NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 綜合財務報表附註 For the year ended 31st December, GENERAL INFORMATION 1. 一般資料 The Company is an exempt

Transcription

1 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 綜合財務報表附註 1. GENERAL INFORMATION 1. 一般資料 The Company is an exempted company incorporated in Bermuda with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited ( Stock Exchange ). The addresses of the Company s registered office and principal office in Hong Kong are disclosed in the Corporate Information section of this annual report. The consolidated financial statements are presented in Hong Kong dollars ( HK$ ), which is the same as the functional currency of the Company and its subsidiaries ( Group ) and all amounts are rounded to the nearest thousand (HK$ 000) except otherwise indicated. The Company s principal activity is investment holding and the principal activities of its principal subsidiaries and associates are set out in Notes 52 and 53 respectively. 2. APPLICATION OF NEW AND REvISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) 應用新訂及經修訂香港財務報告準則 ( 香港財務報告準則 ) The accounting policies adopted in the consolidated financial statements for the year ended 31st December, 2014 are consistent with those followed in the preparation of the Group s consolidated financial statements for the year ended 31st December, 2013 except as described below. In the current year, the Group has applied, for the first time, the following amendments to existing HKFRSs and new interpretation ( Amendments and New Interpretation ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ), which are effective for current financial year of the Group. The Amendments and New Interpretation adopted by the Group in the consolidated financial statements are set out below: HKFRS 10, HKFRS 12 and Investment Entities 10 HKAS 27 (Amendments) HKAS 32 (Amendments) Presentation Offsetting Financial 32 Assets and Financial Liabilities HKAS 36 (Amendments) Recoverable Amount Disclosures for 36 Non-Financial Assets HKAS 39 (Amendments) Novation of Derivatives and 39 Continuation of Hedge Accounting HK(IFRIC) Int 21 Levies 21 二零一四年年報華人業集團 95

2 2. APPLICATION OF NEW AND REvISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (Cont'd) 2. 應用新訂及經修訂香港財務報告準則 ( 香港財務報告準則 ) The amendments to HKFRS 10 include a definition of an investment entity and provide an exception to the consolidation requirement for entities that meet the definition of an investment entity. Investment entities are required to account for subsidiaries at fair value through profit or loss in accordance with HKFRS 9 Financial Instruments rather than consolidate them. Consequential amendments were made to HKFRS 12 Disclosure of Interests in Other Entities and HKAS 27 (Revised in 2011) Separate Financial Statements The amendments to HKAS 32 clarify the meaning of currently has a legally enforceable right to set off for offsetting financial assets and financial liabilities. The amendments also clarify the application of the offsetting criteria in HKAS 32 to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous The amendments to HKAS 36 remove the unintended disclosure requirements made by HKFRS 13 Fair Value Measurement on the recoverable amount of a cash-generating unit ( CGU ) which is not impaired. In addition, the amendments require the disclosure of the recoverable amounts for the assets or CGUs for which an impairment loss has been recognised or reversed during the reporting period, and expand the disclosure requirements regarding the fair value measurement for these assets or units if their recoverable amounts are based on fair value less costs of disposal Save as described above, the application of the Amendments and New Interpretation had no material effect on how the results and financial position for the current or prior accounting periods are prepared and presented. Accordingly, no prior period adjustment has been required. 96 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

3 2. APPLICATION OF NEW AND REvISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (Cont'd) The Group has not early adopted the following new HKFRSs and amendments to existing HKFRSs ( new and revised HKFRSs ) that have been issued but are not yet effective. 2. 應用新訂及經修訂香港財務報告準則 ( 香港財務報告準則 ) HKFRSs (Amendments) HKFRSs (Amendments) HKFRSs (Amendments) Annual Improvements to HKFRSs Cycle 2 Annual Improvements to HKFRSs Cycle 1 Annual Improvements to HKFRSs Cycle 3 HKFRS 9 Financial Instruments 6 HKFRS 10 and HKAS 28 (Amendments) HKFRS 10, HKFRS 12 and HKAS 28 (Amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 3 Investment Entities: Applying the Consolidation Exceptions 3 HKFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint Operations 3 HKFRS 14 Regulatory Deferral Accounts 4 HKFRS 15 Revenue from Contracts with Customers 5 HKAS 1 (Amendments) Disclosure Initiative 3 HKAS 16 and HKAS 38 (Amendments) HKAS 16 and HKAS 41 (Amendments) HKAS 19 (Amendments) HKAS 27 (Amendments) Clarification of Acceptable Methods of Depreciation and Amortisation 3 Agriculture: Bearer Plants 3 Defined Benefits Plans: Employee Contributions 1 Equity Method in Separate Financial Statements 3 1 Effective for annual periods beginning on or after 1st July, Effective for annual periods beginning on or after 1st July, 2014, with limited exceptions 3 Effective for annual periods beginning on or after 1st January, Effective for first annual HKFRS financial statements beginning on or after 1st January, Effective for annual periods beginning on or after 1st January, Effective for annual periods beginning on or after 1st January, 二零一四年年報華人業集團 97

4 2. APPLICATION OF NEW AND REvISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (Cont'd) 2. 應用新訂及經修訂香港財務報告準則 ( 香港財務報告準則 ) HKFRS 9 Financial Instruments 香港財務報告準則第 9 號 - 金融工具 HKFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July It replaces the guidance in HKAS 39 Financial Instruments: Recognition and Measurement that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities, there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk management purposes CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

5 2. APPLICATION OF NEW AND REvISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (Cont'd) 2. 應用新訂及經修訂香港財務報告準則 ( 香港財務報告準則 ) Amendments to HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture 香港財務報告準則第 10 號及香港會計準則第 28 號之修訂 - 投資與其聯營公司或合資公司之間的資產出售或注資 The amendments to HKFRS 10 and HKAS 28 address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor s profit or loss only to the extent of the unrelated investor s interest in that associate or joint venture The directors of the Company ( Directors ) are in the process of assessing the potential impact of the new and revised HKFRSs but are not yet in a position to determine whether the new and revised HKFRSs will have a significant impact on how the Group s results of operations and financial position are prepared and presented. The new and revised HKFRSs may result in changes in the future as to how the results and financial position are prepared and presented. 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES 3. 主要會計政策概要 The consolidated financial statements have been prepared in accordance with all applicable HKFRSs, which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ( HKASs ) and Interpretations issued by the HKICPA and accounting principles generally accepted in Hong Kong. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange ( Listing Rules ) and the disclosure requirements of the Hong Kong Companies Ordinance. 二零一四年年報華人業集團 99

6 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 The consolidated financial statements have been prepared under the historical cost basis, except for certain properties and financial instruments, which are measured at their fair values as explained in the accounting policies set out below. Fair value measurements 公平值計量 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 HKFRS 2, leasing transactions that are within the scope of HKAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 or value in use in HKAS 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 measurements 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. 100 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

7 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (a) Basis of consolidation (a) 綜合賬目基準 Subsidiaries 附屬公司 The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company: (i) has (i) (ii) power over the investee; (ii) is exposed, or has rights, to variable returns from its involvement with the investee; and (iii) (iii) 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 profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary. Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognised in profit or loss as incurred. 二零一四年年報華人業集團 101

8 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (a) Basis of consolidation (Cont'd) (a) 綜合賬目基準 Subsidiaries (Cont'd) 附屬公司 Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests proportionate share of the recognised amounts of the acquiree s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at their fair value or, when applicable, on the basis specified in another HKFRS. Total comprehensive income and expense 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. 102 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

9 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (a) Basis of consolidation (Cont'd) (a) 綜合賬目基準 Changes in the Group s ownership interests in 本集團於現有附屬公司之擁有權益的變 existing subsidiaries 動 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 (i) difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained (ii) 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, that is, reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable HKFRSs. The fair value of any investment retained in the former subsidiary at the date 39 when control is lost that is regarded as the fair value on initial recognition for subsequent accounting under HKAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. 二零一四年年報華人業集團 103

10 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (b) Goodwill (b) 商譽 Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any (see the accounting policy above). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer s previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. For the purposes of impairment testing, goodwill is allocated to each of the Group s CGUs (or groups of CGUs) that is expected to benefit from the synergies of the combination. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant CGU, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. 104 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

11 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (c) Investments in associates (c) 於聯營公司之投資 An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for 5 sale, in which case it is accounted for in accordance with HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate 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 associate. When the Group s share of losses of an associate exceeds the Group s interest in that associate (which includes any long-term interests that, in substance, form part of the Group s net investment in the associate), 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 associate. The requirements of HKAS 39 are applied to determine 39 whether it is necessary to recognise any impairment loss with respect to the Group s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance 36 with HKAS 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 36 loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases. 二零一四年年報華人業集團 105

12 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (c) Investments in associates (Cont'd) (c) 於聯營公司之投資 The Group discontinues the use of the equity method from the date when the investment ceases to be an associate, or when the investment (or a portion thereof) is classified as held for sale. When the Group retains an interest in the former associate 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 39 recognition in accordance with HKAS 39. The difference between the carrying amount of the associate 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 associate is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate 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. When the Group reduces its ownership interest in an associate 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 an associate of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the associate are recognised in the Group s consolidated financial statements only to the extent of interests in the associate that are not related to the Group. 106 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

13 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (d) Impairment losses (other than goodwill and intangible (d) 減值虧損 ( 商譽及無限使用年期之無形 assets with indefinite useful lives) 資產除外 ) At the end of the reporting period, the Group reviews the carrying amounts of its tangible assets and intangible assets with finite useful lives to determine whether there is any indication that those assets have suffered an impairment loss. 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. When 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. (e) Investment properties and investment properties (e) 投資物業及興建中及發展中投資物業 under construction and development Investment properties are properties held to earn rental income and/or for capital appreciation including properties under construction and development for such purposes and land held for a currently undetermined future use. On initial recognition, investment properties are measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at fair value. Gains and losses arising from changes in the fair values of investment properties are included in profit or loss for the period in which they arise. However, if the fair values of investment properties under construction and development are not reliably determinable but expect the fair values of the properties to be reliably determinable when construction/ development is completed, it shall measure that investment properties under construction and development at cost, less any impairment loss, until either its fair value become reliably determinable or construction/development is completed (whichever is earlier). 二零一四年年報華人業集團 107

14 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (e) Investment properties and investment properties (e) 投資物業及興建中及發展中投資物業 under construction and development (Cont'd) Leasehold land held for undetermined future use is regarded as held for capital appreciation purpose and classified as an investment property, and carried at fair value. Changes in fair value of the leasehold land are recognised directly in profit or loss for the period in which changes take place. 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 disposals. 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 property) is included in profit or loss for the period in which the property is derecognised. An investment property is transferred at fair value to properties and other fixed assets when the property begins to be occupied by the owner. Gain or loss arising from change in fair value of the investment property upon the transfer is included in profit or loss. An owner-occupied property is transferred from properties and other fixed assets to investment properties at fair value when it is evidenced by the end of owner-occupation. The difference between the carrying amount and the fair value at 16 the date of transfer is accounted for as a revaluation increase or decrease in accordance with HKAS 16 Property, Plant and Equipment. On the subsequent sale or retirement of assets, the relevant revaluation reserve is transferred directly to retained profits. 108 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

15 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (f) Properties and other fixed assets (f) 物業及其他固定資產 Properties and other fixed assets including buildings and leasehold land classified as finance leases (other than properties under development) are stated at cost less subsequent accumulated depreciation and accumulated impairment losses, if any. Buildings and leasehold land mainly comprise hotels and office premises. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. Depreciation is provided to write off the cost of properties and other fixed assets (other than properties under development) over their estimated useful lives and after taking into account their estimated residual values, using the straight-line method, at the following rates per annum: Type Basis 種類 基準 Leasehold land Over the remaining lives of the leases Buildings Over the shorter of the remaining unexpired period of the lease and 40 years Furniture, fixtures and 3 to 10 years equipment Yachts and motor vehicles 3 to 10 years An item of properties and other fixed assets 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 derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the asset is derecognised. 二零一四年年報華人業集團 109

16 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (g) Property interests held for future development (g) 持作日後發展之物業權益 Property interests held for future development represents a right to develop properties on a piece of land upon payment of a final amount, and are carried at cost less any identified impairment loss. (h) Stock of properties (h) 物業存貨 Stock of properties including completed properties and properties under development, which are held-for-trading, is stated at the lower of cost and net realisable value. The cost of completed properties held for sale is determined by apportionment of the total development costs, including borrowing costs capitalised, attributable to unsold units. Net realisable value is estimated by the management of the Group based on prevailing market conditions, which represents the estimated selling price less estimated costs to be incurred in selling the property. The cost of properties under development held for sale includes identified costs including the acquisition cost of land, aggregate cost of development, borrowing costs capitalised, material and supplies, wages, other direct expenses and an appropriate proportion of overheads. Net realisable value is estimated by the management of the Group taking into account the expected price that can ultimately be achieved based on prevailing market conditions, the anticipated costs of completion and costs to be incurred in selling the property. The amount of any write-down of or provision for completed properties held for sale and properties under development held for sale is recognised as an expense in the period when the write-down or loss occurs. The amount of any reversal of any write-down or provision arising from an increase in net realisable value is recognised in profit or loss in the period in which the reversal occurs. 110 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

17 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (i) Inventories (i) 存貨 Inventories comprise finished goods and raw materials for cosmetic products and food and beverages held for sale in hotel operation, which are stated at the lower of cost and net realisable value. Cost represents the invoiced cost of inventories. Costs are assigned to individual items on the weighted-average basis. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. (j) Intangible assets (j) 無形資產 Trading rights, exchange rights and trademark 買賣權 貿易權及商標 Trading rights, gold and silver exchange rights and trademark are stated at cost less accumulated amortisation and less any identified impairment loss. The amortisation period adopted for intangible assets is 5 years. (k) Financial instruments (k) 金融工具 Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instruments. 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 (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. 二零一四年年報華人業集團 111

18 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets 金融資產 The Group s financial assets are classified into one of the three categories, including financial assets at fair value through profit or loss, loans and receivables and available- for-sale financial assets. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. The accounting policies adopted in respect of such category of financial assets are set out below. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset 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 financial asset or, where appropriate, a shorter period to the net carrying amount on initial recognition. Interest income is recognised on an effective interest basis for debt instruments other than financial assets designated as at fair value through profit or loss. Financial assets at fair value through profit or loss Financial assets are classified as at fair value through profit or loss when the financial asset is either held-for-trading or it is designated by the management of the Group as such at inception. 112 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

19 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Financial assets at fair value through profit or loss (Cont'd) A financial asset is classified as held-for-trading if: (i) it has been acquired principally for the purpose of (i) selling it in the near future; or (ii) on initial recognition, it is a part of an identified (ii) portfolio of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or (iii) it is a derivative that is not designated and effective as (iii) a hedging instrument. A financial asset other than a financial asset held-for-trading may be designated as at fair value through profit or loss upon initial recognition if: (i) such designation eliminates or significantly reduces a (i) measurement or recognition inconsistency that would otherwise arise; or (ii) the financial asset forms part of a group of financial (ii) assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or (iii) it forms part of a contract containing one or more (iii) embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated 39 as at fair value through profit or loss. 二零一四年年報華人業集團 113

20 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Financial assets at fair value through profit or loss (Cont'd) Financial assets at fair value through profit or loss are measured 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 incorporates any dividend or interest earned on the financial assets and is included in Investment Income/Expenses. Loans and receivables Loans and receivables (including advances to associates/ an investee company/a non-controlling shareholder, loans receivable, debtors and deposits, securities trading receivables and deposits, pledged deposits, time deposits, bank balances and cash and sales proceeds held by stakeholders) are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are measured at amortised cost using the effective interest method, less any identified impairment losses. Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as any of the other categories under HKAS CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

21 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Available-for-sale financial assets (Cont'd) Available-for-sale financial assets are measured at fair value at the end of each reporting period. Changes in fair value are recognised in other comprehensive income and accumulated under the securities investments reserve, when the financial asset is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in the securities investments reserve is reclassified to profit or loss (see the accounting policy in respect of impairment loss on financial assets below). However, interest calculated using the effective interest method is recognised in profit or loss. For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, they are measured at cost less any identified impairment losses at the end of each reporting period. Impairment of financial assets Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the financial assets have been affected. For available-for-sale equity investments, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment. 二零一四年年報華人業集團 115

22 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Impairment of financial assets (Cont'd) For all other financial assets, objective evidence of impairment could include: (i) significant financial difficulty of the issuer or (i) counterparty; or (ii) breach of contract, such as a default or delinquency in (ii) interest or principal payments; or (iii) it becoming probable that the borrower will enter (iii) bankruptcy or financial re-organisation; or (iv) the disappearance of an active market for that financial (iv) asset because of financial difficulties. For certain categories of financial assets, such as trade receivables, 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, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset s carrying amount and the present value of the estimated future cash flows, discounted at the financial asset s original effective interest rate. 116 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

23 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Impairment of financial assets (Cont'd) For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When available-for-sale financial assets are considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period in which the impairment takes place. For financial assets measured at amortised cost, if, in a subsequent period, the amount of 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. 二零一四年年報華人業集團 117

24 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial assets (Cont'd) 金融資產 Impairment of financial assets (Cont'd) In respect of available-for-sale equity investments, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of securities investments reserve. Financial liabilities and equity instruments 金融負債及股本工具 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. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Group s financial liabilities are classified into financial liabilities at fair value through profit or loss and other financial liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set out below. 118 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

25 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial liabilities and equity instruments (Cont'd) 金融負債及股本工具 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 other than financial liabilities classified as at fair value through profit or loss. Financial liabilities at fair value through profit or loss Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held-for-trading or it is designated as such on initial recognition. A financial liability is classified as held-for-trading if: (i) it has been acquired principally for the purpose of (i) repurchasing it in the near future; or (ii) on initial recognition, it is part of an identified portfolio (ii) of financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or (iii) it is a derivative that is not designated and effective as (iii) a hedging instrument. 二零一四年年報華人業集團 119

26 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial liabilities and equity instruments (Cont'd) 金融負債及股本工具 Financial liabilities at fair value through profit or loss (Cont'd) A financial liability other than a financial liability held-for- trading may be designated as at fair value through profit or loss upon initial recognition if: (i) such designation eliminates or significantly reduces a (i) measurement or recognition inconsistency that would otherwise arise; or (ii) the financial liability forms part of a group of financial (ii) assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or (iii) it forms part of a contract containing one or more (iii) embedded derivatives, and HKAS 39 permits the entire combined contract (asset or liability) to be designated 39 as at fair value through profit or loss. Financial liabilities at fair value through profit or loss are measured 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 includes any interest paid on the financial liability. 120 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

27 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Financial liabilities and equity instruments (Cont'd) 金融負債及股本工具 Other financial liabilities Other financial liabilities (including creditors and accruals, securities trading and margin payable, deposits received, bank and other borrowings, amounts due to associates/investee companies/non-controlling shareholders) are subsequently measured at amortised cost, using the effective interest method. Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Financial guarantee contracts 財務擔保合約 A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of debt instrument. A financial guarantee contract issued by the Group and not designated as at fair value through profit or loss is recognised initially at its fair value less transaction costs that are directly attributable to (i) the issue of the financial guarantee contract. Subsequent 37 to initial recognition, the Group measures the financial (ii) guarantee contract at the higher of: (i) the amount of the obligation under the contract, as determined in accordance 18 with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets ; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue. 二零一四年年報華人業集團 121

28 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (k) Financial instruments (Cont'd) (k) 金融工具 Derecognition 取消確認 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 directly 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 they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. (l) Revenue recognition (l) 收入確認 Revenue from properties developed for sale is recognised upon completion of sales agreement and by reference to the timing of the execution of deed of legal assignment or delivery of property to the purchaser, whichever is earlier. Revenue from properties held for sale is recognised on the execution of a binding sales agreement. Payments received from the purchasers prior to this stage are recorded as deposits received on sales of properties and are grouped under current liabilities. Rental income, including rental invoiced in advance from properties under operating leases, is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Revenue from hotel room rental, food and beverages sales and other ancillary services is recognised when the relevant services have been rendered. Sale of securities investments are recognised on a trade date basis. 122 CHINESE ESTATES HOLDINGS LIMITED ANNUAL REPORT 2014

29 3. SuMMARY OF SIGNIFICANT ACCOuNTING POLICIES (Cont'd) 3. 主要會計政策概要 (l) Revenue recognition (Cont'd) (l) 收入確認 Brokerage income on dealings in securities and futures contracts and the profit and loss on trade in securities and futures contracts are recognised on the transaction dates when the relevant contract notes are executed. Management fee income is recognised in accordance with terms of respective agreements over the relevant period in which the services are rendered. Dividend income from investments is recognised when the Group s right to receive payment has been established. Revenue from sales of cosmetic products is recognised when goods are delivered and titles have been passed. Interest income from a financial asset 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. (m) Taxation (m) 稅項 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 tax as reported in the consolidated statement of comprehensive income because of items of income or expense 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. 二零一四年年報華人業集團 123