020)
Sales deposits - (17,671) - - (17,671)
Bank borrowings - (159,078) - - (159,078)
Deferred tax
liabilities (17,179) - - - (17,179)
----------------- ----------------- ----------------- ----------------- -----------------
Net assets disposed
of 9,328,395 996,276 24,362 750,570 11,099,603
========== ========== ========== ========== ==========
Gain (loss) on disposal
of subsidiaries:
Cash consideration 10,100,710 900,000 2,000 890,000 11,892,710
Add: Realisation
of translation reserve
upon disposal - 6,654 759 (9,261) (1,848)
Less: Transaction
costs incurred (150,250) (903) (10,677) (3,059) (164,889)
Less: Write off
of unamortised
front-end
fee (10,566) - - - (10,566)
Less: Net assets
disposed of (9,328,395) (996,276) (24,362) (750,570) (11,099,603)
----------------- ----------------- ----------------- ----------------- -----------------
Gain (loss) on disposal
of subsidiaries 611,499 (90,525) (32,280) 127,110 615,804
========== ========== ========== ========== ==========
Cash consideration 10,100,710 900,000 2,000 890,000 11,892,710
Less: Cash
consideration
receivable - - - (445,000) (445,000)
Less: Cash and cash
equivalents disposed
of (44,229) (118,580) (191) (124,746) (287,746)
Less: Transaction
costs paid (150,250) (903) (10,677) (3,059) (164,889)
----------------- ----------------- ----------------- ----------------- -----------------
Net cash inflow
(outflow) arising
on disposal 9,906,231 780,517 (8,868) 317,195 10,995,075
========== ========== ========== ========== ==========
The cash consideration receivable, included in receivables,
deposits and prepayment as set out in note 27 will be settled in
August 2017.
42. GAIN ON DISPOSAL OF SUBSIDIARIES - continued
On 30 September 2015, after taking into account the market
conditions, the current development plan was changed. The Group
entered into a sale and purchase agreement, pursuant to which the
Group agreed to sell the subsidiaries, being the owner of a piece
of land known as Sha Tin Town Lot No. 75 and the Remaining Portion
of Lot No. 744 in the Demarcation District No. 176 and situated at
1-11 Au Pui Wan Street, Fo Tan, Sha Tin, New Territories, Hong
Kong, to the purchaser at an aggregate consideration of HK$1,400
million, subject to certain adjustments not exceeding HK$10
million. The disposal was completed on 30 November 2015.
The major classes of assets and liabilities of the disposed
subsidiaries at the date of the disposal were as follows:
HK$'000
Properties under development for sale 950,524
Receivables, deposits and prepayments 603
-------------------
951,127
===========
Gain on disposal of subsidiaries:
Cash consideration 1,400,000
Add: Consideration receivable 603
-------------------
Total consideration 1,400,603
Less: Transaction costs incurred (17,650)
Less: Net assets disposed of (951,127)
-------------------
Gain on disposal of subsidiaries 431,826
===========
Cash consideration received 1,400,000
Less: Transaction costs paid (17,500)
-------------------
Net cash inflow arising on disposal 1,382,500
===========
Management did not consider the disposal of the subsidiaries
comprising the entire early stage development projects or
investment property, to be in the normal course of business of the
Group and for that reason the gain or loss on disposal was
presented below profit from operations after fair value changes on
investment properties.
43. PRINCIPAL SUBSIDIARIES
Issued Effective
and paid % of
Place/country up share issued share
of capital/ capital/registered
incorporation/ registered capital held Principal
Name of subsidiary operation capital by the Company activities
2016 2015
Direct subsidiary
Benefit Strong B.V.I./Hong Investment
Group Limited Kong HK$1 100 100 holding
Indirect subsidiaries
AGP (Diamond Hill) Property
Limited Hong Kong HK$2 100 100 development
Chengdu Huashang RMB200,000,000
House Development registered Property
Co., Ltd.* PRC capital 100 100 investment
Chengdu Yulong PRC RMB345,000,000 - 100 Property
No. 1 Property registered development
Development Company capital
Limited*
Chengdu Yulong PRC RMB80,000,000 - 100 Property
No. 2 Property registered development
Development Company capital
Limited*
Chengdu Yulong PRC RMB450,000,000 - 100 Property
No. 3 Property registered development
Development Company capital
Limited*
Concord Way Limited Hong Kong HK$100 100 100 Hotel operation
Giant Well Enterprises B.V.I./Hong Investment
Limited Kong US$1 100 100 holding
Grace Art Development Treasury
Limited Hong Kong HK$1 100 100 services
Guangzhou Yingfat
House Property US$20,110,000 Property
Development Co., registered development
Ltd.* PRC capital 100 100 and investment
Harvest Hill Limited Hong Kong HK$2 100 100 Financing
Huangshan City PRC RMB35,000,000 - 100 Property
Huizhou District registered and tourist
Feng Dan Bailu capital leisure
Investment and facilities
Development Company development
Limited*
Kaifeng International PRC US$152,500,000 - 100 Property
City No. 1 Realty registered development
Development Company capital
Limited*
Kaifeng International PRC US$42,450,000 - 100 Property
City No. 5 Realty registered development
Development Company capital
Limited*
Kingston Pacific B.V.I./Hong Property
Investment Limited Kong US$100 55 55 development
Leighton Road
Hotel Management
Services Limited Hong Kong HK$1 100 100 Hotel operation
B.V.I./Hong Financial
Luck Marker Limited Kong US$1 100 - investment
Issued Effective
and paid % of
Place/country up share issued share
of capital/ capital/registered
incorporation/ registered capital held Principal
Name of subsidiary operation capital by the Company activities
2016 2015
Indirect subsidiaries
- continued
Nanjing Hushu Property,
Ecology Travel RMB100,000,000 cultural
Development Co., registered and tourism
Ltd.(@) ("NJ Hushu") PRC capital 51 51 development
Nanjing Taligang
Tourist Leisure Property,
Facilities Company RMB35,000,000 cultural
Limited(@) ("NJ registered and tourism
Taligang") PRC capital 51 51 development
Rainbow Mark Investments B.V.I./Hong Financial
Limited Kong US$1 100 - investment
Shine Concord
Investments Limited Hong Kong HK$1 100 100 Hotel operation
Sino Harvest Real
Estate Development US$3,000,000
(Chengdu) Company registered Property
Limited* PRC capital 100 100 investment
Sky Trend Investments
Limited Hong Kong HK$2 100 100 Hotel operation
Treasure Indicator B.V.I./Hong Financial
Limited Kong US$1 100 - investment
Investment
holding
of The Moorgate
Tycoon Honour B.V.I./Hong Unit Trust
Limited Kong US$1 100 - units
Sunfold Development
Limited Hong Kong HK$1 100 100 Hotel operation
Wing Siu Company Hong Kong HK$2 - 100 Property
Limited investment
Investment
holding
of The Moorgate
B.V.I./Hong Unit Trust
Worthy Merit Limited Kong US$1 100 - units
* Wholly foreign owned enterprise
(@) 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.
Subsidiaries with material non-controlling interest
Non-controlling interest recognised in the consolidated
statement of financial position is mainly attributable to the
shareholder's deficits relating to NJ Hushu and NJ Taligang
amounting to HK$71,689,000 and HK$12,230,000 respectively. No
dividend was paid or payable during the year.
As at 31 December 2016, these subsidiaries have no material
income and assets; and the total current liabilities of NJ Hushu
and NJ Taligang are approximately HK$186,256,000 and HK$25,401,000,
respectively. During the year, the losses of NJ Hushu and NJ
Taligang are approximately HK$244,455,000 and HK$45,219,000
respectively. No material cash flow was contributed by these
subsidiaries during the year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBVNRBSAOAAR
(END) Dow Jones Newswires
March 17, 2017 13:01 ET (17:01 GMT)
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