Harbour Centre Development Limited - Interim / Quarterly Report 2018

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遠東發展有限公司

Far East Consortium International Limited

(Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立之有限公司) Stock Code 股份代號 : 035

Achieving A Great Milestone 奠定里程碑

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2 Diversified and Balanced Portfolio of Businesses
4 Major Events of Financial Year 2017/18
6 Corporate Information
7 Interim Results 2017/18
10 Management Discussion and Analysis
25 Other Information
31 Report on Review of Condensed Consolidated Financial Statements
32 Condensed Consolidated Statement of Profit or Loss
33 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income
34 Condensed Consolidated Statement of Financial Position
36 Condensed Consolidated Statement of Changes in Equity
39 Condensed Consolidated Statement of Cash Flows
40 Notes to the Condensed Consolidated Financial Statements

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UNITED KINGDOM
Manchester
London
CHINA
UNITED KINGDOM Shanghai
Wuhan
Chengdu
• Property development
Lushan
• Hotel operations
• Car park operations Guangzhou
Zhongshan
Hong
Kong
SINGAPORE Labuan
MALAYSIA
Kuala Lumpur
Subang Johor
MALAYSIA
• Property development
• Investment properties
• Hotel operations
SINGAPORE • Car park operations and
facilities management
• Property development
• Investment properties
• Hotel operations
Perth
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DIVERSIFIED AND BALANCED PORTFOLIO OF BUSINESSES

FEC has a geographically diverse footprint across the Asia Pacific and Europe

MAINLAND CHINA

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• Property development
• Investment properties
• Hotel operations
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HONG KONG

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• Property development
• Investment properties
• Hotel operations
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AUSTRALIA & NEW ZEALAND
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• Property development
• Investment properties
• Hotel operations
• Car park operations and
facilities management
• Gaming and
entertainment
AUSTRALIA
Brisbane
Gold Coast
Sydney
Melbourne
NEW ZEALAND
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The Group was selected as preferred proponent to develop Lots 3B, 6 and 7 of Perth City Link in Perth, Australia

The Group was selected to work with the Manchester City Council in the United Kingdom to jointly deliver the Northern Gateway development project. This project will deliver more than 10,000 new homes over the next decade

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APRIL 2017
Artra at Singapore launched
UNITED KINGDOM
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MAY 2017

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APRIL 2017
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Silka West Kowloon, Hong Kong was sold in May 2017 at HK$450 million realizing a gain of appox. HK$320 million

Marin Point at Sha Tau Kok, Hong Kong launched

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The Star Residences at Gold Coast launched

West Side Place (Tower 4) at Melbourne launched

JUNE 2017

The Group was awarded the Best Investor Relations Company in Hong Kong and Ms Venus Zhao, Head of Corporate Finance and Investor Relations, was awarded the Best Investor Relations Professional in Hong Kong at the 7th Asian Excellence Awards 2017 organised by Corporate Governance Asia

SEPTEMBER 2017

Care Park, a subsidiary of the Group, was awarded as the Parking Organisation of the Year in the 2017 Parking Industry Awards organised by Parking Australia Care Park is also the first company in Australia to achieve the Accredited Operator Scheme (AOS) accreditation launched by Parking Australia

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FAR EAST CONSORTIUM INTERNATIONAL LIMITED

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

David CHIU, Tan Sri Dato’, B.Sc. (Chairman and Chief Executive Officer)

Cheong Thard HOONG, B.ENG., ACA

Dennis CHIU, B.A.

Craig Grenfell WILLIAMS, B.ENG. (CIVIL)

Non-Executive Director

Chi Hing CHAN, EMBA

Independent Non-Executive Directors

Kwok Wai CHAN Peter Man Kong WONG, J.P. Kwong Siu LAM

AUDIT COMMITTEE

Kwok Wai CHAN (Chairman) Peter Man Kong WONG Kwong Siu LAM

NOMINATION COMMITTEE

David CHIU (Chairman) Kwok Wai CHAN Peter Man Kong WONG Kwong Siu LAM

REMUNERATION COMMITTEE

Kwok Wai CHAN (Chairman) David CHIU Peter Man Kong WONG

EXECUTIVE COMMITTEE

David CHIU Cheong Thard HOONG Dennis CHIU Craig Grenfell WILLIAMS Ka Pong CHAN

MANAGING DIRECTOR

Cheong Thard HOONG

CHIEF FINANCIAL OFFICER

Ka Pong CHAN

COMPANY SECRETARY

Ka Pong CHAN

AUTHORISED REPRESENTATIVES

David CHIU Ka Pong CHAN

LEGAL ADVISORS

Woo, Kwan, Lee & Lo Reed Smith Richards Butler Maples and Calder HWL Ebsworth Lawyers Lo & Lo

AUDITOR

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong

PRINCIPAL BANKERS

Hong Kong

Australia and New Zealand Banking Group Limited Bank of China (Hong Kong) Limited DBS Bank (Hong Kong) Limited Fubon Bank (Hong Kong) Limited Hang Seng Bank Limited Industrial and Commercial Bank of China (Asia) Limited Nanyang Commercial Bank, Limited OCBC Wing Hang Bank Limited Public Bank (Hong Kong) Limited The Hongkong and Shanghai Banking Corporation Limited The Bank of East Asia, Limited

Malaysia

Public Bank Berhad OCBC Bank (Malaysia) Berhad

Singapore

CIMB Bank Berhad Oversea-Chinese Banking Corporate Limited The Hongkong and Shanghai Banking Corporation Limited

Australia

Australia and New Zealand Banking

Group Limited Bank of China (Australia) Limited Bank of Western Australia Commonwealth Bank of Australia Limited Industrial and Commercial Bank of China Limited Oversea-Chinese Banking Corporation Limited United Overseas Bank Limited Westpac Banking Corporation

Mainland China

China Construction Bank Corporation Dah Sing Bank (China) Limited HSBC Bank (China) Company Limited Industrial and Commercial Bank of China Limited Public Bank (Hong Kong) Limited Shanghai Pudong Development Bank Wing Lung Bank Limited

United Kingdom

Oversea-Chinese Banking Corporation Limited The Bank of East Asia, Limited The Hongkong and Shanghai Banking Corporation Limited

PLACE OF INCORPORATION

Cayman Islands

REGISTERED OFFICE

P.O. Box 1043, Whitehall House, 238 North Church Street, George Town, Grand Cayman KY1-1102, Cayman Islands

PRINCIPAL OFFICE

16th Floor, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong

SHARE REGISTRAR

Tricor Standard Limited Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong

LISTING INFORMATION

Ordinary Shares (Code: 035) 6.0% CNY Bonds 2018 of Dorsett (Code: 85917)

3.75% USD Medium Term Notes 2021 (Code: 4310)
4.5% USD Medium Term Notes 2023 (Code: 5011)

The Stock Exchange of Hong Kong Limited

WEBSITE

http://www.fecil.com.hk

INTERIM REPORT 2017-2018

INTERIM RESULTS 2017/18

INTERIM RESULTS

The board of directors (the “Board”) of Far East Consortium International Limited (the “Company”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 30 September 2017 (“1H FY2018”). These unaudited consolidated financial statements have been reviewed by the Company’s audit committee (the “Audit Committee”) prior to recommending them to the Board for approval.

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MeadowSide, Manchester

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The Star Residences, Gold Coast

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Artra, Singapore

INTERIM DIVIDEND

The Board has declared the payment of an interim dividend for the six months ended 30 September 2017 of HK4.0 cents (30 September 2016: HK3.5 cents) per ordinary share (the “Interim Dividend”). The Interim Dividend will be paid to the shareholders of the Company (the “Shareholders”) whose names appear on the Company’s Register of Members on 28 December 2017. The Interim Dividend will be paid in the form of a scrip dividend with Shareholders being given an option to elect to receive cash in lieu of all or part of their scrip dividend entitlements (the “Scrip Dividend Scheme”).

The Scrip Dividend Scheme will be subject to The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) granting listing of, and permission to deal in the new shares to be allotted and issued thereunder. For the purpose of determining the number of new shares to be allotted, the market value of new shares will be calculated as the average of the closing prices of the existing shares of the Company on the Stock Exchange for the 5 consecutive trading days prior to and including 28 December 2017. Full details of the Scrip Dividend Scheme will be set out in a circular which is expected to be sent to Shareholders together with a form of election (if applicable) on or around 9 January 2018. Dividend warrants and/or new share certificates will be posted on or around 8 February 2018.

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FUTURE
VISION
THE STAR_RESIDENCES,
GOLD COAST
DORSETT WANCHAI,
HONG KONG
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WE
CONQUER
BUT
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SE
T
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S T
U A
L
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H
I
IT E
V
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10 FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL AND BUSINESS REVIEWS

Financial review

1. Profit and loss analysis

The Company’s consolidated revenue for 1H FY2018 was approximately HK$2.8 billion, a slight decrease of 6.0% as compared with the six months ended 30 September 2016 (“1H FY2017”). Despite the lower revenue due to completion timing of projects, gross profit (before depreciation of hotel and car park assets) came in at HK$1.6 billion, showing a strong growth of 24.7% from HK$1.3 billion during 1H FY2017. A breakdown of the Group’s revenue and gross profit is shown below:

	Property development Hotel operations and management Car park operations and facilities management Others Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

For 1H FY2018 Revenue	1,654,534 695,315 333,154 92,983 2,775,986
Gross profit Depreciation	982,697 276,917 68,439 77,251 1,405,304 – 150,992 10,010 – 161,002
Adjustedgrossprofit	982,697 427,909 78,449 77,251 1,566,306
Adjustedgrossprofit margin	59.4% 61.5% 23.5% 83.1% 56.4%

For 1H FY2017 Revenue	1,957,868 616,408 309,494 68,837 2,952,607
Gross profit Depreciation	765,537 232,771 56,943 53,314 1,108,565 – 137,359 10,083 – 147,442
Adjustedgrossprofit	765,537 370,130 67,026 53,314 1,256,007
Adjustedgrossprofit margin	39.1% 60.0% 21.7% 77.4% 42.5%

Revenue from sales of properties amounted to approximately HK$1,655 million in 1H FY2018, down 15.5% as compared with 1H FY2017 owing to the completion timing of the projects in the Group’s pipeline, with gross profit climbing from HK$766 million in 1H FY2017 to HK$983 million for 1H FY2018, representing a 28.4% increase. During 1H FY2018, two projects were completed, namely Royal Crest II in Shanghai and Dorsett Bukit Bintang in Kuala Lumpur. Phased completion of the FIFTH in Melbourne also commenced during 1H FY2018 and will continue into the second half of the financial year.

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Dorsett City, London

Revenue from hotel operations and management amounted to approximately HK$695 million in 1H FY2018, an improvement of 12.8% as compared to 1H FY2017, thanks to the solid recovery of the hotel market, in particular in Hong Kong, and the addition of new hotels in the Group’s portfolio, namely Silka Tsuen Wan in Hong Kong (opened in February 2017) and Dorsett City in London (partially opened in August 2017), both of which having contributed to the Group’s hotel revenue during 1H FY2018. Despite the opening of new hotels, gross margin from the Group’s hotel operations and management (before depreciation and amortisation) improved from 60.0% in 1H FY2017 to 61.5% in 1H FY2018, due to higher overall occupancy rate as well as average room rate.

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue from car park operations and facilities management amounted to approximately HK$333 million in 1H FY2018, an increase of 7.6% as compared to 1H FY2017, with adjusted gross profit increasing from HK$67.0 million for 1H FY2017 to HK$78.4 million for 1H FY2018, a 17.0% year-on-year growth, as the Group continued to allocate more resources to self-owned car parks which have higher margin compared to thirdparty car park management contracts. During 1H FY2018, approximately 9,300 car park bays were added to the Group’s car park management portfolio, with another 1,392 car park bays added subsequent to 30 September 2017 through an acquisition of a portfolio of car parks in Budapest, Hungary.

Profit attributable to shareholders of the Company amounted to HK$1,033 million, as a result of the completion of a number of high margin projects, a strong recovery of the hotel business, a steadily expanding car park portfolio, as well as a gain on sale of one of the non-core hotels of the Group during 1H FY2018.

Adjusted cash profit[(1)] was at HK$1,071 million for 1H FY2018 which represented a growth of 72.6% from HK$620 million for 1H FY2017, demonstrating the Group’s strong ability to continuously generate cash flow which provides ammunition for the Group’s future growth.

In general, contributions from the Group’s non-Hong Kong operations were affected by the movement of foreign currencies against Hong Kong dollar. The table below sets forth the exchange rates of Hong Kong dollar against the local currency of countries where the Group has significant operations:

Rate as at	As at 30 September 2017	As at 31 March 2017 Change
HK$/AUD HK$/RMB HK$/MYR HK$/GBP HK$/SGD	6.11 1.18 1.85 10.43 5.75	5.93 3.0% 1.13 4.4% 1.75 5.7% 9.67 7.9% 5.56 3.4%


Average rates for	1H FY2018	1H FY2017 Change
HK$/AUD HK$/RMB HK$/MYR HK$/GBP HK$/SGD	6.02 1.16 1.80 10.05 5.66	5.92 1.7% 1.18 (1.7%) 1.92 (6.3%) 10.57 (4.9%) 5.71 (0.9%)

(1) Adjusted cash profit is calculated by adding depreciation and amortisation charges to, and subtracting fair value gain in investment properties from, net profit attributable to shareholders. The amounts are adjusted for minority interests.

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Care Assist

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Customer Service in Care Park

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

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From the roof top of Artra, Singapore

2. Liquidity, financial resources and net gearing

The following table sets out the Group’s bank and cash balances, investment securities (which are considered as cash equivalent items due to its easily-monetizable nature), bank loans and borrowings and equity as at 30 September 2017.

	As at 30 September 2017 HK$ million	As at 31 March 2017 HK$ million
Bank loans, notes and bonds Due within 1 year Due 1–2 years Due 2–5 years Due more than 5years	4,028 2,067 7,192 356	1,431 4,482 6,547 814
Total bank loans, notes and bonds	13,643	13,274
Investment securities Bank and cash balances	2,075 3,836	1,467 4,161
Liquidity position	5,911	5,628
Net debts(i)	7,732	7,646
Carrying amount of the total equity Add: hotel revaluation surplus	12,061 13,011	10,944 13,354
Total adjusted equity	25,072	24,298
Netgearingratio (net debts to total adjusted equity)	30.8%	31.5%

To better manage the Group’s liquidity position, the Group allocated a portion of its cash position in marketable investment securities. Investment securities shown on the consolidated statement of financial position represent primarily fixed income securities and investments in fixed income funds.

The liquidity position of the Group as at 30 September 2017 was approximately HK$5.9 billion, representing an increase of 5.0% from the balance as at 31 March 2017, primarily due to the collection of sales proceeds upon completion of the Group’s residential developments during 1H FY2018, stable cash inflow from the Group’s recurring income business, as well as the proceeds on the sale of Silka Tsuen Wan at a consideration of HK$450 million, and offset by repayment of bank borrowings and certain capital expenditure.

Note (i) Net debts represent total bank loans, notes and bonds less investment securities, bank and cash balances.

INTERIM REPORT 2017-2018 13

MANAGEMENT DISCUSSION AND ANALYSIS

During 1H FY2018, the Group’s net debts increased slightly by HK$86 million to HK$7.7 billion. The Group will continue to settle development construction loans when the relevant projects are completed and to repay loans with shorter maturity, with an aim of locking in longer dated funding.

The table below shows the Group’s debts profile.

	As at 30 September 2017 HK$ million	As at 31 March 2017 HK$ million
The Company’s notes Dorsett bonds Unsecured bank loans Secured bank loans – Property development and investment – Hotel operations and management – Car park operations and facilities management – Others	2,231 947 1,570 3,877 4,506 495 17	2,311 820 1,744 3,418 4,572 398 11
Total bank loans, notes and bonds	13,643	13,274

The carrying amounts of the total bank loans, notes and bonds in the Company’s consolidated statement of financial position include an amount of approximately HK$1,294 million (as at 31 March 2017: HK$1,329 million) which is reflected as current liabilities even though such sum is not repayable within one year, as the relevant banks and/or financial institutions have discretionary rights to demand immediate repayment.

As at 30 September 2017, the Group’s undrawn banking facilities were approximately HK$6.2 billion which were all committed banking facilities, of which approximately HK$4.4 billion was in relation to construction development while the balance of approximately HK$1.8 billion was for the Group’s general corporate use. The unutilized banking facilities together with sale proceeds to be generated from the Group’s upcoming property development projects place the Group in a solid financial position to fund not only its existing business and operations but also to expand its business further.

In addition, a total of 8 hotel assets within the Group were unencumbered as at 30 September 2017, the capital value of which amounted to HK$4.4 billion based on independent valuation assessed as at 31 March 2017. These assets can be used as collateral for further bank borrowings which can provide further liquidity for the Group, should this be necessary.

Adjusting for the unrecognized hotel revaluation surplus of approximately HK$13,011 million, based on independent valuation assessed as at 31 March 2017, the Group’s total consolidated equity as at 30 September 2017 was approximately HK$25,072 million. The net gearing ratio of the Group was at 30.8%, which has improved further from 31.5% achieved as of 31 March 2017.

The Star Residences, Gold Coast

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

3. Net asset value per share

Net asset value per share
	As at 30 September 2017 HK$ million	As at 31 March 2017 HK$ million
Equity attributable to shareholders of the Company Add: Hotel revaluation surplus	11,887 13,011	10,792 13,354
Total net asset value attributable to shareholders of the Company	24,898	24,146
Number of shares issued (million)	2,249	2,238
Net asset valueper share	HK$11.07	HK$10.79

Adjusting for revaluation surplus on hotel assets of approximately HK$13,011 million based on independent valuation assessed as at 31 March 2017, net asset value attributable to shareholders of the Company reached approximately HK$24,898 million. Net asset value per share for the Company as at 30 September 2017 was approximately HK$11.07.

4. Capital expenditure

The Group’s capital expenditure consists of expenditure for acquisitions, development and refurbishment of hotel properties, plant and equipment.

During 1H FY2018, the Group’s capital expenditure amounted to approximately HK$130 million primarily attributable to construction works on the recently opened Dorsett City in London. The capital expenditure was funded through a combination of borrowings and internal resources.

5. Capital commitments

Capital commitments
	As at 30 September 2017 HK$ million	As at 31 March 2017 HK$ million
Capital expenditure contracted but not provided in the condensed consolidated financial statements in respect of: Acquisition, development and refurbishment of hotel properties Others	2,077 3	1,175 6
	2,080	1,181

6. Post balance sheet events

Acquisition of car parks in Hungary

The Group completed an acquisition of a portfolio of 6 car parks in Budapest, Hungary at a consideration of approximately EUR21.0 million in October 2017.

The car park portfolio, with a capacity of approximately 1,400 spaces is located in the prestigious central city District 6 and District 7 of Budapest with strong demand for car parking spaces. The acquisition provides the Group a solid base to expand its car park management operation in Budapest and Hungary, and places the Group as one of the largest car park owners and operators in Hungary. Hungary is ideally located in the center of Europe and is attracting significant investment in manufacturing, infrastructure, office and hotel investment, providing a strategic base for the Group to expand further throughout Europe.

Issue of US$150 million 4.5% 5.5-year notes

In November 2017, the Company issued US$150 million 4.5 percent 5.5-year notes (the “Issue”) due on 13 May 2023 under the Medium Term Note Programme.

The Issue represented another successful fundraising by the Group in the international capital markets, and helped to further push out the debt maturity profile of the Group. The proceeds from the Issue will be used for the Group’s business development and general corporate purposes.

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

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The view from West Side Place, Melbourne

Business review

1. Property division

The Group’s property division includes property investment and property development.

Property investment comprises investments in retail and office buildings located in Hong Kong, Singapore, Mainland China and Australia. For 1H FY2018, a fair value gain of investment properties of approximately HK$126 million was recognized, as a result of an increase in fair value of the investment properties in Shanghai, Hong Kong and Melbourne (following completion of the commercial units of FIFTH). As at 30 September 2017, valuation of investment properties reached approximately HK$3.2 billion (31 March 2017: HK$3.0 billion), up 6.6% as compared to the balance as at 31 March 2017.

The Group has a diversified portfolio in residential property development in Australia, Mainland China, Hong Kong, Singapore, Malaysia and the United Kingdom. To carry out property development in the various markets, the Group has established strong local teams in each of these markets which coupled with the regionalisation approach, allow the Group to take advantage of the different property cycles in different markets. This strategy has resulted in a relatively low land cost base for the Group’s development projects. The Group’s property developments are largely focused on mass residential market from which the Group can benefit due to the growing affluence of the middle class.

Total attributable cumulative presales value of the Group’s residential properties under development amounted to approximately HK$13.0 billion as at 30 September 2017. Such presales proceeds are not reflected in the Group’s consolidated income statement until the point in time when the relevant projects are completed and the revenue of the relevant projects is then recognized.

The following shows a breakdown of the Group’s total attributable cumulative presales value of residential properties under development as at 30 September 2017.

			Expected
		Attributable	financial
		pre-sales	year of
Developments	Location	HK$ million	completion
Aspen Crest	Hong Kong	1,060	FY2019
Marin Point	Hong Kong	186	FY2019
Artra	Singapore	1,076	FY2020
The FIFTH	Melbourne	981	FY2018
West Side Place (Towers 1, 2 and 4)	Melbourne	6,443	FY2021/22
The Towers at Elizabeth Quay	Perth	1,908	FY2020
The Star Residences	Gold Coast	213	FY2022
Royal Riverside (Towers 1, 2, 3 and 4)	Guangzhou	1,173	FY2018/19
Total attributable cumulativepresales		13,040

Cumulative contracted presales value

During 1H FY2018, the Group launched presales of four of its residential development projects, namely (i) Artra in Singapore; (ii) Marin Point in Hong Kong; (iii) West Side Place Tower 4 in Melbourne; and (iv) The Star Residences in Gold Coast. Total expected attributable gross development value (“GDV”) and attributable saleable floor area of these four development projects are approximately HK$7.3 billion and 1.1 million sq. ft. respectively.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

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West Side Place, Melbourne

As at 30 September 2017, the Group had 23 active residential property development projects in the pipeline with expected attributable saleable floor area of approximately 8.0 million sq. ft. under various stages of development across the regions, as detailed below:

	Developments Attributable saleable floor area(i) Expected attributable GDV(ii) Status/ expected launch Expected financial year of completion Sq. ft. HK$ million
	Pipeline development Melbourne West Side Place – Towers 1 & 2 1,072,000 5,771 Launched FY2021 – Tower 3 564,000 2,920 Planning Planning – Tower 4 565,000 2,987 Launched FY2022 The FIFTH(iii) 214,000 981 Launched FY2018 Perth The Towers at Elizabeth Quay 366,000 2,816 Launched FY2020 Perth City Link (Lots 2 and 3A) 320,000 1,500 FY2018/19 Planning Brisbane Queen’s Wharf Brisbane(iv) – Tower 4 259,000 1,104 FY2019 Planning – Tower 5 224,000 1,119 Planning Planning – Tower 6 439,000 2,198 Planning Planning Gold Coast The Star Residences(v) 98,000 549 Launched FY2022 Guangzhou Royal Riverside – Towers 1, 2, 3 & 4 477,000 1,507 Launched FY2018/19 – Tower 5 207,000 818 FY2019 FY2019 Hong Kong Aspen Crest 64,000 1,060 Launched FY2019 Tan Kwai Tsuen 48,000 628 FY2018/19 FY2019 Marin Point 103,000 1,082 Launched FY2019 Sham Shui Po 20,000 396 FY2018 FY2019/20 Tai Wai 30,000 554 FY2019 FY2019/20 Shatin Heights 70,000 1,200 Planning Planning

Developments
Attributable
saleable
floor area(i)
Expected
attributable
GDV(ii)
Status/
expected
launch
Expected
financial
year of
completion
Sq. ft.
HK$ million

Pipeline development
Melbourne
West Side Place
– Towers 1 & 2
1,072,000
5,771
Launched
FY2021
– Tower 3
564,000
2,920
Planning
Planning
– Tower 4
565,000
2,987
Launched
FY2022
The FIFTH(iii)
214,000
981
Launched
FY2018
Perth
The Towers at Elizabeth Quay
366,000
2,816
Launched
FY2020
Perth City Link (Lots 2 and 3A)
320,000
1,500
FY2018/19
Planning
Brisbane
Queen’s Wharf Brisbane(iv)
– Tower 4
259,000
1,104
FY2019
Planning
– Tower 5
224,000
1,119
Planning
Planning
– Tower 6
439,000
2,198
Planning
Planning
Gold Coast
The Star Residences(v)
98,000
549
Launched
FY2022
Guangzhou
Royal Riverside
– Towers 1, 2, 3 & 4
477,000
1,507
Launched
FY2018/19
– Tower 5
207,000
818
FY2019
FY2019
Hong Kong
Aspen Crest
64,000
1,060
Launched
FY2019
Tan Kwai Tsuen
48,000
628
FY2018/19
FY2019
Marin Point
103,000
1,082
Launched
FY2019
Sham Shui Po
20,000
396
FY2018
FY2019/20
Tai Wai
30,000
554
FY2019
FY2019/20
Shatin Heights
70,000
1,200
Planning
Planning

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

	Developments Attributable saleable floor area(i) Expected attributable GDV(ii) Status/ expected launch Expected financial year of completion Sq. ft. HK$ million
	London Alpha Square 388,000 4,452 FY2019 Planning Hornsey Townhall 105,000 1,039 FY2018/19 Planning Manchester MeadowSide 554,000 2,467 FY2018/19 FY2020/21 Northern Gateway(vi) 1,500,000 5,400 Planning Planning Singapore Artra(vii) 290,000 2,709 FY2018 FY2020
	Total development pipeline as at 30 September 2017 7,977,000 45,257
	Completed development available for sale Shanghai King’s Manor 59,000 374 The Royal Crest II 91,000 508 Kuala Lumpur Dorsett Bukit Bintang 121,000 484 Hong Kong 4,000 124 Total completed development available for sale as at 30 September 2017 275,000 1,490 Total pipeline and completed development available for sale as at 30 September 2017 8,252,000 46,747

Notes:

(i) The figures represent approximate saleable residential floor area which may vary subject to finalization of development plans.

(ii) The amounts represent expected gross development value attributable to the Group, which may change subject to market conditions.

(iii) Excluding units which were completed and delivered before 30 September 2017.

(iv) This residential development consists of a total floor area of approximately 1,800,000 sq. ft.. The Group has 50% interest in the development.

(v) The Group has 33.3% interest in the development.

(vi) The saleable floor area and GDV figure is estimated based on land already acquired and expected number of units to be built. As the master developer of Northern Gateway, the Group is expecting further land acquisitions which will increase both saleable floor area and GDV for this development.

(vii) Total saleable floor area of this development is approximately 410,000 sq. ft.. The Group has 70% interest in the development.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

In addition to the above, the Group has entered into a memorandum of understanding with the partners of Destination Brisbane Consortium to develop The Star Entertainment Group Limited (“The Star”)’s casino site in Sydney, further contributing to the residential pipeline of the Group.

Australia

Melbourne

West Side Place is a mixed-use residential development located in the Central Business District (“CBD”) of Melbourne. This development is expected to have a residential saleable floor area of approximately 2 million sq. ft. from 4 towers with approximately 3,000 apartments and a total GDV exceeding HK$10 billion. The development will comprise two hotels, including one under the Group’s Dorsett brand with approximately 300 hotel rooms located in Tower 3, and another hotel to be operated by Ritz Carlton with approximately 250 hotel rooms located at the top of Tower 1. Following the strong response on the presales of Towers 1 and 2 in June 2016, the Group launched the pre-sale of Tower 4 in June 2017. Total expected GDV of these 3 towers is HK$8.8 billion, of which HK$6.4 billion was presold as at 30 September 2017, representing 73.6% of the corresponding GDV. With the first two towers of the development expected to be completed in FY2021 and Tower 4 expected to be completed in FY2022, this development is expected to strengthen the Group’s cashflow and earnings in the coming few years.

The FIFTH is located next to West Side Place and provides 402 apartments. This development with a total GDV of approximately HK$1.3 billion has been completely presold. Completion of the development is by stages with the first stage commencing towards the end of 1H FY2018 and with the rest expected to be completed by the end of the financial year ending 31 March 2018.

Perth

The Towers at Elizabeth Quay is a mixed-use development comprising residential apartments of approximately 366,000 sq. ft. in saleable floor area, a luxury Ritz-Carlton hotel with more than 200 rooms, approximately 20,000 sq. ft. of commercial or retail area as well as other ancillary facilities. As at 30 September 2017, its presales value reached approximately HK$1.9 billion, representing 67.8% of the expected GDV. This development is expected to be completed in the financial year ending 31 March 2020.

The Perth City Link is a major project being undertaken by the Western Australian Government to reconnect the Perth CBD and the entertainment district. Lots 2 and 3A of the Perth City Link project is a mixeduse development located adjacent to the Perth Arena. This project is expected to deliver more than 300 residential apartments and approximately 270 hotel rooms to be operated by Dorsett. In May 2017, the Group was also selected as the preferred proponent to develop Lots 3B, 6 and 7 of the Perth City Link project. These three lots will be home to a range of boutique apartments and an integrated retail, entertainment and hospitality complex. The entire project is currently under planning stage.

Brisbane

The Destination Brisbane Consortium, a joint venture between the Group, The Star and Chow Tai Fook Enterprises Limited (“CTF”), entered into Development Agreements with the Queensland State, Australia for the delivery of the Queen’s Wharf Project in Brisbane (the “QWB Project”). The QWB Project comprises:

(1) an integrated resort component in which the Group’s ownership is 25% (CTF: 25% and The Star: 50%) with an equity investment amount of more than AUD200 million. Payments will be made progressively commencing from signing of the QWB Project documents up to completion of the QWB Project which is expected by the end of the financial year ending 31 March 2023.
(2) The residential component owned in the proportion of 50% by the Group and 50% by CTF.

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

Together with the Group’s portion of land premium for this residential component, the total capital commitment of the Group is expected to be approximately AUD250 million to AUD300 million which the Group intends to fund from its internal resources. The QWB Project encompasses a total area of approximately 9.4 hectares at Queen’s Wharf, Brisbane, and envisages three residential towers, five world-class hotels, high-end food and commercial outlets and a casino in Brisbane’s prime waterfront district. The total core development gross floor area (“GFA”) of the QWB Project is expected to be 544,600 square meters (“sq. m.”) of which approximately 171,300 sq. m. relates to the residential component.

The QWB Project brings together the Group’s experience in international hospitality operation and mixed-use development, CTF’s extensive VIP customer base in Mainland China and Asian markets, as well as The Star’s operational experience in integrated resorts. The QWB Project is expected to contribute significantly to the Group’s recurring cash flow stream as well as to add to its residential development pipeline.

Gold Coast

The Star Residences is a mixed-use development featuring 5 towers in the heart of Gold Coast’s world-class integrated resort on Broadbeach Island. Pre-sale for the first tower with a saleable area of 294,000 sq. ft. and a GDV of HK$1.6 billion was launched in September 2017, with pre-sale contracted for 39% of the GDV of the first tower as at 30 September 2017. This is an extension of the partnership between the Group, The Star and CTF in Gold Coast, in which the Group has a 33.3% interest. The completion of the first tower of the development is expected to take place in the financial year ending 31 March 2022.

Mainland China

The Group has been developing California Garden, a premier township development in Shanghai over a number of years. The development comprises a diversified portfolio of residences including low-rise apartments, high-rise apartments and town houses.

King’s Manor consists of 479 apartments and 90 town houses, out of which all the apartments and 63 town houses have been delivered up to 30 September 2017, with the remaining townhouses to be sold on a completed basis.

The Royal Crest II consists of 180 apartments and 42 town houses, with an expected GDV of HK$1.4 billion. All the apartments have been pre-sold by the end of FY2017 and delivered during 1H FY2018. Presale for town houses commenced in September 2016 with 5 town houses delivered during 1H FY2018, and with the remaining town houses to be sold on completed basis.

In Guangzhou, Royal Riverside is a 5-tower residential development comprising 607 apartments with a total saleable floor area of approximately 684,000 sq. ft. and a total expected GDV of HK$2.3 billion. Towers 1, 2, 3 and 4 have been launched for presale with the cumulative presales value reaching HK$1,173 million as at 30 September 2017. The development is expected to be fully completed in the financial year ending 31 March 2019.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

Hong Kong

The Group has built its development pipeline in Hong Kong over the years through acquisition of redevelopment sites, participating in government tender and bidding for projects with Urban Renewal Authority (“URA”).

Currently the Group has 6 residential projects in the pipeline in Hong Kong.

Aspen Crest is a redevelopment project and consists of 234 apartments with approximately 64,000 sq. ft. in saleable floor area and approximately 16,000 sq. ft. of commercial component. All the units have been presold as at 30 September 2017 with completion expected to take place in the financial year ending 31 March 2019.

Marin Point is a residential development site at Sha Tau Kok which the Group acquired through a government tender. This development comprises 261 low-rise apartments with approximately 103,000 sq. ft. in saleable floor area. The development was launched for pre-sale during 1H FY2018 with 17% of the units pre-sold as at 30 September 2017. Completion of the development is expected in the financial year ending 31 March 2019.

A residential development site at Hai Tan Street, Sham Shui Po was acquired through URA. This residential development will comprise 72 apartments (mainly 1-bedroom apartment) with approximately 20,000 sq. ft. in saleable floor area. Pre-sale for the development is expected to be launched during the financial year ending 31 March 2018 with completion expected in the financial year ending 31 March 2019/2020.

A residential development site at Tan Kwai Tsuen consisting of 24 town houses with approximately 48,000 sq. ft. in saleable floor area is expected to be launched for sale on a completed basis, with completion expected to be in the financial years ending 31 March 2019.

A development site at Mei Tin Road, Tai Wai, comprising a residential component of approximately 30,000 sq. ft. in saleable floor area and a commercial component of approximately 5,300 sq. ft. in gross floor area, was acquired by the Group through government tender. Completion is expected to be in the financial year ending 31 March 2019/2020.

The Group also acquired through government tender a residential development site at Tai Po Road, Shatin Heights. This development will comprise more than 60 apartments and 4 houses. The project has a GFA of approximately 70,000 sq. ft. and is currently under planning stage.

Malaysia

Dorsett Bukit Bintang is a residential development adjacent to Dorsett Regency Kuala Lumpur. This development consists of 252 high-rise apartments with approximately 215,000 sq. ft. in saleable floor area. Completion of the development took place during 1H FY2018 with 114 apartments delivered, with the remaining units to be sold on a completed basis.

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

United Kingdom

London

Alpha Square is a residential development site in Marsh Wall, Canary Wharf, London. Planning approval has been obtained for the development which will feature a mixed-use complex including residences of approximately 388,000 sq. ft. in saleable floor area, a hotel of approximately 250 rooms and commercial facilities. This development is currently under planning stage.

Hornsey Townhall, located in North London, is a redevelopment project which will be converted into a mixeduse development featuring a residential component, a hotel/serviced apartment tower and a town hall with communal areas. The residential component will provide 135 apartments with saleable floor area of approximately 105,000 sq. ft.. The development is under planning stage.

Manchester

MeadowSide is a residential development site in Manchester at NOMA which is one of the major residential growth areas of the city. The development will feature 4 towers comprising more than 750 apartments with approximately 554,000 sq. ft. of saleable floor area around the historic Angel Meadow park near Victoria Station. Presale was launched for the first 2 towers of the development with more than 280 apartments in October 2017, with the other two towers expected to be launched during the financial year ending 31 March 2018/2019. Completion of the development is expected to be in the year ending 31 March 2020/2021.

Northern Gateway is a mega-sized development project in Manchester the Group will deliver, having signed an agreement with the Manchester City Council in April 2017, which spans across an area of more than 350 acres (equivalent to 15 million sq. ft.), sweeping north from Victoria Station and taking in the neighbourhoods of New Cross, the Lower Irk Valley and Collyhurst. This is the latest and arguably the largest residential opportunity for transformational change ever undertaken in Manchester. This investment partnership is expected to deliver in excess of 10,000 new homes over the next decade, allowing the city centre to expand and providing the optimal mix of high quality housing in well-planned new areas. The over-arching vision of this project is essentially to create a series of distinct yet clearly connected communities that make the most of the area’s natural resources. This is in addition to the MeadowSide development which is located at the peripheral of the Northern Gateway area.

The Group is currently developing a masterplan of the development within which the Group will identify infrastructure and building programmes, as well as a land acquisition strategy. The project is expected to provide the Group with a significant and long-term pipeline within UK and signals the fact that the Group is accelerating its expansion into the UK market.

Singapore

Artra is a residential project located next to the Redhill MRT station in Singapore with approximately 410,000 sq. ft. in saleable floor area and is owned by a joint venture in which the Group has a 70% interest. Pre-sale of the development was launched in April 2017 with 40% of the overall units pre-sold as at 30 September 2017. Completion of the development is expected to take place during the year ending 31 March 2020.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

2. Hotel operations and management

The performance of Dorsett’s owned hotel operations for 1H FY2018 is summarized as follows:

Six months ended	30.9.2017	30.9.2016
Hong Kong Occupancy rate Average room rate (HK$) RevPAR (HK$) Total revenue (HK$ million) Mainland China Occupancy rate Average room rate (RMB) RevPAR (RMB) Total revenue (RMB million) Malaysia Occupancy rate Average room rate (MYR) RevPAR (MYR) Total revenue (MYR million) Singapore Occupancy rate Average room rate (SGD) RevPAR (SGD) Total revenue (SGD million) United Kingdom Occupancy rate Average room rate (GBP) RevPAR (GBP) Total revenue (GBP million) Group Total Occupancy rate Average room rate (HK$) RevPAR (HK$) Total revenue (HK$ million)	91.2% 655 597 341 69.2% 415 287 107 72.4% 194 140 62 85.9% 173 149 8 87.6% 105 92 7 81.8% 604 494 695	87.2% 632 551 287 59.7% 414 247 92 68.3% 187 128 56 79.5% 187 149 9 89.4% 101 91 6 76.2% 599 456 616

The Group’s hotel operations recorded a solid growth of 12.8% on total revenue to HK$695 million for 1H FY2018 as compared to 1H FY2017. The overall occupancy rate (“OCC”) increased by 5.6 percentage points to 81.8%. Albeit some adverse currency movements against Hong Kong dollar, the overall average room rate (“ARR”) increased by 0.8% to HK$604 per night. As a result, revenue per available room (“RevPAR”) for the Group increased by 8.3% to HK$494.

INTERIM REPORT 2017-2018

MANAGEMENT DISCUSSION AND ANALYSIS

For the period under review, total revenue for Hong Kong hotel operations and management recorded a strong growth of 18.8% as compared to 1H FY2017 to HK$341 million. Hong Kong remains the main contributor to the Group’s hotel revenue, representing 49.1% of the total revenue from the Group’s hotel business. OCC in Hong Kong increased 4.0 percentage points to 91.2% and ARR increased by 3.6% to HK$655 per night as compared to the same period last year, resulting in a solid growth of 8.3% in RevPAR for Hong Kong to HK$597. In May 2017, the Group completed the sale of Silka West Kowloon in Hong Kong. Had the disposed hotel been taken out of the year-on-year comparison, the overall OCC in Hong Kong would have increased by 4.5 percentage points and ARR increased by 1.9% to HK$657, resulting in a solid growth of 7.2% in RevPAR to HK$598 and an increase of total revenue by 22.6%.

Our hotel business in Hong Kong has not only benefited from the recovering market situation, but also outperformed our competitors through the strategy of diversification with more emphasis on the transient travellers from emerging platforms of North Asia and South East Asia origins.

In Mainland China, OCC in 1H FY2018 increased 9.5 percentage points year-on-year while ARR was RMB415 per night. RevPAR recorded a respectable growth of 16.2% year-on-year to RMB287 with a solid increase in total revenue of 16.3% to RMB107 million, primarily due to the strong performance of Dorsett Shanghai and Dorsett Grand Chengdu. Dorsett Shanghai’s improved results were driven by the continuous effort to enhance its ARR through a combination of price increase and segmentation adjustment, which increased 6.9% to RMB753 per night. OCC of Dorsett Grand Chengdu also increased by 12 percentage points yearon-year which significantly improved the RevPAR by 23.5% due to a more diverse customer mix with higher proportion of corporate customers and more international guests.

In Malaysia, total revenue from hotel operations for 1H FY2018 achieved a solid growth of 10.7% as compared to 1H FY2017 to approximately MYR62 million. Despite the increasingly challenging market condition, all our Dorsett branded hotels in Malaysia managed to increase market share. OCC in Malaysia in 1H FY2018 increased by 4.1 percentage points to 72.4% and the ARR increased by 3.7% to MYR194 per night. As a result, the RevPAR recorded a solid growth of 9.4% to MYR140.

In Singapore, Dorsett Singapore recorded revenue of SGD8.0 million for 1H FY2018. OCC increased by 6.4 percentage points to 85.9% and the ARR was at SGD173 per night, resulting in a RevPAR of SGD149.

In the UK, the Group recorded total revenue of GBP7 million, with a year-on-year growth of 16.7% from 1H FY2017. ARR continued to improve by 4.0% to GBP105 per night while OCC was at 87.6%, resulting in a RevPAR increase by 1.1% to GBP92. Dorsett Shepherds Bush recorded a 3.8% increase in RevPAR while ARR increased 2.7% to GBP104 per night with an OCC of 90.4%, and with its performance expected to continue to grow steadily. Dorsett City hotel in London had a soft opening in August 2017 with partial room inventory opened up, contributing GBP0.9 million to the total revenue.

In May 2017, Silka West Kowloon, Hong Kong was sold for HK$450 million with the Group continuing to manage the hotel for a term of 6 years. A gain of HK$320 million was recorded in this period.

As at 30 September 2017, the Group operated 22 owned hotels (9 in Hong Kong, 5 in Malaysia, 4 in Mainland China, 1 in Singapore, 2 in London and 1 in Gold Coast) with approximately 6,900 rooms. The Group also manages 4 other hotels (2 in Hong Kong and 2 in Malaysia) with approximately 880 rooms.

The Group has 13 hotels in the development pipeline, of which two are Ritz Carlton hotels, one each in Melbourne and Perth, and four world-class hotels in the integrated resort of Queen’s Wharf, Brisbane in which the Group has a 25% interest, with the remaining expected to be operated by Dorsett. When all the hotels in the pipeline become operational, the Group will have 35 owned hotels operating more than 10,000 rooms.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

MANAGEMENT DISCUSSION AND ANALYSIS

3. Car park operations and facilities management

The Group’s car park and facilities management business includes car park operations and property management services.

The car park business extends to both third party owned car parks and self-owned car parks and generates a stable recurring income for the Group. This business sector has been achieving steady growth over the years, with the Group’s portfolio under management growing into 427 car parks with approximately 83,801 car parking bays as at 30 September 2017, having added approximately 9,275 car parking bays during 1H FY2018. Of the Group’s 427 car parks, 30 were self-owned car parks (24 in Australia, 3 in New Zealand, 1 in the United Kingdom, 2 in Malaysia) comprising approximately 9,292 car parking bays, with the remaining 74,509 car parking bays in Australia, New Zealand and Malaysia under management contracts entered into with third party car park owners, which include local governments, shopping malls, retailers, universities, airports, hotels, hospitals, government departments and commercial and office buildings.

During 1H FY2018, the Group’s car park business continued to deliver consistent profit contribution to the Group through organic growth and acquisitions, having leveraged on its central monitoring system, Care Assist, which enabled the management team of this business to have a better control on the day-today operations of the business, providing a strong foundation for growth. With a management team rich in experience in car parking operations and the scalability offered by Care Assist, the Group is allocating more resources to the car parking division which is currently actively evaluating a number of acquisition opportunities in regions where the Group has an existing presence, with an aim of adding further self-owned car parks to its portfolio.

With this division further expanding its operation to include property management services in Australia (mainly in Brisbane, Melbourne and Adelaide) and Johor Bahru, Malaysia, where the Group had 70 contracts in relation to facilities management services as at 30 September 2017, it is expected that the car park operations and facilities management business will continue to be a steadily growing source of recurring cash flow streams.

OUTLOOK

The Group continues to be well positioned to deliver sustainable and long-term growth with its regionalization strategy which has resulted in a strong performance during 1H FY2018. Presales value of the Group as at 30 September 2017 was at a record high of HK$13.0 billion and a development pipeline of HK$45.3 billion provides clear visibility of the Group’s future profitability. The Group will continue to add to the development pipelines by allocating resources to regions where the Group sees long-term growth prospects, especially when the strength in Hong Kong dollars offers the Group good timing to actively explore overseas opportunities.

Since Dorsett has become wholly-owned by the Group in 2015, the Group has been reaping benefits from the increased flexibility in capital allocation which has helped partly fuel the Group’s accelerated growth in recent years.

The Group’s hotel business is expected to continue its recovery track, especially those in Hong Kong, whereas new hotels in the pipelines will further add to the future recurring cash flow base. The Group’s direction of allocating more capital to the car park operations and facilities management business ensures this part of the Group’s business will not only grow organically as it has been for years, but also through acquisitions of car park assets that yield good returns.

The Group has a favorable liquidity position at approximately HK$5.9 billion and a net gearing ratio of 30.8%, reflecting the strength of the Group’s balance sheet. Together with the available undrawn credit facility of HK$6.2 billion and with abundant asset base which remains unencumbered, there is a significant war chest to support the growth of the Group.

In conclusion, the Group has laid a solid foundation for growth and will continue to bring to its shareholders longterm growth.

Lastly, the Board will take into account full year earnings and historical payout ratios in determining final dividend payment for the year ending 31 March 2018. With a strong first half performance, prospects for a growth in final dividend look promising.

INTERIM REPORT 2017-2018 25

OTHER INFORMATION

EMPLOYEES AND REMUNERATION POLICIES

As at 30 September 2017, the Group had approximately 3,700 employees. The Group provides its employees with comprehensive benefit packages and career development opportunities, including medical benefits, both internal and external trainings appropriate for various level of staff roles and functions.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 September 2017, the interests and short positions of the directors and chief executive of the Company in the shares, underlying shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)), as recorded in the register required to be kept by the Company pursuant to Section 352 of SFO; or 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”) were as follows:

A. THE COMPANY

A.1 Long position in the ordinary shares

			Approximate
		Number of	% of
		ordinary	the Company’s
		shares	issued
Name of directors	Capacity	interested	share capital*
David CHIU	Beneficial owner	17,138,886	0.76%
	Interest of spouse	585,322(i)	0.03%
	Interest of controlled corporations	1,035,013,215(i)	46.01%
Cheong Thard HOONG	Beneficial owner	12,240,761	0.54%
	Joint interest	447,997(ii)	0.02%
Chi Hing CHAN	Beneficial owner	1,400,843	0.06%
Dennis CHIU	Beneficial owner	3,654	0.00%
	Interest of controlled corporation	5,754,093(iii)	0.26%

Notes:

(i) 1,034,997,952 shares were held by Sumptuous Assets Limited and 15,263 shares were held by Modest Secretarial Services Limited, companies controlled by Tan Sri Dato’ David CHIU and 585,322 shares were held by Ms. Nancy NG, spouse of Tan Sri Dato’ David CHIU.

(ii) 447,997 shares were held by Mr. Cheong Thard HOONG jointly with his wife.

(iii) 5,754,093 shares were held by First Level Holdings Limited, a company controlled by Mr. Dennis CHIU and his brother Mr. Daniel Tat Jung CHIU.

The percentage represents the number of ordinary shares interested divided by the Company’s issued shares as at 30 September 2017.

A.2 Debentures

As at 30 September 2017, Tan Sri Dato’ David CHIU was deemed to have an interest in the 3.75% USD Medium Term Notes 2021 issued by the Company in the principal amount of USD12,000,000 of which USD10,000,000 was held by Tan Sri Dato’ David CHIU and USD2,000,000 was held by his spouse, Ms. Nancy NG.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

OTHER INFORMATION

B. ASSOCIATED CORPORATIONS

B.1 Long position in the ordinary shares

			Number of	Approximate %
	Name of associated		ordinary shares	of the relevant
Name of director	corporation	Capacity	interested	issued share capital*
Craig Grenfell WILLIAMS	Care Park Group	Beneficiary of a	825(i)	8.25%
	Pty. Ltd. (the “Care	discretionary trust
	Park”)

Note:

(i) These shares in Care Park were held by Chartbridge Pty Ltd in its capacity as the trustee of the Craig Williams Family Trust, and Mr. Craig Grenfell WILLIAMS, as a beneficiary of the Craig Williams Family Trust, was deemed to be interested in these shares.
The percentage represents the number of ordinary shares interested divided by the Care Park’s issued shares as at 30 September 2017.

B.2 Debentures of Dorsett

As at 30 September 2017, Tan Sri Dato’ David CHIU was deemed to have an interest in the 6.0% CNY Bonds 2018 issued by Dorsett in the principal amount of CNY90,030,000 of which CNY83,030,000 was held by Singford Holdings Limited, a wholly owned subsidiary in which Tan Sri Dato’ David CHIU owned approximately 46.80% interest in the issued share capital of the Company and CNY7,000,000 was held by his spouse, Ms. Nancy NG.

Save as disclosed above, none of the directors and chief executive of the Company had registered an interest and short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code as at 30 September 2017.

SHARE OPTION SCHEME

(A) FECIL Share Option Schemes

FECIL Share Option Schemes were adopted for the purpose of providing incentives and rewards to employees or executives or officers of the Company or any of its subsidiaries (including executive and nonexecutive directors) and business consultants, agents and legal or financial advisers who will contribute or have contributed to the Company or any of its subsidiaries. Under FECIL Share Option Schemes, the directors of the Company may grant options to eligible employees including directors of the Company and its subsidiaries, to subscribe for shares of the Company.

The Company’s old share option scheme adopted on 28 August 2002 was expired on 28 August 2012. In order to continue to provide incentives and rewards to the eligible employees and participants, the Company adopted a new share option scheme pursuant to a resolution passed by the Shareholders on 31 August 2012 for a period of 10 years commencing on the adoption date.

INTERIM REPORT 2017-2018 27

OTHER INFORMATION

The following table discloses movements in the Company’s share options during the six months ended 30 September 2017:

Category of grantee Date of grant Exercise price per share HK$	Number of share options Outstanding at 01.04.2017 Granted during the period Exercised during the period Lapsed/ cancelled during the period Outstanding at 30.09.2017 Exercise period*
Directors Cheong Thard HOONG 27.03.2013 2.550	250,000 – (250,000) – – 01.03.2014–28.02.2020 1,000,000 – (1,000,000) – – 01.03.2015–28.02.2020 1,250,000 – (1,250,000) – – 01.03.2016–28.02.2020 2,000,000 – (2,000,000) – – 01.03.2017–28.02.2020
	4,500,000 – (4,500,000) – –
Chi Hing CHAN 27.03.2013 2.550	– – – – – 01.03.2014–28.02.2020 – – – – – 01.03.2015–28.02.2020 – – – – – 01.03.2016–28.02.2020 1,400,000 – (1,400,000) – – 01.03.2017–28.02.2020
	1,400,000 – (1,400,000) – –
Other employees in aggregate 27.03.2013 2.550	675,000 – (450,000) – 225,000 01.03.2014–28.02.2020 1,500,000 – (1,200,000) – 300,000 01.03.2015–28.02.2020 1,875,000 – (1,400,000) – 475,000 01.03.2016–28.02.2020 3,000,000 – (2,000,000) – 1,000,000 01.03.2017–28.02.2020
	7,050,000 – (5,050,000) – 2,000,000
Total	12,950,000 – (10,950,000) – 2,000,000

The vesting period of the share options is from the date of grant until the commencement of the exercise period.

The weighted average price of the Company’s share immediately before the date(s) on which the options were exercised is HK$4.11 (six months ended 30 September 2016: Nil).

Further information on FECIL Share Option Schemes and the options granted by the Company is set out in note 23 to the consolidated financial statements.

(B) Dorsett Share Option Scheme

Dorsett Share Option Scheme was adopted for the purpose of providing incentives or rewards to selected eligible participants for their contribution to the Group. Eligible participants of Dorsett Share Option Scheme include directors of Dorsett (including executive directors, non-executive directors and independent nonexecutive directors) and employees of Dorsett and the Group and any advisors, consultants, distributors, contractors, suppliers, agents, customers, business partners, joint venture business partners, promoters, service providers of any member of the Group whom the board of Dorsett considers, in its sole discretion, have contributed or will contribute to the Group.

The share options under Dorsett Share Option Scheme, save for those lapsed on 10 October 2015 in accordance with the Dorsett Share Option Scheme, were cancelled upon acceptance of the offer under Rule 13 of The Code on Takeovers and Mergers and Share Buy-backs published by the Securities and Futures Commission made by or on behalf of Willow Bliss Limited, a wholly-owned subsidiary of the Company, to the holders of Dorsett Share Option Scheme at a nominal value of HK$0.01 for each share option under Dorsett Share Option Scheme.

As at 30 September 2017, there were no outstanding share options. No share options were granted, exercised, cancelled or lapsed during the six months ended 30 September 2017.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

OTHER INFORMATION

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

Save as disclosed above, at no time during the period was the Company or any of its subsidiaries a party to any arrangements to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS

As at 30 September 2017, according to the register of interests in shares or short positions in the shares or underlying shares of the Company as recorded in the register, required to be kept by the Company pursuant to Section 336 of the SFO (other than the interests of directors of the Company as set out above) and as far as the directors of the Company are aware, the following persons had interests of 5% or more or short positions in the shares of the Company:

			Approximate
		Number of	% of
		ordinary	the Company’s
		shares	issued
Name of substantial shareholders	Capacity	interested	share capital*
Sumptuous Assets Limited	Beneficial owner	1,034,997,952(i)	46.01%
		(long position)
Deacon Te Ken CHIU	Beneficial owner	13,022,647	0.58%
		(long position)
	Interest of controlled corporations	140,942,693(ii)	6.27%
		(long position)
	Interest of spouse	1,624,301(ii)	0.07%
		(long position)
Value Partners Group Limited	Interest of controlled corporations	107,639,987(iii)	4.79%
		(long position)
Value Partners High-Dividend	Beneficial owner	112,842,788	5.02%
Stocks Fund		(long position)

Notes:

(i) The interests of Sumptuous Assets Limited were also disclosed as the interests of Tan Sri Dato’ David CHIU in the above section headed “Directors’ and Chief Executive’s Interests and Short Positions in Shares, Underlying Shares and Debentures”. Tan Sri Dato’ David CHIU is a director of Sumptuous Assets Limited.

(ii) 140,942,693 shares were held by various companies controlled by Mr. Deacon Te Ken CHIU’s estate and 1,624,301 shares were held by Mrs. Ching Lan JU CHIU, spouse of Mr. Deacon Te Ken CHIU. Mr. Deacon Te Ken CHIU passed away on 17 March 2015 and his interests in the ordinary shares of the Company forms part of his estate.

(iii) These shares were held by various companies controlled by Value Partners Group Limited.

The percentage represents the number of ordinary shares interested divided by the Company’s issued shares as at 30 September 2017.

Save as disclosed above, as at 30 September 2017, the Company has not been notified of any persons (other than directors or chief executive of the Company) who had an interest or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO.

INTERIM REPORT 2017-2018

OTHER INFORMATION

DISCLOSURE PURSUANT TO RULE 13.21 OF THE LISTING RULES

The Company and certain of its subsidiaries, as guarantors, and City Sight Limited (“City Sight”), its subsidiary, as borrower, entered into a facility agreement (the “Facility Agreement”) with a group of banks, as lenders, on 22 February 2016 and an unsecured term loan facility in the aggregate amount of HK$1,350 million was granted to City Sight. The final maturity date is 36 months from the date of the Facility Agreement.

Pursuant to the Facility Agreement, the following specific performance covenants were imposed on the controlling shareholder of the Company:

(a) Sumptuous Assets Limited shall own, directly or indirectly, at least 40% of the beneficial interest in the Company, carrying at least 40% of the voting right; and
(b) Chiu Family (as defined in the Facility Agreement) shall own, directly or indirectly, more than 51% of the beneficial interest in Sumptuous Assets Limited, carrying more than 51% of the voting right, free from any security.

During the six months ended 30 September 2017, the above specific performance covenants under the Facility Agreement have been complied with. For details, please refer to the announcement of the Company dated 22 February 2016.

COMPLIANCE WITH CORPORATE GOVERNANCE CODE

Throughout the six months ended 30 September 2017, the Company has complied with the code provisions (the “Code Provisions”) set out in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Listing Rules, except for the deviation from Code Provision A.2.1 described below.

Pursuant to Code Provision A.2.1 of the CG Code, the roles of Chairman and Chief Executive Officer should be separate and should not be performed by the same individual. Currently Tan Sri Dato’ David CHIU assumes the roles of both the Chairman and Chief Executive Officer of the Company. The Board believes that this structure provides the Group with strong and consistent leadership and allows for more effective and efficient business planning and decisions as well as execution of long-term business strategies. As such, it is beneficial to the business prospects of the Group.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its own code of conduct regarding directors’ securities transactions. Following specific enquiry made by the Company, all directors have confirmed they had complied with the required standards set out in the Model Code throughout the six months ended 30 September 2017.

The Company has also applied the principles of the Model Code for securities transactions by employees who are likely to be in possession of unpublished inside information of the Company and/or its securities. No incident of non-compliance of the principles of the Model Code by the Group’s employees has been noted by the Company.

The Company has been notifying directors and relevant employees, if any, of the prohibitions on dealings in the securities of the Company according to the Model Code, whenever black-out periods arise. In addition, the Company requires directors and relevant employees to copy their notifications of intended dealings to the Company Secretary as well as one designated director for receiving such notifications.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

OTHER INFORMATION

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the six months ended 30 September 2017, neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities.

AUDIT COMMITTEE

The Audit Committee, comprising all of the Company’s three independent non-executive directors, namely Mr. Kwok Wai CHAN, Mr. Peter Man Kong WONG and Mr. Kwong Siu LAM has reviewed the accounting principles, standard and practices adopted by the Company, and discussed matters relating to auditing, risk management and internal control and financial reporting, including the review of the unaudited consolidated interim results of the Group for the six months ended 30 September 2017.

CHANGES IN PARTICULARS OF THE DIRECTORS

Pursuant to rule 13.51B(1) of the Listing Rules, changes of directors’ particulars since the publication of the Company’s 2017 Annual Report are set out below:

Effective date	Change
25 August 2017	Mr. Peter Man Kong WONG has retired as an independent non-executive director
	of Chinney Investments, Limited (stock code: 216)
15 September 2017	Mr. David CHIU has been appointed as a non-executive director and the chairman
	of i-CABLE Communications Limited (stock code: 1097)
15 September 2017	Mr. Cheong Thard HOONG has been appointed as a non-executive director of
	i-CABLE Communications Limited (stock code: 1097)

CLOSURE OF REGISTER OF MEMBERS

The Register of Members of the Company will be closed from Wednesday, 20 December 2017 to Thursday, 28 December 2017, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for entitlement to the Interim Dividend, unregistered holders of shares of the Company should ensure that all share transfer documents accompanied by the relevant share certificates must be lodged with the Company’s share registrar in Hong Kong, Tricor Standard Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration not later than 4:30 p.m. on Tuesday, 19 December 2017.

By order of the Board of Far East Consortium International Limited Ka Pong CHAN Company Secretary

Hong Kong, 27 November 2017

INTERIM REPORT 2017-2018 31

REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

To the Board of Directors of Far East Consortium International Limited

INTRODUCTION

We have reviewed the condensed consolidated financial statements of Far East Consortium International Limited (the “Company”) and its subsidiaries set out on pages 32 to 56 which comprise the condensed consolidated statement of financial position as of 30 September 2017 and the related condensed consolidated statement of profit or loss, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 “Interim Financial Reporting” (“HKAS 34”) issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.

Deloitte Touche Tohmatsu

Certified Public Accountants Hong Kong 27 November 2017

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 September 2017

	Six months ended	Six months ended
NOTES	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Revenue 5 Cost of sales and services Depreciation and amortisation of hotel and carpark assets	2,775,986 (1,209,680) (161,002)	2,952,607 (1,696,600) (147,442)
Gross profit Other income Other gains and losses 6 Administrative expenses – Hotel operations and management – Others Pre-opening expenses – Hotel operations and management Selling and marketing expenses Share of results of associates Share of results of joint ventures Finance costs 7	1,405,304 12,417 486,374 (186,121) (123,902) (6,452) (86,034) (1,262) (791) (146,821)	1,108,565 6,590 235,019 (174,983) (132,309) (2,592) (16,113) 3,935 (1,452) (105,483)
Profit before tax Income tax expense 8	1,352,712 (306,234)	921,177 (233,000)
Profit for theperiod 9	1,046,478	688,177
Attributable to: Shareholders of the Company Non-controllinginterests	1,032,795 13,683	681,427 6,750
	1,046,478	688,177
Earnings per share 10 – Basic (HK cents)	46.0	32.0
– Diluted (HK cents)	46.0	32.0

INTERIM REPORT 2017-2018

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 September 2017

	Six months ended 30.9.2017 30.9.2016 HK$’000 HK$’000 (unaudited) (unaudited)	Six months ended 30.9.2017 30.9.2016 HK$’000 HK$’000 (unaudited) (unaudited)
	30.9.2017 HK$’000 (unaudited)
Profit for theperiod	1,046,478	688,177
Other comprehensive income (expense) for the period Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations Fair value adjustment on cross currency swap contracts designated as cash flows hedge	336,556 43,522	(231,632) (16,059)
Other comprehensive income (expense) for theperiod	380,078	(247,691)
Total comprehensive income for theperiod	1,426,556	440,486
Total comprehensive income attributable to: Shareholders of the Company Non-controllinginterests	1,404,791 21,765	426,950 13,536
	1,426,556	440,486

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 2017

NOTES	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Non-current Assets Investment properties 12 Property, plant and equipment 12 Prepaid lease payments Goodwill Interests in associates 13 Interests in joint ventures Investment securities 14 Deposits for acquisition of property, plant and equipment Amounts due from associates Amount due from a joint venture Amount due from an investee company Other receivables Pledged deposits Deferred tax assets	3,199,679 7,616,289 498,405 68,400 771,990 383,505 2,873 122,174 66,831 25,372 119,995 81,325 3,968 30,155	3,001,786 7,481,570 486,491 68,400 667,416 353,742 692 117,601 70,724 25,372 119,995 79,936 3,723 31,233
	12,990,961	12,508,681
Current Assets Properties for sale Completed properties Properties for/under development Other inventories Prepaid lease payments Debtors, deposits and prepayments 15 Deposits receivable from stakeholders Other receivables Loan to a joint venture Amounts due from joint ventures Amount due from an associate Tax recoverable Investment securities 14 Derivative financial instruments 18 Pledged deposits Restricted bank deposits Deposit in a financial institution Bank balances and cash	517,781 9,464,968 8,372 14,935 375,909 476,195 12,163 92,948 52,415 30,078 220,064 2,075,193 2,350 10,068 4,554 11,768 3,819,915	280,341 8,889,843 8,137 14,466 375,190 252,109 11,688 77,313 51,204 32,748 136,267 1,466,188 67 25,234 267,983 11,331 3,881,894
Assets classified as held for sale 16	17,189,676 –	15,782,003 109,277
	17,189,676	15,891,280

INTERIM REPORT 2017-2018

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 2017

NOTES	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Current Liabilities Creditors and accruals 17 Customers’ deposits received Obligations under finance leases Amount due to a related company Amounts due to associates Amounts due to shareholders of non-wholly owned subsidiaries Derivative financial instruments 18 Dividend payable Notes and bonds 20 Tax payable Bank borrowings 19	1,011,425 1,926,410 10,990 17,559 10,119 7,502 3,602 337,398 946,795 399,058 4,364,468	889,406 2,109,874 3,775 16,815 7,186 26,907 9,176 – – 358,917 2,755,293
Liabilities associated with assets classified as held for sale 16	9,035,326 –	6,177,349 3,600
	9,035,326	6,180,949
Net Current Assets	8,154,350	9,710,331
Total Assets less Current Liabilities	21,145,311	22,219,012
Non-current Liabilities Obligations under finance leases Amount due to a shareholder of a non-wholly owned subsidiary Derivative financial instruments 18 Notes and bonds 20 Bank borrowings 19 Deferred tax liabilities	6,001 257,366 75,797 2,231,171 6,083,503 430,677	7,594 246,740 119,314 3,130,542 7,376,392 394,715
	9,084,515	11,275,297
Net Assets	12,060,796	10,943,715
Capital and Reserves Share capital 21 Share premium Reserves	224,932 4,084,368 7,577,818	223,837 4,033,779 6,534,186
Equity attributable to shareholders of the Company Non-controllinginterests	11,887,118 173,678	10,791,802 151,913
Total Equity	12,060,796	10,943,715

The condensed consolidated financial statements on pages 32 to 56 were approved and authorised for issue by the Board of Directors on 27 November 2017 and are signed on its behalf by:

DAVID CHIU DIRECTOR

CHEONG THARD HOONG DIRECTOR

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2017

At 1 April 2016 (audited)	Attributable to shareholders of the Company Capital Assets Share Non- Share Share redemption revaluation Exchange options Hedging Other Retained controlling capital premium reserve reserve reserve reserve reserve reserve profits Total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 213,171 3,730,625 28,458 16,242 (287,068) 27,313 (95,167) 1,059,180 5,447,378 10,140,132 127,123 10,267,255
Profit for the period	– – – – – – – – 681,427 681,427 6,750 688,177
Exchange differences arising on translation of foreign operations Fair value adjustment on cross currency swap contracts designated as cash flows hedge	– – – – (238,418) – – – – (238,418) 6,786 (231,632) – – – – – – (16,059) – – (16,059) – (16,059)
Other comprehensive (expense) income for the period	– – – – (238,418) – (16,059) – – (254,477) 6,786 (247,691)
Total comprehensive (expense) income for the period – – – – (238,418) – (16,059) – 681,427 426,950 13,536 440,486 Recognition of equity-settled share-based payment expenses – – – – – 738 – – – 738 – 738 Dividends recognised as distribution – – – – – – – – (277,122) (277,122) – (277,122) Dividends paid to non-controlling interests – – – – – – – – – – (2,412) (2,412) Lapse of share options – – – – – (3,203) – – 3,203 – – –
At 30 September 2016 (unaudited) 213,171 3,730,625 28,458 16,242 (525,486) 24,848 (111,226) 1,059,180 5,854,886 10,290,698 138,247 10,428,945

INTERIM REPORT 2017-2018 37

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2017

	Attributable to shareholders of the Company Capital Assets Share Non- Share Share redemption revaluation Exchange options Hedging Other Retained controlling capital premium reserve reserve reserve reserve reserve reserve profits Total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Profit for the period	– – – – – – – – 436,261 436,261 8,421 444,682
Exchange differences arising on translation of foreign operations Fair value adjustment on cross currency swap contracts designated as cash flow hedge	– – – – (152,613) – – – – (152,613) (7,017) (159,630) – – – – – – (26,581) – – (26,581) – (26,581)
Other comprehensive expense for the period	– – – – (152,613) – (26,581) – – (179,194) (7,017) (186,211)
Total comprehensive (expense) income for the period – – – – (152,613) – (26,581) – 436,261 257,067 1,404 258,471 Shares issued in lieu of cash dividend 10,406 296,783 – – – – – – – 307,189 – 307,189 Shares issued upon exercise of share options 260 6,371 – – – – – – – 6,631 – 6,631 Recognition of equity-settled share-based payment expenses – – – – – 606 – – – 606 – 606 Gain on revaluation of properties transferred from property, plant and equipment to investment properties – – – 8,654 – – – – – 8,654 – 8,654 Acquisition of additional interests in subsidiaries – – – – – – – (1,416) – (1,416) (4,782) (6,198) Additional non-controlling interest on a subsidiary – – – – – – – – – – 297 297 Dividends recognised as distribution – – – – – – – – (77,627) (77,627) – (77,627) Dividends paid to non-controlling interests – – – – – – – – – – (2,934) (2,934) Deemed capital contribution arising from interest-free loans advanced by a non-controlling shareholder – – – – – – – – – – 19,681 19,681

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 September 2017

At 31 March 2017 (audited)	Attributable to shareholders of the Company Capital Assets Share Non- Share Share redemption revaluation Exchange options Hedging Other Retained controlling capital premium reserve reserve reserve reserve reserve reserve profits Total interests Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 223,837 4,033,779 28,458 24,896 (678,099) 25,454 (137,807) 1,057,764 6,213,520 10,791,802 151,913 10,943,715
Profit for the period	– – – – – – – – 1,032,795 1,032,795 13,683 1,046,478
Exchange differences arising on translation of foreign operations Fair value adjustment on cross currency swap contracts designated as cash flows hedge	– – – – 328,474 – – – – 328,474 8,082 336,556 – – – – – – 43,522 – – 43,522 – 43,522
Other comprehensive expenses for the period	– – – – 328,474 – 43,522 – – 371,996 8,082 380,078
Total comprehensive income for the period Share issue upon exercise of share options Dividends recognised as distribution (note 11)	– – – – 328,474 – 43,522 – 1,032,795 1,404,791 21,765 1,426,556 1,095 50,589 – – – (23,761) – – – 27,923 – 27,923 – – – – – – – – (337,398) (337,398) – (337,398)
At 30 September 2017 (unaudited)	224,932 4,084,368 28,458 24,896 (349,625) 1,693 (94,285) 1,057,764 6,908,917 11,887,118 173,678 12,060,796

Other reserve mainly comprise (a) credit balance of HK$1,038,709,000 recognised in respect of the group reorganisation in 1991, representing the excess of the value of the net assets of the subsidiaries acquired and the nominal value of the shares issued by the Company for the acquisition; (b) credit balance of HK$440,192,000 recognised in the year ended 31 March 2010 in respect of the gain on decrease in interest in a non-wholly owned listed subsidiary, Dorsett Hospitality International Limited (“Dorsett”); (c) a debit balance of HK$3,097,000 and HK$1,416,000 recognised in the year ended 31 March 2013 and 31 March 2017 in respect of the excess of the consideration paid over the net assets attributable to the additional interest in an indirect subsidiary, Care Park Group Pty Limited, acquired; (d) a credit balance of HK$6,415,000 recognised in the year ended 31 March 2014 in respect of the excess of the net assets attributable to the additional interest in an indirect subsidiary, Dorsett, acquired over the consideration; (e) a debit balance of HK$746,000 recognised in the year ended 31 March 2015 in respect of the excess of consideration paid over the net assets attributable to the additional interest in an indirect subsidiary, Dorsett, acquired; (f) credit balance of HK$23,568,000 representing the difference between the Group’s interest in the net assets acquired from shareholders of non-wholly owned subsidiaries and the consideration paid for the acquisition of remaining interests in Dorsett and the transfer of the net amount of HK$445,861,000 previously recognised for Dorsett in other reserve, to retained profits arising from the acquisition in the year ended 31 March 2016.

INTERIM REPORT 2017-2018

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 September 2017

	Six months ended	Six months ended
NOTE	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Net cash (used in) generated from operating activities	(524,683)	1,814,114
Investing activities Acquisition and development expenditure of property, plant and equipment Investment in an associate Placement of pledged bank deposits Release of pledged bank deposits Placement of restricted bank deposits Release of restricted bank deposits Proceeds from disposal of a subsidiary 22 Other investingactivities	(121,486) (92,632) – 14,921 – 263,429 400,605 (19,082)	(289,269) – (2,936) 1,881 (226,829) – – (41,171)
Net cash generated from (used in) investing activities	445,755	(558,324)
Financing activities Net proceeds on issue of note New bank borrowings raised Repayment of bank borrowings Interest paid Other financingactivities	– 1,234,679 (1,026,866) (265,074) 28,270	2,303,819 1,513,967 (3,262,980) (179,135) (8,666)
Net cash (used in) generated from financing activities	(28,991)	367,005
Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Effect of foreign exchange rate changes	(107,919) 3,893,225 46,377	1,622,795 2,369,657 (45,822)
Cash and cash equivalents at end of theperiod	3,831,683	3,946,630
Analysis of the balances of cash and cash equivalents Bank balances and cash Deposit in a financial institution	3,819,915 11,768	3,935,299 11,331
	3,831,683	3,946,630

40 FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

1. GENERAL

The Company was incorporated as an exempted company with limited liability in the Cayman Islands. The shares of the company have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

2. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange.

3. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values, as appropriate.

The accounting policies and method of computation used in the condensed consolidated financial statements for the six months ended 30 September 2017 are the same as those followed in the preparation of the Group’s annual financial statements for the year ended 31 March 2017.

Application of amendments to Hong Kong Financial Reporting Standards (“HKFRSs”)

The Group has applied for the first time in the current interim period, the following amendments to HKFRSs issued by the HKICPA that are relevant for the preparation of the Group’s condensed consolidated financial statements.

Amendments to HKAS 7 Disclosure Initiative Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to HKFRS 12 As part of Annual Improvements to HKFRS 2014–2016 Cycle

The application of the above amendments to HKFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements.

4. SEGMENT INFORMATION

Segment revenue and profit

The Group determines its operating segments based on internal reporting about components that are regularly reviewed by the chief operating decision makers. Information reported to the Group’s chief operating decision makers, who are the executive directors of the Company, for the purposes of resource allocation and assessment of performance is mainly focused on the property development, property investment, operations of Dorsett and its subsidiaries (including hotel operations and management and property investments), and car park operations and facilities management in each of the geographical locations as stated below, securities and financial product investments and other operations, which mainly include provision of engineering services and second mortgage loans.

INTERIM REPORT 2017-2018

For the six months ended 30 September 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. SEGMENT INFORMATION (continued)

Segment revenue and profit (continued)

The following is an analysis of the Group’s revenue and results by reportable and operating segment. Segment profit (loss) represents the pre-tax profit (loss) earned (incurred) by each segment without allocation of central administrative costs, directors’ salaries and finance costs.

	Segment revenue	Segment revenue	Segment profit	Segment profit
	Six months ended 30.9.2017 HK$’000 (unaudited)	Six months ended 30.9.2016 HK$’000 (unaudited)	Six months ended 30.9.2017 HK$’000 (unaudited)	Six months ended 30.9.2016 HK$’000 (unaudited)
Property development – Australia – Hong Kong (“HK”) – Malaysia – Other regions in the People’s Republic of China excluding HK (“PRC”) – Singapore Property investment – Australia – HK – PRC – United Kingdom (“UK”) Operations of Dorsett and its subsidiaries – HK – Malaysia – PRC – Singapore – UK Car park operations and facilities management – Australia – Malaysia – UK Securities and financial product investments Other operations	378,578 – 361,063 914,893 – 1,654,534 2,579 21,297 6,766 992 31,634 340,689 111,729 123,469 46,628 72,800 695,315 322,627 4,105 6,422 333,154 60,665 684	1,482,370 – – 475,498 – 1,957,868 2,371 17,775 5,816 – 25,962 286,987 108,071 108,099 48,883 64,368 616,408 303,823 5,671 – 309,494 42,326 549	118,409 (17,484) 178,103 627,774 (21,201) 885,601 1,412 151,343 (13,423) (1,208) 138,124 334,285 15,646 2,686 8,951 8,912 370,480 41,962 3,475 6,410 51,847 72,930 2,433	462,170 (8,595) 2,224 300,677 (4,096) 752,380 1,431 158,553 (12,198) (678) 147,108 57,343 11,147 (10,005) 9,859 7,567 75,911 24,421 2,425 – 26,846 60,571 2,617
Segment revenue/segmentprofit	2,775,986	2,952,607	1,521,415 (21,882) (146,821)	1,065,433 (38,773) (105,483)
Unallocated corporate income and expenses Finance costs Profit before tax Income tax expense Profit for the period
			1,352,712 (306,234)	921,177 (233,000)
			1,046,478	688,177

None of the segments derived any revenue from transactions with other segments.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

4. SEGMENT INFORMATION (continued)

Segment assets

The following is an analysis of the Group’s assets by reportable segment as at the end of the reporting period. Segment assets represent assets held by each segment without allocation of corporate assets which are mainly bank balances and cash and deposits in a financial institution.

	As at 30.9.2017 HK$’000 (unaudited)	As at 31.3.2017 HK$’000 (audited)
Property development – Australia – HK – Malaysia – PRC – Singapore – UK Property investment – Australia – HK – PRC Operations of Dorsett and its subsidiaries – HK – Malaysia – PRC – Singapore – UK Car park operations and facilities management – Australia – Malaysia – UK Securities and financial product investments Other operations	4,018,850 2,550,064 508,062 2,284,530 2,497,148 509,275 12,367,929 165,673 2,344,741 3,084 2,513,498 3,446,277 858,561 1,914,887 613,408 1,226,179 8,059,312 873,435 137,954 149,510 1,160,899 2,029,272 218,044	3,309,546 2,179,248 641,353 2,559,895 2,369,356 327,605 11,387,003 161,296 2,242,535 4,821 2,408,652 3,627,380 819,955 1,887,490 608,915 1,068,067 8,011,807 759,231 137,101 139,708 1,036,040 1,442,422 220,812
Segment assets Unallocated corporate assets	26,348,954 3,831,683	24,506,736 3,893,225
Total assets	30,180,637	28,399,961

Information about segment liabilities are not regularly reviewed by the chief operating decision makers. Accordingly, segment liability information is not presented.

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

5. REVENUE

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Sale of properties Leasing of properties Hotel operations and management Car park operations and facilities management Provision of property management services Interest income and dividend income from financial instruments Other operations	1,641,373 64,158 666,720 332,926 6,419 60,672 3,718	1,948,291 59,808 586,430 309,564 5,640 42,325 549
	2,775,986	2,952,607

6. OTHER GAINS AND LOSSES

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Change in fair value of investment properties Gain arising on transfer of completed properties for sales to investment properties Change in fair value of financial assets at fair value through profit or loss Change in fair value of derivative financial instruments Gain on disposal of a subsidiary (note 22) Gain on disposal of property, plant and equipment Impairment loss recognised in respect of interest in an associate Net foreign exchange gains Allowance for doubtful debts	116,906 8,982 4,379 13,586 320,130 11,575 – 13,748 (2,932)	211,630 – 10,324 2,495 – – (25,000) 37,614 (2,044)
	486,374	235,019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

7. FINANCE COSTS

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Interest on bank borrowings Interest on notes and bonds Less: net interest income from cross currency swap contracts Amortisation of front-end fee Others	131,434 72,979 (1,773) 4,918 952	150,905 45,757 (12,739) 5,042 1,635
Total interest costs Less: amounts capitalised to properties under development: – properties for owners’ occupation –properties for sale	208,510 (4,972) (56,717)	190,600 (11,838) (73,279)
	146,821	105,483

Borrowing costs capitalised during the period which arose on the general borrowing pool of the Group were calculated by applying a capitalisation rate of 1.79% to 6.17% (six months ended 30.9.2016: 1.83% to 4.97%) per annum to expenditure on the qualifying assets.

8. INCOME TAX EXPENSE

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
The income tax expense comprises: Current tax: HK Profits Tax PRC Enterprise Income Tax (“PRC EIT”) PRC Land Appreciation Tax (“PRC LAT”) Australia Income Tax Malaysia Income Tax Singapore Income Tax UK Income Tax	9,945 176,111 45,619 9,866 35,001 3,063 3,382	3,547 67,354 24,679 105,544 2,232 – –
	282,987	203,356
Overprovision in prior years: – HK Profits Tax – PRC EIT – Malaysia Income Tax	– – –	(41) 4,142 (9)
	–	4,092
Deferred taxation	23,247	25,552
	306,234	233,000

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

8. INCOME TAX EXPENSE (continued)

HK Profits Tax is calculated at 16.5% of the estimated assessable profits for the period of each individual company comprising the Group less tax losses brought forward where applicable.

PRC EIT is calculated in accordance with the EIT Law and Implementation Regulations of the EIT Law at the rate of 25%.

PRC LAT is levied at the deemed levying rates in accordance with the relevant PRC tax laws and regulations.

The domestic statutory tax rate of Australia, Malaysia, Singapore and UK is 30%, 25%, 17% and 19% of the estimated assessable profit for the period, respectively.

9. PROFIT FOR THE PERIOD

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Profit for the period has been arrived at after charging: Amortisation of prepaid lease payments Depreciation of property, plant and equipment Share of taxation of associates (included in share of results of associates)	5,857 166,068 630	5,387 147,572 777
and after crediting: Bank interest income	10,300	2,879

10. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the shareholders of the Company is based on the consolidated profit for the period attributable to the shareholders of the Company of HK$1,032,795,000 (six months ended 30.9.2016: HK$681,427,000) and the number of shares calculated as follows:

	Six months ended	Six months ended
	30.9.2017 ‘000 (unaudited)	30.9.2016 ‘000 (unaudited)
Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares – Company’s share options	2,243,437 2,960	2,131,709 444
Weighted average number of ordinary shares for thepurpose of diluted earningsper share	2,246,397	2,132,153

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

11. DIVIDENDS

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Dividends recognised as distribution during the period: Final dividend for the year ended 31 March 2017 of HK15 cents (six months ended 30.9.2016: final dividend for the year ended 31 March 2016 of HK13 cents)per share	337,398	277,122

The 2017 final dividend was declared in form of a scrip dividend to shareholders who were given an option to elect to receive cash in lieu of all or part of their scrip dividend at a share price of HK$4.01 per share. These new shares rank pari passu to the existing shares of the Company.

Subsequent to the end of the reporting period, the directors of the Company have determined that an interim dividend of HK4.0 cents (six months ended 30.9.2016: HK3.5 cents) per share will be paid to the shareholders of the Company whose names appear in the Register of Member on 28 December 2017.

12. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT

During the period ended 30 September 2017, the Group acquired certain property, plant and equipment amounting to HK$130,438,000 (six months ended 30.9.2016: HK$301,260,000). In addition, the Group incurred development expenditure on development of certain hotel properties amounting to HK$106,538,000 (six months ended 30.9.2016: HK$239,876,000).

The fair value of the investment properties at 30 September 2017 and 31 March 2017 have been arrived at on the basis of valuations carried out by the following independent firms of qualified professional valuers not connected to the Group:

Location of the	Independent qualified
investmentproperties	professional valuers	Qualification
Australia	CBRE Valuations Pty Limited	Member of the Australian
	DTZ Australia (VIC) Pty Limited	Property Institute
HK/PRC	DTZ Cushman & Wakefield Limited	Member of the Hong Kong
		Institute of Surveyors
UK	Cushman & Wakefield Debenham	Member of Royal Institution of
	Tie Leung Limited	Chartered Surveyors
Singapore	Savills Valuation and Professional	Member of the Singapore Institute of
	Services (S) Pte. Ltd.	Surveyors and Valuers

The valuations of the investment properties, which falls under level 3 of fair value hierarchy, was arrived at by reference to market evidence of transaction prices for similar properties at similar locations or by capitalisation of future rental which is estimated by reference to comparable rental as available in the relevant markets. In the valuation, the market rentals of all lettable units of the properties are made reference to the rentals achieved by the Group in the lettable units as well as those of similar properties in the neighbourhood. The capitalisation rate adopted is by reference to the yield rates observed by the valuer for similar properties in the locality and adjusted for the valuer’s knowledge of factors specific to the respective properties.

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

13. INTERESTS IN ASSOCIATES

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Unlisted investments, at cost less impairment Share ofpost-acquisition results, net of dividends received	550,843 221,147	445,007 222,409
	771,990	667,416

14. INVESTMENT SECURITIES

(i) Available-for-sale investments

INVESTMENT SECURITIES (i) Available-for-sale investments
	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Unlisted: Equity securities Club membership	2,185 688	4 688
	2,873	692
(ii)Financial assets at fair value through profit or loss (“FVTPL”) Equity securities listed in HK Equity securities listed in overseas Listed debt securities Unlisted debt securities Investment funds	7,161 3,396 1,344,270 96,305 570,961	7,280 – 713,659 137,070 574,279
	2,022,093	1,432,288
Financial assets designated at FVTPL Structured deposits	53,100	33,900
	2,075,193	1,466,188
	2,078,066	1,466,880
Analysed for reporting purposes as: Non-current assets Current assets	2,873 2,075,193	692 1,466,188
	2,078,066	1,466,880

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

15. DEBTORS, DEPOSITS AND PREPAYMENTS

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Trade debtors, net of allowance of doubtful debt Advance to contractors Utility and other deposits Prepayment and other receivables Other tax recoverable	122,492 2,451 22,077 182,347 46,542	97,869 9,524 65,950 170,298 31,549
	375,909	375,190

Trade debtors mainly represent receivable from renting of properties, use of hotel facilities and sales of properties. Rentals are payable on presentation of demand notes. Hotel room revenue is normally settled by cash or credit card. The Group allows an average credit period of 14 to 60 days to its corporate customers and travel agents.

Proceeds from sales of properties are settled according to the payment terms of the sale and purchase agreements.

The following is an aging analysis of trade debtors, net of allowance of doubtful debt, based on the invoice dates at the end of the reporting period, which approximated the respective revenue recognition date:

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
0–60 days 61–90 days Over 90 days	95,410 7,385 19,697	80,050 3,966 13,853
	122,492	97,869

16. ASSETS CLASSIFIED AS HELD FOR SALE/LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE

On 3 March 2017, the Group entered into a sale and purchase agreement with Golden Wheel Tiandi Holdings Company Limited (“GWTH”), an independent third party to the Group, whereby the Group has agreed to sell, and GWTH has agreed to purchase, the entire issued share capital of Double Advance Group Limited (“DAGL”), a wholly owned subsidiary of the Company holding a hotel property included in the property, plant and equipment. The assets and liabilities of DAGL, which was expected to be sold within twelve months, have been classified as a disposal group held for sale and are presented separately in the consolidated statement of financial position as at 31 March 2017.

The disposal was completed on 12 May 2017 and disclosed in note 22. Details of the transaction are set out in Company’s announcements dated 3 March 2017 and 12 May 2017.

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

17. CREDITORS AND ACCRUALS

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Trade creditors – Land and construction cost and retention payable – Others	497,893 70,378	353,878 66,636
Construction cost and retention payable for capital assets Rental and reservation deposits and receipts in advance Otherpayable and accrued charges	568,271 62,675 40,206 340,273	420,514 63,033 39,972 365,887
	1,011,425	889,406

The following is an aging analysis of the trade creditors, based on the invoice date:

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
0–60 days 61–90 days Over 90 days	553,111 11,294 3,866	406,662 2,442 11,410
	568,271	420,514

18. DERIVATIVE FINANCIAL INSTRUMENTS

	Assets	Assets	Liabilities	Liabilities
	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Designated under hedge accounting Cross currency swap contracts Designated not under hedge accounting Interest rate swap contracts Call/put options in unlisted equity securities and foreign currencies Cross currency swap contracts Forward foreign exchange contracts	– – – 2,170 180	– – – – 67	(75,797) (3,602) – – –	(119,314) (2,996) (684) (5,496) –
	2,350	67	(79,399)	(128,490)
Analysed for reporting purpose as: Current Non-current	2,350 –	67 –	(3,602) (75,797)	(9,176) (119,314)
	2,350	67	(79,399)	(128,490)

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

19. BANK BORROWINGS

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Bank loans Less: front-end fee	10,475,601 (27,630)	10,161,641 (29,956)
	10,447,971	10,131,685
Analysed for reporting purpose as: Non-current liabilities Current liabilities	6,083,503 4,364,468	7,376,392 2,755,293
	10,447,971	10,131,685
The borrowings repayable based on scheduled repayment dates set out in the loan agreements are as follows: On demand or within one year More than one year, but not exceeding two years More than two years, but not exceeding five years More than fiveyears	3,083,192 2,070,135 4,966,748 355,526	1,439,712 3,669,738 4,238,461 813,730
	10,475,601	10,161,641

The carrying amount of borrowings include an amount of HK$1,294,264,000 (31.3.2017: HK$1,328,767,000) which is not repayable within one year based on scheduled repayment dates has, however, been shown under current liabilities as the counterparties have a discretionary right to demand immediate repayment.

20. NOTES AND BONDS

2021 Notes

On 8 September 2016, the Company issued bonds with aggregate principal amount of United States dollar (“US$”) 300,000,000 with maturity date on 8 September 2021 (the “2021 Notes”) to independent third parties. The 2021 Notes bear interest at 3.75% per annum payable semi-annually. As at 30 September 2017, the aggregate principal amount of the 2021 Notes outstanding was US$300,000,000 (equivalent to HK$2,340,000,000).

2018 Bonds

On 3 April 2013, Dorsett issued bonds with aggregate principal amount of RMB850,000,000 (equivalent to HK$1,062,500,000) at the issue price of 100% of the principal amount with maturity date on 3 April 2018 (the “2018 Bonds”) to independent third parties. The 2018 Bonds bear interest at 6.17% per annum payable semiannually. As at 30 September 2017, the outstanding principal amount of 2018 Bonds was RMB727,310,000 (equivalent to HK$850,952,700).

Details of the issue of the 2021 Notes and 2018 Bonds were disclosed in Company’s circular dated 25 August 2016 and the Dorsett’s circular dated 25 March 2013, respectively.

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

21. SHARE CAPITAL

	Number of
	ordinary
	shares of
	HK$0.10 each	Nominal value
		HK$’000
Authorised:	4,000,000,000	400,000
Issued and fully paid:
At 1 April 2016 (audited) and 30 September 2016 (Unaudited)	2,131,709,116	213,171
Issue of share in lieu of cash dividends	104,061,601	10,406
Issue upon exercise of share option at HK$2.55per share	2,600,000	260
At 31 March 2017 (audited)	2,238,370,717	223,837
Issue of share in lieu of share option at HK$2.55per share	10,950,000	1,095
At 30 September 2017 (unaudited)	2,249,320,717	224,932

22. DISPOSAL OF A SUBSIDIARY

In May 2017, the Group disposed of the entire equity interests in DAGL, which was classified as assets and liabilities held for disposal at 31 March 2017, and assigned the shareholder’s loan made to that subsidiary. The net liabilities disposed of in the transaction were as follows:

	HK$’000
Property, plant and equipment	107,855
Debtors, deposits and prepayments	1,561
Other inventories	79
Bank balances and cash	1,616
Trade and other payables	(621)
Amount due to the Group	(188,068)
Deferred tax liabilities	(3,399)
Net liabilities disposed of	(80,977)
Consideration	452,614
Shareholder’s loan assigned	(188,068)
Net liabilities disposed of	80,977
Transaction costs incurred in connection with the disposal	(5,393)
Liabilities arisingfrom rentalguarantee arrangement	(20,000)
Gain on disposal	320,130
Total consideration satisfied by:
Cash consideration received – current period	407,614
Sales deposit received – 2017	45,000
	452,614
Net cash inflow arising on disposal:
Cash consideration received	407,614
Transaction costs paid	(5,393)
Bank balances and cash disposed of	(1,616)
	400,605

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

23. SHARE OPTION SCHEMES

The Company has a share option scheme under which the directors and full-time employees may be granted options to subscribe for shares in the Company. Particulars of the share option schemes are set out in the 2017 annual report of the Company.

	1.4.2017 to 30.9.2017 ‘000 (unaudited)	1.4.2016 to 31.3.2017 ‘000 (audited)
At the beginning of the period/year Exercised during the period Lapsed duringtheperiod/year	12,950 (10,950) –	16,500 (2,600) (950)
At the end of theperiod/year	2,000	12,950

No share options were granted by the Company during the period.

24. CHARGE ON ASSETS

Bank borrowings with aggregate amount of HK$8,872,971,000 (31.3.2017: HK$8,411,641,000) outstanding at the end of the reporting period are secured by a fixed charge over the following assets of the Group and together with a floating charge over other assets of the property owners and benefits accrued to those properties:

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Investment properties Property, plant and equipment Prepaid lease payments Properties for sale Bank deposits	2,038,422 5,095,764 511,211 7,230,356 14,036	1,811,461 5,037,296 497,635 5,307,241 28,957
Total	14,889,789	12,682,590

In addition, the shares of certain subsidiaries are pledged as securities to obtain certain banking facilities granted to the Group at the end of the reporting period.

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

25. CAPITAL COMMITMENTS

	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
Capital expenditure contracted for but not provided in the condensed consolidated financial statements in respect of: Acquisition, development and refurbishment of hotel properties Others	2,077,221 2,546	1,174,949 6,453
	2,079,767	1,181,402

26. SIGNIFICANT RELATED PARTIES TRANSACTIONS

(a) During the period, the Group entered into the following transactions with related parties:

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Provision of buildingmanagement service byassociates	1,560	2,196

Details of the balances with associates, joint ventures, shareholders of non-wholly owned subsidiaries, an investee company and a related company as at the end of the reporting period are set out in the condensed consolidated statement of financial position.

The related companies are companies controlled by certain executive directors or their close family members who have significant influence over the Group through their direct and indirect equity interest in the Company.

(b) The remuneration of directors and other members of key management during the period are as follows:

	Six months ended	Six months ended
	30.9.2017 HK$’000 (unaudited)	30.9.2016 HK$’000 (unaudited)
Short-term benefits Post-employment benefits Share basedpayment	12,474 153 –	14,266 147 400
	12,627	14,813

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

27. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

Fair value of the Group’s financial instruments that are measured at fair value on a recurring basis

Certain financial instruments of the Group 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), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active market for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that included inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Financial assets (liabilities) included in the condensed consolidated statement of financial position	Fair value as at Fair value hierarchy Valuation technique and key inputs	Fair value as at Fair value hierarchy Valuation technique and key inputs
	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
1) Listed equity securities classified as financial assets at FVTPL 2a) Listed debt securities classified as financial assets at FVTPL 2b) Unlisted debt securities classified as financial assets at FVTPL 3) Investment funds classified as financial assets at FVTPL 4) Structured deposits classified as financial assets at FVTPL	10,557 1,344,270 96,305 570,961 53,100	7,280 Level 1 Quoted bid prices in an active market 713,659 Level 1 Quoted bid prices in an active market 137,070 Level 2 Discounted cash flows Future cash flows are estimated based on applying the interest yield curves of different types of bonds as the key parameter 574,279 Level 2 Redemption value quoted by the relevant investment funds with reference to the underlying assets (mainly listed securities) of the funds 33,900 Level 3 Discounted cash flows Future cash flows are estimated based on applying the expected yields of money market instruments and debt instruments invested by banks and a discount rate that reflects the credit risk of the banks

INTERIM REPORT 2017-2018

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

27. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued)

Fair value of the Group’s financial instruments that are measured at fair value on a recurring basis (continued)

Financial assets (liabilities) included in the condensed consolidated statement of financial position	Fair value as at Fair value hierarchy Valuation technique and key inputs	Fair value as at Fair value hierarchy Valuation technique and key inputs
	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
5) Call/put options in unlisted equity securities and foreign currencies classified as derivative financial instruments 6) Forward foreign exchange contracts classified as derivative financial instruments 7) Interest rate swap contracts classified as derivative financial instruments 8) Cross currency swaps classified as derivative financial instruments designated as hedging instruments	– Asset – 180 Liabilities – (3,602) Liabilities – (75,797)	Liabilities – (684) Level 2 Discounted cash flows Future cash flows are estimated based on applying the expected yields of foreign currency and equity security by banks and a discount rate that reflects the credit risk of the banks Asset – 67 Level 2 Discounted cash flows Future cash flows are estimated based on forward exchange rates (from observable forward exchange rate at the end of the reporting period) and contracted forward rates, discounted at a rate that reflects the credit risk of various counterparties Liabilities – (2,996) Level 2 Discounted cash flow analysis Future cash flows are estimated based on forward interest rates (from observable yield curves at the end of the reporting period) and contracted interest rate, discounted at a rate that reflects the credit risk of various counterparties Liabilities – (119,314) Level 2 Discounted cash flow Future cash flows are estimated based on forward exchange and interest rates (from observable forward exchange and interest rates at the end of the reporting period) and contracted forward exchange and interest rates, discounted at a rate that reflects the credit risk of various counterparties.

FAR EAST CONSORTIUM INTERNATIONAL LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 September 2017

27. FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS (continued)

Fair value of the Group’s financial instruments that are measured at fair value on a recurring basis (continued)

Financial assets (liabilities) included in the condensed consolidated statement of financial position	Fair value as at Fair value hierarchy Valuation technique and key inputs	Fair value as at Fair value hierarchy Valuation technique and key inputs
	30.9.2017 HK$’000 (unaudited)	31.3.2017 HK$’000 (audited)
9) Cross currency swaps classified as derivative financial instruments not designated as hedging instruments	Assets – 2,170	Liabilities – (5,496) Level 2 Discounted cash flow Future cash flows are estimated based on forward exchange and interest rates (from observable forward exchange and interest rates at the end of the reporting period) and contracted forward exchange and interest rates, discounted at a rate that reflects the credit risk of various counterparties.

There were no transfers between Levels 1, 2 and 3 during the six-month period ended 30 September 2017.

Reconciliation of Level 3 fair value measurements of financial assets

Financial assets at fair value through profit or loss

	1.4.2017 to 30.9.2017 HK$’000 (unaudited)	1.4.2016 to 31.3.2017 HK$’000 (audited)
At the beginning of the period/year Purchase	33,900 19,200	24,000 9,900
At the end of theperiod/year	53,100	33,900

No sensitivity analysis is disclosed for the impact of changes in the relevant unobservable data under discounted cash flow in respect of structured deposits classified as financial assets at fair value through profit or loss, as the management considers that the exposure is insignificant to the Group.

28. EVENT AFTER THE REPORTING PERIOD

Subsequent to 30 September 2017,

(a) the Company issued bonds with aggregate principal amount of US$150 million with maturity date on 13 May 2023 (the “2023 Notes”) to independent third parties. The 2023 Notes bear interest at 4.5% per annum payable semi-annually; and
(b) the Group entered into an agreement to acquire car parks in Budapest, Hungary at a consideration of approximately EUR21 million.

Concept, design and printing: iOne Financial Press Limited. Website: www.ione.com.hk 設計與製作: 卓智財經印刷有限公司網址: www.ione.com.hk

16th Floor, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong 香港德輔道中121號遠東發展大廈16 樓 Website 網址: www.fecil.com.hk

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AI assistant

Harbour Centre Development Limited — Interim / Quarterly Report 2018

48902_rns_2017-12-21_bd07320c-a50c-4122-9c57-2031851c3e83.pdf

遠東發展有限公司

Far East Consortium International Limited

CONTENTS

DIVERSIFIED AND BALANCED PORTFOLIO OF BUSINESSES

MAINLAND CHINA

HONG KONG

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Non-Executive Director

Independent Non-Executive Directors

AUDIT COMMITTEE

NOMINATION COMMITTEE

REMUNERATION COMMITTEE

EXECUTIVE COMMITTEE

MANAGING DIRECTOR

CHIEF FINANCIAL OFFICER

COMPANY SECRETARY

AUTHORISED REPRESENTATIVES

LEGAL ADVISORS

AUDITOR

PRINCIPAL BANKERS

Hong Kong

Malaysia

Singapore

Australia

Mainland China

United Kingdom

PLACE OF INCORPORATION

REGISTERED OFFICE

PRINCIPAL OFFICE

SHARE REGISTRAR

LISTING INFORMATION

WEBSITE

INTERIM RESULTS 2017/18

INTERIM RESULTS

INTERIM DIVIDEND

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL AND BUSINESS REVIEWS

Financial review

1. Profit and loss analysis

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

4. Capital expenditure

5. Capital commitments

6. Post balance sheet events

Acquisition of car parks in Hungary

Issue of US$150 million 4.5% 5.5-year notes

MANAGEMENT DISCUSSION AND ANALYSIS

Business review

1. Property division

Cumulative contracted presales value

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

Australia

Melbourne

Perth

Brisbane

MANAGEMENT DISCUSSION AND ANALYSIS

Gold Coast

Mainland China

MANAGEMENT DISCUSSION AND ANALYSIS

Hong Kong

Malaysia

MANAGEMENT DISCUSSION AND ANALYSIS

United Kingdom

London

Manchester

Singapore

MANAGEMENT DISCUSSION AND ANALYSIS

2. Hotel operations and management

MANAGEMENT DISCUSSION AND ANALYSIS

MANAGEMENT DISCUSSION AND ANALYSIS

OUTLOOK

OTHER INFORMATION

Harbour Centre Development Limited Interim / Quarterly Report 2018