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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Asian Growth Properties | LSE:AGP | London | Ordinary Share | BMG054131021 | COM SHS USD0.05 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.05 | 0.10 | 2.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMAGP
RNS Number : 7333C
Asian Growth Properties Limited
19 March 2014
19 March 2014
Asian Growth Properties Limited
Immediate Release
Results for the year ended 31 December 2013
Asian Growth Properties Limited (the "Company") (AIM Stock Code: AGP), the Hong Kong based China property development and investment company, announces its audited consolidated results for the year ended 31 December 2013 as follows:
Financial Highlights
n Profit attributable to the Company's shareholders of HK$474.5 million (GBP37.0 million) (2012: HK$1,326.4 million (GBP105.8 million))
n Profit attributable to the Company's shareholders (excluding revaluation surplus net of deferred tax) was HK$205.0 million (GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million))
n Earnings per share for profit attributable to the Company's shareholders of HK53.5 cents (4.2 pence) (2012: HK149.7 cents (11.9 pence))
n Net asset value per share attributable to the Company's shareholders as at 31 December 2013 of HK$14.1 (110.0 pence) (31 December 2012: HK$13.4 (106.9 pence))
Hot Features
Premium
n Geographical location of the Group's property assets were as follow:
31 December 2013 31 December 2012
---------- ---------------------- ----------------------
Hong Kong HK$9,637.8 million HK$9,385.0 million
(GBP751.9 million) (GBP748.9 million)
Mainland HK$4,355.5 million HK$4,046.1 million
China (GBP339.8 million) (GBP322.8 million)
---------- ---------------------- ----------------------
Total HK$13,993.3 million HK$13,431.1 million
(GBP1,091.7 million) (GBP1,071.7 million)
========== ====================== ======================
n Gearing ratio of 8.9% (31 December 2012: 9.9%)
Operational Highlights
n Increased gross rental income generated from Dah Sing Financial Centre in Hong Kong and its occupancy rate remains high.
n The commercial podium, all public car parking spaces and all the remaining residential units of The Forest Hills were sold, with only the resident's car parking spaces to be sold.
n The hotel operation results of Crowne Plaza Hong Kong Causeway Bay were satisfactory.
n Major mixed use development projects in Chengdu and Kaifeng, Mainland China are progressing. Site formation works for Phase I of Chengdu project and superstructure works for Phase I of Kaifeng project are in progress.
Notes:
1. Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting years. The relevant exchange rates adopted are stated as follows:
For 31 December GBP1 = HK$12.8184; and 2013: For 31 December GBP1 = HK$12.5323 2012:
2. For Shareholders' information, the exchange rate on 18 March 2014 was GBP1 = HK$12.8934
Miscellaneous
The results included in this announcement are extracted from the audited consolidated financial statements of the Company for the year ended 31 December 2013, which have been approved by the Board of Directors on 19 March 2014.
The 2013 Annual Report is expected to be posted to shareholders and holders of depositary interests in late April 2014.
For further information, please contact:
Lu Wing Chi TEL: +852 2828
6363
Executive Director
Asian Growth Properties
Limited
Richard Gray TEL: +44 207 886
2500
Andrew Potts
Panmure Gordon (UK) Limited
(Nominated Advisor)
Attached:-
1. Chairman's Review; 2. Executive Directors' Review; 3. Consolidated Statement of Profit or Loss; 4. Consolidated Statement of Profit or Loss and Other Comprehensive Income; 5. Consolidated Statement of Financial Position; 6. Consolidated Statement of Changes in Equity; 7. Consolidated Statement of Cash Flows; and 8. Notes to the Consolidated Financial Statements.
This announcement can also be viewed on the Company's website at:
http://www.asiangrowth.com/html/eng/news.asp
CHAIRMAN'S REVIEW
I am pleased to present the audited consolidated financial results of Asian Growth Properties Limited ("AGP" or the "Company", together with its subsidiaries, the "Group") for the year 2013 to the shareholders of the Company.
Results
AGP reported a profit attributable to the Company's shareholders of HK$474.5 million (GBP37.0 million) for the year ended 31 December 2013 (2012: HK$1,326.4 million (GBP105.8 million)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$269.5 million (GBP21.0 million) (2012: HK$1,297.1 million (GBP103.5 million)). By excluding the net effect of such surplus, the Group's net profit attributable to the Company's shareholders was HK$205.0 million (GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million)).
As at 31 December 2013, the Group's equity attributable to the Company's shareholders amounted to HK$12,458.7 million (GBP971.9 million), representing an increase of HK$597.3 million (GBP25.4 million) over 31 December 2012. The net asset value per share as at 31 December 2013 was HK$14.1 (110.0 pence) as compared with HK$13.4 (106.9 pence) as at 31 December 2012.
Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting years.
Operations
During the year 2013, the Group has continued the development of various property projects in Hong Kong and Mainland China.
The rental income from investment properties situated in both Hong Kong and Mainland China continue to provide stable returns to the Group. Turnover for the year has included the sale of the commercial podium, all public car parking spaces and five residential units of The Forest Hills. Crowne Plaza Hong Kong Causeway Bay has also performed satisfactorily with improvements in room rate as compared with last year.
For details of the Group's operations, please refer to the Executive Directors' Review.
Outlook
With the pick up of trade in the second half of 2013, the International Monetary Fund (the "IMF") is predicting that economic global activity is expected to improve further in 2014 with an anticipated growth rate of 3.7%. The growth rate in China is anticipated to be around 7.5% while in Hong Kong is estimated to be 3.5%. The IMF also stated in their report published in January 2014 that in advanced economies, output gaps generally remain large and, given the risks, the monetary policy stance should stay accommodative while fiscal consolidation continues. However, the global political and economic landscape continues to be uncertain in this year.
Based on the recent reforms in Mainland China aimed at private investment in State-owned enterprises, crackdown on corruption and spending on infrastructure, the Boston Consulting Group forecasts that Mainland China will grow faster in 2014 than 2013. China's largest stockbroker has recently revised upwards the property price growth figure in Mainland China from 3% to 8%.
In conclusion, we are of the opinion that 2014 will continue to see recovery in many of the world's economies and the more advanced nations are unlikely to see economic recovery snuffed out by premature acceleration of tapering and raising of interest rates.
During the year under review, the Group continues to dispose of the remaining properties held for sale and focus on those development projects that the Board believes are capable of generating significant profits in the coming years.
Final Dividend
The Board does not propose the payment of a final dividend for the year ended 31 December 2013 (2012: Nil).
Acknowledgement
The Board would like to take this opportunity to thank the executive and management team for the execution of the Board's strategy and their ongoing support.
Richard Prickett
Non-Executive Chairman
England, 19 March 2014
EXECUTIVE DIRECTORS' REVIEW
FINANCIAL SUMMARY
Turnover for the year ended 31 December 2013 amounted to HK$878.6 million (GBP68.5 million) (2012: HK$594.8 million (GBP47.5 million)). The turnover was principally attributable to the recognition of rental income from investment properties, revenue from hotel operation and the sales of commercial podium, all public car parking spaces and all the remaining residential units of The Forest Hills.
Profit attributable to the Company's shareholders for the year amounted to HK$474.5 million (GBP37.0 million) (2012: HK$1,326.4 million (GBP105.8 million)), equivalent to a basic earnings per share of HK53.5 cents (4.2 pence) (2012: HK149.7 cents (11.9 pence)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$269.5 million (GBP21.0 million) (2012: HK$1,297.1 million (GBP103.5 million)). By excluding the effect of such surplus, the Group's net profit attributable to the Company's shareholders was HK$205.0 million (GBP16.0 million) (2012: HK$29.3 million (GBP2.3 million)), equivalent to HK23.1 cents (1.8 pence) (2012: HK3.3 cents (0.3 pence)) per share.
As at 31 December 2013, the Group's equity attributable to the Company's shareholders amounted to HK$12,458.7 million (GBP971.9 million) (31 December 2012: HK$11,861.4 million (GBP946.5 million)). The net asset value per share attributable to the Company's shareholders as at 31 December 2013 was HK$14.1 (110.0 pence) as compared with HK$13.4 (106.9 pence) as at 31 December 2012.
For Shareholders' information, figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting years and the relevant exchange rates adopted are stated as follows:
For 31 December 2013: GBP1 = HK$12.8184; and For 31 December 2012: GBP1 = HK$12.5323
BUSINESS REVIEW
Property Investment and Development
The Group continues to focus on development and investment projects in Hong Kong and Mainland China. It is the Group's approach to review and optimise the project portfolios from time to time. The Group's core projects located in Hong Kong and Mainland China are listed below.
Hong Kong
The office leasing market was stable during the year. With several tenancies of Dah Sing Financial Centre, a 39-storey commercial building, being renewed at market rates, rental income received during the year increased. The occupancy rate of Dah Sing Financial Centre remains at a high level of approximately 92% as at 31 December 2013.
The Group has sold the commercial podium, all public car parking spaces and all the remaining residential units of The Forest Hills for the year under review. The sale of the residents' car parking spaces are continuing.
The negotiation of the land premium with the Government for the development project at Fo Tan is in progress. This development project has a site area of approximately 20,000 square metres and envisages, among other facilities, residential units, car parks, educational facilities and a bus terminus. The foundation work of the project has been completed and the amended building plans were approved by the Buildings Department.
Mainland China
Chengdu, Sichuan Province
During the year, the occupancy rate for the two 30-storey office towers of Plaza Central remained at a high level and its retail podium with a gross floor area of about 29,000 square metres is fully let principally to Chengdu New World Department Store on a long-term lease. As at 31 December 2013, the aggregate occupancy rate for the two office towers and the retail podium was approximately 93%. Leasing activities for the remaining areas of Plaza Central continue.
The shopping arcade of New Century Plaza with a gross floor area of about 16,300 square metres is fully let to a furniture retailer on a medium-term lease.
The master layout plan of the Longquan project, which has a site area of 506,000 square metres, was approved by the local government in January 2014. Preliminary site works of the project have been completed and site formation works for Phase I are in progress.
Kaifeng, Henan Province
The Kaifeng project, known as "Nova City", is situated in Zheng-Kai District, a new town in Kaifeng and envisages shopping mall, premium offices, exhibition hall, hotel, serviced apartments and residential towers. This project has a site area of 735,000 square metres and in order to provide a better living environment, the gross floor area of the development will vary from 2,000,000 to 2,500,000 square metres only. The master layout plan has been approved by the local government and foundation work for Phase I of the residential has been completed during the year under review. The superstructure works for Phase I of the residential are in progress and scheduled to be completed in the first quarter of 2015.
Guangzhou, Guangdong Province
As at 31 December 2013, the occupancy rate of the 14-storey office tower of Westmin Plaza Phase II of about 16,100 square metres was approximately 99% with more than one-third of the total office space being leased to AIA. Leasing activities for the 3-storey shopping arcade of Westmin Plaza Phase II with a total gross floor area of about 26,400 square metres are in progress.
Huangshan, Anhui Province
The project in Huangshan has a site area of about 337,000 square metres comprising of development land of about 117,000 square metres and landscape land of 220,000 square metres. The master layout plan for the development of the project comprising a hotel, serviced apartments and resort villas in the integrated resort site has been approved by the local government and site formation work for phase I of the project is in progress.
Chi Shan, Nanjing, Jiangsu Province
The Group has established two 51%-owned joint venture companies to participate in the tenant relocation arrangements and excavation and infrastructure works on certain pieces of land in Chi Shan. The Group intends to acquire such lands through land auctions by different stages.
Hotel Operation
Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star hotel comprising 263 guest rooms with ancillary facilities and is managed by the InterContinental Hotels Group. It has achieved satisfactory occupancy and room rates for the year under review.
Termination of Management Agreement and Lease Agreements with related parties
On 18 September 2006, the Company entered into a management agreement (the "Management Agreement") with South-East Asia Investment And Agency Company, Limited ("SEAI"), a wholly-owned subsidiary of S E A Holdings Limited (the holding company of the Company), to appoint SEAI as manager for managing the Group's property portfolio (which comprised of corporate and management services of investment property and development project).
On 11 November, 2013, the Company and SEAI mutually agreed to terminate the Management Agreement with effect from 1 January 2014. From 1 January 2014, the Group's property portfolio is now managed by the Group itself and all related staff costs and office overheads are now borne by the Group directly. In addition, the lease agreements for leasing the 25th and 26th floors of Dah Sing Financial Centre to SEAI were also terminated with effect from 1 January 2014. It is expected that the overall costs incurred by the Group for managing the Group's property portfolio will be reduced after termination of the Management Agreement.
WORKING CAPITAL AND LOAN FACILITIES
As at 31 December 2013, the Group's total cash balance was HK$1,766.4 million (GBP137.8 million) (31 December 2012: HK$1,389.3 million (GBP110.9 million)) and unutilised facilities were HK$855.0 million (GBP66.7 million) (31 December 2012: HK$910.0 million (GBP72.6 million)).
The gearing ratio as at 31 December 2013, calculated on the basis of net interest bearing debts minus cash and restricted and pledged deposits as a percentage of total property assets, was 8.9% (31 December 2012: 9.9%).
As at 31 December 2013, the maturity of the Group's outstanding borrowings was as follows:
31 December 2013 31 December 2012
HK$' million HK$' million
---------------- ---------------------------- ----------------
Due
Within 1 year 1,291.8 388.9
1-2 years 395.2 1,035.3
3-5 years 1,082.9 1,015.4
Over 5 years 256.6 300.9
---------------- ---------------------------- ----------------
3,026.5 2,740.5
Less: Front-end
fee (13.7) (15.4)
---------------- ---------------------------- ----------------
3,012.8 2,725.1
================ ============================ ================
Pledge of Assets
For the Company's subsidiaries operating in Hong Kong and Mainland China, the total bank loans drawn as at 31 December 2013 amounted to HK$3,012.8 million (31 December 2012: HK$2,725.1 million) which comprise secured bank loans of HK$2,894.8 million (31 December 2012: HK$2,725.1) and unsecured bank loans of HK$118.0 million (31 December 2012: Nil). The secured bank loans were secured by properties valued at HK$11,343.7 million and note receivable of HK$54.3 million (31 December 2012: secured by properties valued at HK$10,872.8 million and fixed deposits of HK$58.8 million).
Treasury Policies
The Group adheres to prudent treasury policies. As at 31 December 2013, all of the Group's borrowings were raised through its wholly-owned or substantially controlled subsidiaries on a non-recourse basis.
International Financial Reporting Standards ("IFRS")
The Group has adopted IFRS and the audited consolidated financial statements accompanying this Review have been prepared in accordance with IFRS.
OUTLOOK
The Mainland China property market continues to grow with the 100-cities index recording twenty months growth since June 2012. However, the growth momentum continues to be slowing down in recent months.
In Hong Kong, the property prices of residential properties have declined slightly and there may be a further modest decline in 2014. It is believed that land supply continues to be a problem. The Hong Kong Government's policy does not address the prompt implementation of a comprehensive solution to the housing shortage with insufficient housing stock being produced and an administrative system which seems to have lost its way.
Negotiation of the land premium that would be paid by the Group for our Fo Tan development project is a slow and painful process. The Group is awaiting a more realistic revised land premium from the Hong Kong Lands Department which should reflect the current market circumstances. There has been some softening of rents from the recent highs for our Dah Sing Financial Centre but pick up is anticipated in the latter half of the year with an uptick in the financial service market activity. Our hotel has firmly established itself as the number one hotel in Causeway Bay recording high occupancy rates which are predicted to continue. The hotel is currently looking at growing its room rate by 5% in view of the increased Chinese visitors.
In Mainland China, our investment properties remain substantially let and generate steady cash flow whilst the two major developments in Chengdu and Kaifeng are now under construction. Pre-sales of the first phase of the Kaifeng project will commence in the second quarter of this year while pre-sales of the residential project in Chengdu will commence in the middle of the year. Both cities are expected to see modest growth in sales prices over the year and are unlikely to be so affected as the first tier cities where further intervention could be imposed by the Central Government. As cooling measures have resulted in a much reduced number of apartments sold and thus such further intervention may not be foreseen.
Notwithstanding an anticipated modest decline in property prices for residential properties in Hong Kong, the outlook for the markets in which the Group operate is expected to be relatively stable in 2014.
On behalf of Executive Directors
Lu Wing Chi
Executive Director
Hong Kong, 19 March 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Revenue 7 878,597 594,756
Interest income 8 24,874 18,615
Other income 24,166 21,998
Costs:
Property and related costs 9 (160,091) (53,013)
Staff costs (82,291) (79,812)
Depreciation and amortisation (80,159) (80,955)
Other expenses 10 (278,509) (308,563)
-------------- --------------
(601,050) (522,343)
- - - - - -
- - - - - -
- - - - - -
Profit from operations
before fair value changes
on properties 326,587 113,026
Fair value changes on
investment properties 289,340 1,359,411
-------------- --------------
Profit from operations
after fair value changes
on properties 615,927 1,472,437
Gain on disposal of assets
classified as held for
sale 21,640 -
Share of results of joint
ventures - (2,667)
Finance costs 11 (80,994) (82,398)
---------------- --------------
Profit before taxation 12 556,573 1,387,372
Income tax expense 14 (81,313) (87,045)
---------------- --------------
Profit for the year 475,260 1,300,327
========= =========
Attributable to:
Company's shareholders 474,543 1,326,447
Non-controlling interests 717 (26,120)
---------------- --------------
475,260 1,300,327
========= =========
HK cents HK cents
Earnings per share for
profit attributable to
the Company's shareholders
- Basic 15 53.5 149.7
========= =========
Earnings per share excluding
fair value changes on
investment properties
net of deferred tax
* Basic 15 23.1 3.3
========= =========
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Profit for the year 475,260 1,300,327
-------------- --------------
Other comprehensive income:
Items that may be subsequently
reclassified to profit or loss:
Exchange differences arising
on translation of foreign operations 126,825 1,259
Release of translation reserve
upon disposal of assets classified
as held for sale (2,480) -
Share of exchange differences
of joint ventures - (250)
-------------- --------------
124,345 1,009
-------------- --------------
Total comprehensive income
for the year 599,605 1,301,336
========= =========
Total comprehensive income
(expense) attributable to:
Company's shareholders 597,328 1,327,552
Non-controlling interests 2,277 (26,216)
---------------- --------------
599,605 1,301,336
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Non-current assets
Investment properties 17 10,216,706 9,854,688
Property, plant and equipment 18 1,016,607 1,063,711
Properties for development 19 1,350,813 1,292,243
loans receivable 20 7,072 9,396
Note receivables 21 54,279 15,510
Other receivable 22 384,794 365,800
Pledged bank deposits 23 - 58,750
Restricted bank deposits 23 6,360 -
---------------- --------------
13,036,631 12,660,098
---------------- --------------
Current assets
Properties held for sale 24
Completed properties 484,531 574,197
Properties under development 966,684 707,889
Other inventories 1,119 935
loans receivable 20 463 642
Trade receivables, deposits
and prepayments 25 124,536 112,380
Tax recoverable 940 1,069
Amounts due from non-controlling
interests 26 265 1,270
Bank balances and cash 27 1,760,007 1,330,574
---------------- --------------
3,338,545 2,728,956
Assets classified as held
for sale 28 - 42,090
---------------- --------------
3,338,545 2,771,046
---------------- --------------
Current liabilities
Payables, deposits and
accrued charges 29 290,079 295,527
Tax liabilities 133,024 98,922
Amounts due to non-controlling
interests 26 96,985 93,478
bank borrowings - due
within one year 30 1,290,658 388,004
---------------- --------------
1,810,746 875,931
---------------- --------------
Net current assets 1,527,799 1,895,115
---------------- --------------
Total assets less current
liabilities 14,564,430 14,555,213
========= =========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued
AS AT 31 December 2013
NOTES 2013 2012
HK$'000 HK$'000
Capital and reserves
Share capital 31 345,204 345,204
Reserves 12,113,481 11,516,153
---------------- --------------
Equity attributable to
the Company's shareholders 12,458,685 11,861,357
Non-controlling interests 57,706 57,995
---------------- --------------
Total equity 12,516,391 11,919,352
---------------- --------------
Non-current liabilities
Bank borrowings - due
after one year 30 1,722,108 2,337,119
Deferred taxation 32 325,931 298,742
---------------- --------------
2,048,039 2,635,861
---------------- --------------
14,564,430 14,555,213
========= =========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 December 2013
Attributable to the Company's
shareholders
----------------------------------------------------------------------------------------------------------
Non-
Share Share Translation Other Retained controlling
capital premium reserve reserves profits Total interests Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 345,204 4,836,225 403,765 766,370 4,182,241 10,533,805 89,116 10,622,921
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Profit for
the year - - - - 1,326,447 1,326,447 (26,120) 1,300,327
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Exchange
differences
arising on
translation
of foreign
operations - - 1,355 - - 1,355 (96) 1,259
Share of
translation
differences
of
joint ventures - - (250) - - (250) - (250)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- -------------
Other
comprehensive
income (expense)
for the year - - 1,105 - - 1,105 (96) 1,009
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Total
comprehensive
income
(expense)
for the year - - 1,105 - 1,326,447 1,327,552 (26,216) 1,301,336
Dividends paid
to
non-controlling
interests - - - - - - (4,905) (4,905)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- ------------
At 31 December
2012 345,204 4,836,225 404,870 766,370 5,508,688 11,861,357 57,995 11,919,352
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Profit for
the year - - - - 474,543 474,543 717 475,260
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Exchange
differences
arising on
translation
of foreign
operations - - 125,265 - - 125,265 1,560 126,825
Release of
translation
reserve
upon disposal
of assets
classified
as held for
sale - - (2,480) - - (2,480) - (2,480)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
Other
comprehensive
income for
the year - - 122,785 - - 122,785 1,560 124,345
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - -
Total
comprehensive
income for
the year - - 122,785 - 474,543 597,328 2,277 599,605
Dividends paid
to
non-controlling
interests - - - - - - (2,566) (2,566)
-------------- -------------- -------------- -------------- -------------- -------------- -------------- --------------
At 31 December
2013 345,204 4,836,225 527,655 766,370 5,983,231 12,458,685 57,706 12,516,391
========= ========= ========= ========= ========= ========= ========= =========
Other reserves comprise (i) a discount on acquisition/assumption of certain assets and liabilities from the intermediate holding company, S E A Holdings Limited ("SEA"), and the excess of the consideration over the market closing price of the shares issued for the acquisition. The amounts attributable to those assets and liabilities derecognised in subsequent years will be recognised in profit or loss; and (ii) the excess of the consideration paid for acquisition of additional interest in a subsidiary from non-controlling interests over the carrying amount of non-controlling interests acquired.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Operating activities
Profit before taxation 556,573 1,387,372
Adjustments for:
Interest expenses 74,711 76,972
Reversal of provision on relocation
compensation - (5,089)
Depreciation and amortisation 80,159 80,955
Fair value changes on investment
properties (289,340) (1,359,411)
Fair value adjustment on other
receivable (7,435) 14,706
Gain on disposal of assets (21,640) -
classified as held for sale
Share of results of joint ventures - 2,667
Interest income (24,874) (18,615)
Loss on disposal of property,
plant and equipment 41 80
Share options expense 217 102
---------------- --------------
Operating cash flows before
movements in working
capital 368,412 179,739
Increase in properties held
for sale (70,240) (77,921)
(Increase) decrease in other
inventories (184) 84
(Increase) decrease in trade
receivables, deposits and prepayments (2,037) 18,332
Increase in payables, deposits
and accrued charges 34,991 2,897
---------------- --------------
Cash generated from operations 330,942 123,131
Interest paid (72,489) (78,458)
Tax paid (31,031) (12,732)
---------------- --------------
Net cash from operating activities 227,422 31,941
---------------- --------------
Investing activities
Acquisition of and additional
costs on properties for development (125,038) (25,417)
Interest received 17,742 17,434
Decrease in loans receivable 2,503 7,851
Increase in note receivables (38,785) (15,510)
Increase in bank deposits (461,607) (94,964)
Pledged bank deposit refunded 59,295 -
Bank deposits refunded 36,999 -
Purchase of property, plant
and equipment (9,043) (3,249)
Additional costs of investment
properties - (9,482)
Net proceeds received on disposals
of property, plant and equipment 64 95
Increase in other receivable (7,459) (11)
Consideration/deposit received
on disposal of assets classified
as held for sale 21,250 40,000
---------------- --------------
Net cash used in investing
activities (504,079) (83,253)
---------------- ----------------
CONSOLIDATED STATEMENT OF CASH FLOWS - continued
FOR THE YEAR ENDED 31 December 2013
2013 2012
HK$'000 HK$'000
Financing activities
Draw down of bank loans 624,656 1,000,000
Repayments of bank loans (351,880) (1,666,952)
Payment of front-end fee (2,100) -
Advances from non-controlling
interests 574 7,682
Repayments from non-controlling
interests 1,005 114
Dividends paid to non-controlling
interests (2,566) (4,905)
---------------- --------------
Net cash from (used in) financing
activities 269,689 (664,061)
---------------- --------------
Net decrease in cash and cash
equivalents (6,968) (715,373)
Cash and cash equivalents at
beginning of the year 1,293,575 2,007,938
Effect of foreign exchange
rate changes 18,060 1,010
---------------- --------------
Cash and cash equivalents at
end of the year 1,304,667 1,293,575
========= =========
Represented by:
Bank balances and cash 1,760,007 1,330,574
Less: fixed deposits with original
maturity date more than
3 months (455,340) (36,999)
---------------- --------------
1,304,667 1,293,575
========= =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2013
1. GENERAL
The Company is a public company incorporated in the British Virgin Islands ("B.V.I.") with limited liability and its shares are admitted for trading on the AIM Market of London Stock Exchange plc. ("AIM Market"). The Company's immediate holding company is Charm Action Holdings Limited, a company incorporated in the B.V.I. One of the Company's intermediate holding companies is S E A Holdings Limited ("SEA"), the shares of which are listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The directors of the Company consider that the Company's ultimate holding company is JCS Limited. Both SEA and JCS Limited are companies incorporated in Bermuda as exempted companies with limited liability. The addresses of the registered office and principal place of business of the Company are Portcullis TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, B.V.I. and 25th Floor, Dah Sing Financial Centre, 108 Gloucester Road, Wanchai, Hong Kong, respectively.
The consolidated financial statements are presented in Hong Kong dollars, which is the functional currency of the Company.
The Company acts as an investment holding company. The activities of its principal subsidiaries are set out in note 39.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs")
In the current year, the Group has applied the following new and revised IFRSs issued by the International Accounting Standards Board (the "IASB") and the IFRS Interpretations Committee of IASB:
Amendments to IFRSs Annual improvements to IFRSs
2009 - 2011 cycle
Amendments to IFRS Disclosures - Offsetting
7 financial assets and
financial liabilities
Amendments to IFRS Consolidated financial statements,
10, joint
IFRS 11 and IFRS arrangements and disclosure
12 of interests in other
entities: Transition guidance
IFRS 10 Consolidated financial statements
IFRS 11 Joint arrangements
IFRS 12 Disclosure of interests in
other entities
IFRS 13 Fair value measurement
IAS 19 (as revised Employee benefits
in 2011)
IAS 27 (as revised Separate financial statements
in 2011)
IAS 28 (as revised Investments in associates
in 2011) and joint ventures
Amendments to IAS Presentation of items of
1 other comprehensive income
IFRIC 20 Stripping costs in the production
phase of a surface
mine
Except as described below, the application of the new and revised IFRSs in the current year has had no material impact on the Group's financial performance and positions for the current and prior years and/or on the disclosures set out in these financial statements.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs") - continued
IFRS 11 Joint Arrangements
IFRS 11 replaces IAS 31 Interests in Joint Ventures, and the guidance contained in a related interpretation, SIC 13 Jointly Controlled Entities - Non-Monetary Contributions by Venturers, has been incorporated in IAS 28 (as revised in 2011). Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of parties to the joint arrangements. In contrast, under IAS 31, there were three types of joint arrangements - jointly controlled entities, jointly controlled operations and jointly controlled assets. The classification of joint arrangements under IAS 31 was primarily determined based on the legal form of the arrangement (e.g. a joint arrangement that was established through a separate entity was classified as a jointly controlled entity).
In addition, joint ventures under IFRS 11 are required to account for using the equity method, whereas jointly controlled entities under IAS 31 could be accounted for using the equity method of accounting or proportionate consolidation.
The directors of the Company reviewed and assessed the classification of the Group's investments in joint arrangements in accordance with the requirements of IFRS 11. The directors concluded that the Group's joint arrangements, which were classified as jointly controlled entities under IAS 31 and were accounted for using the equity method, should be classified as joint ventures under IFRS 11 and continue to be accounted for using the equity method up to the date the joint arrangements are classified as assets held for sale.
IFRS 13 Fair Value Measurement
The Group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for, and disclosures about, fair value measurements. The scope of IFRS 13 is broad: the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).
IFRS 13 defines the fair value of an asset as the price that would be received to sell an asset (or paid to transfer a liability, in the case of determining the fair value of a liability) in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.
IFRS 13 requires prospective application. In accordance with the transitional provisions of IFRS 13, the Group has not made any new disclosures required by IFRS 13 for the 2012 comparative period (please see note 17 for the 2013 disclosures). Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the consolidated financial statements.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs") - continued
Amendments to IAS 1 Presentation of items of other comprehensive income
The Group has applied the amendments to IAS 1 Presentation of items of other comprehensive income. Upon the adoption of the amendments to IAS 1, the Group's 'statement of comprehensive income' is renamed as the 'statement of profit or loss and other comprehensive income' and the 'income statement' is renamed as the 'statement of profit or loss'. The amendments to IFRS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. Furthermore, the amendments to IAS 1 require additional disclosures to be made in the other comprehensive income section such that items of other comprehensive income are grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis - the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.
New and revised IFRSs issued but not yet effective
The directors of the Company expect that the application of the new and revised standards, amendments or interpretations that were issued but not yet effective will have no material impact on the results and financial position of the Group. However, those which may be relevant to the Group's consolidatedfinancial statements are disclosed as below.
Annual Improvements to IFRSs 2010-2012 Cycle
The Annual Improvements to IFRSs 2010-2012 Cycle include a number of amendments to various IFRSs, the amendments which may relevant to the Group are summarised below.
The amendments to IFRS 2 (i) change the definitions of 'vesting condition' and 'market condition'; and (ii) add definitions for 'performance condition' and 'service condition' which were previously included within the definition of 'vesting condition'. The amendments to IFRS 2 are effective for share-based payment transactions for which the grant date is on or after 1 July 2014.
The amendments to IFRS 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have 'similar economic characteristics'; and (ii) clarify that a reconciliation of the total of the reportable segments' assets to the entity's assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs") - continued
Annual Improvements to IFRSs 2010-2012 Cycle - continued
The amendments to the basis for conclusions of IFRS 13 clarify that the issue of IFRS 13 and consequential amendments to IAS 39 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.
The amendments to IAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required.
The directors do not anticipate that the application of the amendments included in the Annual Improvements to IFRSs 2010-2012 Cycle will have a material effect on the Group's consolidated financial statements.
Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities
The amendments to IAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of "currently has a legally enforceable right of set-off" and "simultaneous realisation and settlement".
The amendments to IAS 32 are not effective until annual periods beginning on or after 1 January 2014, with retrospective application required.
The directors of the Company do not anticipate that the application of these amendments to IAS 32 will have a significant impact on the Group's consolidated financial statements as the Group does not have any financial assets and financial liabilities that qualify for offset.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS ("IFRSs") - continued
IFRS 9 Financial Instruments
IFRS 9 issued in 2009 introduces new requirements for the classification and measurement of financial assets. IFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for hedge accounting.
Key requirements of IFRS 9 are described as follows:
-- All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.
-- With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability's credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liabilities' credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss.
The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an 'economic relationship'. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity's risk management activities have also been introduced.
The directors expect that the application of IFRS 9 will not have a significant impact on amounts reported in respect of the Group's financial assets and financial liabilities.
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared on the historical cost basis except for investment properties and derivative financial instruments, which are measured at fair values, as explained in the accounting policies set out below. Historical cost is generally based on the fair value of the consideration given in exchange for goods.
The consolidated financial statements have been prepared in accordance with IFRSs as issued by the IASB.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
-- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
The principal accounting policies are set out below.
Going concern
The directors have at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. On this basis, they continue to adopt the going concern basis of accounting in preparing the financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary.
Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
Changes in the Group's ownership interests in existing subsidiaries
Changes in the Group's ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in joint ventures
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.
The results and assets and liabilities of joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the joint venture. When the Group's share of losses of the joint venture exceeds the Group's interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes a joint venture. On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group's investment in a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Investments in joint ventures - continued
The Group discontinues the use of the equity method from the date when the investment ceases to be a joint venture, or when the investment (or a portion thereof) is classified as held for sale. When the Group retains an interest in the former joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with IAS 39. The difference between the carrying amount of the joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the joint venture is included in the determination of the gain or loss on disposal of the joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that joint venture on the same basis as would be required if that joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.
The Group continues to use the equity method when an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with a joint venture of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the joint venture are recognised in the Group's consolidated financial statements only to the extent of interests in the joint venture that are not related to the Group.
Assets classified as held for sale
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in a joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held for sale from the time when the investment (or a portion of the investment) is classified as held for sale. Any retained portion of an investment in a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group losing joint control over the joint venture.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Assets classified as held for sale - continued
After the disposal takes place, the Group accounts for any retained interest in the joint venture in accordance with IAS 39 unless the retained interest continues to be a joint venture, in which case the Group uses the equity method (see the accounting policy regarding investments in joint ventures above).
Assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs of disposal.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.
Revenue from sale of properties in the ordinary course of business is recognised when the respective properties have been completed and delivered to the buyers. Deposits and instalments received from purchasers prior to meeting the revenue recognition criteria are included in the consolidated statement of financial position under current liabilities.
Rental income is recognised on a straight-line basis over the term of the relevant lease. In the event that lease incentives are provided to enter into operating leases, such incentives are recognised as an asset. The aggregate benefit of incentives is recognised as a reduction of rental income on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Hotel operation and other service income are recognised when services are provided.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.
Investment properties
investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values. Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the period in which the item is derecognised.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Property, plant and equipment
Leasehold land and building held for use in the supply of services, or for administrative purpose and other property, plant and equipment other than crockery, utensils and linens are stated in the consolidated statement of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Depreciation is recognised so as to write off the cost of items of property, plant and equipment, other than crockery, utensils and linen, less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Initial expenditure incurred for crockery, utensils and linens is capitalised and no depreciation is provided thereon. The cost of subsequent replacement for these items is recognised in profit or loss when incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Properties under development
When buildings are in the course of development held for use, in the supply of services or for administrative purposes, the amortisation of prepaid lease payments, where the leasehold land is classified as operating leases, provided during the construction period is included as part of the cost of the building under construction. Buildings under construction are carried at cost, less any identified impairment losses. Cost comprises development costs including attributable borrowing costs, prepaid lease payments and directly attributable costs capitalised during the development period. Depreciation of buildings commences when they are available for use (i.e. when they are in the condition necessary for them to be capable of operating in the manner intended by management).
When leasehold land is intended for sale in the ordinary course of business after completion of development, the leasehold land component is included within the carrying amount of the properties and is classified under current assets.
Properties for development
Properties for development represents consideration and other direct costs for acquisition of leasehold interest in land held for future development.
Properties for development are stated at cost and amortised to profit or loss on a straight-line basis over the term of the relevant lease until the commencement of development, upon which the remaining carrying value of the properties will be transferred to the appropriate categories according to the management's intention of use of the properties after completion of development.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Inventories
Properties held for sale
Completed properties for sale in the ordinary course of business are stated at the lower of cost and net realisable value. Net realisable value is determined by reference to estimated selling price less selling expenses.
Properties for or under development intended for sale after completion of development are stated at the lower of cost and net realisable value. Net realisable value is determined by reference to estimated selling price less anticipated costs to completion of the development and costs to be incurred in marketing and selling the completed properties.
Cost of properties comprises land cost, development costs and other direct costs attributable to the development and borrowing costs capitalised during the development period that have been incurred in bringing the properties to their present condition.
Other inventories
Other inventories comprising food and beverage are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.
Impairment of assets
At the end of the reporting period, the Group reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
Financial assets
The Group's financial assets are classified as either loans and receivables or fair value through profit or loss ("FVTPL"). The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including loans receivable, note receivables, other receivable, trade receivables, amounts due from non-controlling interests, bank deposits and cash) are measured at amortised cost using the effective interest method, less any impairment.
Financial assets at FVTPL
Financial assets at FVTPL has two subcategories, including financial assets held for trading and those designated as at FVTPL on initial recognition.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling in the near term; or
-- on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial assets.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Interest income is recognised on an effective interest basis.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial assets - continued
Impairment of financial assets - continued
objective evidence of impairment could include:
-- significant financial difficulty of the issuer or counterparty; or
-- breach of contract, such as default or delinquency in interest and principal payments; or
-- it becoming probable that the borrower will enter bankruptcy or financial
re-organisation; or
-- the disappearance of an active market for that financial asset because of financial difficulties.
Financial assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, as well as observable changes in national or local economic conditions that correlate with default on receivables.
The amount of the impairment loss recognised is the difference between the asset's carrying amount and the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of loans receivable, other receivable and trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
Financial liabilities and equity instruments
Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Financial instruments - continued
Financial liabilities and equity instruments - continued
financial liabilities
financial liabilities including payables, amounts due to non-controlling interests and bank borrowings are subsequently measured at amortised cost, using the effective interest method.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Interest expense is recognised on an effective interest basis.
Derivative financial instruments
Derivatives are initially recognised at fair value at the date when derivative contracts are entered into and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
Derivatives embedded in non-derivative host contracts are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Group as lessor
Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease.
The Group as lessee
Rentals payable under operating leases are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Leasehold land and building
When a lease includes both land and building elements, the Group assesses the classification of each element as a finance or an operating lease separately based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the Group, unless it is clear that both elements are operating leases in which case the entire lease is classified as an operating lease. Specifically, the minimum lease payments (including any lump-sum upfront payments) are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of the lease.
To the extent the allocation of the lease payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as "prepaid lease payments" in the consolidated statement of financial position and is amortised over the lease term on a straight-line basis except for those that are classified and accounted for as investment properties under the fair value model.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Foreign currencies
In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated into the presentation currency of the Group (i.e. Hong Kong dollars) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve (attributed to non-controlling interest as appropriate).
Share-based payment transactions
The fair value of services received determined by reference to the fair value of share options granted under the share option scheme and share award scheme of the Company and the holding company at the grant date is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity.
At the end of the reporting period, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity. At the time when the share options are exercised, forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised will continue to be held in equity.
Retirement benefit costs
Payments to defined contribution retirement benefit plans, including state-managed retirement benefit scheme and the Mandatory Provident Fund Scheme, are charged as an expense when employees have rendered service entitling them to the contributions.
3. SIGNIFICANT ACCOUNTING POLICIES - continued
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before taxation" as reported in the consolidated statement of profit or loss because of income or expenses that are taxable or deductible in other years and items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and interests in joint arrangements, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
For the purposes of measuring deferred tax liabilities for investment properties that are measured using the fair value model, the carrying amount of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.
Current and deferred tax is recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group's accounting policies which are described in note 3, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Critical judgements in applying accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.
Deferred tax
For the purposes of measuring deferred tax liabilities or deferred tax assets arising from investment properties that are measured using the fair value model, the directors have determined that the Group's investment properties situated in Hong Kong are held under a business model whose objective is to recover the value through sale rather than to consume substantially all of the economic benefits embodied in the investment properties over time, whereas those situated in the People's Republic of China ("PRC") are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the presumption that the carrying amounts of investment properties are recovered entirely through sale is not rebutted for properties situated in Hong Kong. As a result, the Group has not recognised any deferred taxes on changes in fair value of the Group's investment properties situated in Hong Kong as the Group is not subject to any income taxes on disposal of these investment properties. The presumption that the carrying amounts of the Group's investment properties situated in the PRC are recovered entirely through sale has been rebutted and the deferred tax on the changes in fair value of these investment properties is recognised according to the relevant tax rules.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
Income tax
No deferred tax asset has been recognised in respect of tax losses of HK$41,282,000 (2012: HK$47,827,000) as it is not probable that taxable profit will be available due to the unpredictability of future profit streams. The realisability of the deferred tax asset mainly depends on whether sufficient future profits will be available in the future. In cases where the actual future profits generated are more than expected, additional recognition of deferred tax assets may arise, which would be recognised in the consolidated statement of profit or loss for the period in which it takes place.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY - continued
Key sources of estimation uncertainty - continued
Impairment of property, plant and equipment
The Group performs a review annually to determine whether its hotel property with an aggregate carrying amount of HK$974,569,000 (2012: HK$1,002,086,000) has any indication of impairment by considering the recoverable amount of the hotel building which has been determined based on value in use. The calculation of value in use requires an estimation of future profit generated from the hotel's operating cash flows discounted to arrive at the present value of the asset. Where the actual future cash flows are less than expected, a material impairment loss may arise.
Fair value of investment properties
Investment properties with a carrying amount of HK$10,216,706,000(2012: HK$9,854,688,000) are stated at fair value based on the valuation performed by independent professional valuers. In determining the fair value, the valuers have used a method of valuation which involves certain assumptions of market conditions. In relying on the valuation report or making their own valuation, the directors of the Company have exercised their judgment and are satisfied that the method of valuation is reflective of the current market conditions.
Valuation of properties for development
The Group performs a review annually to determine whether properties for development with an aggregate carrying amount of HK$1,350,813,000(2012: HK$1,292,243,000) has any indication of impairment by considering the recoverable amounts of the properties which has been determined based on the current market price of properties of comparable location. In case the recoverable amounts of the properties are less than the carrying amount, a material adjustment for an impairment loss may result.
Valuation of properties held for sale
Management's assessment of properties held for sale with an aggregate carrying amount of HK$1,451,215,000 (2012: HK$1,282,086,000) is based on an estimation of the net realisable value of these properties which involves, inter-alia, considerable analyses of the recent transacted prices of the respective properties held for sale, the current market price of properties of comparable standard and location, the estimated costs to complete the development, where appropriate, and a forecast of future sales based on available market data and statistics. If the actual net realisable values of the properties held for sale are (more) less than expected as a result of change in market condition and/or significant variation in the budgeted development cost, a material adjustment for (reversal of)
write-down of the properties held for sale may result.
Impairment of other receivable
In determining whether there is any impairment loss on the carrying amount of the other receivable of HK$384,794,000 (2012: HK$365,800,000) in relation to costs incurred on certain pieces of land as detailed in note 22, the Group takes into consideration objective evidence in the estimation of future cash flows. Where the actual future cash flows are less than expected, a material impairment loss, which is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows, may arise.
5. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balances. The Group's overall strategy remains unchanged from the prior year.
The capital structure of the Group consists of net debt, which includes bank borrowings net of bank deposit, and bank balances and cash, and equity attributable to the Company's shareholders, comprising issued share capital, retained profits and reserves.
The directors of the Company review the capital structure periodically and maintain a low gearing. The Group's percentage of net debt to carrying value of properties (comprising investment properties, hotel property, properties for development and properties held for sale) at the end of the reporting period is as follows:
2013 2012
HK$'000 HK$'000
Bank borrowings 3,012,766 2,725,123
Pledged bank deposits - (58,750)
Restricted bank deposits (6,360) -
Bank balances and cash (1,760,007) (1,330,574)
---------------- --------------
Net debt 1,246,399 1,335,799
========= =========
Total carrying value of
properties 13,993,303 13,431,103
========= =========
Percentage of net debt to
carrying value of
properties 8.9% 9.9%
========= =========
6. SEGMENT INFORMATION
Information reported to the executive directors of the Company, being the chief operating decision makers, for the purposes of resource allocation and assessment of segment performance is mainly focused on the property development, property investment and hotel operation. No operating segments identified by the chief operating decision makers have been aggregated in arriving at the reportable segments of the Group.
Property investment and development activities are in Hong Kong and the PRC whereas the hotel operation is in Hong Kong.
The following is an analysis of the Group's revenue and results by reportable segment:
Segment revenues and results
For the year ended 31 December 2013
Property Property Hotel
development investment operation Eliminations Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External sales 235,465 385,983 257,149 - 878,597
Inter-segment
sales - 498 - (498) -
--------------- --------------- --------------- --------------- ---------------
Total 235,465 386,481 257,149 (498) 878,597
========= ========= ========= ========= =========
SEGMENT RESULTS
Segment profit 57,006 507,768 50,256 615,030
========= ========= =========
Interest income 24,874
Corporate
income less
expenses (2,337)
Finance costs (80,994)
---------------
Profit before
taxation 556,573
=========
For the year ended 31 December 2012
Property Property Hotel
development investment operation Eliminations Consolidated
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
SEGMENT REVENUE
External sales 36,998 309,552 248,206 - 594,756
Inter-segment
sales - 1,185 - (1,185) -
--------------- --------------- --------------- --------------- ---------------
Total 36,998 310,737 248,206 (1,185) 594,756
========= ========= ========= ========== =========
SEGMENT RESULTS
Segment (loss)
profit (91,356) 1,508,338 35,390 1,452,372
========= ========= =========
Interest income 18,615
Corporate
income less
expenses 1,450
Share of results
of joint ventures (2,667)
Finance costs (82,398)
---------------
Profit before
taxation 1,387,372
=========
6. SEGMENT INFORMATION - continued
Inter-segment sales are at mutually agreed terms.
The Group does not allocate interest income, corporate income less expenses, share of results of joint ventures and finance costs to individual reportable segment profit or loss for the purposes of resource allocation and performance assessment by the chief operating decision makers.
The accounting policies adopted in preparing the reportable segment information are the same as the Group's accounting policies described in note 3.
Other segment profit or loss information
The following charges (credits) are included in the measurement of segment profit or loss:
For the year ended 31 December 2013
Property Property Hotel Consolidated
development investment operation
HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and
depreciation
* Properties for development 24,124 - - 24,124
* Depreciation of property, plant and equipment 1,745 2,493 51,797 56,035
Fair value changes
on investment
properties - (289,340) - (289,340)
Fair value adjustment
on other receivable (7,435) - - (7,435)
Loss on disposal
of property, plant
and equipment - 41 - 41
========= ========= ========= =========
For the year ended 31 December 2012
Property Property Hotel Consolidated
development investment operation
HK$'000 HK$'000 HK$'000 HK$'000
Amortisation and
depreciation
* Properties for development 21,533 - - 21,533
* Depreciation of property, plant and equipment 1,521 1,424 56,477 59,422
Fair value changes
on investment
properties - (1,359,411) - (1,359,411)
Fair value adjustment
on other receivable 14,706 - - 14,706
Loss on disposal
of property, plant
and equipment - 33 47 80
Reversal of provision
on relocation
compensation (5,089) - - (5,089)
========= ========= ========= =========
6. SEGMENT INFORMATION - continued
Geographical information
The Group operates in two principal geographical areas, being Hong Kong (country of domicile) and the PRC.
The Group's revenue from external customers by geographical location of properties is detailed below.
2013 2012
HK$'000 HK$'000
Hong Kong 737,833 469,160
PRC 140,764 125,596
---------------- --------------
878,597 594,756
========= =========
No single customer contributes over 10% of the total revenue of the Group for both years.
The Group's information about its non-current assets, excluding financial assets, by geographical location are detailed below.
2013 2012
HK$'000 HK$'000
Hong Kong 8,783,264 8,624,866
PRC 3,800,862 3,585,776
---------------- --------------
12,584,126 12,210,642
========= =========
No segment assets and liabilities are presented as the information is not reportable to the chief operating decision makers in the resource allocation and assessment of performance.
7. REVENUE
The following is an analysis of the Group's revenue from its major business activities.
2013 2012
HK$'000 HK$'000
Sale of properties 235,465 36,998
Renting of investment properties 385,983 309,552
Hotel operation 257,149 248,206
---------------- --------------
878,597 594,756
========= =========
8. OTHER INCOME
2013 2012
HK$'000 HK$'000
Included in other income
is:
Net exchange gain 6,642 9,624
Rental income from properties
held for sale temporarily
leased 4,223 6,369
========= =========
9. PROPERTY AND RELATED COSTS
2013 2012
HK$'000 HK$'000
Changes in completed properties
held for sale 103,493 16,268
Reversal of provision on
relocation compensation - (5,089)
Selling and marketing expenses 6,472 2,949
Direct operating expenses
on investment properties 50,126 38,885
---------------- --------------
160,091 53,013
========= =========
10. OTHER EXPENSES
2013 2012
HK$'000 HK$'000
Included in other expenses
are:
Management fees paid to
a related company
(note 38) 148,087 141,846
Less: Amount capitalised
to property development
project (3,797) (3,797)
---------------- --------------
144,290 138,049
Hotel operating expenses 63,661 63,277
legal and professional fees 6,056 3,594
========= =========
11. FINANCE COSTS
2013 2012
HK$'000 HK$'000
Interest on:
Bank borrowings wholly repayable
within 5 years 41,417 41,296
bank borrowings not wholly
repayable within 5 years 37,427 38,387
---------------- --------------
78,844 79,683
Less: Amount capitalised
to property development
project (4,133) (2,711)
---------------- --------------
74,711 76,972
Front end fee 4,005 3,463
other charges 2,278 1,963
---------------- --------------
80,994 82,398
========= =========
12. Profit before taxation
2013 2012
HK$'000 HK$'000
Profit before taxation has
been arrived at after charging
(crediting):
Auditor's remuneration 2,359 2,253
Directors' emoluments (note
13) 2,935 5,516
Fair value adjustment on
other receivable (7,435) 14,706
Loss on disposal of property,
plant and equipment 41 80
Depreciation and amortisation 80,487 81,231
Less: Amount capitalised
to property development
projects (328) (276)
---------------- --------------
80,159 80,955
- - - - - -
- - - - - -
- - - - - -
-
Interest income from second
mortgage loans (418) (791)
Interest earned on bank
deposits (24,000) (17,392)
Imputed interest income
on loans to joint ventures - (432)
Other interest income (456) -
--------------- --------------
(24,874) (18,615)
- - - - - -
- - - - - -
- - - - - -
-
Gross rental income from
investment properties (385,983) (309,552)
Less: Direct operating expenses 50,126 38,885
---------------- --------------
Net rental income (335,857) (270,667)
- - - - - -
- - - - - -
- - - - - -
-
13. DIRECTORS' EMOLUMENTS
The emoluments paid or payable to each of the directors are as follows:
Mr. Mr. Mr.
Mr. Mr. David Donald Richard
Lu Wing Lambert Andrew Ian Öther
Chi Lu Runciman Fletcher Prickett Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
2013
Fee 244 244 - 244 486 1,218
Other
emoluments
Salaries
and other
benefits - - 1,320 - - 1,320
Retirement
benefits
scheme
contribution 24 24 132 - - 180
Share-based
payment
expenses - - 217 - - 217
--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
Total
emoluments 268 268 1,669 244 486 2,935
============ ============ ============ ============ ============ ============
2012
Fee 245 245 - 245 494 1,229
Other
emoluments
Salaries
and other
benefits - - 1,320 - - 1,320
Retirement
benefits
scheme
contribution 24 24 132 - - 180
Share-based
payment
expenses - - 102 - - 102
Share awards
expense - - 2,685 - - 2,685
--------------------- --------------------- --------------------- --------------------- --------------------- ---------------------
Total
emoluments 269 269 4,239 245 494 5,516
============ ============ ============ ============ ============ ============
14. INCOME TAX EXPENSE
2013 2012
HK$'000 HK$'000
The charge comprises:
Current tax
Hong Kong Profits Tax 51,091 12,877
PRC Enterprise Income Tax 11,232 8,963
---------------- --------------
62,323 21,840
---------------- --------------
Underprovision in prior
years
Hong Kong Profits Tax 135 1,017
---------------- --------------
Deferred tax 18,855 64,188
---------------- --------------
81,313 87,045
========= =========
Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for both years.
PRC Enterprise Income Tax is calculated at 25% of the estimated assessable profits for both years.
Details of deferred taxation are set out in note 32.
Income tax expense for the year can be reconciled from profit before taxation per the consolidated statement of profit or loss as follows:
2013 2012
HK$'000 HK$'000
Profit before taxation 556,573 1,387,372
========= =========
Tax charge at Hong Kong
income tax rate of 16.5% 91,835 228,916
Tax effect of share of results
of joint ventures - 440
Tax effect of expenses not
deductible for tax
purposes 25,606 24,874
Tax effect of income not
taxable for tax purposes (44,366) (187,827)
Tax effect of tax losses
not recognised 2,661 4,138
Tax effect of deductible
temporary differences not
recognised 224 -
Utilisation of tax losses
previously not recognised (3,753) (11,095)
Effect of different tax
rates of subsidiaries operating
in other jurisdiction 10,750 24,437
Underprovision in prior
years 135 1,017
Others (1,779) 2,145
---------------- --------------
Income tax expense for the
year 81,313 87,045
========= =========
15. EARNINGS PER SHARE
The calculation of the basic earnings per share attributable to the Company's shareholders is based on the following data:
2013 2012
HK$'000 HK$'000
Earnings for the purpose
of basic earnings per share:
Profit for the year attributable
to the Company's shareholders 474,543 1,326,447
========= =========
2013 2012
number of ordinary shares
for the purpose of basic
earnings per share 886,347,812 886,347,812
========= =========
No diluted earnings per share is presented as the Company did not have any potential ordinary share in issue during both years or at the end of each reporting period.
For the purpose of assessing the performance of the Group, the directors are of the view that the profit for the year should be adjusted for the fair value changes on investment properties recognised in profit or loss and the related deferred taxation in arriving at the "adjusted profit attributable to the Company's shareholders". A reconciliation of the adjusted earnings is as follows:
2013 2012
HK$'000 HK$'000
Profit for the year attributable
to the Company's shareholders
as shown in the consolidated
statement of profit or
loss 474,543 1,326,447
Fair value changes on investment
properties (289,340) (1,359,411)
Deferred tax thereon 19,835 62,223
------------------ ------------------
Adjusted profit attributable
to the Company's shareholders 205,038 29,259
========== ==========
Basic earnings per share
excluding fair value changes
on investment properties
net of HK23.1
deferred tax cents HK3.3 cents
========== ==========
The denominators used in the calculation of adjusted earnings per share are the same as those detailed above.
16. DIVIDENDS
No dividend was paid, declared or proposed during the reported period. The directors do not recommend the payment of any final dividend.
17. INVESTMENT PROPERTIES
Hong Kong PRC
----------------- ------------------------------------
Medium- Medium-
term leases Long leases term leases Total
HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 6,450,000 1,768,839 266,436 8,485,275
Additions 9,482 - - 9,482
Fair value changes 1,110,518 229,227 19,666 1,359,411
Exchange adjustments - 496 24 520
----------------- ----------------- ----------------- -----------------
At 31 December
2012 7,570,000 1,998,562 286,126 9,854,688
Fair value changes 210,000 60,539 18,801 289,340
Exchange adjustments - 63,445 9,233 72,678
----------------- ----------------- ----------------- -----------------
At 31 December
2013 7,780,000 2,122,546 314,160 10,216,706
========== ========== ========== ==========
All of the Group's property interests are held under operating leases to earn rentals and/or for capital appreciation purposes. These properties are measured using the fair value model and are classified and accounted for as investment properties.
In estimating the fair value of investment properties, the Group uses market-observable data to the extent it is available. The Group engages third party qualified valuers to perform the valuation of the Group's investment properties. At the end of each reporting period, the Group works closely with the qualified external valuers to establish and determine the appropriate valuation techniques and inputs to the model.
The fair values of investment properties as at 31 December 2013 and 31 December 2012 were arrived at on the basis of valuations carried out at those dates by Savills Valuation and Professional Services Limited ("Savills"), a firm of Chartered Surveyors not connected to the Group, recognised by The Hong Kong Institute of Surveyors, that has appropriate qualifications and recent experience in the valuation of properties in the relevant locations.
The valuation, which conforms to the appropriate sections of both the current Practice Statements, and United Kingdom Practices Statements contained in the RICS Valuation Standards published by the Royal Institution of Chartered Surveyors in the United Kingdom (the "Red Book"), was arrived at by reference to market evidence of transaction prices or by capitalisation of future rental which is estimated by reference to comparable rental as available in the relevant markets. In the valuation, which falls under Level 3 of the fair value hierarchy, the market rentals of all lettable units as well as those of similar properties are made by reference to the rentals achieved by the Group in the lettable units as well as those of similar properties in the neighbourhood. The capitalisation rate adopted is by reference to the yield rates observed by the valuer for similar properties in the locality and adjusted for the valuer's knowledge of factors specific to the respective properties. These has been no change from the valuation technique used in the prior year.
In estimating the fair value of the properties, the highest and best use of the properties is their current use.
17. INVESTMENT PROPERTIES - continued
The key inputs used in valuing the investment properties under the income capitalisation approach were the capitalisation rates used and monthly unit rent. A slight increase in the capitalisation rate used would result in a significant decrease in the fair value measurement of the investment properties, and vice versa. The higher the monthly unit rent, the higher the fair value and vice versa.
Details of the significant unobservable input under the income capitalisation approach are as follows:
Class of property Capitalisation rates
Office units and shops in Hong Kong 3.75% per annum
Car parking spaces in Hong Kong 5.5% per annum
Shops in the PRC 6.75% per annum to 9.0% per annum
Office units in the PRC 6.0% per annum to 6.5% per annum
Car parking spaces in the PRC were valued under the direct comparison approach. The market unit rate is one of the key inputs. The higher the market unit rate the higher the fair value, and vice versa. The adopted market unit rates range from RMB115,000 to RMB150,000 per unit.
Details of the Group's investment properties which falls under Level 3 of the fair value hierarchy as at 31 December 2013 are as follows:
Fair value
as at
2013
HK$'000
Commercial property located in
Hong Kong 7,780,000
Commercial properties located in
the PRC 2,436,706
----------------------
10,216,706
=============
There were no transfers into or out of Level 3 during the year.
18. PROPERTY, PLANT AND EQUIPMENT
Land
in
Hong
Kong
under
medium-term
lease Furniture, Crockery,
and Plant fixtures utensils
hotel and and Motor Leasehold and
building machinery equipment vehicles improvements linen Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
COST
At 1 January
2012 1,089,727 39,175 33,985 6,418 73,189 5,051 1,247,545
Additions - - 2,095 669 485 - 3,249
Disposals (55) - (190) (75) (17) - (337)
Exchange
adjustments - - 3 (1) 1 - 3
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2012 1,089,672 39,175 35,893 7,011 73,658 5,051 1,250,460
Additions - 5,910 1,627 701 805 - 9,043
Disposals - - (619) (47) - - (666)
Exchange
adjustments - 88 120 166 193 - 567
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2013 1,089,672 45,173 37,021 7,831 74,656 5,051 1,259,404
------------ ------------- ------------- ----------- --------------- ----------- ------------
DEPRECIATION
At 1 January
2012 60,072 9,167 17,017 2,043 38,905 - 127,204
Provided
for the
year 27,518 3,918 8,460 1,315 18,487 - 59,698
Eliminated
on disposals (4) - (147) - (11) - (162)
Exchange
adjustments - - 2 2 5 - 9
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2012 87,586 13,085 25,332 3,360 57,386 - 186,749
Provided
for the
year 27,517 5,153 7,535 1,213 14,945 - 56,363
Eliminated
on disposals - - (557) (4) - - (561)
Exchange
adjustments - 19 40 76 111 - 246
------------ ------------- ------------- ----------- --------------- ----------- ------------
At 31 December
2013 115,103 18,257 32,350 4,645 72,442 - 242,797
------------ ------------- ------------- ----------- --------------- ----------- ------------
CARRYING
VALUES
At 31 December
2013 974,569 26,916 4,671 3,186 2,214 5,051 1,016,607
======== ======== ======== ======= ======== ======= ========
At 31 December
2012 1,002,086 26,090 10,561 3,651 16,272 5,051 1,063,711
======== ======== ======== ======= ======== ======= ========
The above items of property, plant and equipment are depreciated on a straight-line basis after taking into account their estimated residual values at the following rates per annum:
Leasehold land Over the lease terms ranging from 42 years
to 45.5 years
Completed hotel building 40 years
Plant and machinery 10%
Furniture, fixtures and equipment 25%
Motor vehicles 25%
Leasehold improvements 25%
19. PROPERTIES FOR DEVELOPMENT
2013 2012
HK$'000 HK$'000
COST
At 1 January 1,336,169 1,310,596
Additions 125,366 25,693
Transfer to properties held (86,436) -
for sale
Exchange adjustments 41,934 (120)
---------------- --------------
At 31 December 1,417,033 1,336,169
---------------- --------------
AMORTISATION
At 1 January 43,926 22,324
Provided for the year 24,124 21,533
Transfer to properties held (3,455) -
for sale
Exchange adjustments 1,625 69
---------------- --------------
At 31 December 66,220 43,926
---------------- --------------
CARRYING VALUE
At 31 December 1,350,813 1,292,243
========= =========
The carrying amount represents the Group's interest in certain pieces of land located in the PRC to be held for future development.
The carrying amount is amortised on a straight-line basis over the lease terms ranging from 40 to 70 years.
20. LOANS RECEIVABLE
2013 2012
HK$'000 HK$'000
Second mortgage loans 7,535 10,038
========= =========
Analysed for reporting purposes:
Non-current assets 7,072 9,396
Current assets 463 642
---------------- --------------
7,535 10,038
========= =========
The loans bear interest at Hong Kong Prime Rate and are repayable by monthly installments over a period of 20 years or as stipulated in the respective agreements.
The second mortgage loans are secured by the leasehold properties of the borrowers.
The effective interest rate of the loans receivable is 5.0% (2012: 5.0%) per annum.
Loans receivable balances which are past due at the end of the reporting period are minimal and are not considered impaired. In determining the recoverability of the loans receivable, the Group considers, among other factors, any change in value of the properties securing the loans.
The concentration of credit risk is limited due to the customer base being large and unrelated. No single loan receivable is individually material.
21. NOTE RECEIVABLES
The amount represents (i) the carrying value of a five-year zero coupon principal protected index-linked note with principal amount of US$2,000,000 (equivalent to HK$15,508,000) (2012: US$2,000,000 (equivalent to HK$15,510,000) maturing on 7 February 2017; and (ii) the carrying value of a five-year zero coupon principal protected index-linked note with a principal amount of US$5,000,000 (equivalent to HK$38,771,000) (2012: nil) maturing on 9 August 2018. The index is a proprietary index named Forex Yield Differential Accrual Perpetual Index, which is a proprietary non-discretionary algorithm to calculate the risk filter multiple of non-discretionary trading that observes a basket of ten currencies.
The host contracts of the note are measured at amortised cost. The index-linked feature is regarded as a derivative embedded in but not closely related to the host contract in accordance with IAS 39 Financial Instruments: Recognition and Measurement. However, in the opinion of the directors, the fair values of the embedded derivatives at the end of the reporting period are insignificant and therefore they have not been accounted for as a separate component in the consolidated financial statements.
22. OTHER RECEIVABLE
At 31 December 2013, the Group had incurred a total amount of RMB321,052,000 (2012: RMB321,052,000), equivalent to HK$408,346,000 (2012: HK$395,954,000), for the tenant relocation arrangements, excavation and infrastructure work on certain pieces of land in Nanjing, the PRC. The amount, together with further costs to complete the work, are wholly refundable from the relevant PRC local government either by deduction against the consideration payable if the Group is successful in bidding for the land or out of the proceeds received by the relevant PRC local government from another successful tenderer. The directors estimate that, based on the Group's development plan, the time schedule for auction of the relevant land will be initiated before the end of 2016 and by then the full amount will be recovered.
The balance of HK$384,794,000 (2012: HK$365,800,000) represents the Hong Kong dollar equivalent of the present value of the original amount of RMB321,052,000 expected to be recovered in 2016 discounted at the rate of 2% per annum.
23. PLEDGED BANK DEPOSITS/RESTRICTED BANK DEPOSITS
Pledged bank deposits carried interest at fixed rates ranging from 0.1% to 2.9% per annum at 31 December 2012. All pledged bank deposits were refunded to the Group during the year upon full repayment of the relevant bank borrowings.
Restricted bank deposits carry interest at a fixed rate of 0.35% per annum and were placed with a bank in relation to long-term bank borrowings.
24. PROPERTIES HELD FOR SALE
Properties under development are expected to be realised in more than twelve months after the end of the reporting period.
25. TRADE RECEIVABLES, DEPOSITS AND PREPAYMENTS
2013 2012
HK$'000 HK$'000
Trade receivables 9,114 11,638
Accrued income 92,234 85,407
Deposits and prepayments 23,188 15,335
---------------- --------------
124,536 112,380
========= =========
Trade receivables mainly represent rental receivable from tenants for the use of the Group's properties and receivables from corporate customers and travel agents for the use of hotel facilities. No credit is allowed to tenants. Rentals are payable upon presentation of demand notes. An average credit period of 30 days is allowed to corporate customers and travel agents.
All trade receivables at the end of the reporting period are aged less than 60 days. The Group does not hold any collateral over these balances.
Before granting credit to any customer, the Group uses an internal credit assessment policy to assess the potential customers' credit quality and defines credit limit by customer. trade receivables of HK$940,000 (2012: HK$2,088,000) at the end of the reporting period are past due but are not considered impaired as these debtors have good repayment history. The Group does not hold any collateral over these balances.
26. AMOUNTS DUE FROM/TO NON-CONTROLLING INTERESTS
The balances are unsecured, interest-free and repayable on demand.
27. Bank balances and CASH
Bank balances and cash comprise cash and short-term bank deposits which carry fixed interest rates ranging from 0.1% to 3.3% (2012: 0.1% to 3.1%) per annum. Included in bank balances and cash is fixed deposits of HK$455,340,000 (2012: HK$36,999,000) with an original maturity period of more than three months.
The Group's bank balances and cash that are denominated in currencies other than the functional currencies of the relevant group entities are set out below:
2013 2012
HK$'000 HK$'000
Hong Kong dollars 23 100
========= =========
United States dollars 15,994 76,470
========= =========
Renminbi 184,118 554,661
========= =========
28. ASSETS CLASSIFIED AS HELD FOR SALE
2013 2012
HK$'000 HK$'000
Cost of unlisted investment
in joint ventures - 3,994
Share of post-acquisition
reserves - (5,929)
---------------- --------------
- (1,935)
Loans to joint ventures - 44,025
---------------- --------------
- 42,090
========= =========
On 7 March 2012, the Group entered into an agreement to dispose of its entire equity interest, together with the assignment of the loans to the joint ventures, to the joint venture partner for a total cash consideration of HK$61,250,000. The disposal was completed in May 2013.
29. PAYABLES, DEPOSITS AND ACCRUED CHARGES
2013 2012
HK$'000 HK$'000
Trade payables 2,609 2,720
Rental deposits 113,185 93,539
Rental received in advance 12,052 8,590
Other payables, other deposits
and accrued charges 162,233 190,678
---------------- --------------
290,079 295,527
========= =========
Included in other payables is an aggregate amount of HK$87,876,000 (2012: HK$85,761,000) payable to contractors for the cost in relation to the tenant relocation arrangements, excavation and infrastructure work on certain pieces of land as detailed in note 22. Included in other deposits at 31 December 2012 is an amount of HK$40,000,000 received on disposal of the interests in joint ventures as detailed in note 28.
Rental deposits to be settled after twelve months from the end of the reporting period based on the respective lease terms amounted to HK$87,302,000 (2012: HK$61,667,000).
30. BANK BORROWINGS
2013 2012
HK$'000 HK$'000
Secured 2,908,463 2,740,500
Unsecured 118,000 -
---------------- --------------
3,026,463 2,740,500
Less: Front-end fee (13,697) (15,377)
---------------- --------------
3,012,766 2,725,123
========= =========
Analysed for reporting purpose
as:
Current liabilities 1,290,658 388,004
Non-current liabilities 1,722,108 2,337,119
---------------- --------------
3,012,766 2,725,123
========= =========
The bank borrowings are
repayable as follows:
On demand or within one
year 1,291,791 388,848
More than one year, but
not exceeding two years 395,152 1,035,297
More than two years, but
not exceeding five years 1,082,914 1,015,430
More than five years 256,606 300,925
---------------- --------------
3,026,463 2,740,500
========= =========
All bank borrowings are denominated in the functional currencies of the relevant group entities and carry interest at floating rates, the principal amounts of which are analysed below:
Denominated Interest rates 2013 2012
in
HK$'000 HK$'000
Hong Kong Interbank
Offered Rate ("HIBOR")
plus 1% to 2.75%
Hong Kong (2012: HIBOR plus
dollars 1% to 2.75%) 2,480,182 2,173,182
95% to 125% of
People's Bank of
China ("PBOC")
Prescribed Interest
Rates (2012: 95%
to 110% of PBOC
Prescribed Interest
Renminbi Rates) 546,281 567,318
---------------- --------------
3,026,463 2,740,500
========= =========
The effective interest rates of these variable-rate borrowings range from 1.5% to 8.2% (2012: 1.5% to 7.8%) per annum.
31. SHARE CAPITAL
2013 2012
US$'000 HK$'000 HK$'000
Authorised:
1,300,000,000 ordinary
shares of US$0.05 each 65,000 506,313 506,313
========= ========= =========
Issued and fully paid:
886,347,812 ordinary
shares of US$0.05 each 44,317 345,204 345,204
========= ========= =========
32. DEFERRED TAXATION
The following are the major deferred tax liabilities (assets) recognised and movements thereon during the current and prior reporting periods:
Fair
value Effective
Accelerated of investment rental Tax
tax depreciation properties income losses Others Total
HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 1 January
2012 19,356 202,876 17,867 (10,217) 4,489 234,371
Exchange
adjustments - 184 1 (2) - 183
(Credit)
charge
to profit
or
loss (4,527) 62,223 1,274 5,745 (527) 64,188
---------------- ----------------- ---------------- ---------------- ---------------- ----------------
At 31
December
2012 14,829 265,283 19,142 (4,474) 3,962 298,742
Exchange
adjustments - 7,791 617 (74) - 8,334
(Credit)
charge
to profit
or
loss (871) 19,835 1,169 1,774 (3,052) 18,855
---------------- ----------------- ---------------- ---------------- ---------------- ----------------
At 31
December
2013 13,958 292,909 20,928 (2,774) 910 325,931
========= ========== ========= ========= ========= =========
For the purpose of presentation of the consolidated statement of financial position, deferred tax assets and liabilities have been offset and shown under non-current liabilities.
At 31 December 2013, the Group has unused tax losses of HK$52,375,000 (2012: HK$70,645,000) available to offset against future profits. A deferred tax asset has been recognised in respect of HK$11,093,000 (2012: HK$22,818,000) of such losses. No deferred tax asset has been recognised in respect of the remaining HK$41,282,000 (2012: HK$47,827,000) as it is not probable that taxable profit will be available to offset against the tax losses due to the unpredictability of future profit streams. The unrecognised tax losses will expire in the following years ending 31 December:
2013 2012
HK$'000 HK$'000
2013 - 1,699
2014 605 586
2015 2,129 2,064
2016 1,562 1,514
2017 3,574 3,467
2018 5,111 -
---------------- --------------
12,981 9,330
========= =========
32. DEFERRED TAXATION - continued
Other tax losses may be carried forward indefinitely.
At 31 December 2013, the Group has deductible temporary differences in respect of property, plant and equipment of HK$1,360,000 (2012: nil). No deferred tax asset has been recognised in respect of such deductible temporary differences as it is not probable that taxable profit will be available against which the deductible temporary differences can be utilised.
33. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
2013 2012
HK$'000 HK$'000
Financial assets
Loans and receivables
(including cash and cash
equivalents) 2,222,354 1,794,281
========= =========
Financial liabilities
Financial liabilities
at amortised cost 3,267,050 2,966,656
========= =========
(b) Financial risk management objectives and policies
The directors of the Company have overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls to monitor risks and adherence to market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a constructive control environment in which all employees understand their roles and obligations. The directors of the Company monitor and manage the financial risks relating to the operations of the Group to ensure appropriate measures are implemented on a timely and effective manner. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.
The Group's overall strategy remains unchanged from prior year.
Market risk
(i) Foreign currency risk
Certain subsidiaries of the Company have foreign currency denominated monetary assets, which expose the Group to foreign currency risk. The Group currently does not have a policy to hedge the foreign currency exposure. However, the management monitors the related foreign currency fluctuation closely and will consider entering into foreign exchange forward contracts to hedge significant portion of the foreign currency risk should the need arise.
33. FINANCIAL INSTRUMENTS - continued (b) Financial risk management objectives and policies - continued
Market risk - continued
(i) Foreign currency risk - continued
The carrying amounts of the foreign currency denominated monetary assets at the end of the reporting period in the respective group entities are as follows:
2013 2012
HK$'000 HK$'000
Hong Kong dollars 23 100
United States dollars 70,274 76,470
Renminbi 184,118 554,661
========= =========
The loans for foreign operations within the Group that form part of the Group's net investment in foreign operations, and are denominated in foreign currency, other than the functional currency of the respective foreign entities, the Hong Kong dollars and United States dollars,
at the end of the reporting period amounted to HK$208,904,000
(2012: HK$207,908,000) and HK$92,420,000 (2012: HK$92,387,000) respectively.
Sensitivity analysis
The following table details the Group's sensitivity to a 5% (2012: 5%) appreciation in the functional currencies of the relevant subsidiaries, Renminbi and Hong Kong dollars, relative to the foreign currencies of the relevant subsidiaries, the Hong Kong dollars, United States dollars and Renminbi. There would be an equal and opposite impact where Renminbi and Hong Kong dollars weaken 5% (2012: 5%) against the relevant currencies.
Decrease in
profit for the
year Increase in equity
2013 2012 2013 2012
HK$'000 HK$'000 HK$'000 HK$'000
Hong Kong
dollars 1 5 10,445 10,395
United
States
dollars 3,514 3,824 4,621 4,619
Renminbi 9,206 27,733 - -
======== ======== ======== ========
In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign currency risk as the year end exposure does not reflect the exposure during the year.
Since the Hong Kong dollar is pegged to the United States dollar under the Linked Exchange Rate System, management does not expect any significant foreign currency exposure in relation to the exchange rate fluctuations between the Hong Kong dollar and the United States dollar.
33. FINANCIAL INSTRUMENTS - continued (b) Financial risk management objectives and policies - continued
Market risk - continued
(ii) Interest rate risk
The Group is exposed to cash flow interest rate risk in relation to variable-rate borrowings, loans receivable, bank balances and deposits. The directors consider that the interest rate risk on bank balances and deposits are insignificant as they are subject to minimal interest rate fluctuation, accordingly, no sensitivity analysis is presented. The Group's cash flow interest rate risk is mainly concentrated on the fluctuation of HIBOR and the PBOC Prescribed Interest Rates on the bank borrowings, and Hong Kong Prime Rate on the loans receivable.
The Group currently does not have an interest rate swap hedging policy. However, management monitors the interest exposure and will consider hedging interest rate risk exposure should the need arise.
Sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rates in relation to the Group's variable-rate bank borrowings and loans receivable at the end of the reporting period. The analysis is prepared assuming the amount of asset and liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis points increase or decrease represents management's assessment of the reasonably possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group's profit for the year ended 31 December 2013 would decrease/increase by HK$15,095,000 (2012: HK$13,575,000).
Credit risk
The Group's maximum exposure to credit risk in the event of the counterparties' failure to perform their obligations at the end of the reporting period in relation to each class of recognised financial assets is the carrying amount of those assets as stated in the consolidated statement of financial position. In order to minimise the credit risk, management of the Group has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual debt at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group's credit risk is significantly reduced.
At 31 December 2013, the Group has concentration of credit risk on other receivable from two counterparties.
Although the placing of deposits and notes subscribed are concentrated on certain banks, the credit risk on these financial assets is limited because the counterparties are licensed banks.
The Group has no other significant concentration of credit risk with exposure spread over a number of counterparties and customers.
33. FINANCIAL INSTRUMENTS - continued (b) Financial risk management objectives and policies - continued
Liquidity risk
Ultimate responsibility for liquidity risk management rests with the directors of the Company, which have built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities, and by continuously monitoring forecast and actual cash flows. As at 31 December 2013, the Group has available unutilised bank loan facilities of approximately HK$855,000,000 (2012: HK$910,000,000).
The following table details the Group's remaining contractual maturity for its financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities and on the earliest date on which the Group can be required to pay. The table includes both interest, estimated based on interest rate at the end of the reporting period, and principal cash flows.
Weighted
average 9 months Total
effective Within 3 months 6 months to undiscounted
interest 3 to to 12 Over cash Carrying
rate months 6 months 9 months months 1 year flows amount
% HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000
At 31.12.2013
Payables
and rental
deposits
received - 167,597 8,478 3,743 3,364 87,302 270,484 270,484
Amounts
due to
non-controlling
interests - 96,985 - - - - 96,985 96,985
Variable
rates
bank borrowings 2.6 351,334 395,361 42,965 568,450 1,911,451 3,269,561 3,012,766
------------ ------------- ------------- ------------- -------------- -------------- --------------
615,916 403,839 46,708 571,814 1,998,753 3,637,030 3,380,235
======== ======== ======== ======== ======== ======== ========
At 31.12.2012
Payables
and rental
deposits
received - 157,171 3,967 9,631 9,158 61,667 241,594 241,594
Amounts
due to
non-controlling
interests - 93,478 - - - - 93,478 93,478
Variable
rates
bank borrowings 2.7 40,606 41,100 40,946 335,477 2,549,370 3,007,499 2,725,123
------------- ------------- ------------- ------------- -------------- ---------------- ---------------
291,255 45,067 50,577 344,635 2,611,037 3,342,571 3,060,195
======== ======== ======== ======== ======== ======== ========
The amounts included above for variable rate bank borrowings are subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.
(c) Fair value measurement of financial instruments
the fair value of financial assets and financial liabilities are determined in accordance with generally accepted pricing models which is based on discounted cash flows analysis using the relevant prevailing market rates as input.
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values.
34. OPERATING LEASE ARRANGEMENTS
The Group as lessee
Minimum lease payments paid under operating leases during the year are HK$1,045,000 (2012: HK$792,000).
At the end of the reporting period, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:
2013 2012
HK$'000 HK$'000
Within one year 477 567
In the second to fifth years
inclusive 993 87
---------------- --------------
1,470 654
========= =========
Leases are negotiated for the range of 1 to 2 years (2012: 1 to 2 years) with fixed monthly rentals.
The Group as lessor
The majority of the Group's investment properties were leased out under operating leases.
At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments:
2013 2012
HK$'000 HK$'000
Within one year 365,017 333,429
In the second to fifth years
inclusive 636,653 585,789
Over five years 489,571 498,327
---------------- --------------
1,491,241 1,417,545
========= =========
In addition to the annual minimum lease payments, the Group is entitled to, in respect of leases, in addition to committed rent, additional rental based on a specified percentage of revenue, if achieved, earned by the tenant. No such additional rental was received during the year and the preceding year.
The lease terms of the remaining leased properties range from 1 to 18 years (2012: 1 to 19 years).
35. PLEDGE OF ASSETS
At the end of the reporting period, the Group had pledged the following assets to secure banking facilities granted to the Group:
(a) Fixed charges on investment properties with an aggregate carrying value of HK$9,486,635,000 (2012: HK$9,162,807,000) together with a floating charge over all the assets of the properties owning subsidiaries and benefits accrued to the relevant properties.
(b) Fixed charges on hotel properties with aggregate carrying values of HK$974,569,000(2012: HK$1,002,086,000) together with a floating charge over all the assets of the properties owning subsidiaries and benefits accrued to the relevant properties.
(c) Fixed charges on properties under development held for sale with an aggregate carrying value of HK$882,479,000 (2012: HK$707,889,000).
(d) Note receivable of HK$54,279,000 (2012: Nil). (e) Bank deposits amounting to HK$58,750,000 at 31 December 2012. 36. SHARE-BASED PAYMENTS
Share Option Scheme of the Company
The share option scheme of the Company (the "Share Option Scheme") was approved by the shareholders of SEA on 27 May 2010 and by the board of directors of the Company (the "Board") on 28 May 2010. The Share Option Scheme came into effect on 16 August 2010 (the "Adoption Date") upon fulfillment of the conditions contained in the Share Option Scheme. Unless terminated earlier by the Board, the Share Option Scheme shall be valid and effective for a term of 10 years until 15 August 2020.
The purpose of the Share Option Scheme is to provide a flexible means to recognise and acknowledge the performance and/or contribution of any (i) director or employee of the Company or any of its affiliates; (ii) representative, manager, agent, contractor, advisor, consultant, distributor or supplier engaged by the Company or any of its affiliates; (iii) customer, promoter, business ally or joint-venture partner of the Company or any of its affiliates; or (iv) trustee of any trust established for the benefit of employees of the Company or any of its affiliates.
Under the Share Option Scheme, the Board (or any committee delegated by the Board) may offer to the eligible participants options to subscribe for shares of the Company at a price at least the highest of (i) the closing price of the share of the Company on the AIM Market on the date of grant of the option; (ii) the average of the closing price of the share of the Company on the AIM Market for the five business days immediately preceding the date of grant of the option; and (iii) the par value of the share of the Company.
36. SHARE-BASED PAYMENTS - continued
Share Option Scheme of the Company - continued
Without prior approval of the shareholders of SEA in general meetings, (a) no option may be granted to an eligible participant which, if exercised in full, would result in the total number of shares issued and to be issued upon exercise of the options already granted or to be granted to such eligible participant in any 12-month period, exceeding 1% of the shares of the Company then in issue; and (b) any grant of options to a substantial shareholder and/or an independent non-executive director of the Company or SEA or any of their respective associates, would result in the total number of shares issued and to be issued upon exercise of all options granted or to be granted to such person in any 12-month period exceeding 0.1% of the shares of the Company then in issue and with an aggregate value exceeding HK$5 million (or its equivalent amount in British Pound).
Options granted must be taken up within 28 days from the date of grant upon payment of HK$10 (or its equivalent amount in British Pound or United States dollars). The period during which an option may be exercised is determined by the Board (or any committee delegated by the Board) at its absolute discretion, save that no option may be exercised more than 10 years after it has been granted. Unless otherwise determined by the Board (or any committee delegated by the Board) at its sole discretion, there is no minimum period for which an option must be held before it can be exercised.
No option was granted since the Adoption Date of the Share Option Scheme.
Share Award Scheme of the Company
The share award scheme of the Company (the "Share Award Scheme") was approved by the shareholders of SEA on 27 May 2010 and by the Board on 28 May 2010 and came into effect on the Adoption Date. Unless terminated earlier by the Board, the Share Award Scheme shall be valid and effective for a term of 15 years until 15 August 2025.
The purpose of the Share Award Scheme is to provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants. Under the Share Award Scheme, the Board (or any committee delegated by the Board) may at its absolute discretion grant awards, which may comprise (a) new shares of the Company; (b) existing shares of the Company in issue and is listed on the AIM Market from time to time; (c) cash in lieu of the shares of the Company; or (d) a combination of (a), (b) and (c), to any eligible participants as it thinks fit and appropriate and subject to the terms and conditions of the Share Award Scheme. No award may be granted under the Share Award Scheme if the aggregate number of shares which may be issued and/or transferred upon vesting of all outstanding awards granted under the Share Award Scheme and any other share award scheme of the Company and which may be issued upon exercise of all outstanding options granted and yet to be exercised under any share option scheme of the Company exceed 30% of the shares of the Company in issue from time to time.
No award was granted since the Adoption Date of the Share Award Scheme.
36. SHARE-BASED PAYMENTS - continued
Share Option Scheme of SEA
SEA approved and adopted an employee share option scheme (the "SEA Share Option Scheme") on 19 August 2005 for the primary purpose of providing incentive to directors and eligible employees. The SEA Share Option Scheme shall be valid and effective for a term of 10 years until 24 August 2015.
Under the SEA Share Option Scheme, the board of directors of SEA may offer to any director or full time employee/chief executive of SEA, or any of its subsidiaries, options to subscribe for shares in SEA at a price at least the highest of (i) the nominal value of the share of SEA; (ii) the average of the closing price of the share of SEA on the Stock Exchange for the five business days immediately preceding the date of grant of the option; and (iii) the closing price of the share of SEA on the Stock Exchange on the date of grant of the option.
Without prior approval of the shareholders of SEA in general meeting, (a) no option may be granted to an eligible participant which, if exercised in full, would result in the total number of shares issued and to be issued upon exercise of the options already granted or to be granted to such eligible participant in any 12-month period, exceeding 1% of the shares of SEA then in issue; and (b) any grant of options to a substantial shareholder and/or an independent non-executive director of SEA or its subsidiaries or any of their respective associates, would result in the total number of shares issued and to be issued upon exercise of all options granted or to be granted to such person in any 12-month period exceeding 0.1% of the shares of SEA then in issue and with an aggregate value exceeding HK$5 million.
Options granted must be taken up within 28 days from the date of grant upon payment of HK$10. The period during which an option may be exercised is determined by the board of directors of SEA at its absolute discretion, save that no option may be exercised more than 10 years after it has been granted. Unless otherwise determined by the board of directors of SEA at its sole discretion, there is no minimum period for which an option must be held before it can be exercised.
On 31 December 2008, SEA granted share options to a director of the Company entitling the holder to subscribe for 2,000,000 shares of SEA at an exercise price of HK$2.262 per share with an exercise period of 2 years from 31 December 2010 to 30 December 2012. The directors determined the fair value of the share options with reference to the calculation made by an independent professional valuer to be HK$592,000. 1,000,000 share options were exercised in January 2011 and the remaining were exercised in September 2012.
On 12 July 2012, SEA granted share options to a director of the Company entitling the holder to subscribe for 1,000,000 shares of SEA at an exercise price of HK$3.454 per share with an exercise period of 2 years from 1 July 2015 to 30 June 2017. The directors determined the fair value of the share options with reference to the calculation made by an independent professional valuer to be HK$643,300. None of the options were lapsed or exercised up to the end of the reporting period.
36. SHARE-BASED PAYMENTS - continued
Share Award Scheme of SEA
The share award scheme of SEA (the "SEA Share Award Scheme") was approved by the shareholders of SEA on 27 May 2010. The SEA Share Award Scheme came into effect on 15 June 2010 upon fulfillment of the conditions contained in the SEA Share Award Scheme. Unless terminated earlier by the board of directors of SEA, the SEA Share Award Scheme shall be valid and effective for a term of 15 years until 14 June 2025.
The purpose of the SEA Share Award Scheme is to provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants. Under the SEA Share Award Scheme, the board of directors of SEA (or any committee delegated by the board of directors of SEA) may at its absolute discretion grant awards, which may comprise (a) new shares of SEA; (b) existing shares of SEA in issue and is listed on the Stock Exchange from time to time; (c) cash in lieu of the shares of SEA; or (d) a combination of (a), (b) and (c), to any eligible participants as it thinks fit and appropriate and subject to the terms and conditions of the SEA Share Award Scheme. No award may be granted under the SEA Share Award Scheme if the aggregate number of shares which may be issued and/or transferred upon vesting of all outstanding awards granted under the SEA Share Award Scheme and any other share award scheme of SEA and which may be issued upon exercise of all outstanding options granted and yet to be exercised under any share option scheme of SEA exceed 30% of the shares of SEA in issue from time to time.
SEA has appointed trustee to acquire shares of SEA in the open market with funds provided by the SEA group and to hold the shares of SEA before they are vested and transferred to the selected participants. On 12 July 2012, 500,000 shares of SEA were awarded to a director of the Company and vested immediately.
37. RETIREMENT BENEFIT PLANS
The Group participates in a defined contribution scheme which is registered under a Mandatory Provident Fund Scheme (the "MPF Scheme") established under the Mandatory Provident Fund Schemes Ordinance of Hong Kong in December 2000 for eligible employees in Hong Kong. The assets of the MPF Scheme are held separately from those of the Group, in funds under the control of trustees. The Group contributes 5% to 15% of relevant payroll costs per month to the scheme for members of the MPF Scheme, depending on the length of service with the Group.
The employees of the Group's subsidiaries in the PRC are members of state-managed retirement benefit scheme operated by the government of the PRC.
The total contribution paid to the retirement benefit schemes by the Group charged to profit or loss for the year amounted to HK$3,474,000 (2012: HK$3,531,000).
38. RELATED PARTY TRANSACTIONS
(a) The Group had the following transactions with fellow subsidiaries, which are wholly-owned subsidiaries of SEA, during the year:
(i) Rental income of HK$14,304,000 (2012: HK$11,110,000) from the renting of the Group's premises; and
(ii) Management fees of HK$148,087,000 (2012: HK$141,846,000) in respect of the provision of property development and management services to the Group on the Group's property portfolio.
(b) Details of loans to joint ventures are disclosed in note 28.
(c) The remuneration of directors who are the Group's key management was set out in note 13.
39. PRINCIPAL SUBSIDIARIES
Effective
% of
issued
share
Place/country Issued capital/registered
of and paid
incorporation/ up share capital
capital/ held
Name of subsidiary operation registered by the Principal
capital Company activities
2013 2012
Direct subsidiary
1 ordinary
Benefit Strong B.V.I./Hong share Investment
Group Limited Kong of HK$1 100 100 holding
Indirect subsidiaries
2 ordinary
shares
AGP (Diamond of HK$1 Property
Hill) Limited Hong Kong each 100 100 development
1 ordinary
AGP (Sha Tin) share Property
Limited Hong Kong of HK$1 100 100 development
Chengdu Huashang
House RMB200,000,000
Development registered Property
Co., Ltd.* PRC capital 100 100 investment
Chengdu Yulong
No. 1 RMB275,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
Chengdu Yulong
No. 2 RMB80,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
Chengdu Yulong
No. 3 RMB450,000,000
Property Development registered Property
Company Limited* PRC capital 100 100 development
100 ordinary
shares
Concord Way of HK$1 Hotel
Limited Hong Kong each 100 100 operation
Giant Well 1 ordinary
Enterprises B.V.I./Hong share Investment
Limited Kong of US$1 100 100 holding
1 ordinary
Grace Art Development share Treasury
Limited Hong Kong of HK$1 100 100 services
Guangzhou Yingfat
House US$20,110,000 Property
Property Development registered development
Co., Ltd.** PRC capital 100 100 and investment
39. PRINCIPAL SUBSIDIARIES - continued
Effective
% of
issued
share
Place/country Issued capital/registered
of and paid
incorporation/ up share capital
capital/ held
Name of subsidiary operation registered by the Principal
capital Company activities
2013 2012
Indirect subsidiaries
- continued
2 ordinary
shares
Harvest Hill of HK$1
Limited Hong Kong each 100 100 Financing
Huangshan City
Huizhou Property
District Feng and
Dan Bailu tourist
Investment RMB35,000,000 leisure
and Development registered facilities
Company Limited* PRC capital 100 100 development
Kaifeng International
City
No. 1 Realty US$76,500,000
Development registered Property
Company Limited* PRC capital 100 100 development
Kaifeng International
City
No. 5 Realty US$42,450,000
Development registered Property
Company Limited* PRC capital 100 100 development
100 ordinary
Kingston Pacific shares
Investment B.V.I./Hong of US$1 Property
Limited Kong each 55 55 development
Leighton Road
Hotel 1 ordinary
Management share Hotel
Services Limited Hong Kong of HK$1 100 100 operation
Nanjing Hushu Property,
Ecology RMB100,000,000 cultural
Travel Development registered and tourism
Co., Ltd.(@) PRC capital 51 51 development
Nanjing Taligang Property,
Tourist RMB35,000,000 cultural
Leisure Facilities registered and tourism
Company Limited(@) PRC capital 51 51 development
Shine Concord 1 ordinary
Investments share Hotel
Limited Hong Kong of HK$1 100 100 operation
Sino Harvest
Real Estate
Development US$3,000,000
(Chengdu) registered Property
Company Limited* PRC capital 100 100 Investment
2 ordinary
shares
Sky Trend Investments of HK$1 Hotel
Limited Hong Kong each 100 100 operation
1 ordinary
Sunfold Development share Hotel
Limited Hong Kong of HK$1 100 100 operation
2 ordinary
shares
Wing Siu Company of HK$1 Property
Limited Hong Kong each 100 100 Investment
* Wholly foreign owned enterprise
** The Group is entitled to the remaining profit/asset after the PRC partner's entitlement which is the higher of a fixed sum of return or 5% of the profit generated from the related property development project
(@) Sino-foreign equity joint venture
The directors of the Company are of the opinion that a complete list of the particulars of all subsidiaries of the Company will be of excessive length and therefore the above list contains only the particulars of subsidiaries which principally affect the results or assets of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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