Rosedale Hotel Holdings Limited (Incorporated in Bermuda with limited liability) (Stock Code : 1189) 1189 Annual Report 2015

Transcription

1 (Incorporated in Bermuda with limited liability) (Stock Code : 1189) 1189 Annual Report 2015

2 Corporate Information 公司資料 BOARD OF DIRECTORS Executive Directors Dr. Yap, Allan (Chairman) Ms. Chan Ling, Eva (Managing Director) Mr. Chan Pak Cheung, Natalis Independent Non-executive Directors Mr. Kwok Ka Lap, Alva Mr. Poon Kwok Hing, Albert Mr. Sin Chi Fai COMPANY SECRETARY Ms. Law Sau Lai REGISTERED OFFICE Clarendon House 2 Church Street Hamilton HM 11 Bermuda HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS 31st Floor, Paul Y. Centre 51 Hung To Road, Kwun Tong Kowloon Hong Kong AUDITOR Deloitte Touche Tohmatsu Certified Public Accountants 35/F., One Pacific Place 88 Queensway Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Tricor Secretaries Limited Level 22, Hopewell Centre 183 Queen s Road East Hong Kong STOCK CODE Stock Code on The Stock Exchange of Hong Kong Limited: 1189 WEBSITE Clarendon House 2 Church Street Hamilton HM 11 Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda

3 Contents Management Discussion and Analysis 2 Directors Profile 10 Senior Management Profile 13 Corporate Governance Report 14 Report of the Directors 32 Independent Auditor s Report 44 Consolidated Statement of Profit or Loss and 46 Other Comprehensive Income Consolidated Statement of Financial Position 48 Consolidated Statement of Changes in Equity 50 Consolidated Statement of Cash Flows Financial Summary 162 Particulars of Properties 163

4 Management Discussion and Analysis 管理層論述及分析 MARKET REVIEW During 2015, the performance for global markets were rather flattish, as the European migrant crisis and the Federal funds rate normalisation further kept investors staying risk-averse, especially during the past quarters. In the People s Republic of China (the PRC ), as weighed down by sluggish demand at home and abroad, industrial overcapacity and faltering investment, its Gross Domestic Product (GDP) slowed to 6.9% in 2015, reflecting a negative growth of about 0.5% as compared to In the meanwhile, the GDP of Hong Kong increased moderately by 2.4% year-on-year, visitor arrivals to Hong Kong dropped by 2.5%, after rising by 12% in 2014, which accounting for more than 75% of the total were visitors from Mainland China, and those visitors from Mainland China also declined by 3%, after rising by 16% in 2014, accordingly. 6.9% 0.5% 2.4% 12% 2.5% 75% 16% 3% BUSINESS REVIEW During the year ended 31 December 2015, turnover of the Group attained HK$235.4 million, represented a decrease of 42.1% as compared to HK$406.7 million of The results of the Group for the year ended 31 December 2015 was a loss of HK$121.4 million (2014: profit of HK$372.9 million) which was mainly attributable to gross profit of HK$83.9 million (2014: gross profit of HK$145.3 million); administrative expenses of HK$169.3 million (2014: HK$193.1 million); finance costs of HK$1.6 million (2014: HK$14.8 million); impairment loss recognised in respect of property, plant and equipment of HK$17.5 million (2014: nil); impairment loss recognised in respect of available-for-sale investments of HK$18.7 million (2014: HK$12.9 million); decrease in fair value of investment properties of HK$30.6 million (2014: HK$27.7 million); share of loss from a joint venture of HK$7.4 million (2014: gain of HK$1.5 million) and income tax expense of HK$1.6 million (2014: HK$2.6 million), offset by interest income of HK$69.7 million (2014: HK$33.2 million). 235,400, ,700, % 121,400, ,900,000 83,900, ,300, ,300, ,100,000 1,600,000 14,800,000 17,500,000 18,700,00012,900,000 30,600,000 27,700,000 7,400,000 1,500,000 1,600,000 2,600,000 69,700,000 33,200,000 2 Annual Report 2015

5 Management Discussion and Analysis 管理層論述及分析 BUSINESS REVIEW (CONTINUED) Hotel Investment The hotel investment of the Group comprises three Rosedale branded 4-star rated hotels located in Hong Kong, Guangzhou and Shenyang and the Luoyang Golden Gulf Hotel. Turnover decreased by 42.1% to HK$235.4 million for the year ended 31 December 2015 (2014: HK$406.7 million) consequent to the disposal of the entire equity interest in Rosedale Hotel Kowloon ( Rosedale Kowloon ) completed in The average occupancy rate was increased by 4.5% to 65.4% for the year ended 31 December 2015 (2014: 60.9%) which mainly due to the average room rate was overall dropped. Segment loss for the reporting period was HK$78.1 million (2014: profit of HK$430.9 million). Profit for the reporting period of 2014 came mainly from the gain on disposal of Rosedale Kowloon of HK$459.3 million completed in March % 235,400, ,700, % 65.4% 60.9% 78,100, ,900, ,300,000 Securities Trading Loss from securities trading for the year ended 31 December 2015 was HK$18.4 million (2014: loss of HK$0.2 million). 18,400, ,000 珀麗酒店控股有限公司 2015 年報 3

6 Management Discussion and Analysis 管理層論述及分析 MATERIAL ACQUISITIONS AND DISPOSALS On 31 December 2014, the Company entered into a framework agreement (the Framework Agreement ) with two independent third parties (the Vendors ) in relation to the possible acquisition of 51% equity interests in a company owned by the Vendors (the Possible Acquisition ). Pursuant to the Framework Agreement, among other things, (i) an exclusivity period of three months after the date of the Framework Agreement was granted to the Company; and (ii) the Company and the Vendors shall enter into a loan agreement for a short term interest free loan of HK$75 million (the Loan Agreement ) to facilitate the Vendors to the acquisition of the entire entity interest in a PRC registered company (the PRC Company ) from all its existing shareholders. The PRC Company owns a parcel of land in Zhuhai, the PRC with a site area of 19, square metres. The PRC Company also owns a hotel property on the aforesaid land known as Zhuhai Lizhou Holiday Hotel. Subsequently, supplemental framework agreements and extension letters were signed to further extend the exclusivity period and the repayment date of the Loan Agreement to 29 April Further details of the Possible Acquisition are disclosed in the Company s announcements dated 31 December 2014, 31 March 2015, 30 June 2015, 30 September 2015 and 30 December No formal agreement has been entered into between the Company and the Vendors as at the date of this annual report. 及 51% (i) (ii) 75,000,000 19, On 2 July 2015, the Company and an independent third party (the JV Partner ) entered into a memorandum of understanding (the MOU ), relating to possible investment in a hotel located in Canada (the Possible Investment ). The Company paid a refundable earnest money of approximately HK$172.9 million to the JV Partner. The expiry date of the MOU was 31 July On 31 July 2015, 31 August 2015, 25 September 2015, 30 November 2015 and 29 January 2016, the Company and the JV Partner further entered into letters of extension in relation to the MOU to extend the expiry date of the MOU to 31 August 2015, 30 September 2015, 30 November 2015, 29 January 2016 and 29 April 2016, respectively. Further details of the Possible Investment are disclosed in the Company s announcements dated 2 July 2015, 31 July 2015, 31 August 2015, 25 September 2015, 30 November 2015 and 29 January As at the date of this annual report, formal agreements in relation to the Possible Investment have not yet been entered into. 172,900,000 4 Annual Report 2015

7 Management Discussion and Analysis 管理層論述及分析 LIQUIDITY AND FINANCIAL RESOURCES At the end of the reporting period, the Group s total borrowings were as follows: 及 HK$ million HK$ million Borrowings amount due within one year Borrowings amount due after one year All borrowings bear floating interest rates. During the current reporting period, the Group repaid borrowings of HK$250 million. 250,000,000 The gearing ratio as at 31 December 2015, expressed as a percentage of total borrowings to equity attributable to owners of the Company, was approximately 0.4% (31 December 2014: 11.5%). 0.4% 11.5% PLEDGE OF ASSETS The Group did not have any assets pledged for credit facilities as at each of 31 December 2015 and 31 December CONTINGENT LIABILITIES The Group did not have any significant contingent liabilities as at each of 31 December 2015 and 31 December FOREIGN CURRENCY RISK MANAGEMENT The majority of the Group s assets and liabilities and business transactions were denominated in Hong Kong dollars and Renminbi. During the year ended 31 December 2015, the Group has not entered into any hedging arrangements. However, the Group will actively consider the use of relevant financial instruments to manage currency exchange risks in line with our business development. 管理 珀麗酒店控股有限公司 2015 年報 5

8 Management Discussion and Analysis 管理層論述及分析 INTEREST RATE RISK MANAGEMENT For the year ended 31 December 2015, the Group was not subject to the risk of significant interest rate volatility. The Company will continue to monitor the interest rate markets and actively consider the application of relevant financial instruments to manage risks associated with interest rates. 管理 EMPLOYEE AND REMUNERATION POLICY At 31 December 2015, the Group had 678 employees of which 556 employees were stationed in the PRC. Employees remuneration packages were determined in accordance with individual s responsibilities, competence and skills, qualifications, experience and performance as well as market pay-level. Staff benefits include training programs, provident fund scheme, medical insurance and other competitive fringe benefits. 及 To provide incentives and rewards to employees, the Company has adopted a share option scheme for the eligible participants (including employees). PROSPECTS For the outlook period, major uncertainties are expected to emerge regarding the future direction of monetary policy in advanced economies and geopolitical conflicts. On the one hand, the world economy is undergoing deep adjustment; while on the other hand, China s economic development is entering the new normal. As the Chinese Government accelerates the rollout of policy to stabilise growth, promote reform, adjust structure and improve people s livelihood, the Chinese economy is expected to maintain stable growth at 6.5% to 7% in However, with the continuous tensed political environment and the recent incidents in Hong Kong directed against visitors from Mainland China have aroused negative publicity and widespread concerns, which affecting the number of PRC individual visitors to Hong Kong, the Group is still cautiously optimistic on the business in the upcoming period. 6.5% 7% 6 Annual Report 2015

9 Management Discussion and Analysis 管理層論述及分析 PROSPECTS (CONTINUED) The global economy continues to face uncertainties while the PRC and local economic growths have slowed down. In view of 2016 looking set to be a year of both challenges and opportunities. As such, the management will take a judicious approach in managing the Group s investments portfolio. In order to toughen the Group s capital base, and continued to maintain a strong cash position and a healthy financial position, the Company had conducted the share placement during the past year and raised in aggregate net proceeds of approximately HK$114 million. Despite the tough market environment, the Group continues to seek expansion opportunities in the market to pursue long term growth. Nevertheless, the Group will position the new capital raised to revisit its business strategy and composition of its hotel portfolio with the view to magnify shareholders value. 114,000,000 ENVIRONMENT, SOCIAL AND GOVERNANCE This section aims to provide an overview of the Group s efforts regarding environmental, social and governance impacts arising from its daily operations, so as to achieve the organic unity of economic profitability, social benefits and eco-friendliness. 及管 Workplace Quality Recognising the importance of human capital in supporting our operations, the Group has a diverse workforce in terms of gender and age, providing a variety of ideas and levels of competency that contribute to achieve the Group s success. Various communication channels are also in place for the Group and our colleagues to discuss, respond to and resolve issues of concern. In fact, the Group is firmly committed to gender equality, and therefore particularly encourages female participation at managerial and operational levels. Staff turnover rate among managerial positions is relatively low, reflecting a high level of employee satisfaction and engagement with the Group. 珀麗酒店控股有限公司 2015 年報 7

10 Management Discussion and Analysis 管理層論述及分析 Health and Safety Maintaining a safe, healthy and hygienic environment across our operations is the fundamental principle of the Group. Our obligations extend not only to our own employees but also to our customers and anyone who legitimately enters our facilities. Adequate arrangements, training courses and guidelines are implemented for promoting occupational health and safety. The Group is pleased to report that the rate of accidents and injuries during the year ended 31 December 2015 was extremely low. The Group values the health and wellbeing of staff. In order to provide employees with health coverage, staff are entitled to benefits including medical insurance and other competitive fringe benefits. Environmental Protection The Group understands the interdependency between our operations and the natural environment. We recognises our responsibility to protect the environment from our business activities and services. In the hotel operations, air conditioning and lighting are the main contributors to the Group s carbon footprint, the Group has stepped up its efforts in environmental initiatives to maximise energy conservation, by promoting efficient use of resources and adopting green technologies. The Group s approach aims at rationalising the use of raw materials, including water and energy, reducing the volume of wastes and improving waste management, adopting a more ecological purchasing policy and improving logistics and making our staff aware of the importance of environmental issues. 8 Annual Report 2015

11 Management Discussion and Analysis 管理層論述及分析 Supply Chain Management The Group values mutually beneficial and longstanding relationships with our suppliers. The Group works closely with a number of suppliers in providing a range of hospitality goods, including guestroom consumables, tableware, furniture, and foods and beverages. Whilst meeting our financial and quality requirements, the Group makes preference to source locally and from sustainable sources in order to support the local communities and environment and, in the process to reduce our carbon and water footprints, with the goal of minimising the negative environment and social impacts of the procurement decisions of the Group. Anti-corruption/Anti-money laundering Practising integrity and respectable business ethics is paramount to the Group s continued success. In order to build up an ethical corporate culture and practices, the Group has established policies and procedures for preventing corruption and anti-money laundering. The policies and procedures are reviewed and updated periodically to ensure appropriateness and compliance with the law. The Group also adopted a whistle-blowing system and reporting procedures for reporting concerns raised in a safe environment and in complete confidence if they have genuine suspicions about wrongdoings. Compliance to Laws and Regulations Compliance procedures are in place to ensure adherence to applicable laws, rules and regulations, which have significant impact on the Group. Our Corporate Governance Committee is delegated by the Board to monitor the Group s policies and practices on compliance with legal and regulatory requirements and such policies are regularly reviewed. The Group firmly believes good corporate governance is fundamental in ensuring that it is well managed in the interest of all of our stakeholders. Hence, the Group will continue to seek to identify and formalise best practices for adoption. 珀麗酒店控股有限公司 2015 年報 9

12 Directors Profile 董事簡介 EXECUTIVE DIRECTORS Dr. Yap, Allan, aged 60, has been the Chairman of the Company since December He is also the chairman of the Nomination Committee of the Company and a director of various subsidiaries of the Company. Dr. Yap obtained the honorary degree of Doctor of Laws and has over 30 years experience in finance, investment and banking. He was an executive director of the Company from 2002 to Dr. Yap is currently a substantial shareholder, an executive director and the chairman of Hanny Holdings Limited ( Hanny ), a substantial shareholder of the Company, and the chairman and an executive director of Meike International Holdings Limited, the shares of which are listed on The Stock Exchange of Hong Kong Limited. He is also the chairman and chief executive officer of China Enterprises Limited (the shares of which are traded on the OTC Securities Marketplace in the United States of America, a substantial shareholder of the Company within the meaning of Part XV of the Securities and Futures Ordinance and also an associated company of Hanny) as well as Burcon NutraScience Corporation (the shares of which are listed on the NASDAQ Stock Market in the United States of America, the Toronto Stock Exchange (TSX) in Canada and Frankfurt Stock Exchange in Germany). Dr. Yap is the executive chairman of Hanwell Holdings Limited and Tat Seng Packaging Group Ltd., both companies whose shares are listed on Singapore Exchange Limited. Dr. Yap was an alternate director of Television Broadcasts Limited, a listed company in Hong Kong, until he resigned on 29 December 董事 China Enterprises Limited XV Burcon NutraScience Corporation NASDAQ Stock Market Toronto Stock Exchange (TSX) Hanwell Holdings Limited Tat Seng Packaging Group Ltd. 10 Annual Report 2015

13 Directors Profile 董事簡介 EXECUTIVE DIRECTORS (CONTINUED) Ms. Chan Ling, Eva, aged 50, has been the Managing Director of the Company since June She is also the chairman of the Corporate Governance Committee, a member of the Remuneration Committee of the Company and a director of various subsidiaries of the Company. She joined the Company in May Ms. Chan has over 27 years experience in auditing, accounting and finance in both international accounting firms and listed companies. She is a member of Chartered Accountants Australia and New Zealand, a fellow of the Association of Chartered Certified Accountants and also a practicing member of the Hong Kong Institute of Certified Public Accountants. Ms. Chan is currently the deputy chairman of China Enterprises Limited, the shares of which are traded on the OTC Securities Marketplace in the United States of America, a substantial shareholder of the Company within the meaning of Part XV of the Securities and Futures Ordinance and an associated company of Hanny Holdings Limited, a substantial shareholder of the Company. Ms. Chan was an executive director of China Strategic Holdings Limited and an independent non-executive director of Global Mastermind Holdings Limited (formerly known as Well Way Group Limited), both of which are listed companies in Hong Kong, until she resigned on 1 June 2014 and 23 June 2014 respectively. 董事 China Enterprises Limited XV Mr. Chan Pak Cheung, Natalis, aged 65, has been an Executive Director of the Company since April He is a well-known actor, master of ceremonies, and horseracing and soccer commentator. Mr. Chan has over 35 years experience in the entertainment and film industry in Hong Kong 珀麗酒店控股有限公司 2015 年報 11

14 Directors Profile 董事簡介 INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Kwok Ka Lap, Alva, aged 67, has been an Independent Nonexecutive Director of the Company since December He is also the chairman of the Remuneration Committee and a member of the Audit Committee, the Nomination Committee and the Corporate Governance Committee of the Company. Mr. Kwok was a marketing manager in an international company engaging in the design of business administration system. He has been in the insurance and investment business for over 33 years, principally in the senior managerial position leading a sizable sales team. Mr. Kwok is also an independent non-executive director of ITC Properties Group Limited and Hanny Holdings Limited, a substantial shareholder of the Company, both of which are listed companies in Hong Kong. 董事 Mr. Poon Kwok Hing, Albert, aged 54, has been an Independent Non-executive Director of the Company since March He is also the chairman of the Audit Committee and a member of the Remuneration Committee, the Nomination Committee and the Corporate Governance Committee of the Company. Mr. Poon graduated from the University of Bath, United Kingdom with a Master of Science degree in Business Administration. He is a member of the Hong Kong Institute of Certified Public Accountants and a member of the CPA Australia. Mr. Poon is also an independent non-executive director of Hanny Holdings Limited, a substantial shareholder of the Company, and an independent non-executive director of Meike International Holdings Limited, both of which are listed companies in Hong Kong. 54 University of Bath Mr. Sin Chi Fai, aged 56, has been an Independent Non-executive Director of the Company since January 2008 and is also a member of the Audit Committee of the Company. Mr. Sin is a director and a shareholder of a Singapore company engaged in the distribution of data storage media and computer related products in Asian countries. He obtained a diploma in Banking from The Hong Kong Polytechnic (now known as The Hong Kong Polytechnic University) and is a member of Singapore Institute of Directors. Mr. Sin has over 19 years experience in banking field and sales and marketing in information technology industries. He is also an independent non-executive director of Hanny Holdings Limited ( Hanny ), a listed company in Hong Kong and a substantial shareholder of the Company, and China Enterprises Limited, the shares of which are traded on the OTC Securities Marketplace in the United States of America, a substantial shareholder of the Company within the meaning of Part XV of the Securities and Futures Ordinance and an associated company of Hanny. 56 Singapore Institute of Directors 19 China Enterprises Limited XV 12 Annual Report 2015

15 Senior Management Profile 高級管理人員簡介 CORPORATE MANAGEMENT Mr. Lau Ka Kit, Ken, aged 44, has been the Financial Controller of the Company since April 2015 and is also a director of various subsidiaries of the Company. He has about 20 years of progressive accounting experience through management roles for a variety of public and private multinational corporations. Mr. Lau is a member of CPA Australia and a certificate holder of American Institute of Certified Public Accountants. 管理 American Institute of Certified Public Accountants Ms. Law Sau Lai, aged 48, has been the Company Secretary of the Company since August Ms. Law is an associate of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. She has extensive experience in company secretarial practice. 48 珀麗酒店控股有限公司 2015 年報 13

16 Corporate Governance Report 企業管治報告 INTRODUCTION The Company is committed to achieving and maintaining high standard of corporate governance which is crucial to the development of the Company and can safeguard the interests of its shareholders ( Shareholders ). The board of directors of the Company (the Board ) has adopted various policies and procedures for compliance with the code provisions set out in the Corporate Governance Code and Corporate Governance Report (the Code ) contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) (the Listing Rules ). In the opinion of the Board, the Company has complied with the code provisions of the Code during the year ended 31 December 2015, except for Code Provisions A.1.1, A.4.1.and E.1.2. A.1.1A.4.1E.1.2 CORPORATE STRATEGY AND LONG TERM BUSINESS MODEL The Company is principally engaged in the sector of hotel investment and management in Hong Kong and in the People s Republic of China (the PRC ). The Company s corporate objective is to create and enhance value for Shareholders. To achieve this corporate objective, the business strategies of the Company are to maintain the long term growth and the profitability of the Company by developing and investing in quality hotels in decent locations in Hong Kong and in the PRC. Notwithstanding that the Company shall strive to further comprehend its four-star rated business hotel network, it shall explore further opportunities in the hospitality sector. The Company is committed to maintain a solid and healthy financial status with a solid cash balance and an efficient debt/equity ratio that will enable the Company to finance the existing operations and proceed with potential investments. 企業 業 14 Annual Report 2015

17 Corporate Governance Report 企業管治報告 BOARD OF DIRECTORS The Board currently comprises six directors including three executive directors and three independent non-executive directors whose biographical details are set out in the Directors Profile on pages 10 to 12 of this annual report The Board is principally accountable to Shareholders and responsible for the leadership and control of the Company and its subsidiaries (collectively, the Group ) including overseeing the Group s businesses, formulating corporate strategies, establishing strategic directions, monitoring operating and financial performance, setting objectives and business development plans, and monitoring the performance of the senior management. The Board has delegated operational decisions to the executive directors of the Company led by the Managing Director. Daily operations and administration are delegated to the management. The Board meets regularly throughout the year to review the financial and operating performance of the Group and holds additional board meetings as and when required. Resolutions in writing may be passed by the Board in lieu of a meeting pursuant to Bye-Laws of the Company ( Bye-Laws ). Code Provision A.1.1 of the Code stipulates that the board should meet regularly and board meetings should be held at least four times a year at approximately quarterly intervals. During the year, two (2) regular Board meetings and three (3) irregular Board meetings were held. In addition, one (1) set of resolution in writing was passed by the Board. A.1.1 (2) (3) (1) Although the Board meetings held during the year were not convened on a quarterly basis, the Board considered that sufficient meetings had been held as business operations were under the management and supervision of the executive directors of the Company. In addition, the Board has established the audit committee, the remuneration committee, the nomination committee and the corporate governance committee to oversee particular aspects of the Company s affairs. 珀麗酒店控股有限公司 2015 年報 15

18 Corporate Governance Report 企業管治報告 BOARD OF DIRECTORS (CONTINUED) The attendance of each Board member at the full Board meetings and the annual general meeting of the Company held during the year is as follows: Board members Board Meetings Attendance Annual General Meeting Executive Directors Dr. Yap, Allan (Chairman) 5/5 0/1 Ms. Chan Ling, Eva (Managing Director) 5/5 1/1 Mr. Chan Pak Cheung, Natalis 5/5 0/1 Independent Non-executive Directors Mr. Kwok Ka Lap, Alva 5/5 1/1 Mr. Poon Kwok Hing, Albert 5/5 1/1 Mr. Sin Chi Fai 5/5 0/1 RELATIONSHIP BETWEEN THE BOARD MEMBERS None of the members of the Board has any relationship (including financial, business, family or other material/relevant relations) between each other. 16 Annual Report 2015

19 Corporate Governance Report 企業管治報告 BOARD DIVERSITY POLICY The Board has adopted the Board diversity policy (the Policy ) to guide the Board in developing and achieving its diversity in terms of skills, professional experience, knowledge, expertise, education, age, gender and length of service in order to enhance the effectiveness of the Board. In selecting new directors, the Nomination Committee will identify suitably qualified candidates to become members of the Board and recommend to the Board, with due regard for the benefits of diversity on the Board. In reviewing and assessing the composition of the Board, the Nomination Committee will consider the benefits of all aspects of diversity on the Board. Board appointments will be based on merit while taking into account diversity of background. The Board did not set any measurable objectives for implementing the Policy at the current time having taken into account of the existing composition of the Board and the business nature of the Group. The Board will review the Policy, as appropriate, to ensure its continued effectiveness. CHAIRMAN AND MANAGING DIRECTOR Code Provision A.2.1 of the Code stipulates that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. The roles of the Chairman and the Managing Director, who performs the function of chief executive officer, are currently held by Dr. Yap, Allan and Ms. Chan Ling, Eva separately. The Chairman is responsible for the leadership of the Board while the Managing Director is responsible for the operation of the business and performance of the Group. The division of responsibilities between the Chairman and the Managing Director of the Company is clearly established and set out in writing. A.2.1 珀麗酒店控股有限公司 2015 年報 17

20 Corporate Governance Report 企業管治報告 CHAIRMAN AND MANAGING DIRECTOR (CONTINUED) Code Provision E.1.2 of the Code stipulates that the chairman of the board should attend the annual general meeting. The Chairman of the Company, Dr. Yap, Allan was unable to attend the annual general meeting held on 28 May 2015 (the 2015 AGM ) as he had other business engagement. Nevertheless, Ms. Chan Ling, Eva, the Managing Director of the Company, attended and took the chair of the 2015 AGM in accordance with Bye-Law 68 of the Bye-Laws and answered questions from Shareholders. E DIRECTORS TRAINING According to Code Provision A.6.5 of the Code, all directors should participate in continuous professional development to develop and refresh their knowledge and skills. A.6.5 During the year, directors of the Company are provided with materials on the latest developments regarding the Listing Rules and other applicable regulatory requirements, to ensure compliance and enhance their awareness of good corporate governance practices. Directors of the Company are also encouraged to attend the relevant training courses and seminars organised by professional bodies at the Company s expenses. According to the records received by the Company, the directors of the Company (namely, Dr. Yap, Allan, Ms. Chan Ling, Eva, Mr. Chan Pak Cheung, Natalis, Mr. Kwok Ka Lap, Alva, Mr. Poon Kwok Hing, Albert and Mr. Sin Chi Fai) have participated in continuous professional development during the year ended 31 December 2015 by reading materials provided by the Company. Besides, Ms. Chan Ling, Eva attended other seminars organised by various professional bodies. 18 Annual Report 2015

21 Corporate Governance Report 企業管治報告 NON-EXECUTIVE DIRECTORS Code Provision A.4.1 of the Code stipulates that non-executive directors should be appointed for a specific term, subject to reelection. The current independent non-executive directors of the Company were not appointed for a specific term. However, they are subject to retirement by rotation and re-election at the annual general meeting in accordance with Bye-Law 99 of the Bye-Laws. As such, the Board considers that this is no less exacting than that in the Code. A The Company has received the annual confirmation of independence from each of the independent non-executive directors of the Company as required under Rule 3.13 of the Listing Rules. On 24 March 2016, the Nomination Committee held a meeting to assess the annual confirmation of independence from each of the independent non-executive directors of the Company. Taking into account the independence criteria set out in Rule 3.13 of the Listing Rules, the Nomination Committee considered that all independent non-executive directors of the Company remained independent DIRECTORS SECURITIES TRANSACTIONS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) set out in Appendix 10 to the Listing Rules as its own code for dealing in securities of the Company by the directors of the Company. Having made specific enquiry of all directors of the Company, the Company confirmed that all directors of the Company has complied with the required standard set out in the Model Code during the year ended 31 December 珀麗酒店控股有限公司 2015 年報 19

22 Corporate Governance Report 企業管治報告 AUDIT COMMITTEE The Company has established an audit committee (the Audit Committee ) with written terms of reference in line with the Code. The Audit Committee comprises three independent non-executive directors, namely Mr. Poon Kwok Hing, Albert (Chairman of the Audit Committee), Mr. Kwok Ka Lap, Alva and Mr. Sin Chi Fai. The main responsibilities of the Audit Committee are (i) to review the financial information of the Company and to oversee the relationship with the Company s external auditor; (ii) to assist the Board to review the financial reporting system, and risk management and internal control systems (including the adequacy of resources, staff qualifications and experience, training programmes and budget of the Group s accounting and financial reporting function); and (iii) to make recommendations to the Board on the appointment, re-appointment and removal of external auditor. (i) (ii) (iii) During 2015, three (3) meetings of the Audit Committee were held: (3) (1) to review and/or discuss with the management and the Company s auditor the financial reporting matters including the annual results for the year ended 31 December 2014 and the interim results for the six months ended 30 June 2015, and make recommendations to the Board for approval; (2) to review and approve the engagement letter of external auditor for the audit of the Group s 2014 annual results and the review of 2015 interim results; and (3) to review with the management the effectiveness of the internal control system of the Group. 20 Annual Report 2015

23 Corporate Governance Report 企業管治報告 AUDIT COMMITTEE (CONTINUED) The attendance of individual member at the meetings of the Audit Committee held during the year is as follows: Members of Audit Committee Attendance Mr. Poon Kwok Hing, Albert 3/3 Mr. Kwok Ka Lap, Alva 3/3 Mr. Sin Chi Fai 3/3 3/3 3/3 3/3 REMUNERATION COMMITTEE The Company has established a remuneration committee (the Remuneration Committee ) with written terms of reference in line with the Code. The Remuneration Committee comprises two independent nonexecutive directors, namely Mr. Kwok Ka Lap, Alva (Chairman of the Remuneration Committee) and Mr. Poon Kwok Hing, Albert and one executive director, namely Ms. Chan Ling, Eva. The main responsibilities of the Remuneration Committee are (i) to consider and to make recommendations to the Board on the Company s remuneration policy and structure for all the directors and senior management of the Company; (ii) to review and determine the remuneration and compensation packages of the executive directors and senior management of the Company; and (iii) to make recommendations to the Board on the remuneration of non-executive directors of the Company. (i) (ii) (iii) 珀麗酒店控股有限公司 2015 年報 21

24 Corporate Governance Report 企業管治報告 REMUNERATION COMMITTEE (CONTINUED) During 2015, the Remuneration Committee held one (1) meeting: (1) (1) to review and make recommendations to the Board on the directors fees for independent non-executive directors of the Company for 2016; (2) to review the remuneration policy of the Company and the remuneration packages of the executive directors and senior management of the Company; and (3) to review and approve the proposed level of salary increase of the employees of the Company, including the senior management, for In addition, the Remuneration Committee passed two (2) sets of resolutions in writing in 2015 regarding the payment of discretionary bonuses to the Managing Director and the senior management of the Company for 2014, and the monthly salary adjustment of the Managing Director respectively. (2) The attendance of individual member at the meetings of the Remuneration Committee held during the year is as follows: Members of Remuneration Committee Attendance Mr. Kwok Ka Lap, Alva 1/1 Mr. Poon Kwok Hing, Albert 1/1 Ms. Chan Ling, Eva 1/1 1/1 1/1 1/1 The directors of the Company are remunerated with reference to their respective duties and responsibilities with the Company and prevailing market conditions. 22 Annual Report 2015

25 Corporate Governance Report 企業管治報告 REMUNERATION COMMITTEE (CONTINUED) During the year, no directors of the Company were involved in deciding his or her own remuneration. Details of emoluments of the directors of the Company for the year ended 31 December 2015 are disclosed in note 11 to the consolidated financial statements of this annual report. 11 For the year ended 31 December 2015, the remuneration of the members of the senior management is within the following bands: Up to HK$1,000,000 1,000,000 HK$1,000,001 to HK$1,500,000 1,000,0011,500,000 1 Number of Senior Management 2 (Note 1) 1 Note 1: One member of which left the Group during the year. 1 NOMINATION COMMITTEE The Company has established a nomination committee (the Nomination Committee ) with written terms of reference in line with the Code. The Nomination Committee comprises two independent non-executive directors, namely Mr. Kwok Ka Lap, Alva and Mr. Poon Kwok Hing, Albert and one executive director, namely Dr. Yap, Allan (Chairman of the Nomination Committee). The main responsibilities of the Nomination Committee are (i) to review the structure, size and composition of the Board at least annually and make recommendations on any proposed changes to the Board to complement the corporate strategy of the Company; (ii) to identify individuals suitably qualified to become Board member; (iii) to assess the independence of independent non-executive directors of the Company; (iv) to review regularly the time required from a director of the Company to perform his/her responsibilities to the Company; and (v) to make recommendations to the Board on the appointment or re-appointment of directors and succession planning for directors. (i) (ii) (iii) (iv) (v) 珀麗酒店控股有限公司 2015 年報 23

26 Corporate Governance Report 企業管治報告 NOMINATION COMMITTEE (CONTINUED) The nomination of directors will be taken into consideration of the nominee s qualification, ability and potential contributions to the Company, with due regard for the benefits of diversity on the Board. No candidates were nominated to the Board for appointment as directors of the Company during the year ended 31 December During 2015, the Nomination Committee held two (2) meetings: (2) (1) to assess the independence of independent non-executive directors of the Company; (2) to consider and make recommendations to the Board on the reappointment of retiring directors at the 2015 AGM; and (3) to review the structure, size and composition of the Board; and (4) to review the time required from a director of the Company to perform his/her responsibilities to the Company. The attendance of individual member at the meetings of the Nomination Committee held during the year is as follows: Members of Nomination Committee Attendance Dr. Yap, Allan 2/2 Mr. Poon Kwok Hing, Albert 2/2 Mr. Kwok Ka Lap, Alva 2/2 2/2 2/2 2/2 24 Annual Report 2015

27 Corporate Governance Report 企業管治報告 CORPORATE GOVERNANCE COMMITTEE The Company has established a corporate governance committee (the Corporate Governance Committee ) with written terms of reference in line with the Code. 企業管治 The Corporate Governance Committee comprises two independent non-executive directors, namely Mr. Kwok Ka Lap, Alva and Mr. Poon Kwok Hing, Albert and one executive director, namely Ms. Chan Ling, Eva (Chairman of the Corporate Governance Committee). The main responsibilities of the Corporate Governance Committee are (i) to develop and review the Company s policies and practices on corporate governance and make recommendations to the Board; (ii) to review and monitor the training and continuous professional development of directors and senior management; (iii) to review and monitor the Company s policies and practices on compliance with legal and regulatory requirements; and (iv) to review the Company s compliance with the Code and disclosure in the Corporate Governance Report. (i) (ii) (iii) (iv) During 2015, the Corporate Governance Committee held two (2) meetings: (2) (1) to review the Company s practices on corporate governance and the Company s practices in compliance with legal and regulatory requirements; (1) (2) to review the Company s compliance with the Code for the year ended 31 December 2014 and for the six months ended 30 June 2015 and disclosures in the Corporate Governance Report and interim report; and (2) (3) to review the training and continuous professional development of directors of the Company. (3) 珀麗酒店控股有限公司 2015 年報 25

28 Corporate Governance Report 企業管治報告 CORPORATE GOVERNANCE COMMITTEE (CONTINUED) The attendance of individual member at the meetings of the Corporate Governance Committee held during the year is as follows: 企業管治 Members of Corporate Governance Committee Attendance Ms. Chan Ling, Eva 2/2 Mr. Poon Kwok Hing, Albert 2/2 Mr. Kwok Ka Lap, Alva 2/2 2/2 2/2 2/2 ACCOUNTABILITY AND AUDIT Directors Responsibilities for the Financial Statements The directors of the Company are responsible for the preparation of the consolidated financial statements for each financial period which gives a true and fair view of the state of affairs of the Group and of the results and cash flows for that period. In preparing the consolidated financial statements for the year ended 31 December 2015, the directors of the Company have selected suitable accounting policies and applied them consistently, made judgments and estimates that are prudent, fair and reasonable and prepared the consolidated financial statements on a going concern basis. Auditor s Responsibilities and Remuneration During the year, the external auditor of the Company received approximately HK$3,533,000 for audit services and approximately HK$1,717,000 for interim review and other non-audit services. 3,533,0001,717,000 The statement of the auditor of the Company regarding their reporting responsibilities is set out in the Independent Auditor s Report on page Annual Report 2015

29 Corporate Governance Report 企業管治報告 ACCOUNTABILITY AND AUDIT (CONTINUED) Internal Control The Board has the responsibility for setting appropriate policies for the Group s internal control system and reviewing its effectiveness. The Board has through the Audit Committee, conducted a review on the effectiveness of the Company s internal control system for the year ended 31 December 2015, including all material financial, operational and compliance controls, and the risk management function, and concluded that an adequate and effective internal control system is maintained to safeguard the shareholders investment and the Company s assets. All of these are achieved primarily through reviewing the findings, nature, scope of work of internal audit work, the annual and interim financial statements, and report of the external auditors. It was found that there were no significant control failings, weaknesses or significant areas of concern identified during the year which might affect shareholders. COMPANY SECRETARY The Company Secretary is an employee of the Company. During the year, the Company Secretary has complied with the relevant professional training requirement under Rule 3.29 of the Listing Rules. 公司 3.29 COMMUNICATION WITH SHAREHOLDERS The Company acknowledges the importance of communicating with Shareholders. The Board has adopted a Shareholders communication policy setting out formal channels of communication with Shareholders. 股 The Company maintains continuing communication with Shareholders through a number of channels including financial reports (interim and annual reports), announcements, annual general meetings and other general meetings that may be convened as well as other documents submitted to the Stock Exchange. Information relating to the Group is available on the Company s website at com.hk 珀麗酒店控股有限公司 2015 年報 27

30 Corporate Governance Report 企業管治報告 COMMUNICATION WITH SHAREHOLDERS (CONTINUED) The Company uses general meetings as a tool to effectively communicate with Shareholders and provide Shareholders with the opportunity of asking questions on any relevant matters. Shareholders are encouraged to participate in general meetings of the Company or to appoint proxies to attend and vote at meetings for and on their behalf if they are unable to attend the meetings. Directors, appropriate management executives and external auditor will be present at annual general meetings of the Company to answer Shareholders questions. SHAREHOLDERS RIGHTS Procedures for Shareholders to put enquiries to the Board Shareholders should direct their enquiries about their shareholdings to the Company s branch share registrar and transfer office in Hong Kong, Tricor Secretaries Limited at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong. Other Shareholders enquiries can be sent by mail to the head office and principal place of business of the Company in Hong Kong at 31/F., Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong or by to [email protected] for the attention of Company Secretary who will direct the enquiries to the Board for handling [email protected] Shareholders may also make enquiries with the Board at the general meetings of the Company. 28 Annual Report 2015

31 Corporate Governance Report 企業管治報告 SHAREHOLDERS RIGHTS (CONTINUED) Procedures for Shareholders to convene a special general meeting Pursuant to Section 74 of the Companies Act 1981 of Bermuda (as amended), registered Shareholder(s) holding at the date of the deposit of the requisition not less than one-tenth (10%) of such of the paidup capital of the Company as at the date of the deposit carries the right of voting at general meetings of the Company, may request the Board to convene a special general meeting. 股 74 (10%) The written requisition must state the purposes of the meeting, and be signed by the requisitionist(s) and deposited at the registered office of the Company at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda for the attention of the Company Secretary and may consist of several documents in like form, each signed by one or more requisitionists. Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda The requisition will be verified with the Company s branch share registrar and transfer office in Hong Kong and upon confirmation that the request is proper and in order, the Company Secretary will arrange with the Board to convene a special general meeting by serving sufficient notice to all Shareholders in accordance with the requirements set out in the Listing Rules and the Bye-Laws. In the event that the requisition has been verified as not in order, the requisitionist(s) concerned will be advised of this outcome and accordingly, a special general meeting will not be convened as requested. If the Board does not within twenty-one (21) days from the date of the deposit of a valid requisition, proceed duly to convene a meeting, the requisitionist(s), or any of them representing more than one half (50%) of the total voting rights of all of them, may themselves convene a meeting, but any meeting so convened shall not be held after the expiration of three months from the said date. A general meeting so convened by the requisitionist(s) shall be convened in the same manner, as nearly as possible as that in which meetings are to be convened by the Board. (21) (50%) 珀麗酒店控股有限公司 2015 年報 29

32 Corporate Governance Report 企業管治報告 SHAREHOLDERS RIGHTS (CONTINUED) Procedures for Shareholders to put forward proposals at general meetings Pursuant to Section 79 of the Companies Act 1981 of Bermuda (as amended), either (i) any number of registered Shareholders representing not less than one-twentieth (5%) of the total voting rights of all Shareholders having at the date of the requisition a right to vote at the general meeting of the Company to which the requisition relates; or (ii) not less than one hundred (100) of such Shareholders, can submit a requisition in writing to the Company: 79 (i) (5%)(ii)(100) (a) to give to Shareholders entitled to receive notice of next annual (a) general meeting notice of any resolution (other than a proposal for election as a Director) which may properly be moved and is intended to be moved at that meeting; (b) to circulate Shareholders entitled to have notice of any general (b) meeting sent to them any statement of not more than one (1,000) thousand (1,000) words with respect to the matter referred to in any proposed resolution or the business to be dealt with at that meeting. The written requisition must be signed by the requisitionist(s) (may consist of one or several documents in like form, each signed by one or more requisitionists) and deposited at the registered office of the Company at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda for the attention of the Company Secretary with a sum reasonably sufficient to meet the Company s relevant expenses and not less than six (6) weeks before the annual general meeting in case of a requisition requiring notice of resolution or not less than one (1) week before the general meeting in case of any other requisition. Provided that if an annual general meeting is called for a date six (6) weeks or less after the requisition has been deposited, the copy though not deposited within the time required shall be deemed to have been properly deposited for the purposes thereof. Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda (6) (1) (6) 30 Annual Report 2015

33 Corporate Governance Report 企業管治報告 SHAREHOLDERS RIGHTS (CONTINUED) Procedures for Shareholders to put forward proposals at general meetings (CONTINUED) The requisition will be verified with the Company s branch share registrar and transfer office in Hong Kong and upon confirmation that the request is proper and in order, the Company Secretary will arrange with the Board to include the resolution in the agenda for the annual general meeting or circulating the statement for the general meeting. 股 In the event that the requisition is not in order or the requisitionist(s) concerned have failed to deposit sufficient money to meet the Company s expenses for the said purpose, the requisitionist(s) concerned will be advised of this outcome and accordingly, the proposed resolution will not be included in the agenda for the annual general meeting or the statement will not be circulated for the general meeting. Procedures for Shareholders to propose a person for election as a director As regards the procedures for proposing a person for election as a director of the Company, please refer to the procedures made available on the Company s website at AMENDMENTS TO THE BYE-LAWS At the 2015 AGM, Shareholders approved the amendments to the Bye-Laws, to (i) bring the Bye-Laws in line with certain amendments made to the Listing Rules and applicable laws of Bermuda; and (ii) incorporate certain housekeeping amendments and update certain provisions, and the adoption of a new set of the Bye-Laws which consolidates all of the amendments made pursuant to resolutions passed by Shareholders. 公司 (i) (ii) The updated Memorandum of Association and Bye-Laws are available on both the websites of the Company at and the Stock Exchange at hkex.com.hk 珀麗酒店控股有限公司 2015 年報 31

34 Report of the Directors 董事會報告 The directors of the Company (the Directors ) present their report and the audited consolidated financial statements of the Company and its subsidiaries (collectively, the Group ) for the year ended 31 December PRINCIPAL ACTIVITIES The Company is an investment holding company. Its principal subsidiaries are engaged in the business of hotel operation and trading of securities. Details of the Company s principal subsidiaries as at 31 December 2015 are set out in note 40 to the consolidation financial statements of this annual report. 40 RESULTS AND APPROPRIATIONS The results of the Group for the year ended 31 December 2015 are set out in the consolidated statement of profit or loss and other comprehensive income on pages 46 and 47 of this annual report The board of Directors (the Board ) of the Company has resolved not to recommend the payment of a final dividend for the year ended 31 December 2015 (2014: Nil). BUSINESS REVIEW Please refer to the Management Discussion and Analysis on pages 2 to 9 of this annual report. 29 FINANCIAL SUMMARY A financial summary of the Group for the past five years is set out on page 162 of this annual report. 162 SHARE CAPITAL Particulars of the movements in the share capital of the Company are set out in note 29 to the consolidated financial statements of this annual report Annual Report 2015

35 Report of the Directors 董事會報告 DISTRIBUTABLE RESERVES OF THE COMPANY In addition to the accumulated profits, under The Companies Act 1981 of Bermuda (as amended), contributed surplus is also available for distribution. However, the Company cannot declare or pay a dividend, or make a distribution out of contributed surplus if: 公司 (a) it is, or would after the payment be, unable to pay its liabilities (a) as they become due; or (b) the realisable value of its assets would thereby be less than the (b) aggregate of its liabilities and its issued share capital and share premium account. In the opinion of the Directors, the reserves of the Company which were available for distribution to Shareholders at 31 December 2015 were approximately HK$90,458,000 (2014: HK$80,556,000). 90,458,00080,556,000 BORROWINGS Details of borrowings of the Group are set out in note 27 to the consolidated financial statements of this annual report. 27 PROPERTY, PLANT AND EQUIPMENT Details of movements during the year in property, plant and equipment of the Group are set out in note 15 to the consolidated financial statements of this annual report. 15 PARTICULARS OF PROPERTIES OF THE GROUP Particulars of the properties of the Group as at 31 December 2015 are set out on pages 163 and 164 of this annual report 珀麗酒店控股有限公司 2015 年報 33

36 Report of the Directors 董事會報告 DIRECTORS The Directors during the year and up to the date of this report are: 董事 Executive Directors: Dr. Yap, Allan (Chairman) Ms. Chan Ling, Eva (Managing Director) Mr. Chan Pak Cheung, Natalis Independent Non-executive Directors: Mr. Kwok Ka Lap, Alva Mr. Poon Kwok Hing, Albert Mr. Sin Chi Fai In accordance with Bye-Law 99 of the Bye-Laws of the Company ( Bye-Laws ) and Code Provision A.4.2 of the Corporate Governance Code and Corporate Governance Report (the CG Code ) contained in Appendix 14 to the Rules Governing the Listing of the Securities on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) (the Listing Rules ), Ms. Chan Ling, Eva and Mr. Sin Chi Fai shall retire by rotation at the forthcoming annual general meeting of the Company and, being eligible, offer themselves for re-election. 99 A.4.2 DIRECTORS SERVICE CONTRACTS None of the Directors being proposed for re-election at the forthcoming annual general meeting of the Company has a service contract with the Company or any of its subsidiaries which is not determinable by the Group within one year without payment of compensation other than statutory compensation. 董事 34 Annual Report 2015

37 Report of the Directors 董事會報告 PERMITTED INDEMNITY PROVISION Pursuant to the Bye-Laws and subject to the provisions of the statutes, the Directors shall be entitled to be indemnified out of the assets of the Company from and against all losses or liabilities which they may sustain or incur in or about the execution of the duties of their office or otherwise in relation thereto, and they shall not be liable for any loss, damages or misfortune which may happen to or be incurred by the Company in the execution of the duties of their office or in relation thereto. The Company has arranged appropriate Directors and officers liability insurance for the directors and officers of the Group during the year. DIRECTORS INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS Save as disclosed in note 38 to the financial statements headed Related Party Transactions of this annual report, No transaction, arrangement or contracts to which the Company or any of its subsidiaries was a party and in which a Director or an entity connected with a Director had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. 董事 38 MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Group were entered into or existed during the year. SHARE OPTION SCHEME The Company adopted a share option scheme (the Scheme ) on 30 May 2013 and is valid and effective for a period of 10 years commencing on 3 June 2013 (the date on which the last condition to the Scheme was satisfied) until 2 June 2023), subject to earlier termination by the Company in general meeting or by the Board. 股 珀麗酒店控股有限公司 2015 年報 35

38 Report of the Directors 董事會報告 SHARE OPTION SCHEME (CONTINUED) The purpose of the Scheme is to enable the Company to grant options to subscribe for shares of the Company (the Options ) to any eligible employee (including executive directors) and any non-executive director of the Group or any entity in which the Group holds an equity interest (the Invested Entity ), any supplier of goods or services to the Group or any Invested Entity, any customer of the Group or any Invested Entity, any consultant, adviser, manager, officer and entity that provides research, development or other technological support to the Group or any Invested Entity, and any shareholder or any member of the Group who has contributed to the business of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity (the Participant ), as incentives or rewards for their contributions or potential contribution to the Group. The total number of shares in respect of which Options may be granted under the Scheme, when aggregated with any shares subject to any other schemes of the Company, is not permitted to exceed 10% of the shares of the Company in issue on the date of adoption of the Scheme (the Scheme Mandate Limit ) unless the Company obtains an approval from Shareholders in a general meeting to refresh the Scheme Mandate Limit provided that the Scheme Mandate Limit so refreshed must not exceed 10% of the shares of the Company in issue as at the date of approval of refreshment by Shareholders. Nevertheless, the maximum number of shares of the Company which may be issued upon exercise of all outstanding Options granted and not yet exercised under the Scheme and any other share option schemes of the Company shall not exceed 30% of the issued shares of the Company from time to time. 10% 10% 30% The number of shares of the Company in respect of which Options may be granted under the Scheme and other share option scheme(s) of the Company to any Participant in aggregate in any 12-month period up to and including the date of such grant is not permitted to exceed 1% of the shares of the Company in issue, without prior approval from Shareholders in general meeting with such Participant and his/her associates (as defined in the Listing Rules) abstaining from voting. 1% 36 Annual Report 2015

39 Report of the Directors 董事會報告 SHARE OPTION SCHEME (CONTINUED) Where any grant of Options to a substantial shareholder of the Company or any Independent Non-executive Director, or any of their respective associates (as defined in the Listing Rules), would result in the number of shares issued and to be issued upon exercise of all Options already granted and to be granted to such person in 12-month period up to and including the date of such grant: 股 (i) representing in aggregate over 0.1% of the shares of the (i) 0.1% Company in issue, and (ii) having an aggregate value, based on the closing price of the (ii) shares of the Company on the date of each grant in excess of 5,000,000 HK$5 million, such grant of Options shall be subject to prior approval of Shareholders in general meeting. The grantee, his/her associates and all core connected persons (as defined in the Listing Rules) of the Company must abstain from voting in favour at such general meeting. The subscription price of the Options under the Scheme will be a price determined by the Board, in its absolute discretion, but in any case will not be lower than the highest of (i) the closing price of the shares of the Company as stated in the (i) daily quotations sheet of the Stock Exchange on the date of grant, which must be a trading day; (ii) the average closing price of the shares of the Company as stated (ii) in the Stock Exchange s daily quotations sheets for the five trading days immediately preceding the date of grant; and (iii) the nominal value of a share of the Company on the date of (iii) grant. 珀麗酒店控股有限公司 2015 年報 37

40 Report of the Directors 董事會報告 SHARE OPTION SCHEME (CONTINUED) The acceptance of an Option granted under the Scheme must be taken up within 21 days from the date of grant and to be accompanied by payment of the consideration of HK$1.00. The Options may be exercised in accordance with the terms of the Scheme at any time during a period as the Board may in its absolute discretion determine which shall not be more than 10 years from the date of grant and subject to the provisions of early termination thereof and the Board may provide restrictions on the exercise of an Option No Options under the Scheme were granted, exercised, cancelled or lapsed during the year, nor outstanding at 31 December The total number of shares of the Company available for issue under the Scheme is 65,767,587 shares, representing 8.33% of the issued share capital of the Company as at the date of this report. 65,767, % Save as disclosed above, at no time during the year was the Company or any of its subsidiaries a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate and neither the Directors nor any of their spouses or children under the age of 18 had any right to subscribe for the securities of the Company or had exercised any such right during the year. 18 DIRECTORS INTERESTS IN SECURITIES As at 31 December 2015, none of the Directors had any interests or short positions in the shares, underlying shares and debentures of the Company or its associated corporation (within the meaning of Part XV of the Securities and Futures Ordinance (the SFO )) (a) as recorded in the register required to be kept under section 352 of the SFO; or (b) as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) set out in Appendix 10 to the Listing Rules. 董事 XV (a) 352 (b) 38 Annual Report 2015

41 Report of the Directors 董事會報告 EQUITY-LINKED AGREEMENTS No equity-linked agreements that will or may result in the Company issuing shares or no agreement that requires the Company to enter into an agreement that will or may result in the Company issuing shares, were entered into by the Group during the year or existed at the end of the year. 股 DIRECTORS INTERESTS IN COMPETING BUSINESSES As at 31 December 2015, interests of the Directors, other than Independent Non-executive Directors, in competing businesses required to be disclosed pursuant to Rule 8.10 of the Listing Rules were as follows: 董事 有 8.10 Name of Director Name of entity which businesses are considered to compete or likely to compete with the businesses of the Group Description of businesses of the entity which are considered to compete or likely to compete with the businesses of the Group Nature of interest of the Director in the entity Dr. Yap, Allan Hanny Holdings Limited and its subsidiaries Trading of securities Executive director and substantial shareholder As the Board is independent of the boards of the above mentioned entities, the Group is capable of carrying on its business independently of, and at arm s length, from the business of those entities. 珀麗酒店控股有限公司 2015 年報 39

42 Report of the Directors 董事會報告 SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS INTERESTS As at 31 December 2015, the interests or short positions of persons, other than Directors, in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the SFO were as follows: 336 Interests in the shares Name of Shareholder Long position/ Short position Capacity/ Nature of interest Number of shares held Approximate percentage of the issued share capital of the Company (a) Hanny Holdings Limited ( Hanny ) (Note 1) ) 1 Long position Interest of controlled 148,506, % corporation 148,506, % Hanny Magnetics (B.V.I.) Limited ( Hanny Magnetics ) (Note 1) Hanny Magnetics (B.V.I.) Limited Hanny Magnetics )1 Long position Interest of controlled 148,506, % corporation 148,506, % Hanny Investment Group Limited ( HIG ) (Note 1) Hanny Investment Group Limited HIG )1 Long position Interest of controlled 148,506, % corporation 148,506, % Leaptop Investments Limited ( Leaptop ) (Note 1) Leaptop Investments Limited Leaptop )1 Long position Interest of controlled 148,506, % corporation 148,506, % Asia Will Limited ( AWL ) (Note 1) Long position Beneficial owner 148,506, % 1 148,506, % 40 Annual Report 2015

43 Report of the Directors 董事會報告 SUBSTANTIAL SHAREHOLDERS AND OTHER PERSONS INTERESTS (CONTINUED) Interests in the shares (CONTINUED) 股 Name of Shareholder Long position/ Short position Capacity/ Nature of interest Number of shares held Approximate percentage of the issued share capital of the Company (b) China Enterprises Limited ( CEL ) (Note 2) China Enterprises Limited CEL 2 Long position Interest of controlled 48,660, % corporation 48,660, % Cosmos Regent Ltd. (Note 2) Long position Beneficial owner 43,325, % Cosmos Regent Ltd.2 43,325, % Notes: (1) AWL, which held 148,506,000 shares of the Company, was a whollyowned subsidiary of Leaptop which was in turn a wholly-owned subsidiary of HIG. HIG was a wholly-owned subsidiary of Hanny Magnetics which was in turn wholly-owned by Hanny. Accordingly, Leaptop, HIG, Hanny Magnetics and Hanny were deemed to be interested in 148,506,000 shares of the Company held by AWL. (2) CEL was deemed to be interested in 48,660,424 shares of the Company through its interest in its wholly-owned subsidiaries, Cosmos Regent Ltd. and Million Good Limited, which held 43,325,554 shares of the Company and 5,334,870 shares of the Company respectively. (1) Leaptop 148,506,000 Leaptop HIG HIG Hanny Magnetics Hanny Magnetics Hanny Leaptop HIG Hanny Magnetics Hanny 148,506,000 (2) C E L C o s m o s Regent Ltd. Million Good Limited 4 3, 3 2 5, ,334,870 48,660,424 Save as disclosed above, as at 31 December 2015, the Company had not been notified of any other persons who had interests or short positions in the shares and underlying shares which would be required to be disclosed to the Company and the Stock Exchange pursuant to Part XV of the SFO. XV 珀麗酒店控股有限公司 2015 年報 41

44 Report of the Directors 董事會報告 CHANGES IN INFORMATION OF DIRECTORS The changes in the information of the Directors since the publication of the interim report of the Company for the six months ended 30 June 2015 required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules are set out below: 董事 13.51B(1) The monthly salary of Ms. Chan Ling, Eva was revised from HK$170,000 to HK$180,000 with effect from 1 February A discretionary bonus for the year ended 31 December 2015 amounted to HK$600,000 was received by Ms. Chan Ling, Eva in February , , ,000 Updated biographical details of the Directors are set out in the Directors Profile on pages 10 to 12 of this annual report PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company s listed securities during the year ended 31 December PROVIDENT FUND SCHEMES Particulars of the Group s provident fund schemes are set out in note 36 to the consolidated financial statements of this annual report. 36 PRE-EMPTIVE RIGHTS There are no provisions for pre-emptive rights under the Bye-Laws although there are no restrictions against such rights under the laws in Bermuda. MAJOR CUSTOMERS AND SUPPLIERS The aggregate amount of purchases and turnover attributable to the Group s five largest suppliers and customers were less than 30% of the total value of the Group s purchases and turnover respectively. 30% 42 Annual Report 2015

45 Report of the Directors 董事會報告 SUFFICIENCY OF PUBLIC FLOAT Based on the information publicly available to the Company and within the knowledge of the Directors as at the date of this report, the Company maintains sufficient public float as required under the Listing Rules. 公 股 CORPORATE GOVERNANCE Information on the Company s corporate governance practices is set out in the Corporate Governance Report on pages 14 to 31 of this annual report DONATIONS During the year, the Group did not make any charitable donations. AUDITOR Messrs. Deloitte Touche Tohmatsu shall retire and, being eligible, offer themselves for re-appointment. Having approved by the Board upon the Audit Committee s recommendation, a resolution for the re-appointment of Messrs. Deloitte Touche Tohmatsu as auditor of the Company will be submitted to the forthcoming annual general meeting of the Company to re-appoint for shareholders approval. On behalf of the Board YAP, ALLAN CHAIRMAN Hong Kong, 24 March 2016 珀麗酒店控股有限公司 2015 年報 43

46 Independent Auditor s Report 獨立核數師報告 TO THE MEMBERS OF ROSEDALE HOTEL HOLDINGS LIMITED (incorporated in Bermuda with limited liability) We have audited the consolidated financial statements of Rosedale Hotel Holdings Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 46 to 161, which comprise the consolidated statement of financial position as at 31 December 2015, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information Directors Responsibility for the Consolidated Financial Statements The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement Annual Report 2015

47 Independent Auditor s Report 獨立核數師報告 Auditor s Responsibility (CONTINUED) An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2015, and of its financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance. Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 24 March 2016 珀麗酒店控股有限公司 2015 年報 45

48 Consolidated Statement of Profit or Loss and Other Comprehensive Income 綜合損益及其他全面收益表 For the year ended 31 December Notes HK$ 000 HK$ 000 Turnover 5 235, ,647 Direct operating costs (151,557) (261,326) Gross profit 83, ,321 Interest income 7 69,734 33,248 Other income, gains and losses 8 (27,255) 7,785 Distribution and selling expenses (878) (2,067) Administrative expenses (169,338) (193,111) Finance costs 9 (1,632) (14,791) Gain on disposals of subsidiaries ,324 Impairment loss recognised in respect of property, plant and equipment (17,496) Decrease in fair value of investment properties 16 (30,634) (27,694) Share of result of an associate (6,058) Share of result of a joint venture 17 (7,445) 1,490 Impairment loss recognised in respect of available-for-sale investment 18 (18,722) (12,916) (Loss) profit before taxation 10 (119,811) 375,531 Income tax expense 12 (1,568) (2,600) (Loss) profit for the year (121,379) 372,931 Other comprehensive expense Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translating foreign operations (35,068) (17,881) Reclassification adjustment of translation reserve upon disposal of subsidiaries (1,434) Reclassification of translation reserve to profit or loss upon deregistration of subsidiaries (1,370) (35,068) (20,685) Total comprehensive (expense) income for the year (156,447) 352, Annual Report 2015

49 Consolidated Statement of Profit or Loss and Other Comprehensive Income 綜合損益及其他全面收益表 For the year ended 31 December Notes HK$ 000 HK$ 000 (Loss) profit for the year attributable to: Owners of the Company (105,098) 380,755 Non-controlling interests (16,281) (7,824) (121,379) 372,931 Total comprehensive (expense) income for the year attributable to: Owners of the Company (135,963) 361,947 Non-controlling interests (20,484) (9,701) (156,447) 352,246 HK$ HK$ (LOSS) EARNINGS PER SHARE Basic 14 (0.14) 0.58 珀麗酒店控股有限公司 2015 年報 47

50 Consolidated Statement of Financial Position 綜合財務狀況報表 At 31 December Notes HK$ 000 HK$ 000 Non-current assets Property, plant and equipment , ,465 Investment properties , ,000 Interest in a joint venture Amount due from a joint venture 17 27,983 Available-for-sale investments 18 18,722 Loan notes receivable ,281 Deposit paid for a possible acquisition of an investment ,940 Other assets 21 19,800 19, ,157 1,289,268 Current assets Inventories 22 2,491 2,805 Trade and other receivables , ,675 Loan notes receivable ,578 Investments held for trading 24 14, Cash and cash equivalent 25 1,436,453 1,272,649 1,758,007 1,683,446 Current liabilities Trade and other payables 26 90,909 86,517 Borrowings amount due within one year 27 10, ,000 Tax liabilities 77,389 79, , ,554 Net current assets 1,579,709 1,407,892 Total assets less current liabilities 2,499,866 2,697, Annual Report 2015

51 Consolidated Statement of Financial Position 綜合財務狀況報表 At 31 December Notes HK$ 000 HK$ 000 Non-current liabilities Borrowings amount due after one year ,000 Deferred taxation 28 52,223 57,089 52, ,089 Net assets 2,447,643 2,490,071 Capital and reserves Share capital 29 7,892 6,577 Share premium and reserves 2,238,700 2,261,959 Equity attributable to owners of the Company 2,246,592 2,268,536 Non-controlling interests 201, ,535 Total equity 2,447,643 2,490,071 The consolidated financial statements on pages 46 to 161 were approved and authorised for issue by the Board of Directors on 24 March 2016 and are signed on its behalf by: YAP, ALLAN CHAN LING, EVA EXECUTIVE DIRECTOR EXECUTIVE DIRECTOR 珀麗酒店控股有限公司 2015 年報 49

52 Consolidated Statement of Changes in Equity 綜合股東權益變動表 For the year ended 31 December 2015 Attributable to owners of the Company (Accumulated Share capital Share premium Special reserve Translation reserve Other reserves loss)/ Retained earnings Sub-total Noncontrolling interests Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 (Note ii) (Note i) ii i At 1 January ,577 1,248, , ,016 (66,522) (19,268) 1,976, ,439 2,218,593 Profit for the year 380, ,755 (7,824) 372,931 Other comprehensive income (expense) for the year Exchange difference arising on translation of financial statements of foreign operations (16,004) (16,004) (1,877) (17,881) Reclassification adjustment of translation reserve upon disposal of a subsidiary Reclassification of translation reserve to profit or loss upon deregistration of subsidiaries (1,434) (1,434) (1,434) (1,370) (1,370) (1,370) Total comprehensive (expense) income for the year (18,808) 380, ,947 (9,701) 352,246 Dividend paid (note 13) 13 (65,768) (65,768) (65,768) Purchase of shares of subsidiaries from non-controlling shareholders (note 37) 37 (3,797) (3,797) (11,203) (15,000) At 31 December ,577 1,248, , ,208 (70,319) 295,719 2,268, ,535 2,490,071 Loss for the year (105,098) (105,098) (16,281) (121,379) Other comprehensive expense for the year Exchange difference arising on translation of financial statements of foreign operations (30,865) (30,865) (4,203) (35,068) Total comprehensive expense for the year Shares issued for the year (Note 29) Transaction cost attributable to the issue of shares (Note 29) (30,865) (105,098) (135,963) (20,484) (156,447) 29 1, , , , (3,047) (3,047) (3,047) At 31 December ,892 1,360, ,303 99,343 (70,319) 190,621 2,246, ,051 2,447, Annual Report 2015

53 Consolidated Statement of Changes in Equity 綜合股東權益變動表 For the year ended 31 December 2015 Notes: (i) When the Group increases its interest in an entity that is already an entity controlled by the Group, it is accounted for as equity transaction. The carrying amounts of the Group s interests and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Other reserves represent the differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid that is recognised directly in equity. (i) (ii) The special reserve represents (i) the difference between the nominal value of the shares of the acquired subsidiaries and the nominal value of the shares of the Company issued for the acquisition under the group reorganisation in September 1997; and (ii) reduction of share capital took place during the years ended 31 December 2006 and (ii) (i) (ii) 珀麗酒店控股有限公司 2015 年報 51

54 Consolidated Statement of Cash Flows 綜合現金流量表 For the year ended 31 December 2015 Cash flows generated by operating activities HK$ 000 HK$ 000 (Loss) profit for the year (121,379) 372,931 Adjustments for: Share of result of an associate 6,058 Share of result of a joint venture 7,445 (1,490) Depreciation of property, plant and equipment 32,780 43,463 Interest income (69,734) (33,248) Interest expense 1,632 14,791 Loss on disposal of property, plant and equipment Impairment loss recognised in respect of property, plant and equipment Unrealised loss in fair value of investments held for trading Impairment loss recognised on other receivables ,496 7, ,410 Gain on disposal of subsidiaries (444,324) Decrease in fair value of investment properties Realised loss on disposal of investments held for trading Impairment loss recognised in respect of available-for-sale investment 30,634 27,694 10,706 18,722 12,916 Operating cash flows before movements in working capital (54,577) (866) Movements in working capital Decrease (increase) in trade and other receivables 280,186 (193,550) Decrease in inventories Increase in investment held-for-sale (32,501) Increase in other assets (35,800) Increase in trade and other payables 4,392 10, ,391 (218,652) Cash flows from (used in) operations Taxation paid in the People s Republic of China 197,814 (219,518) (3,299) (668) Net cash from (used in) operating activities 194,515 (220,186) 52 Annual Report 2015

55 Consolidated Statement of Cash Flows 綜合現金流量表 For the year ended 31 December Notes HK$ 000 HK$ 000 Cash flows from investing activities Proceeds from disposal of subsidiaries 33 1,075,147 Proceeds from deferred cash consideration receivable 665,405 Withdrawal of pledged bank deposits 311,079 Repayment from a joint venture 24,120 Interest received 17,830 14,714 Advance to a joint venture (35,000) Repayment to non-controlling shareholder of a subsidiary (9,278) Proceeds from disposal of property, plant and equipment Advances of loan receivable (75,000) Additions to property, plant and equipment (966) (30,765) Deposit paid for a possible acquisition of an investment (172,940) Early repayment of loan notes receivable 300,000 Net cash generated from investing activities 109,072 1,975,465 Cash flows from financing activities Repayment of bank and other borrowings (250,000) (836,000) Proceeds from issue of shares 117,066 Transaction cost attributable to issue of shares (3,047) Dividend paid (65,768) Purchase of shares of subsidiaries from non-controlling shareholders (15,000) Interest paid (1,632) (14,791) Net cash used in from financing activities (137,613) (931,559) Net increase in cash and cash equivalents 165, ,720 Cash and cash equivalents at beginning of the year Effect of exchange rate changes on the balance of cash held in foreign currencies 1,272, ,387 (2,170) (458) Cash and cash equivalents at end of the year 1,436,453 1,272,649 Representing by: Bank balances and cash 1,045,935 1,272,649 Cash held by securities broker 390,518 1,436,453 1,272,649 珀麗酒店控股有限公司 2015 年報 53

56 For the year ended 31 December GENERAL INFORMATION The Company is incorporated in Bermuda as an exempted company with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the Stock Exchange ). Its substantial shareholder is Hanny Holdings Limited. The addresses of the registered office and the principal place of business of the Company are disclosed in the corporate information of this annual report. 1. The Company is an investment holding company. Its principal subsidiaries are engaged in the business of hotel operation and trading of securities. The consolidated financial statements are presented in Hong Kong dollars, which is also the functional currency of the Company. 2. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) The Group has applied the following amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) for the first time in the current year: 2. 財務報 財務報 Amendments to HKAS 19 Defined benefit plans: Employee contributions 19 Amendments to HKFRSs Annual improvements to HKFRSs cycle Amendments to HKFRSs Annual improvements to HKFRSs cycle The application of the amendments to HKFRSs in the current year has had no material impact on the Group s financial performance and positions for the current and prior years and/or on the disclosures set out in these consolidated financial statements. 54 Annual Report 2015

57 For the year ended 31 December APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (CONTINUED) The Group has not early applied the following new and revised HKFRSs that have been issued but are not yet effective: 2. 財務報 財務報 HKFRS 9 Financial instruments 1 HKFRS 15 Revenue from contracts with customers 1 Amendments to HKFRS 11 Accounting for acquisitions of interests in joint operations 2 Amendments to HKAS 1 Disclosure initiative 2 Amendments to HKAS 16 Clarification of acceptable and HKAS 38 methods of depreciation and amortisation 2 HKAS 27 Equity method in separate financial statements 2 Amendments to HKAS 16 Agriculture: Bearer plants 2 and HKAS 41 Amendments to HKFRS 10 Sale or contribution of and HKAS 28 assets between an investor and its associate or joint venture 3 Amendments to HKFRS 10, Investment entities: Applying HKFRS 12 and HKAS 28 the consolidation exception 2 Amendments to HKFRSs Annual improvements to HKFRSs cycle Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted. 2 Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after a date to be determined 珀麗酒店控股有限公司 2015 年報 55

58 For the year ended 31 December APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (CONTINUED) HKFRS 9 Financial instruments HKFRS 9 issued in 2009 introduced new requirements for the classification and measurement of financial assets. HKFRS 9 was subsequently amended in 2010 to include the requirements for the classification and measurement of financial liabilities and for derecognition, and in 2013 to include the new requirements for hedge accounting. Another revised version of HKFRS 9 was issued in 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a fair value through other comprehensive income (FVTOCI) measurement category for certain simple debt instruments. 2. 財務報 財務報 a) b) all recognised financial assets that are within the scope of HKAS 39 Financial instruments: Recognition and measurement are subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding, are generally measured at amortised cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair values at the end of subsequent reporting periods. In addition, under HKFRS 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 in relation to the impairment of financial assets, HKFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under HKAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. Annual Report

59 For the year ended 31 December APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (CONTINUED) HKFRS 9 Financial instruments (CONTINUED) The directors of the Company do not anticipate that the application of HKFRS 9 will have a material effect on amounts reported in respect of the Group s financial assets and financial liabilities, however, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed. 2. 財務報 財務報 9 9 HKFRS 15 Revenue from contracts with customers HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 Revenue, HKAS 11 Construction contracts and the related Interpretations when it becomes effective The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition: 15 Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation 珀麗酒店控股有限公司 2015 年報 57

60 For the year ended 31 December APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS ( HKFRSs ) (CONTINUED) HKFRS 15 Revenue from contracts with customers (CONTINUED) Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when control of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 財務報 財務報 The directors of the Company are in the process of accessing the impact of HKFRS 15 on the amounts reported and disclosures made in the Group s consolidated financial statements. However, it is not practicable to provide a reasonable estimate of the effect of HKFRS 15 until the Group performs a detailed review The directors of the Company do not anticipate that the application of the other new and revised standards and amendments will have material impact on the consolidated financial statements of the Group. 58 Annual Report 2015

61 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES Statement of compliance The consolidated financial statements have been prepared in accordance with HKFRSs issued by the HKICPA. 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 by the Hong Kong 3. Companies Ordinance ( CO ). The disclosure requirements set out in the Listing Rules regarding annual accounts have been amended with reference to the new CO and to streamline with HKFRSs. Accordingly the presentation and disclosure of information in the consolidated financial statements for the financial year ended 31 December 2015 have been changed to comply with these new requirements. Comparative information in respect of the financial year ended 31 December 2014 are presented or disclosed in the consolidated financial statements based on the new requirements. Information previously required to be disclosed under the predecessor CO or Listing Rules but not under the new CO or amended Listing Rules are not disclosed in these consolidated financial statements. Basis of preparation The consolidated financial statements have been prepared on the historical cost basis except for certain investment properties and investments held for trading that are measured at fair values at the end of each reporting period, 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 and services. 珀麗酒店控股有限公司 2015 年報 59

62 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of preparation (CONTINUED) 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 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. 60 Annual Report 2015

63 For the year ended 31 December 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 3. 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. When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group s voting rights in an investee are sufficient to give it power, including: the size of the Group s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; potential voting rights held by the Group, other vote holders or other parties; rights arising from other contractual arrangements; and 珀麗酒店控股有限公司 2015 年報 61

64 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of consolidation (CONTINUED) any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders 3. meetings. 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 and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary. Profit or loss and each component 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 noncontrolling interests having a deficit balance. Where 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. Non-controlling interests in subsidiaries are presented separately from the Group s equity therein. 62 Annual Report 2015

65 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of consolidation (CONTINUED) Allocation of total comprehensive income to noncontrolling interests Total comprehensive income and expense of a subsidiary is attributed to the owners of the Company and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance. 3. 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 HKFRSs). 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 HKAS 39, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. (i) (ii) 39 珀麗酒店控股有限公司 2015 年報 63

66 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments in an associate and a joint venture An associate is an entity over which the Group has significant influence. 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. 3. 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 an associate and a joint venture 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 HKFRS 5. Under the equity method, an investment in an associate or 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 associate or joint venture. When the Group s share of losses of an associate or joint venture exceeds the Group s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group s net investment in the associate or 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 associate or joint venture Annual Report 2015

67 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments in an associate and a joint venture (CONTINUED) An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or 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. 3. The requirements of HKAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance 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 loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases 珀麗酒店控股有限公司 2015 年報 65

68 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments in an associate and a joint venture (CONTINUED) The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or 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 HKAS 39. The difference between the carrying amount of the associate or 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 associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or 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 associate or 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. 66 Annual Report 2015

69 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investments in an associate and a joint venture (CONTINUED) The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or 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. 3. When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group. 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 hotels accommodation, food and banquet operations are recognised when the services are rendered. Interest income from a financial asset is recognised when it is probable that the economic benefit 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. The Group s accounting policy for recognition of revenue from operating lease is described in the accounting policy for leasing below. 珀麗酒店控股有限公司 2015 年報 67

70 For the year ended 31 December 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. 3. The Group as lessor Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised as an expense on a straight-line basis over the lease term. The Group as lessee Operating lease payments 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. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. 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 lumpsum 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. 68 Annual Report 2015

71 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Leasing (CONTINUED) Leasehold land and building (CONTINUED) 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 leased over the lease term on a straight-line basis. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified 3. as a finance lease and accounted for as property, plant and equipment. 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. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. 珀麗酒店控股有限公司 2015 年報 69

72 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Foreign currencies (CONTINUED) Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: 3. exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; exchange differences on transactions entered into in order to hedge certain foreign currency risks (see the accounting policies below); and 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 purposes of presenting the 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 period, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in ) other comprehensive income and accumulated in equity under the heading of translation reserve (attributed to non-controlling interests as appropriate). 70 Annual Report 2015

73 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Foreign currencies (CONTINUED) On the disposal of a foreign operation (i.e. a disposal of the Group s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement or an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are 3. reclassified to profit or loss. In addition, in relation to a partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Borrowing costs Borrowing costs are recognised in profit or loss in the period in which they are incurred. Retirement benefit costs Payments to defined contribution retirement benefit plans, including state-managed retirement benefit schemes and the Mandatory Provident Fund Scheme, are recognised as an expense when employees have rendered service entitling them to the contributions. 珀麗酒店控股有限公司 2015 年報 71

74 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Share-based payment transactions Equity-settled share-based payment transactions Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. 3. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group s estimate of equity instruments that will eventually vest, with a corresponding increase in equity (share options reserve). For share options that vest immediately at the date of grant, the fair value of the share options granted is expensed immediately to profit or loss. At the end of the reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee benefits reserve. When share options are exercised, the amount previously recognised in share options reserve will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share options reserve will be transferred to retained earnings. 72 Annual Report 2015

75 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Taxation Current tax Income tax expense represents the sum of the tax currently payable and deferred tax. 3. 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 profit or loss and other comprehensive income because 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. Deferred tax 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 profit will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill. 珀麗酒店控股有限公司 2015 年報 73

76 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Taxation (CONTINUED) Deferred tax (CONTINUED) Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, 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 3. 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 profit 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 rate (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. 74 Annual Report 2015

77 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Taxation (CONTINUED) Deferred tax (CONTINUED) For the purposes of measuring deferred tax liabilities or deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts 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 3. time, rather than through sale. Current and deferred tax Current and deferred tax are 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 business combination. Property, plant and equipment Property, plant and equipment including buildings and leasehold land held for use in the production or supply of services or for administrative purposes are stated in the consolidated statement of financial position at costs less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any. Depreciation is recognised so as to write off the cost of asset less their residual value 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 the each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. 珀麗酒店控股有限公司 2015 年報 75

78 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property, plant and equipment (CONTINUED) 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. 3. Investment properties Investment properties are properties held to earn rentals and/ or for capital appreciation. Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values. All of the Group s property interests held under operating leases to earn rentals or for capital appreciation purposes are classified and accounted for as investment properties and are measured using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise. Impairment losses on tangible assets At the end of the reporting period, the Group reviews the carrying amounts of its tangible 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. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. 76 Annual Report 2015

79 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment losses on tangible assets (CONTINUED) Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. 3. If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) 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 (or cash-generating unit) 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 (or a cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss. Inventories Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. 珀麗酒店控股有限公司 2015 年報 77

80 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instruments. 3. 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 ( FVTPL )) 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 FVTPL are recognised immediately in profit or loss. Financial assets Financial assets are classified into the following specified categories: financial assets at FVTPL, available-for-sale ( AFS ) financial assets and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. 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. 78 Annual Report 2015

81 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial assets (CONTINUED) 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 3. net carrying amount on initial recognition. Interest income is recognised on an effective interest basis for debt instruments other than these financial assets classified as at FVTPL. Financial assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. 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. 珀麗酒店控股有限公司 2015 年報 79

82 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial assets (CONTINUED) Financial assets at FVTPL (CONTINUED) 3. 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 incorporates any dividend or interest earned on the financial assets and is included in the other gains and losses line item. Fair value is determined in the manner disclosed in note 32c. 32c 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 amount due from a joint venture, trade and other receivables, loan notes receivable, and bank balances and cash) are measured at amortised cost using the effective interest method, less any impairment (see accounting policy on impairment loss on financial assets below). Loan notes Loan notes held by the Group has a callable feature. On initial recognition, the loan notes are measured at fair value. It is classified as loans and receivables and is subsequently measured at amortised cost using the effective interest method. 80 Annual Report 2015

83 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial assets (CONTINUED) Available-for-sale financial assets AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at FVTPL. 3. (a) (b) (c) Dividends on AFS equity instruments are recognised in profit or loss when the Group s right to receive the dividends is established. The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment losses at the end of each reporting period (see accounting policy in respect of impairment loss on financial assets below). 珀麗酒店控股有限公司 2015 年報 81

84 For the year ended 31 December 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 trade and other receivables and loans receivables are measured at amortised cost using the effective interest method, less any impairment (see accounting policy on impairment loss on financial assets below). 3. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial. 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 where 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 investment have been affected. For an AFS equity investment, a significant or prolonged decline in the fair value of that security below its cost is considered to be objective evidence of impairment. 82 Annual Report 2015

85 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial assets (CONTINUED) Impairment of financial assets (CONTINUED) For all other financial assets, objective evidence of impairment could include: 3. significant financial difficulty of the issuer or counterparty; or breach of contract, such as default or delinquency in interest or principal payments; or it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or disappearance of an active market for that financial 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, 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. 珀麗酒店控股有限公司 2015 年報 83

86 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial assets (CONTINUED) Impairment of financial assets (CONTINUED) 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 (see the accounting policy below). 3. 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. Changes in the carrying amount of the allowance account are recognised in profit or loss. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. 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 was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. 84 Annual Report 2015

87 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Financial liabilities and equity instruments Classification as debt or equity Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with substance of the contractual arrangements and the 3. 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 recognised at the proceeds received, net of direct issue cost. Repurchase of the Company s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company s own equity instruments. Other financial liabilities Other financial liabilities including trade and other payables and 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 and 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. 珀麗酒店控股有限公司 2015 年報 85

88 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) 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. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts, it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. 3. 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. On derecognition of a financial asset other than in its entirety, the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. 86 Annual Report 2015

89 For the year ended 31 December SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Financial instruments (CONTINUED) Derecognition (CONTINUED) The Group derecognises financial liability when, and only when, the Group s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is 3. recognised in profit or loss. 4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY In the application of the Group s accounting policies, which are described in note 3, the directors of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are 4. 3 considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an on-going 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. 珀麗酒店控股有限公司 2015 年報 87

90 For the year ended 31 December CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(CONTINUED) Key sources of estimation uncertainty The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the 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. 4. Estimated impairment of available-for-sale investments In determining whether there is objective evidence of impairment in relation to the Group s available-for-sale investments in unlisted equity securities, the Group takes into consideration of the decline in market values of the properties held by its investees. Judgment is required when determining whether it is necessary to make any impairment on the investment cost in these available-for-sale investments by taking into consideration of the decline in market values of the properties held by the investees over the respective costs. Where the market price of the properties declines more than expected, a further impairment loss may arise. As at 31 December 2015, the carrying amount of relevant available-for sale investments is approximately HK$Nil (2014: HK$18,722,000). The directors performed impairment assessment of the Group s available-for-sale investments and impairment loss of HK$18,722,000 (2014: HK$12,916,000) was recognised in profit or loss for the years ended 31 December 2015 and ,722,000 18,722,000 12,916, Annual Report 2015

91 For the year ended 31 December CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(CONTINUED) Key sources of estimation uncertainty (CONTINUED) Estimated impairment of property, plant and equipment Property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets exceeds its recoverable amount. The recoverable amount is determined with reference to the fair value of the property, plant and equipment less costs to sell or the value-in-use calculations. An impairment loss is measured as the difference between the asset s carrying amount and the recoverable amount. Where the recoverable amount is less than expected, an impairment loss may arise. As at 31 December 2015, the carrying amount of property, plant and equipment is approximately HK$470,255,000 (2014: HK$548,465,000) (net of accumulated depreciation and impairment loss of approximately HK$390,185,000 (2014: HK$366,662,000)) ,255, ,465, ,185, ,662,000 The directors performed impairment assessment of the Group s property, plant and equipment, an impairment loss of HK$17,496,000 (2014: nil) was identified and recognised in the profit or loss for the year ended 31 December 2015 and ,496,000 珀麗酒店控股有限公司 2015 年報 89

92 For the year ended 31 December CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(CONTINUED) Key sources of estimation uncertainty (CONTINUED) Depreciation of hotel properties The Group s carrying amount of hotel properties as at 31 December 2015 was approximately HK$432,634,000 (2014: HK$501,229,000). The Group depreciates the hotel properties on a straight-line basis over the shorter of their remaining unexpired terms of the leases and 2.5% per annum. The useful lives reflect the directors estimate of the periods that the Group intends to derive economic benefits from the use of the Group s hotel properties. During the year, the useful lives of the hotel properties have been reviewed and these estimates are considered to be appropriate. Included in the above amount is a hotel property with a carrying amount of approximately HK$181,359,000 (2014: HK$201,419,000) of which the useful life is determined to be the shorter of 2.5% annum and the unexpired terms of the leases. A subsidiary of the Company has been granted the right to operate and manage the hotel in Guangzhou, the People s Republic of China (the PRC ) for a period from January 1987 to January 2017, and subject to certain conditions to be fulfilled by the subsidiary, the operating period may be extended for a further period of 20 years. Should the conditions not be fulfilled, the depreciation period of the hotel properties would be adjusted and up to January 2017 only. When estimating the useful life of this hotel, it is assumed that the right to operate and manage the hotel can be extended for a further period of 20 years ,634, ,229, % 181,359, ,419, % 90 Annual Report 2015

93 For the year ended 31 December CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(CONTINUED) Key sources of estimation uncertainty (CONTINUED) Impairment loss on trade and other receivables Management regularly reviews the recoverability of the loans receivable and other receivables. Appropriate impairment for estimated irrecoverable amount is recognised in profit and loss when there is objective evidence that the amount is not 4. recoverable. In determining whether allowance for bad and doubtful debts is required, the Group takes into consideration the aged status and likelihood of collection. Specific allowance is only made for the trade and other receivables that are unlikely to be collected and is recognised on the difference between the carrying amount of trade and other receivables and the present value of estimated future cash flow discounted using the original effective interest rate. Where the actual future cash flows are less than expected, an impairment loss may arise. As at 31 December 2015, the carrying amount of trade and other receivables net of accumulated impairment loss is HK$118,079,000 (2014: HK$407,675,000) (impairment loss recognised on other receivables of HK$9,410,000 (2014: nil)). 118,079, ,675,000 9,410,000 珀麗酒店控股有限公司 2015 年報 91

94 For the year ended 31 December CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(CONTINUED) Key sources of estimation uncertainty (CONTINUED) Fair value measurements and valuation processes Some of the Group s assets and liabilities are measured at fair value for financial reporting purposes. 4. In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages third party qualified valuers to perform the valuation. The valuation committee works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The Chief Financial Officer reports the findings to the board of directors of the Company every quarter to explain the cause of fluctuations in the fair value of the assets and liabilities. The Group uses valuation techniques that include inputs that are not based on observable market data to estimate the fair value of certain types of financial instruments. Notes 16 and 32c provide detailed information about the valuation techniques, inputs and key assumptions used in the determination of the fair value of various assets and liabilities c 92 Annual Report 2015

95 For the year ended 31 December TURNOVER Turnover represents the fair value of the consideration received or receivable from outside customers, net of discounts and salesrelated taxes during the year. An analysis of the Group s turnover for the year is as follows: HK$ 000 HK$ 000 Hotel operations 221, ,962 Rental income 14,323 38, , , SEGMENT INFORMATION Information reported to the Executive Directors of the Company, being the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance focuses on types of business activities that the segment carried out. No operating segments identified by the chief operating decision maker have been aggregated in arriving at the reportable segments of the Group. 6. Specifically, the Group s reportable and operating segments under HKFRS 8 are as follows: 8 1. Hotel operations hotel accommodation, food and banquet operations, and rental income; and Securities trading trading of equity securities 2. 珀麗酒店控股有限公司 2015 年報 93

96 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Segment revenues and results The following is an analysis of the Group s revenue and results from continuing operations by reportable segment. 6. For the year ended 31 December 2015 Hotel Securities operations trading Consolidated HK$ 000 HK$ 000 HK$ 000 TURNOVER 235, ,412 RESULTS Amount excluding impairment loss recognised in respect of property, plant and equipment Impairment loss recognised in respect of property, plant and equipment Realised loss on disposal of investment held for trading Unrealised loss in fair value of investment held for trading (60,635) (60,635) (17,496) (17,496) (10,706) (10,706) (7,706) (7,706) Segment loss (78,131) (18,412) (96,543) Interest income 69,734 Share of result of a joint venture (7,445) Impairment loss recognised in respect of available-for-sale investments (18,722) Decrease in fair value of investment properties (30,634) Finance costs (1,632) Central administrative costs and unallocated corporate expenses (34,569) Loss before taxation (119,811) 94 Annual Report 2015

97 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Segment revenues and results (CONTINUED) For the year ended 31 December Hotel Securities operations trading Consolidated HK$ 000 HK$ 000 HK$ 000 TURNOVER 406, ,647 RESULTS Amount excluding impairment loss recognised in respect of property, plant and equipment (13,467) (224) (13,691) Gain on disposals of subsidiaries 444, ,324 Segment profit (loss) 430,857 (224) 430,633 Interest income 33,248 Share of result of an associate (6,058) Share of result of a joint venture 1,490 Impairment loss recognised in respect of available-for-sale investments (12,916) Decrease in fair value of investment properties (27,694) Finance costs (14,791) Central administrative costs and unallocated corporate expenses (28,381) Profit before taxation 375,531 珀麗酒店控股有限公司 2015 年報 95

98 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Segment revenues and results (CONTINUED) The accounting policies of the operating segments are the same as the Group s accounting policies. Segment loss/profit represents the profit earned by each segment without allocation of central administrative costs including directors emoluments, interest income, finance costs, gain on disposals of subsidiaries, certain impairment losses, change in fair value of investment properties, share of result of an associate and share of result of a joint venture. There was asymmetrical allocation to operating segments because the Group allocated borrowings to operating segments without allocating the related finance costs. This is the measure reported to the chief operating decision maker for the purpose of resource allocation and performance assessment Annual Report 2015

99 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Segment assets and liabilities The following is an analysis of the Group s assets and liabilities by reportable and operating segment: HK$'000 HK$'000 SEGMENT ASSETS Hotel operations 492, ,002 Securities trading 14, Total segment assets 507, ,319 Investment properties 229, ,000 Interest in a joint venture 179 Amount due from a joint venture 27,983 Available-for-sale investments 18,722 Deposit paid for a possible acquisition of an investment 172,940 Loan notes receivable 186, ,281 Bank balances and cash 1,436,453 1,272,649 Other unallocated assets 117, ,743 Consolidated assets 2,678,164 2,972,714 SEGMENT LIABILITIES Hotel operations 84, ,243 Securities trading 6,383 Total segment liabilities 90, ,243 Tax liabilities 77,389 79,037 Deferred taxation 52,223 57,089 Other unallocated liabilities 10,000 13,274 Consolidated liabilities 230, ,643 珀麗酒店控股有限公司 2015 年報 97

100 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Segment assets and liabilities (CONTINUED) For the purposes of monitoring segment performances and 6. allocating resources between segments: all assets are allocated to operating segments other than assets relating to investment properties, available-for-sale investments, loan notes receivable, interest in an associate, bank balances and cash and other unallocated assets; and all liabilities are allocated to operating segments other than liabilities relating to current and deferred tax liabilities and other unallocated liabilities. Other segment information 2015 Hotel Securities Consolidated operations trading Unallocated total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Amounts included in the measure of segment profit or loss or segment assets: Unrealised loss in fair value of investments held for trading Realised loss on disposal of investment held for trading 7,706 7,706 10,706 10,706 Addition to non-current assets Depreciation of property, plant and equipment 32,780 32,780 Loss on disposal of property, plant and equipment 5 5 Impairment loss recognised in respect of property, plant and equipment 17,496 17, Annual Report 2015

101 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Other segment information (CONTINUED) Hotel Securities Consolidated operations trading Unallocated total HK$ 000 HK$ 000 HK$ 000 HK$ 000 Amounts included in the measure of segment profit or loss or segment assets: Decrease in fair value of investments held for trading Addition to non-current assets 30,765 30,765 Depreciation of property, plant and equipment 43,463 43,463 Loss on disposal of property, plant and equipment Addition to non-current assets include property, plant and equipment during the years ended 31 December 2015 and 珀麗酒店控股有限公司 2015 年報 99

102 For the year ended 31 December SEGMENT INFORMATION (CONTINUED) Geographical information The Group operates in two principal geographical areas the People s Republic of China (excluding Hong Kong) (the PRC ) and Hong Kong. 6. The Group s revenue from external customers by location of services provided in respect of hotel operations: HK$ 000 HK$ 000 Hong Kong 91, ,789 The PRC (excluding Hong Kong) 143, , , ,647 Information about the Group s non-current assets by location of assets are detailed below: HK$ 000 HK$ 000 The PRC (excluding Hong Kong) 673, ,209 Hong Kong 74, , ,216 1,270,546 Note: Non-current assets excluded available-for-sale investments and deposit paid for acquisition of an investment. Information about major customers and services There is no revenue from any single external customers that contributed over 10% on the total sales of the Group during the years ended 31 December 2015 and % No analysis of the Group s revenue from its major services and security trading is presented as no discrete financial information is prepared based on this analysis and the cost to develop it would be excessive. 100 Annual Report 2015

103 For the year ended 31 December INTEREST INCOME HK$ 000 HK$ 000 Interest income on: Bank deposits and others 679 6,651 Effective interest on loan notes (note 19) 19 38,248 2,377 Reversal of effective interest recognised upon initial recognition for the early repayment portion (note 19) 19 30,200 Imputed interest on amount due from a joint venture ,300 Consideration receivable 7,920 69,734 33, OTHER INCOME, GAINS AND LOSSES HK$ 000 HK$ 000 An analysis of the Group s other income, gains and losses is as follows: Unrealised loss in fair value of investments held for trading (7,706) (219) Realised loss on disposal of investment held for trading (10,706) Impairment loss recognised on other receivables (9,410) Reclassification of translation reserve to profit or loss upon deregistration of subsidiaries 1,370 Sundry income 572 6,759 Loss on disposal of property, plant and equipment (5) (125) (27,255) 7,785 珀麗酒店控股有限公司 2015 年報 101

104 For the year ended 31 December FINANCE COSTS HK$ 000 HK$ 000 Interest on borrowings 1,632 14, (LOSS) PROFIT BEFORE TAXATION HK$ 000 HK$ 000 (Loss) profit before taxation has been arrived at after charging: Depreciation of property, plant and equipment 32,780 43,463 Auditor s remuneration 3,533 3,719 Cost of inventories recognised as expenses 17,529 26,233 Impairment loss recognised in respect of property, plant and equipment 17,496 Minimum lease payments paid in respect of rented premises 32,467 98,040 Staff costs (including directors emoluments) 40,704 91,721 and after crediting: Gross rental income from shops in hotel properties less negligible outgoings (included in turnover) 25,818 24, Annual Report 2015

105 For the year ended 31 December DIRECTORS AND CHIEF EXECUTIVES EMOLUMENTS AND HIGHEST PAID EMPLOYEES The emoluments paid or payable to each of the six (2014: seven) directors and the chief executive were as follows: 11. For the year ended 31 December 2015 Notes Fees Salaries and other benefits Retirement benefit scheme contributions Total emoluments HK$ 000 HK$ 000 HK$ 000 HK$ 000 Executive directors: Dr. Yap Allan (a) Ms. Chan Ling, Eva 2, ,638 Mr. Chan Pak Cheung, Natalis Independent non-executive directors: Mr. Kwok Ka Lap, Alva Mr. Poon Kwok Hing, Albert Mr. Sin Chi Fai , ,938 珀麗酒店控股有限公司 2015 年報 103

106 For the year ended 31 December DIRECTORS AND CHIEF EXECUTIVES EMOLUMENTS AND HIGHEST PAID EMPLOYEES (CONTINUED) For the year ended 31 December Notes Fees Salaries and other benefits Retirement benefit scheme contributions Total emoluments HK$ 000 HK$ 000 HK$ 000 HK$ 000 Executive directors: Dr. Yap Allan (a) Ms. Chan Ling, Eva 2, ,117 Mr. Chan Pak Cheung, Natalis Mr. Cheung Hon Kit (b) Independent non-executive directors: Mr. Kwok Ka Lap, Alva Mr. Poon Kwok Hing, Albert Mr. Sin Chi Fai , ,297 * Ms. Chan Ling, Eva is also the chief executive of the Company and her emoluments disclosed above include those for services rendered by her as the chief executive. * Notes: (a) Appointed as chairman and executive director on 30 December (a) (b) Resigned as chairman and executive director on 30 December (b) 104 Annual Report 2015

107 For the year ended 31 December DIRECTORS AND CHIEF EXECUTIVES EMOLUMENTS AND HIGHEST PAID EMPLOYEES (CONTINUED) Neither the chief executive nor any of the directors waived any emoluments for both years. 11. Of the five individuals with the highest emoluments in the Group, one was director and the chief executive of the Company whose emolument is included in the disclosures above for both years. Except the director and chief executive as disclosed above, the emoluments of the remaining four highest paid individuals were as follows for both years: HK$ 000 HK$ 000 Salaries and other benefits 3,564 9,347 Retirement benefit scheme contributions ,680 9, Their emoluments were within the following bands: HK$1 HK$1,000,000 11,000,000 2 HK$1,000,001 HK$1,500,000 1,000,0011,500, HK$1,500,001 HK$2,000,000 1,500,0012,000,000 HK$2,000,001 HK$2,500,000 2,000,0012,500,000 HK$2,500,001 HK$3,000,000 2,500,0013,000,000 HK$3,000,001 HK$3,500,000 3,000,0013,500,000 1 Over HK$3,500,000 3,500,000 1 珀麗酒店控股有限公司 2015 年報 105

108 For the year ended 31 December INCOME TAX EXPENSE HK$ 000 HK$ 000 Current tax: PRC Enterprise Income Tax (3,030) (3,958) Underprovision in prior years (269) (893) (3,299) (4,851) Deferred tax (note 28): 28 Current year 1,731 2,251 Total income tax recognised in profit or loss (1,568) (2,600) Hong Kong Profits Tax is recognised based on management s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used is 16.5% for both periods under review. 16.5% The PRC enterprise income tax is calculated at the applicable tax rates in accordance with the relevant laws and regulations in the PRC. Taxation arising in other jurisdiction is recognised based on management s best estimate of the weighted average annual income tax rate expected for the full financial year. 106 Annual Report 2015

109 For the year ended 31 December INCOME TAX EXPENSE (CONTINUED) The tax charge for the year can be reconciled to the (loss) profit before taxation per the consolidated statement of profit or loss and other comprehensive income as follows: HK$ 000 HK$ 000 (Loss) profit before taxation (119,811) 375,531 Tax at the domestic income tax rate 16.5% of 16.5% (19,769) 64,948 Tax effect of expenses that are not deductible in determining taxable profit 22,363 17,294 Tax effect of income that is not taxable in determining taxable profit (16,985) (91,084) Tax effect of tax losses not recognised 12,909 12,532 Tax effect of share of result of an associate 1,000 Tax effect of share of result of a joint venture 1,228 (246) Effect of different tax rates of subsidiaries operating in other jurisdictions (3,299) (1,017) Underprovision in prior years Others 4,852 (1,720) Income tax expense for the year 1,568 2, DIVIDEND No dividend was proposed for the year ended 31 December 2015, nor has any dividend been proposed since the end of the reporting period. 13. 股 During the year ended 31 December 2014, the Group distributed special dividends of HK$0.1 per share, totalling of HK$65,768,000. Other than the above, no dividend had been paid in ,768,000 珀麗酒店控股有限公司 2015 年報 107

110 For the year ended 31 December (LOSS) EARNINGS PER SHARE The calculation of the basic (loss) earnings per share attributable to the owners of the Company is based on the following data: HK$ 000 HK$ 000 (Loss) earnings for the purpose of basic earnings per share (105,098) 380,755 Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share for 2015 and ,912, ,675,872 There was no potential ordinary share outstanding during the year ended 31 December Annual Report 2015

111 For the year ended 31 December PROPERTY, PLANT AND EQUIPMENT 15. Office Furniture equipment Hotel and Leasehold Motor and properties fixtures improvements vehicles machinery Vessels Total HK 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Notes (a b) (a b) COST At 1 January ,912 37, ,777 1,830 35,070 35, ,539 Additions 18,000 1,456 11, ,765 Disposals (931) (409) (118) (1,458) Disposals of subsidiaries (686) (1,730) (506) (1,387) (4,309) Currency realignment (19,896) (423) (2,339) (23) (729) (23,410) At 31 December ,016 36, , ,886 35, ,127 Additions Disposals (4,185) (500) (6) (4,691) Currency realignment (43,079) (1,008) (5,352) (48) (1,475) (50,962) At 31 December ,937 32, , ,415 35, ,440 DEPRECIATION AND IMPAIRMENT At 1 January ,628 31,910 95,754 1,324 28,857 9, ,860 Provided for the year 25,107 1,760 3, ,395 43,463 Eliminated on disposals (844) (369) (77) (1,290) Eliminated on disposals of subsidiaries (566) (1,730) (260) (991) (3,547) Currency realignment (5,948) (317) (1,978) (21) (560) (8,824) At 31 December ,787 31,943 95, ,797 21, ,662 Provided for the year 23,527 1,282 2, ,707 32,780 Eliminated on disposals (4,166) (367) (5) (4,538) Impairment loss recognised for the year 17,496 17,496 Currency realignment (15,507) (811) (4,800) (44) (1,053) (22,215) At 31 December 2015 CARRYING VALUES At 31 December 2015 At 31 December ,303 28,248 93, ,058 26, , ,634 4,047 20, ,357 9, , ,229 4,864 23, ,089 13, ,465 珀麗酒店控股有限公司 2015 年報 109

112 For the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (CONTINUED) The above items of property, plant and equipment are depreciated on a straight-line basis at the following rates per annum, after taking into account of their estimate residual value. 15. Hotel properties (comprising Over the shorter of the lease land and buildings) terms of 35 to 40 years and 2.5% Furniture and fixtures 10% 20% Leasehold improvements 10% 20% or the term of the lease, if shorter Motor vehicles 8.33% 20% Office equipment and 20% machinery Vessels 12% % 10% 20% 10% 20% 8.33% 20% 20% 12% An analysis of the properties of the Group (other than the properties amounting to HK$62,823,000 (2014: HK$89,804,000) set out in (b) below) held at the end of the reporting period is as follows: (b)62,823,000 89,804,000 Hotel properties HK$ 000 HK$ 000 In the PRC (notes a) a 364, , Annual Report 2015

113 For the year ended 31 December PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Notes: 15. (a) Included in the hotel properties in the PRC of approximately HK$364,025,000 (2014: HK$393,425,000) is a hotel property with a carrying value of approximately HK$181,359,000 (2014: HK$201,419,000) of which a subsidiary of the Company has been granted the right to operate and manage the hotel in Guangzhou, the PRC for a period from January 1987 to January 2017, and subject to certain conditions to be fulfilled by the subsidiary, the operating period may be extended for a further period of 20 years. (a) 364,025, ,425, ,359, ,419,000 (b) Included in the hotel properties at the end of the reporting period is a hotel property with a carrying value of approximately HK$62,823,000 (2014: HK$89,804,000) situated in Luoyang, the PRC in which the Group holds the property right. The land use rights of the hotel property is currently held by Luoyang Power Supply Bureau, a non-controlling shareholder of the subsidiary holding the hotel property. Pursuant to a land use rights agreement entered into between Luoyang Power Supply Bureau and the subsidiary on 15 April 1999 (before the Group acquired the said subsidiary in 2004), Luoyang Power Supply Bureau agreed to permit the said subsidiary to use the land upon which the hotel property is now situated for a term commencing from April 1999 to April 2049 for hotel use. (b) 62,823,000 89,804,000 (c) The directors of the Company have reviewed the recoverability of the carrying amount of the Group s certain hotel properties with reference to their fair values at 31 December 2015, which have been arrived at on the basis of a valuation carried out on the respective dates by Asset Appraisal Limited, an independent qualified professional valuer not connected with the Group and a member of the Hong Kong Institute of Surveyors with appropriate qualifications and recent experiences in the valuation of similar properties in relevant location. The valuation was arrived at the comparison method based on market observable transactions of similar properties and adjusts to reflect the conditions and locations of the subject properties (Note). During the year ended 31 December 2015, an impairment loss of HK$17,496,000 (2014: nil) was recognised in relation to the impairment testing carried out for a hotel property of the Group as its fair value determined in this manner was estimated to be lower than its carrying amount. (c) 17,496,000 Note: Under the comparison method, transacted prices (prices realised) or, if not available, asked prices (market prices) of comparable properties is made. Comparable properties of similar size, character and location are analysed and adjustments are made to take account of the respective advantages and disadvantages of each property, and also the possible outcome of the negotiation from asked prices to transacted prices, in order to arrive at a reasonable comparison of capital values. 珀麗酒店控股有限公司 2015 年報 111

114 For the year ended 31 December INVESTMENT PROPERTIES 16. HK$ 000 FAIR VALUE At 1 January ,000 Currency realignment (4,306) Decrease in fair value recognised in the profit or loss (27,694) At 31 December ,000 Currency realignment (7,366) Decrease in fair value recognised in the profit or loss (30,634) At 31 December ,000 The fair value at 31 December 2015 and 31 December 2014 has been arrived at on the basis of a valuation carried out on the respective dates by Norton Appraisals Limited ( Norton Appraisals ), an independent qualified professional valuer not connected to the Group. Norton Appraisals is a member of the Hong Kong Institute of Surveyors, and has appropriate qualifications and recent experiences in the valuation of properties in the relevant locations. The fair value was determined based on the market comparison approach that reflects recent transaction prices for similar properties and also consider its term of operation up to 15 October There 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. 112 Annual Report 2015

115 For the year ended 31 December INVESTMENT PROPERTIES (CONTINUED) The Group s investment properties represent a completed complex for commercial use, which is situated on medium-term land use right in the PRC. The Group had intended to hold the property interest held under operating lease to earn rentals and/ or for capital appreciation. Accordingly, the property interest held under operating lease is measured using the fair value model and is classified and accounted for as investment properties. 16. The following table gives information about how the fair value of the investment properties is determined (in particular, the valuation techniques and inputs used), as well as the fair value hierarchy into which the fair value measurement is categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurement is observable. Valuation technique(s) and Significant unobservable Relationship of unobservable Fair value hierarchy key input(s) input(s) inputs to fair value Level 3 Direct comparison approach Adjusting factors: A slight increase in the adjusting The key inputs are: Price per square metre Adjusting factors on location and residual operating period (a) ranging from 20% to 50% (2014: 20% to 50%) on location; (a) 20% 50% 20% 50% (b) 49% (2014: 49%) on residual operating period (b) 49% 49% factor on location metre will decrease significantly the fair value. A slight increase in the adjusting factor on residual operating period will decrease significantly the fair value. 珀麗酒店控股有限公司 2015 年報 113

116 For the year ended 31 December INVESTMENT PROPERTIES (CONTINUED) Fair value measurements and valuation processes In estimating the fair value of the Group s investment property, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages third party qualified valuers to perform the valuation of the Group s investment property. At the end of each reporting period, the management of the Group works closely with the qualified external valuers to establish and determine the appropriate valuation techniques and inputs for Level 2 and Level 3 fair value measurements. The Group will first consider and adopt Level 2 inputs where inputs can be derived observable quoted prices in the active market. When Level 2 inputs are not available, the Group will adopt valuation techniques that include Level 3 inputs. Where there is a material change in the fair value of the assets, the causes of the fluctuations will be reported to the board of directors of the Group. 16. Information about the valuation techniques and inputs used in determining the fair value of the Group s investment property is disclosed above. There were no transfers into or out of Level 3 during the year. The resulting decrease in fair value of the investment property of approximately HK$30,634,000 for the year ended 31 December 2015 (decrease in 2014: HK$27,694,000) has been recognised in the profit or loss. 30,634,000 27,694, Annual Report 2015

117 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE 17. 合 公司 合 公司 HK$ 000 HK$ 000 Cost of investment unlisted Share of post-acquisition losses and other comprehensive income, net of dividend received Deemed capital contribution interest-free loan (7,445) 7, Amount due from a joint venture 27,983 (a) For the year ended 31 December 2015 During the current year, the Group established an entity, in which the Group holds 50% equity interest, Star One Investments Limited ( Star One ). There were two shares at par value of US$1 each allotted and issued as fully paid shares to the Group and a joint venture partner respectively. Pursuant to the relevant shareholders agreement, the Group is able to exercise joint control with counterparty over Star One as the Group has the power to participate in the financial and operating policy decisions of the investee. Accordingly, Star One is regarded as a joint venture of the Group. In addition, the Group further advanced an amount of US$4,500,000 (equivalent to approximately HK$35,000,000) to the investee as its working capital for business development. (a) 50% S t a r O n e Investments Limited Star One 1 Star One Star One 4,500,000 35,000,000 珀麗酒店控股有限公司 2015 年報 115

118 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (CONTINUED) (a) For the year ended 31 December 2015 (CONTINUED) The amount due from a joint venture with principal of US$4,500,000 (equivalent to approximately HK$35,000,000) (2014: nil) is unsecured, non-interest bearing and have no fixed repayment terms. In the opinion of the directors, settlement is neither planned nor likely to occur in the foreseeable future. The directors consider that the amount forms part of the net investment in the joint venture. At the end of the reporting period, the carrying amounts of such non-interest bearing portion of HK$7,624,000 (2014: nil) is determined based on the present value of future cash flows discounted using an effective interest rate of 5% (2014: n/a). It is expected that the amount will be repayable in 5 years. The corresponding adjustment in relation to the imputed interest on the non-interest bearing amount due from a joint venture is recognised against the interest in the joint venture. The amount is not expected to be repaid within one year and are therefore classified as non-current. 17. 合 合 (a) 4, 5 0 0, ,000,000 7,624,000 5% 116 Annual Report 2015

119 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (CONTINUED) (a) For the year ended 31 December 2015 (CONTINUED) As at 31 December 2015 the Group had interest in the following joint venture: 17. 合 公司 合 公司 (a) Name of entity Form of entity Place of establishment/ principal place of operation Class of share held Proportion of nominal value of registered capital/ issued capital held by the Group Proportion of voting rights held by the Group Principal activities Star One Limited liability The BVI and the Ordinary 50% N/A 50% N/A Provision of aviation company PRC business in the PRC Summarised financial information of the joint venture Summarised financial information in respect of the Group s joint venture is set out below. The summarised financial information below represents amounts shown in the joint venture s financial statements prepared in accordance with HKFRSs. The joint venture is accounted for using the equity method in these consolidated financial statements HK$ 000 Current assets 4,009 Non-current assets 238,105 Current liabilities (118,004) Non-current liabilities (139,000) 珀麗酒店控股有限公司 2015 年報 117

120 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (CONTINUED) (a) For the year ended 31 December 2015 (CONTINUED) Summarised financial information of the joint venture (CONTINUED) Current assets mainly comprise of other receivables of HK$4,009,000. Current liabilities mainly comprise of other payables of HK$73,009,000, amount due to a group company of HK$35,000,000 and bank borrowing of HK$9,995,000. Non-current asset solely comprises of property, plant and equipment of HK$238,105,000. Noncurrent liability solely comprises of bank borrowing of HK$139,000, 合 合 (a) 4,009,000 73,009, , 0 0 0, ,995, ,105, ,000, to HK$ 000 Revenue for the period Loss for the period (14,890) Other comprehensive expense for the period Total comprehensive expense for the period (14,890) 118 Annual Report 2015

121 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (CONTINUED) (a) For the year ended 31 December 2015 (CONTINUED) Summarised financial information of the joint venture (CONTINUED) Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements: 17. 合 公司 合 公司 (a) 2015 HK$ 000 Net liabilities of Star One Star One (14,890) Proportion of the Group s ownership Star One interest in Star One 50% Deemed capital contribution interest-free loan 7,624 Carrying amount of the Group s interest Star One in Star One 179 (b) For the year ended 31 December 2014 As disclosed in note 33, following the completion of the transaction on 14 March 2014, the Group, through Eagle Spirit Holdings Limited ( Eagle Spirit ), held 40% interest in More Star Limited ( More Star ) and More Star ceased to be a wholly-owned subsidiary of the Group. As the Group was able to exercise joint control over the operation of More Star because major decisions require unanimous consent of both shareholders according to the shareholders agreement entered into between Eagle Spirit, the purchaser and More Star, More Star was accounted for as a joint venture accordingly. (b) 33 Eagle Spirit Holdings Limited Eagle Spirit More Star Limited More Star 40% More Star Eagle Spirit More Star More Star More Star More Star 珀麗酒店控股有限公司 2015 年報 119

122 For the year ended 31 December INTEREST IN A JOINT VENTURE/AMOUNT DUE FROM A JOINT VENTURE (CONTINUED) (b) For the year ended 31 December 2014 (CONTINUED) The recognition of the Group s retained interest of 40% in More Star was initially measured at its fair value, which was determined with reference to the estimated consideration amount for the disposal of the 40% interest in More Star as agreed between the Group and the potential buyer soon after the date of loss of control of More Star, details of the disposal are set out in note 合 合 (b) More Star 40% More Star More Star 40% 33 On 11 April 2014, the Group entered into sale and purchase agreements with ITC Properties Limited ( ITCP ), in which one of the transactions resulting the disposal of the 40% retained interest in More Star and the details are also in note 33. More Star 40% 33 On 15 December 2014, the Group disposed entire equity interest in Eagle Spirit. Thus, More Star ceased to be a joint venture of the Group on that date. During the period from 11 April 2014 to 15 December 2014, the Group shared its result of HK$1,490,000 accordingly. Eagle Spirit More Star 1,490, Annual Report 2015

123 For the year ended 31 December AVAILABLE-FOR-SALE INVESTMENTS HK$ 000 HK$ 000 Equity securities Unlisted shares, at cost 63,877 63,877 Less: Impairment losses recognised (63,877) (45,155) Amounts shown under non-current assets 18,722 Particulars of the Group s major available-for-sale investments as at 31 December 2015 and 2014 are as follows: Name of entity Place of establishment/ incorporation Paid up capital/ registered capital Proportion of nominal value of issued capital held by the Group Interest attributable to the Group Carrying amount Principal activities HK$ 000 HK$ 000 PRC RMB8,000 25% 25% 25% 25% 18,722 Property investment ( ) (Note a) 8,000 a More Cash Ltd. British Virgin US$10 6% 6% 6% 6% Property investment ( More Cash ) (Note b) Islands More Cash Ltd. 10 More Cash b 18,722 Notes: (a) Though a subsidiary of the Group holds a 25% interest in, the directors considered that the Group cannot exercise significant influence on the financial and operating policies of and accordingly, it is classified as an available-for-sale investment. (a) 25% (b) More Cash wholly holds a subsidiary,, which is incorporated in the PRC and engaged in property development in the PRC. (b) More Cash 珀麗酒店控股有限公司 2015 年報 121

124 For the year ended 31 December AVAILABLE-FOR-SALE INVESTMENTS (CONTINUED) The above unlisted investments represent investments in unlisted equity securities issued by private entities established in the PRC or incorporated in the British Virgin Islands. They are measured at cost less impairment at end of the reporting period because the range of reasonable fair value estimates is so significant that the directors of the Company are of the opinion that their fair values cannot be measured reliably. 18. During the year ended 31 December 2015, the Group identified impairment losses of HK$18,722,000 (2014: HK$12,916,000) in the available-for-sale investment after taking into account of the decline in the market values of underlying properties held by their investees. As the decline in value is significant or for a prolonged period, the impairment loss is recognised in the profit or loss during the year. More Cash 18,722,000 12,916, LOAN NOTES RECEIVABLE Following the completion of the disposal of Eagle Spirit and Makerston Limited ( Makerston ) (details in note 33), the Group received the loan notes with principal amount of HK$500,000,000 issued by ITCP as part of the total consideration. The loan notes bear coupon interest at 5% per annum (payable semi-annually in arrears), and with maturity period of 2 years on 14 December At initial recognition, the fair value of the loan notes are determined based on the valuation report issued by an independent professional valuers, which is measured at the present value of contractual future cash flows discounted at the effective interest rate of 12.9% per annum, taking into account the credit standing of ITCP and the remaining time to maturity. Pursuant to the terms of the loan notes, ITCP has an option to early redeem the loan notes at par plus accrued outstanding interest. Based on the valuation report performed by the independent professional valuers and in the opinion of the Directors, the fair value of such early redemption option is insignificant. 19. E a g l e S p i r i t M a k e r s t o n Limited Makerston ,000,000 5% 12.9% 122 Annual Report 2015

125 For the year ended 31 December LOAN NOTES RECEIVABLE (CONTINUED) On 23 June 2015, ITCP redeemed part of the loan notes with principal amount of HK$300,000,000 at par and settled the accrued interests accordingly. Hence, the relevant imputed interest of HK$30,200,000 recognised upon initial recognition for the period from the date of redemption to the maturity date of such redeemed loan notes was reversed ,000,000 30,200,000 The movement of the loan notes receivable for the year is set out below: HK$ 000 Initial recognition on 15 December ,000 Effective interest recognised in 7 profit or loss (Note 7) 2,377 Coupon interest received (1,096) As at 31 December ,281 Effective interest recognised in 7 profit or loss (Note 7) 38,248 Reversal of effective interest recognised upon initial recognition for the 7 early repayment portion (Note 7) 30,200 Coupon interest received (17,151) Early repayment (300,000) As at 31 December ,578 珀麗酒店控股有限公司 2015 年報 123

126 For the year ended 31 December DEPOSIT PAID FOR A POSSIBLE ACQUISITION OF AN INVESTMENT The entire balance at 31 December 2015 represented a refundable earnest money paid by the Group for entering into a memorandum of understanding relating to a possible investment which holds 25% interest in a hotel operated and located in British Columbia, Canada. Details of the transaction were disclosed in the Company s announcements dated on 2 July 2015, 31 July 2015, 31 August 2015, 25 September 2015, 30 November 2015 and 29 January % Up to the date of authorisation of this annual report, no formal agreement in relation to this possible investment has been entered into by the Group and such transaction has yet to be completed. 21. OTHER ASSETS HK$ 000 HK$ 000 Rental deposits and prepaid rental for hotel operating agreements 19,800 19,800 The amounts represented rental deposit and prepaid rental paid in connection with hotel operating agreements, which entitle the Group to manage and operate a hotel exclusively in Hong Kong for a period of 6 years. The rental deposits are fully refundable upon the end of the lease term. 22. INVENTORIES The inventories were carried at cost and represent principally food, beverages and general stores which are to be utilised in the ordinary course of operations Annual Report 2015

127 For the year ended 31 December TRADE AND OTHER RECEIVABLES HK$ 000 HK$ 000 Trade receivables 5,367 4,680 Consideration receivable (note 33) ,000 Rental and utility deposits 2,249 3,222 Other receivables and prepayments 110, ,657 Loan receivables 37,116 Total trade and other receivables 118, ,675 The Group allows an average credit period of 0 to 30 days to its trade customers. The following is an analysis of trade receivables by age, presented based on invoice date at the end of the reporting period which approximated the respective revenue recognition date HK$ 000 HK$ days ,491 3, days days Over 90 days ,367 4,680 Before accepting any new customer, the Group has assessed the potential customer s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed once a year, and the Group reviews the repayment history of receivables by each customer with reference to the payment terms stated in contracts to determine the recoverability of a trade receivable. In the opinion of the directors of the Company, 84% (2014: 84%) of the trade receivables that are neither past due nor impaired have good credit quality at the end of the reporting period with reference to past settlement history. 84% 84% 珀麗酒店控股有限公司 2015 年報 125

128 For the year ended 31 December TRADE AND OTHER RECEIVABLES (CONTINUED) Included in the Group s trade receivable balance are debtors with aggregate carrying amount of approximately HK$876,000 (2014: HK$752,000) which are past due at the reporting period for which the Group has not provided for impairment loss as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances , ,000 Aging of trade receivables which are past due but not impaired HK$ 000 HK$ days days Over 90 days Total The Group performed assessment on individual trade receivables and no allowance was recognised for both years. Consideration receivable As at 31 December 2014, the amount represented the consideration receivables from the disposal of Eagle Spirit (as disclosed in note 33). Subsequent to the end of the reporting period, the amount had been fully settled in February Eagle Spirit Annual Report 2015

129 For the year ended 31 December TRADE AND OTHER RECEIVABLES (CONTINUED) Other receivables and prepayments On 31 December 2014, the Company and two independent third parties (the Third Parties ) entered into agreements, pursuant to which the Company agreed to provide a short term interestfree loan of HK$75 million (the loan ) to the Third Parties for lending to a target group in order to facilitate an acquisition of the entire equity interest in a PRC Company, which is an entity established under the laws of the PRC and is principally engaged in property leasing and management, and owns a parcel of land in Zhuhai, the PRC. The loan shall be repaid on the date which is three months from the date of the advance. During the year ended 31 December 2015, the Group and the counterparties signed several extension letters to further extend the repayment date of the loan and the loan was extended to 29 April Details were disclosed in the Company s announcements dated 31 December 2014, 31 March, 30 June, 30 September and 30 December ,000,000 The remaining balance of other receivables represents mainly prepayment and deposit for operation use. In addition, impairment loss of other receivables of HK$9,410,000 (2014: nil) was recognised in the profit or loss for the year ended 31 December 2015 due to the sundry receivables relating to a hotel operation which could not be recovered. 9,410,000 Loan receivables Loan receivables as at 31 December 2014 represented loan to independent third parties with repayment terms within one year and interest bearing from 5% to 10% per annum. In the opinion of the directors of the Company, the amount was neither past due nor impaired have good credit quality at the end of the reporting period with reference to past settlement history. 5% 10% 珀麗酒店控股有限公司 2015 年報 127

130 For the year ended 31 December INVESTMENTS HELD FOR TRADING Held-for-trading investments include: HK$ 000 HK$ 000 Listed securities Equity securities listed in Hong Kong 14, The fair value was based on the quoted prices of the respective securities in active markets. At 31 December 2015 and 2014, no investments held for trading have been pledged as security. 25. CASH AND CASH EQUIVALENT Bank balances and cash Bank balances and cash comprise cash held by the Group and short-term bank deposits carry interest at prevailing market interest rates of 0.01% (2014: 0.01%) per annum % 0.01% Cash held by securities broker Cash held by securities broker represented unrestricted deposits of approximately HK$390,518,000 (2014: nil) placed with securities brokers for trading securities in Hong Kong. 390,518, Annual Report 2015

131 For the year ended 31 December TRADE AND OTHER PAYABLES Included in trade and other payables are trade payables of approximately HK$5,905,000 (2014: HK$7,210,000) and the aged analysis of the trade payables presented based on the invoice date at the end of the reporting period is as follows: 26. 5,905,000 7,210, HK$ 000 HK$ days ,037 3, days ,128 1, days Over 90 days ,905 7,210 The credit period on purchases of goods ranged from 30 to 60 days. Included in other payables at 31 December 2015 are advance receipt from customers of approximately HK$3,591,000 (2014: HK$4,026,000), deposits received for rented premises of approximately HK$11,679,000 (2014: HK$11,311,000), payable for hotel construction amounting to approximately HK$320,000 (2014: HK$229,000), accrual for administrative expenses of approximately HK$38,025,000 (2014: HK$33,259,000) and interest payables on other borrowings of approximately HK$345,000 (2014: HK$345,000) ,591,000 4,026,000 11,679,000 11,311, , ,000 38,025,000 33,259, , ,000 珀麗酒店控股有限公司 2015 年報 129

132 For the year ended 31 December BORROWINGS 27. Effective interest rate Carrying amount HK$ 000 HK$ 000 Other borrowings Higher of HIBOR plus 2.5% or 3% unsecured HKD loan Hong Kong Dollar Prime Rate plus 2% unsecured HKD loan N/A 3.0% 250, % 7.0% 10,000 10,000 10, , HK$ 000 HK$ 000 Carrying amount repayable*: * Within one year 10, ,000 More than one year but not exceeding two years 150,000 10, ,000 Less: Amount due within one year shown under current liabilities (10,000) (110,000) Amounts shown under non-current liabilities 150,000 * The amounts due are based on scheduled repayment dates set out in the loan agreements. * 130 Annual Report 2015

133 For the year ended 31 December BORROWINGS (CONTINUED) At the end of the reporting period, the Group has no undrawn borrowing facilities. 27. As at 31 December 2014, included in other borrowings were balance of HK$250,000,000 with a company which was a close strategic business partner of the Company. During the year ended 31 December 2015, the other borrowings of HK$250,000,000 was settled by the Group by using a part of the proceeds receiving from disposal of subsidiaries. 250,000, ,000, DEFERRED TAXATION The followings are the major deferred tax balances liabilities and movement thereon during the current and prior years: 28. Accelerated tax depreciation on hotel properties HK$ 000 At 1 January ,804 Currency realignment (1,464) Credit to the profit or loss (note 12) 12 (2,251) At 31 December ,089 Currency realignment (3,135) Credit to the profit or loss (note 12) 12 (1,731) At 31 December ,223 As at 31 December 2015, the Group has unused tax losses subject to the agreement of tax authorities of approximately HK$789,813,000 (2014: HK$797,349,000) available for offset against future profits. No deferred tax asset has been recognised in respect of these tax losses due to the unpredictability of future profit streams. Pursuant to the relevant laws and regulations in the PRC, the unutilised tax losses of approximately HK$63,229,000 (2014: HK$65,438,000) can be carried forward for a period of five years up to The losses arising from overseas subsidiaries are insignificant, which will expire after a specific period of time. Other unrecognised tax losses may be carried forward indefinitely. 789,813, ,349,000 63,229,000 65,438,000 珀麗酒店控股有限公司 2015 年報 131

134 For the year ended 31 December SHARE CAPITAL 29. Number of shares Amount HK$ 000 Authorised: Shares of HK$0.01 each at 1 January 2014, 31 December 2014 and 31 December ,000,000,000 1,500,000 Issued and fully paid: Shares of HK$0.01 each at 1 January 2014 and 31 December ,675,872 6,577 Issue of new shares (Note) 131,535,174 1,315 Shares of HK$0.01 each at 31 December ,211,046 7,892 Note: On 8 June 2015, the Company completed a placing of 131,535,174 new shares under the general mandate at a placing price of HK$0.89 per placing share. The net proceeds from the placing, after deducting directly attributable cost of HK$3.05 million, were approximately HK$114 million. Details of the placing were disclosed in the Company s announcements dated 26 May 2015, 27 May 2015 and 8 June All ordinary shares issued during the year rank pari passu with the then existing ordinary shares in all respects ,535,174 3,050, ,000, SHARE OPTION SCHEME The Company adopted a share option scheme (the Scheme ) on 30 May 2013 and is valid and effective for a period of 10 years commencing on 3 June 2013 (the date on which the last condition to the Scheme was satisfied) until 2 June 2023), subject to earlier termination by the Company in general meeting or by the Board Annual Report 2015

135 For the year ended 31 December SHARE OPTION SCHEME (CONTINUED) The purpose of the Scheme is to enable the Company to grant options to subscribe for shares of the Company (the Options ) to any eligible employee (including executive directors) and any non-executive director of the Group or any entity in which the Group holds an equity interest (the Invested Entity ), any supplier of goods or services to the Group or any Invested Entity, any customer of the Group or any Invested Entity, any consultant, adviser, manager, officer and entity that provides research, development or other technological support to the Group or any Invested Entity, and any shareholder or any member of the Group who has contributed to the business of the Group or any Invested Entity or any holder of any securities issued by any member of the Group or any Invested Entity (the Participant ), as incentives or rewards for their contributions or potential contribution to the Group. 30. 股 The total number of shares in respect of which Options may be granted under the Scheme, when aggregated with any shares subject to any other schemes of the Company, is not permitted to exceed 10% of the shares of the Company in issue on the date of adoption of the Scheme (the Scheme Mandate Limit ) unless the Company obtains an approval from shareholders in a general meeting to refresh the Scheme Mandate Limit provided that the Scheme Mandate Limit so refreshed must not exceed 10% of the shares of the Company in issue as at the date of approval of refreshment by shareholders. Nevertheless, the maximum number of shares of the Company which may be issued upon exercise of all outstanding Options granted and not yet exercised under the Scheme and any other share option schemes of the Company shall not exceed 30% of the issued shares of the Company from time to time. 10% 10% 30% The acceptance of an Option granted under the Scheme must be taken up within 21 days from the date of grant and to be accompanied by payment of the consideration of HK$1.00. The Options may be exercised in accordance with the terms of the Scheme at any time during a period as the Board may in its absolute discretion determine which shall not be more than 10 years from the date of grant and subject to the provisions of early termination thereof and the Board may provide restrictions on the exercise of an Option No Options under the Scheme were granted, exercised, cancelled or lapsed during the year, nor outstanding at 31 December 珀麗酒店控股有限公司 2015 年報 133

136 For the year ended 31 December 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 balance. The Group s overall strategy 31. remains unchanged from prior year. The capital structure of the Group consists of net debt, which includes the borrowings disclosed in note 27 (net of cash and cash equivalents) and equity attributable to owners of the Company, comprising issued share capital, share premium, reserves and retained profits. 27 The directors of the Company review the capital structure on a semi-annually basis. As part of this review, the directors consider the cost of capital and the risks associates with each class of capital. Based on recommendations of the directors, the Group will balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt. 134 Annual Report 2015

137 For the year ended 31 December FINANCIAL INSTRUMENTS 32a. Categories of financial instruments a HK$ 000 HK$ 000 Financial assets Loans and receivables (including cash and cash equivalents) 1,787,075 2,115,605 FVTPL Held for trading 14, Available-for-sale financial assets 18,722 1,801,481 2,134,644 Financial liabilities Amortised cost 29, ,252 32b. Financial risk management objectives and policies The Group s management monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk. 32b. There has been no change to the types of the Group s exposure in respect of financial instruments or the manner in which it manages and measures the risks. 珀麗酒店控股有限公司 2015 年報 135

138 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Market risk b. (i) Foreign currency risk management (i) The Group does not have significant foreign currency sales and purchases, therefore exposure to foreign currency risk is minimal. (ii) Interest rate risk management (ii) The Group s cash flow interest rate risk relates primarily to variable-rate bank balances (note 25) and borrowings (note 27). The Group s cash flow interest rate is mainly resulted from the fluctuation of market interest rate. The sensitivity analysis below have been determined based on the exposure to interest rates on pledged bank deposits, bank balances and bank borrowings. The analysis is prepared assuming the financial instruments outstanding at the end of reporting date were outstanding for the whole year. A 50 basis point increase is used when reporting interest rate risk internally to key management 50 personnel and represents management s assessment of the reasonably possible change in interest rates. If interest rates had been 25 basis points higher and all other variables were held constant, the Group s loss 25 for the year ended 31 December 2015 would increase by approximately HK$2,163,000 (2014: profit for the year decrease by approximately HK$2,114,000). Management does not expect a significant decrease of 2,163,000 interest rate. 2,114,000 In management s opinion, the sensitivity analysis is unrepresentative of inherent interest rate risk as the year end exposure does not reflect the exposure during the year. 136 Annual Report 2015

139 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Market risk (CONTINUED) (iii) Other price risk management The Group is exposed to equity and other price risks through its investments in listed equity securities. The management manages this exposure by maintaining a portfolio of investments with different risks. The Group s equity and other price risks are mainly concentrated on listed equity securities quoted in the open markets b. (iii) Sensitivity analysis The sensitivity analyses below have been determined based on the exposure to equity price risk at the end of the reporting period. If equity prices had been 10% higher/lower loss for the year ended 31 December 2015 would decrease/increase by HK$1,203,000 (2014: HK$26,000) as a result of the changes in fair value of investments held for trading. 1 0 % 1,203,000 26,000 The Group s sensitivity to equity and other price risks has increased during the year mainly due to the addition in the investments held for trading. 珀麗酒店控股有限公司 2015 年報 137

140 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Credit risk As at 31 December 2015, the Group s maximum exposure to credit risk which will cause a financial loss to the Group due to discharge an obligation by the counterparties 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 b. In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other 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 trade debt and debt investment at the end of the reporting period end 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. The Group has concentration of credit risk on its deposit paid for a possible acquisition of an investment of HK$172,940,000. The management of the Group considers that the credit risk on such deposit paid is limited as it is an earnest money and the counterparty has good credit quality by taking into account of its financial background. 172,940,000 The Group is exposed to credit risk in respect of its loan notes receivable. As at 31 December 2015, the carrying amount of loan notes receivable is HK$186,578,000 (2014: HK$435,281,000). The management of the Group considers that the credit risk on the loan notes receivables is limited as the counterparty is a company listed on the Stock Exchange. 186,578, ,281, Annual Report 2015

141 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Credit risk (CONTINUED) The Group also has concentration of credit risk on aggregate advances to third party amounting to HK$75,000,000 (2014: HK$75,000,000). The Group s advances to third party mentioned above has good credit. An internal credit assessment process to assess the potential borrower s credit quality and defines credit limits by borrower b. 75,000,000 75,000,000 As at 31 December 2014, the Group has concentration of credit risks on its deferred consideration receivables from disposal of subsidiaries (note 33) are due from one counterparty. The balance was due from a counterparty principally engaged in property development and investment in Macau, the PRC and Hong Kong and engaged in hotel operation in the PRC. As represented by the directors of the Company, the counterparty has good credit quality by taking into account of its financial background. 33 The credit risk on liquid funds is limited because the counterparties are banks and securities broker with good reputation. Other than above, the Group does not have any other significant concentration of credit risk at the end of the reporting period. 珀麗酒店控股有限公司 2015 年報 139

142 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has 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 reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities b. The Group does not have unutilised banking facilities in both years. Liquidity tables The following table details the Group s remaining contractual maturity for its non-derivative financial liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Specifically, bank loans with a repayment on demand clause are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities are based on the agreed repayment dates. 140 Annual Report 2015

143 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Liquidity risk management (CONTINUED) Liquidity tables (CONTINUED) The table includes both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curve at the end of the reporting period b. In addition, the following table details the Group s liquidity analysis for its derivative financial instruments. The tables have been drawn up based on the undiscounted contractual net cash (inflows) and outflows on derivative instruments that settle on a net basis, and the undiscounted gross (inflows) and outflows on those derivatives that require gross settlement. When the amount payable is not fixed, the amount disclosed has been determined by reference to the projected interest rates as illustrated by the yield curves existing at the end of the reporting period. The liquidity analysis for the Group s derivative financial instruments are prepared based on the contractual maturities as the management consider that the contractual maturities are essential for an understanding of the timing of the cash flows of derivatives. 珀麗酒店控股有限公司 2015 年報 141

144 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Liquidity risk management (CONTINUED) Liquidity tables (CONTINUED) b. Weighted average interest rate On demand or less than 1 year 1 2 years 2 5 years Total undiscounted cash flows Carrying amount 31 December % HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 % 2015 Non-derivative financial assets Amount due from a joint venture 5 35,000 35,000 27,983 Trade and other receivables 136, , ,061 Loan notes receivable , , ,578 Investments held for trading 14,406 14,406 14,406 Bank balances and cash ,436,453 1,436,453 1,436,453 1,786,920 35,000 1,821,920 1,801,481 Non-derivative financial liabilities Trade and other payables 19,783 19,783 19,783 Borrowings variable rate 7 10,700 10,700 10,000 30,483 30,483 29, Annual Report 2015

145 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32b. Financial risk management objectives and policies (CONTINUED) Liquidity risk management (CONTINUED) Liquidity tables (CONTINUED) b. Weighted average interest rate On demand or less than 1 year 1 2 years 2 5 years Total undiscounted cash flows Carrying amount 31 December % HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 % 2014 Non-derivative financial assets Available-for-sale investments 18,722 18,722 18,722 Trade and other receivables 407, , ,675 Loan notes receivable , , ,281 Investments held for trading Bank balances and cash ,272,649 1,272,649 1,272,649 1,699, ,000 2,249,363 2,134,644 Non-derivative financial liabilities Trade and other payables 11,252 11,252 11,252 Borrowings variable rate , , , , , , , ,252 The amounts included above for variable interest rate instruments for non-derivative financial liabilities is subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period. 珀麗酒店控股有限公司 2015 年報 143

146 For the year ended 31 December FINANCIAL INSTRUMENTS (CONTINUED) 32c. Fair value measurements of financial instruments This note provides information about how the Group determines fair values of various financial assets and financial liabilities c. Fair value of the Group s financial assets and financial liabilities that are measured at fair value on a recurring basis Some of the Group s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and financial liabilities are determined (in particular, the valuation technique(s) and inputs used). Financial assets 31 December 2015 Fair value as at 31 December 2014 Fair value hierarchy Valuation technique(s) and key inputs Significant unobservable input(s) Relationship of unobservable inputs to fair value Held for trading Listed equity Listed equity Level 1 Quoted bid prices N/A N/A non-derivative financial assets securities in securities in in an active market classified as investments held Hong Kong Hong Kong for trading in the statement HK$14,406,000 HK$317,000 of financial position 14,406, , Annual Report 2015

147 For the year ended 31 December DISPOSALS OF SUBSIDIARIES For the year ended 31 December 2014 The disposal of the Group s 60% equity interest in More Star Limited ( More Star ) (mainly representing a hotel property interest in Rosedale Hotel Kowloon ) and 60% of its shareholder s loan due from More Star, for a total cash consideration of approximately HK$762,893,000. The transaction was completed on 14 March 2014 and has resulted in the recognition of a gain of HK$459,286,000 for the year ended 31 December 附 公司 More Star Limited More Star 60% More Star 60% 762,893, ,286,000 On 27 October 2014, the Group entered into an arrangement with an independent third party and it resulted in the Group losing control over Enjoy Media Holdings Limited ( Enjoy Media ), a wholly-owned subsidiary of the Group, and its PRC subsidiary. The transaction was completed on the same date and has resulted in a gain on disposal of subsidiaries of HK$3,078,000 recognised in profit or loss in the current year. Enjoy Media Holdings Limited Enjoy Media 3,078,000 On 11 April 2014, the Group entered into sale and purchase agreements with ITCP, for the sale of (i) its entire equity interest in and shareholder s loan due from Eagle Spirit (mainly representing 40% equity interest in More Star) at a total consideration of not exceeding HK$566,000,000; and (ii) its entire equity interest in and shareholder s loan due from Makerston (mainly representing 20% equity interest in Rosedale Hotel Beijing Co., Ltd. ( Rosedale Beijing ) at a total consideration not exceeding of HK$324,000,000. The transactions were completed on 15 December 2014 and the Group s control was lost on the same date, with the total consideration of HK$487,000,000 from the disposal of Eagle Spirit and HK$288,000,000 from disposal of Makerston, respectively. The transactions have resulted in the recognition of a loss on disposal of Eagle Spirit of HK$21,355,000 and a gain on disposal of Makerston of HK$3,315,000 for the year ended 31 December (i) Eagle Spirit Eagle Spirit More Star 40% 566,000,000 (ii) Makerston Makerston 20% 324,000,000 Eagle Spirit Makerston 487,000, ,000,000 Eagle Spirit 21,355,000 Makerston 3,315,000 珀麗酒店控股有限公司 2015 年報 145

148 For the year ended 31 December DISPOSALS OF SUBSIDIARIES (CONTINUED) For the year ended 31 December 2014 (CONTINUED) The net assets of More Star, Enjoy Media, Eagle Spirit and Makerston at the dates of disposal were as follows: 33. 附 More Star Enjoy Media Eagle Spirit Makerston 2014 More Star Enjoy Eagle Makerston at Media at Spirit at at Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 More Star Enjoy Media Eagle Spirit Makerston Total consideration: Consideration receivable 250,000 1, ,159 Cash consideration 762,893 20,530 69, ,383 Loan notes receivable (note 19) , , , , , ,119 1,538,542 Analysis of assets and liabilities over which control was lost: Property, plant and equipment 810, ,902 Interest in a joint venture 194, ,261 Interest in an associate 263, ,570 Amount due from a joint venture 297, ,287 Other assets 16,520 16,520 Inventories Trade and other receivables 49 1,149 9, ,777 Bank balances and cash ,052 20,133 28,236 Trade and other payables (8,611) (1,750) (18,023) (28,384) Shareholder s loan (Note) (763,125) (763,125) Net assets (liabilities) disposed of 38,503 (553) 508, , ,547 Note: The shareholder s loan includes the amount due from immediate shareholder before disposal and the repayment of bank borrowing. 146 Annual Report 2015

149 For the year ended 31 December DISPOSALS OF SUBSIDIARIES (CONTINUED) For the year ended 31 December 2014 (CONTINUED) 33. 附 公司 2014 More Star Enjoy Eagle Makerston at Media at Spirit at at Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 More Star Enjoy Media Eagle Spirit Makerston Gain (loss) on disposal of subsidiaries: Consideration received and receivables 762, , ,119 1,538,542 Net (assets) liabilities disposed of (38,503) 553 (508,885) (283,712) (830,547) Sale of 60% shareholder s loan 60% (457,875) (457,875) Initial recognition at fair value of 40% interest in More Star as an interest in a joint venture More Star 40% 192, ,771 Gain (loss) on disposal before release of attributable reserve Cumulative exchange difference in respect of the net assets 459, (21,355) 4, ,891 2,525 (1,092) 1,433 Gain (loss) on disposal after release of cumulative exchange difference 459,286 3,078 (21,355) 3, ,324 Net cash inflow (outflow) arising on disposal: Cash consideration received 762, ,530 69,960 1,103,383 Less: Bank balances and cash disposed of (50) (1) (8,052) (20,133) (28,236) 762,843 (1) 262,478 49,827 1,075,147 珀麗酒店控股有限公司 2015 年報 147

150 For the year ended 31 December OPERATING LEASE As lessee At 31 December 2015, the Group had commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows: HK$ 000 HK$ 000 Hotel properties Within one year 39,872 40,005 In the second to fifth years inclusive 158, ,731 Over five years 39, , ,336 Other land and buildings Within one year In the second to fifth years inclusive Operating lease payments for other land and building represent rentals payable by the Group for certain of its shipyard. For hotel properties in the PRC, leases are negotiated for an average term of three to nine years. For hotel properties in Hong Kong, leases are negotiated for an average term of two to five years. 148 Annual Report 2015

151 For the year ended 31 December OPERATING LEASE (CONTINUED) As lessor Property rental income earned during the year was approximately HK$43,697,000 (2014: HK$67,703,000) , 6 9 7, ,703,000 At the end of the reporting period, the Group had contracted with tenants for the following future minimum lease payments under non-cancellable operating leases for premises within the hotel properties for an average term of 2 to 6 years for PRC: HK$ 000 HK$ 000 Within one year 8,159 8,914 In the second to fifth years inclusive 6,743 15,221 14,902 24, CAPITAL COMMITMENTS HK$ 000 HK$ 000 Contracted for but not provided in the consolidated financial statements in respect of: Purchase of property, plant and equipment 62 珀麗酒店控股有限公司 2015 年報 149

152 For the year ended 31 December PROVIDENT FUND SCHEMES The Group has retirement schemes covering a substantial portion of its employees in Hong Kong. The principal schemes are defined contribution schemes. The assets of these schemes are held separately from those of the Group in funds under the control of 36. independent trustees. With effect from 1 December 2000, the Group joined a Mandatory Provident Fund Scheme ( MPF Scheme ) for all its new employees in Hong Kong employed therefrom or existing employees wishing to join the MPF Scheme. The MPF Scheme is registered with the Mandatory Provident Fund Scheme Authority under the Mandatory Provident Fund Schemes Ordinance. The assets of the MPF Scheme are held separately from those of the Group in funds under the control of an independent trustee. Under the rules of the MPF Scheme, the employer and its employees are required to make contributions to the MPF Scheme at 5% of relevant payroll cost. Subject to a cap to monthly relevant income of HK$30,000 since 1 June 2014 (previously HK$25,000), which contribution is matched by employees. The only obligation of the Group in respect of MPF Scheme is to make the required contributions under the MPF Scheme. 5% 30,000 25,000 The employees of the Group s subsidiaries in the PRC are members of the state-managed retirement benefit scheme operated by the government of the PRC. The subsidiaries are required to contribute certain percentage of their payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit scheme is to make the specified contributions. The amounts charged to profit or loss represent contributions paid or payable to the schemes by the Group of approximately HK$6,970,000 (2014: HK$7,171,000). 6,970,000 7,171,000 At the end of the reporting period, there were no forfeited contributions (2014: Nil), which arose upon employees leaving the retirement benefit schemes and which are available to reduce the contributions payable in future year. 150 Annual Report 2015

153 For the year ended 31 December PURCHASE OF SHARES OF SUBSIDIARIES FROM NON-CONTROLLING SHAREHOLDERS On 29 August 2014, the Group entered into a sale and purchase agreement with non-controlling shareholders (the 2014 Vendor ), whereby, the 2014 Vendor agreed to sell and the Group agreed to purchase 2,079,000 ordinary shares of US$0.02 each in the capital of Apex Quality Group Limited ( Apex ), representing approximately 0.75% of the issued share capital of Apex at a total consideration of HK$15,000,000. Following the completion, the Company s equity interest in Apex increased from 88.7% to approximately 89.4% and Apex remains as a non wholly-owned subsidiary of the Group. The said transaction was completed in August 控股股 附 公司 股 Apex Quality Group Limited Apex 2,079, Apex0.75% 15,000,000 Apex88.7% 89.4% Apex 38. RELATED PARTY TRANSACTIONS (a) Save as disclosed elsewhere in these consolidated financial statements, the Group had the following transactions with related parties during the year: 38. (a) HK$ 000 HK$ 000 Rental expenses paid to a joint venture 47,997 Interest income received and receivable from a joint venture 16,300 (b) Compensation of key management personnel The remuneration of key management members was set out in note 11. (b) 11 珀麗酒店控股有限公司 2015 年報 151

154 For the year ended 31 December FINANCIAL INFORMATION OF THE COMPANY 39. 財務 HK$ 000 HK$ 000 Non-current assets Property, plant and equipment Amounts due from subsidiaries 993,528 1,154,308 Deposit paid for a possible acquisition of an investment 172,940 1,166,470 1,154,495 Current assets Other receivables 75, ,782 Investments held for trading 9,400 Bank balances and cash 258,525 97,618 Amount due from subsidiaries 424, , , ,782 Current liabilities Trade and other payables 3,787 7,096 Amounts due to subsidiaries 461,713 Borrowing amount due within one year 10, , , ,096 Net current assets 292, ,686 Non-current liability Borrowing amount due after one year 150,000 Net assets 1,459,102 1,335,181 Capital and reserves Share capital 7,892 6,577 Reserves 1,451,210 1,328,604 1,459,102 1,335,181 The Company s statement of financial position was approved and authorised for issue by the Board of Directors on 24 March 2016 and are signed on its behalf by: YAP, ALLAN EXECUTIVE DIRECTOR CHAN LING, EVA EXECUTIVE DIRECTOR 152 Annual Report 2015

155 For the year ended 31 December FINANCIAL INFORMATION OF THE COMPANY (CONTINUED) Movement in reserves 39. 公司 財務 Share Share Special Accumulated capital premium reserve losses Total HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 At 1 January ,577 1,248, ,303 (503,056) 1,409,872 Total comprehensive expense for the year (8,923) (8,923) Dividend paid (65,768) (65,768) At 31 December ,577 1,248, ,303 (577,747) 1,335,181 Shares issued for the year 29 (Note 29) 1, , ,066 Transaction cost attributable to the issue of shares 29 (Note 29) (3,047) (3,047) Total comprehensive income for the year 9,902 9,902 At 31 December ,892 1,360, ,303 (567,845) 1,459,102 珀麗酒店控股有限公司 2015 年報 153

156 For the year ended 31 December PRINCIPAL SUBSIDIARIES Details of the Company s principal subsidiaries as at 31 December 2015 and 2014 are as follows: 40. 附 Name of company Place of incorporation/ registration Issued and paid up share capital/ registered capital Effective interest in issued share capital/ registered capital held by the Group % % % % Principal activities and place of operation Allied Glory Investment Limited ( Allied Glory ) Hong Kong HK$ Investment holding in the PRC Apex Quality Group Limited ( Apex ) Apex Quality Group Limited Apex British Virgin Islands US$5,548,172 5,548, Investment holding Asia Times Limited Asia Times Limited British Virgin Islands US$ Investment holding Benchmark Pacific Limited Benchmark Pacific Limited British Virgin Islands US$ Investment holding in Hong Kong HMH China Investments Limited HMH China Investments Limited Bermuda CAD$1,152,913 1,152, Investment holding Lucky Million Investments Limited Lucky Million Investments Limited British Virgin Islands US$ Investment holding in Hong Kong 154 Annual Report 2015

157 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) Name of company Place of incorporation/ registration Issued and paid up share capital/ registered capital 40. 附 公司 Effective interest in issued share capital/ registered capital held by the Group % % % % Principal activities and place of operation Rosedale Hotel Group Limited British Virgin Islands US$ Investment holding in 1 Hong Kong Rosedale Hotel Guangzhou Co., Ltd. ## PRC US$11,500, Hotel ownership and operation ( Rosedale Guangzhou ) in the PRC ## 11,500,000 Rosedale Hotel International Limited British Virgin Islands US$ Investment holding Rosedale Hotel International Limited 1 Rosedale Park Limited Hong Kong HK$ Hotel operation in Hong Kong Rosedale Park Limited 2 The Rosedale Luxury Hotel & Suites Ltd. ### PRC US$20,00, Property investment in the PRC ### 20,00,000 Shengyang Limited British Virgin Islands US$ Investment holding in Shengyang Limited 1 Hong Kong 珀麗酒店控股有限公司 2015 年報 155

158 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) Name of company Place of incorporation/ registration Issued and paid up share capital/ registered capital 40. 附 Effective interest in issued share capital/ registered capital held by the Group % % % % Principal activities and place of operation Success Billion Limited British Virgin Islands US$ Trading of securities in Success Billion Limited 1 Hong Kong Rosedale Hotel Shenyang PRC RMB168,000, Hotel ownership and operation Company Limited # in the PRC (formerly known as Time Plaza (Shengyang) Limited) ( Rosedale Shenyang ) 168,000,000 # WHS Marine Services Limited Hong Kong HK$1,000, Ship Building, repair holdings of leisure boat in Hong Kong 1,000,000 # Rosedale Shenyang was a Sino-foreign equity joint venture. On 25 November 2015, the Group paid a deposit of RMB1,682,000 (equivalent to HK$2,039,257) for acquiring its remaining 8% equity interest in Rosedale Shenyang from the non-controlling shareholder. The transaction was subsequently completed on 24 February 2016 and the Group then holds effective interest of 84.9% in Rosedale Shenyang. ## This subsidiary is a Sino-foreign co-operative joint venture. Allied Glory is entitled to recoup its total investment (including capital and interest) from the after-tax earnings of Rosedale Guangzhou before any amounts are distributed. Thereafter, the after-tax earnings of Rosedale Guangzhou are to be distributed at 80% and 20% to Allied Glory and other joint venture partner respectively. ### The subsidiary is a wholly-owned foreign entity. # 8% 1,682,000 2,039, % ## 80% 20% ### 156 Annual Report 2015

159 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) The above table lists the subsidiaries of the Group which, in the opinion of the directors, principally affected the results or assets and liabilities of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length. 40. 附 公司 No debt securities have been issued by any of the subsidiaries during the year. At the end of the reporting period, the Company has other subsidiaries that are not material to the Group. A majority of these subsidiaries operate in the British Virgin Islands ( BVI ). The principal activities of these subsidiaries are summarised as follows: Principal activities of business Principal place Number of subsidiaries Investment holding Inactive BVI 6 6 BVI HK 珀麗酒店控股有限公司 2015 年報 157

160 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) The table below shows details of non-wholly-owned subsidiaries of the Group that have material non-controlling interests: 40. 附 Name of subsidiary Place of incorporation Principal place of business Proportion of ownership interests and voting rights held by non-controlling interests Profit (loss) allocated to non-controlling interests Accumulated non-controlling interests HK$ 000 HK$ 000 HK$ 000 HK$ 000 Apex BVI Hong Kong and PRC 10.6% 10.6% 51,227 56, , ,976 Apex Individually 15,761 29,559 immaterial subsidiaries with non-controlling interests 201, ,535 Apex is an unlisted equity interest with limited liability incorporated in the British Virgin Islands. The Group s shareholding of Apex is being 89.4% throughout the relevant reporting periods. The directors examined all the relevant facts and circumstances, including the Group s dominant voting interest in Apex, dispersion of holding of other vote holders, rights arising from other contractual arrangements, participation rates of shareholders and voting patterns in previous shareholders meetings and concluded that the Group has the control over Apex and recognised Apex as a subsidiary throughout the relevant reporting periods. Apex Apex89.4% Apex Apex Apex Summarised financial information in respect of each of the Group s subsidiaries that has material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. 158 Annual Report 2015

161 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) Apex 40. 附 公司 Apex HK$ 000 HK$ 000 Current assets 1,301,926 1,057,990 Non-current assets 397, ,752 Current liability (112,512) (112,045) Non-current liabilities (49,767) (54,842) Equity attributable to owners of the Company 1,485,613 1,352,007 Non-controlling interests 185, ,976 Current assets mainly comprise of trade and other receivables of HK$31,364,000 (2014: HK$9,488,000), loans to fellow subsidiary of HK$703,695,000 (2014: HK$553,338,000), amount due from ultimate holding company of HK$458,508,000 (2014: nil) and bank balances and cash of HK$100,103,000 (2014: HK$492,961,000). 31,364,000 9,488, ,695, ,338, ,508, ,103, ,961,000 Non-current assets mainly comprise of property, plant and equipment of HK$377,393,000 (2014: HK$422,231,000), loan note receivable of HK$Nil (2014: HK$217,721,000) and longterm rental deposits of HK$19,800,000 (2014: HK$19,800,000) , 3 9 3, ,231, ,721,000 19,800,000 19,800,000 珀麗酒店控股有限公司 2015 年報 159

162 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) Apex (CONTINUED) 40. 附 Apex Year ended Year ended HK$ 000 HK$ 000 Revenue 210, ,600 Other revenue 60,248 21,090 Expenses (263,325) (265,617) Profit (loss) for the year 7,797 (26,927) Profit (loss) attributable to owners of the Company Loss attributable to the non-controlling interests 11,022 (23,604) (3,225) (3,323) Profit (loss) for the year 7,797 (26,927) Other comprehensive expense attributable to owners of the Company Other comprehensive expense attributable to the non-controlling interests (19,612) (7,765) (2,200) (1,059) Other comprehensive expense for the year (21,812) (8,824) Total comprehensive expense attributable to owners of the Company Total comprehensive expense attributable to the non-controlling interests (8,590) (31,369) (5,425) (4,382) Total comprehensive expense for the year (14,015) (35,751) Dividends paid to non-controlling interests Net cash (outflow) inflow from operating activities (517,318) 682,822 Net cash inflow (outflow) from investing activities 125,595 (144,108) Net cash outflow from financing activities (206,000) 160 Net cash (outflow) inflow (391,723) 332,714 Annual Report 2015

163 For the year ended 31 December PRINCIPAL SUBSIDIARIES (CONTINUED) Change in ownership interest in a subsidiary During the year ended 31 December 2014, the Group s equity interest in Apex was increased from 88.7% to 89.4% upon the purchase of shares of subsidiaries from non-controlling shareholders at a total cash consideration of HK$15,000, 附 公司 15,000,000 Apex88.7% 89.4% 珀麗酒店控股有限公司 2015 年報 161

164 Financial Summary 財務概要 RESULTS Year ended 31 December HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Continuing operations Turnover 235, , , , ,023 (Loss) profit before taxation (119,811) 375, ,184 (148,112) (217,886) Income tax expense (1,568) (2,600) (59,086) (933) (1,445) (Loss) profit for the year (121,379) 372, ,098 (149,045) (219,331) (Loss) profit for the year attributable to: Owners of the Company (105,098) 380, ,966 (143,188) (206,643) Non-controlling interests (16,281) (7,824) 61,132 (5,857) (12,688) (121,379) 372, ,098 (149,045) (219,331) ASSETS AND LIABILITIES As at 31 December HK$ 000 HK$ 000 HK$ 000 HK$ 000 HK$ 000 Total assets 2,678,164 2,972,714 3,567,266 3,130,142 3,151,655 Total liabilities 230, ,643 1,348,673 1,240,384 1,057,409 2,447,643 2,490,071 2,218,593 1,889,758 2,094,246 Equity attributable to Owners of the Company 2,246,592 2,268,536 1,976,154 1,704,987 1,854,959 Non-controlling interests 201, , , , ,287 2,447,643 2,490,071 2,218,593 1,889,758 2,094, Annual Report 2015

165 Particulars of Properties 物業詳情 HOTEL PROPERTIES 酒店物業 Company Address Existing Use Site Area Gross Area % Interest Rosedale Hotel Guangzhou Co., Ltd. Rosedale Hotel & Suites, Guangzhou No. 348 Jiangnanda Road Central, Haizhu District, Guangzhou, the PRC Hotel operation 10, sq.m. 46, sq.m. 71.7% , , % Luoyang Golden Gulf Hotel Co., Ltd. Luoyang Golden Gulf Hotel No. 319 Zhongzhou Zhong Road, Xigong District, Luoyang City, Henan Province, the PRC Hotel operation 9, sq.m. 21, sq.m. 60.0% 319 9, , % 珀麗酒店控股有限公司 2015 年報 163

166 Particulars of Properties 物業詳情 Company Address Existing Use Site Area Gross Area % Interest Rosedale Hotel Shenyang Company Limited (formerly known as Time Plaza (Shenyang) Limited) Rosedale Hotel Shenyang No. 99 North Station Road, Shenhe District, Shenyang City, Liaoning Province, the PRC Hotel operation 5, sq.m. 43, sq.m. 77.1% 99 5, , % INVESTMENT PROPERTIES 物業 Company Address Existing Use Lease Term The Rosedale Luxury Hotel & Suites Ltd. No Tianshan Road, Changning District, Shanghai, the PRC Vacant Leasehold with a term expiring on 15 October Annual Report 2015

167 31st Floor, Paul Y. Centre, 51 Hung To Road Kwun Tong, Kowloon, Hong Kong