IRC Limited — Annual Report 2014

Oct 16, 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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(Stock Code: 488)

ANNOUNCEMENT OF FINAL RESULTS FOR THE YEAR ENDED 31 JULY 2014

RESULTS

The board of directors (the “ Board ”) of Lai Sun Development Company Limited (the “ Company ”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “ Group ”) for the year ended 31 July 2014 together with the comparative figures of the last year as follows:

Consolidated Income Statement

For the year ended 31 July 2014

		2014	2013
	Notes	HK$’000	HK$’000
TURNOVER	3	2,109,647	963,757
Cost of sales		(1,051,747)	(374,807)
		__	__
Gross profit		1,057,900	588,950
Other revenue	4	79,563	67,376
Selling and marketing expenses		(56,660)	(25,008)
Administrative expenses		(308,812)	(271,249)
Other operating expenses, net		(84,744)	(52,531)
Employee share option benefits		-	(50,810)
Fair value gains on investment properties		928,755	2,076,072
Provision for tax indemnity	5	(139,017) __	(267,537) __
PROFIT FROM OPERATING ACTIVITIES	6	1,476,985	2,065,263
Finance costs	7	(242,723)	(161,060)
Share of profits and losses of associates		106,513	(7,153)
Share of profits and losses of joint ventures		110,702	616,052
Discount on acquisition of additional interest in an associate	8	150,660 __	134,930 __
PROFIT BEFORE TAX		1,602,137	2,648,032
Tax	9	(90,489)	(45,694)
		__	__
PROFIT FOR THE YEAR		1,511,648 __	2,602,338 __
		__	__
Attributable to:
Owners of the Company		1,478,730	2,564,114
Non-controlling interests		32,918 __	38,224 __
		1,511,648 __	2,602,338 __
		__	__
EARNINGS PER SHARE ATTRIBUTABLE TO
OWNERS OF THE COMPANY	11
Basic		HK$0.074 __	HK$0.128 __
		__	__
Diluted		HK$0.073 _ _	HK$0.127 _ _

Details of the proposed final dividend for the year are disclosed in note 10.

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Consolidated Statement of Comprehensive Income

For the year ended 31 July 2014

	2014	2013
	HK$’000	HK$’000
PROFIT FOR THE YEAR	1,511,648	2,602,338
	__	__
OTHER COMPREHENSIVE INCOME/(EXPENSE)
Other comprehensive income/(expense) to be reclassified to profit or loss
in subsequent periods:
Changes in fair values of available-for-sale financial assets	13,208	33,727
Exchange realignments	16,537	(3,882)
Release of exchange reserve upon liquidation of a subsidiary	(548)	-
Share of other comprehensive income of an associate	11,891 __	56,175 __
OTHER COMPREHENSIVE INCOME FOR THE YEAR	41,088	86,020
	__	__
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	1,552,736 __	2,688,358 __
	__	__
Attributable to:
Owners of the Company	1,519,924	2,650,173
Non-controlling interests	32,812 __	38,185 __
	1,552,736 _ _	2,688,358 _ _

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Consolidated Statement of Financial Position

As at 31 July 2014

Consolidated Statement of Financial Position As at 31 July 2014
		2014	2013
	Notes	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment		554,635	510,202
Prepaid land lease payments		22,955	23,982
Investment properties		12,669,295	10,736,496
Properties under development for sale		109,158	777,904
Interests in associates		3,841,870	3,378,850
Interests in joint ventures		6,018,543	5,688,684
Available-for-sale financial assets		1,232,466	1,198,321
Pledged bank balances and time deposits		138,049	134,692
Deposits paid and other receivables		727,468 __	23,500 __
Total non-current assets		25,314,439	22,472,631
		__	__
CURRENT ASSETS
Completed properties for sale		832,633	765,591
Equity investments at fair value through profit or loss		2,159	7,489
Inventories		8,106	6,456
Debtors, deposits paid and other receivables	12(a)	134,032	122,348
Held-to-maturity debt investments		-	8,317
Cash and cash equivalents		1,671,478 __	3,123,631 __
Total current assets		2,648,408	4,033,832
		__	__
CURRENT LIABILITIES
Creditors, deposits received and accruals	12(b)	299,723	336,278
Tax payable		132,825	77,634
Bank borrowings		416,808 __	417,286 __
Total current liabilities		849,356	831,198
		__	__
NET CURRENT ASSETS		1,799,052	3,202,634
		__	__
TOTAL ASSETS LESS CURRENT LIABILITIES		27,113,491	25,675,265
		__	__
NON-CURRENT LIABILITIES
Bank borrowings		2,274,414	2,661,322
Guaranteed notes	13	2,698,122	2,695,474
Deferred tax		111,620	105,694
Provision for tax indemnity	5	729,387	614,672
Long term rental deposits received		71,087	68,152
Deferred rental		4,366	-
		__	__
Total non-current liabilities		5,888,996	6,145,314
		__	__
		21,224,495 __	19,529,951 __
		__	__
EQUITY
Equity attributable to owners of the Company
Issued capital	14	3,129,961	200,629
Share premium account	14	-	7,429,332
Investment revaluation reserve		1,131,735	1,116,135
Share option reserve		64,469	64,622
Hedging reserve		(963)	(11,786)
Capital redemption reserve	14	-	1,200,000
Capital reduction reserve	14(c)	4,692	-
General reserve		646,700	646,700
Other reserve		256,582	142,076
Special capital reserve		-	-
Exchange fluctuation reserve		111,712	96,941
Retained profits		15,379,503	8,243,123
Proposed final dividend		50,157 __	- __
		20,774,548	19,127,772
Non-controlling interests		449,947 __	402,179 __
		21,224,495 _ _	19,529,951 _ _

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and accounting principles generally accepted in Hong Kong. These financial statements also comply with the applicable requirements of the Hong Kong Companies Ordinance relating to the preparation of financial statements, which for this financial year and the comparative period continue to be those of the predecessor Companies Ordinance (Cap. 32), in accordance with transitional and saving arrangements for Part 9 of the Hong Kong Companies Ordinance (Cap. 622), “Accounts and Audit”, which are set out in Sections 76 to 87 of Schedule 11 to that Ordinance. The financial statements have been prepared under the historical cost convention, except for investment properties, equity investments at fair value through profit or loss and certain available-for-sale financial assets, which have been measured at fair value. These financial statements are presented in Hong Kong dollars (“ HK$ ”) and all values are rounded to the nearest thousand except when otherwise indicated.

2. IMPACT OF NEW AND REVISED HKFRSs

Changes in accounting policies and disclosures

The Group has adopted the following new and revised HKFRSs for the first time for the current year's financial statements.

HKFRS 1 Amendments	Amendments to HKFRS 1_First-time Adoption of Hong Kong Financial Reporting_
	Standards – Government Loans
HKFRS 7 Amendments	Amendments to HKFRS 7_Financial Instruments: Disclosures – Offsetting_
	Financial Assets and Financial Liabilities
HKFRS 10, HKFRS 11 and	Amendments to HKFRS 10, HKFRS 11 and HKFRS 12 –Transition Guidance
HKFRS 12 Amendments
HKFRS 13	Fair Value Measurement
HKAS 19 (2011)	Employee Benefits
HK(IFRIC)-Int 20	Stripping Costs in the Production Phase of a Surface Mine
Annual Improvements	Amendments to a number of HKFRSs issued in June 2012
2009-2011 Cycle

Other than as further explained below regarding the impact of HKFRS 13, the adoption of the new and revised HKFRSs has had no significant financial effect on these financial statements.

HKFRS 13 provides a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across HKFRSs. The standard does not change the circumstances in which the Group is required to use fair value, but rather provides guidance on how fair value should be applied where its use is already required or permitted under other HKFRSs. HKFRS 13 is applied prospectively and the adoption has had no material impact on the Group's fair value measurements. As a result of the guidance in HKFRS 13, the policies for measuring fair value have been amended. Additional disclosures required by HKFRS 13 for the fair value measurements of buildings classified as investment properties, available-for-sale financial assets, equity investments at fair value through profit or loss and financial instruments are included in respective notes to the financial statements.

The Group had early adopted the following new and revised HKFRSs in advance of their respective effective dates for the first time for the financial year ended 31 July 2012:

HKAS 27 (2011)	Separate Financial Statements
HKAS 28 (2011)	Investments in Associates and Joint Ventures
HKFRS 10	Consolidated Financial Statements
HKFRS 11	Joint Arrangements
HKFRS 12	Disclosure of Interests in Other Entities

Except for HKFRS 10 Consolidated Financial Statements, HKFRS 11 Joint Arrangements and HKFRS 12 Disclosure of Interests in Other Entities of which the Group’s financial statements were affected, the adoption of the above new and revised HKFRSs had no material impact on the financial statements of the Group.

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3. SEGMENT INFORMATION

During the year, management changed its reporting segments to (i) property development and sales; (ii) property investment; (iii) hotel operation; (iv) restaurant operation; and (v) others as a result of growing importance of the restaurant operation segment to the operation of the Group. The corresponding information for the year ended 31 July 2013 has been re-presented accordingly.

Segment revenue and results

The following table presents revenue and results for the Group’s reportable segments:

	Property	Property
	development		Property			Hotel	Restaurant
	and sales		investment		operation		operation		Others		Eliminations		Consolidated
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue:
Sales to external customers	1,046,947	100,312	502,335	434,234	372,139	327,003	167,082	82,925	21,144	19,283	-	-	2,109,647	963,757
Intersegment sales	-	-	11,002	15,982	270	-	-	-	22,732	27,172	(34,004)	(43,154)	-	-
Other revenue	2,140 ___	1,126 _	1,042 _	1,206 __	7 __	- __	2,345 _	972 ______	1,509 ______	9,814 ______	- ______	- ______	7,043 __	13,118 _
Total	1,049,087 ___	101,438 _	514,379 _	451,422 __	372,416 __	327,003 __	169,427 _	83,897 ______	45,385 ______	56,269 ______	(34,004) ______	(43,154) ______	2,116,690 __	976,875 _
	___	_	_	__	__	__	_	______	______	______	______	______	__	_
Segment results	346,558 ___	15,373 _	386,022 _	343,484 __	86,476 __	70,101 __	(13,049) _	(6,667) ______	1,422 ______	10,415 ______	- ______	- ______	807,429	432,706
	___	_	_	__	__	__	_	______	______	______	______	______
Interest income from bank deposits - unallocated													19,007	11,260
Unallocated revenue													53,513	42,998
Fair value gains on investment properties	-	-	928,755	2,076,072	-	-	-	-	-	-	-	-	928,755	2,076,072
Employee share option benefits - unallocated													-	(50,810)
Unallocated expenses													(192,702)	(179,426)
Provision for tax indemnity													(139,017) __	(267,537) __
Profit from operating activities													1,476,985	2,065,263
Finance costs													(242,723)	(161,060)
Share of profits and losses of associates	52	150	-	-	-	-	(2,094)	(887)	-	-	-	-	(2,042)	(737)
Share of profits and losses of associates - unallocated													108,555	(6,416)
Share of profits and losses of joint ventures	5,882	18,825	104,820	597,227	-	-	-	-	-	-	-	-	110,702	616,052
Discount on acquisition of additional interest in an associate													150,660 __	134,930 __
Profit before tax													1,602,137	2,648,032
Tax													(90,489) __	(45,694) __
Profit for the year													1,511,648 _ _	2,602,338 _ _

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3. SEGMENT INFORMATION (continued)

The following table presents the total assets and liabilities and other segment information for the Group’s reportable segments:

		Property
	development			Property		Hotel	Restaurant
		and sales		investment		operation	operation		Others		Consolidated
	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013	2014	2013
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment assets and liabilities
Segment assets	1,495,842	1,576,095	12,732,170	10,782,490	885,267	582,639	272,520	265,003	46,726	69,849	15,432,525	13,276,076
Interests in associates	7,199	9,630	-	-	-	-	18,610	20,029	-	-	25,809	29,659
Interests in associates - unallocated											3,816,061	3,349,191
Interests in joint ventures	1,494,050	1,426,038	4,524,493	4,262,646	-	-	-	-	-	-	6,018,543	5,688,684
Unallocated assets											2,669,909 ___	4,162,853 ___
Total assets											27,962,847 ___	26,506,463 ___
											___	___
Segment liabilities	70,333	120,698	151,066	127,086	61,587	57,360	17,180	7,910	6,537	5,140	306,703	318,194
Bank borrowings											2,691,222	3,078,608
Guaranteed notes											2,698,122	2,695,474
Other unallocated liabilities											1,042,305	884,236
											___	___
Total liabilities											6,738,352 ___	6,976,512 ___
											___	___
Other segment information
Amortisation of prepaid land lease payments	-	-	-	-	1,027	1,028	-	-	-	-	1,027	1,028
Depreciation	352	352	593	362	12,059	12,198	15,860	9,571	22	83	28,886	22,566
Depreciation - unallocated											5,601 ___	6,510 ___
											34,487 ___	29,076 ___
											___	___
Capital expenditure	13,492	217,439	968,490	96,974	6,235	6,052	51,855	181,351	29	31	1,040,101	501,847
Capital expenditure - unallocated											23,232 ___	1,951 ___
											1,063,333 _ _	503,798 _ _

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3. SEGMENT INFORMATION (continued)

Geographical information

The following table presents revenue and assets by geographical location of the assets for the years ended 31 July 2014 and 31 July 2013:

	Hong Kong	Hong Kong		Vietnam		Others	Consolidated	Consolidated
	2014	2013	2014	2013	2014	2013	2014	2013
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue
Sales to external customers	1,727,365	627,410	367,208	327,003	15,074	9,344	2,109,647	963,757
Other revenue	6,158	13,116	7	-	878	2	7,043	13,118
	___	___	___	___	___	___	___	___
Total	1,733,523	640,526	367,215	327,003	15,952	9,346	2,116,690	976,875
	_ _	_ _	_ _	_ _	_ _	_ _	_ _	_ _
Segment assets
Non-current assets	12,380,675	11,392,524	274,913	284,153	1,314,725	327,025	13,970,313	12,003,702
Current assets	1,061,035	955,690	372,212	297,376	28,965	19,308	1,462,212	1,272,374
	___	___	___	___	___	___	___	___
Total	13,441,710	12,348,214	647,125	581,529	1,343,690	346,333	15,432,525	13,276,076
	_ _	_ _	_ _	_ _	_ _	_ _	_ _	_ _

Information about major customers

For both the years ended 31 July 2014 and 31 July 2013, there was no revenue derived from a single customer which contributed more than 10% of the Group’s revenue for the respective years.

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4. OTHER REVENUE

	2014	2013
	HK$’000	HK$’000
Interest income from bank deposits	19,007	11,260
Interest income from held-to-maturity debt investments	134	88
Other interest income	1,092	426
Dividend income from listed equity investments at fair value through profit or loss	101	52
Dividend income from unlisted available-for-sale financial assets	38,154	36,420
Gain on disposal of unlisted available-for-sale financial assets	11,640	-
Gain on disposal of a listed equity investment at fair value through profit or loss	786	-
Project management fee income received from a joint venture	-	8,900
Others	8,649	10,230
	__	__
	79,563 _ _	67,376 _ _

5. PROVISION FOR TAX INDEMNITY

Pursuant to an indemnity deed (the “ Lai Fung Tax Indemnity Deed ”) dated 12 November 1997 entered into between the Company and Lai Fung Holdings Limited (“ Lai Fung ”), the Company has undertaken to indemnify Lai Fung in respect of certain potential income tax and land appreciation tax (“ LAT ”) of the People’s Republic of China (“ PRC ”) payable or shared by Lai Fung in consequence of the disposal of any of the property interests attributable to Lai Fung through its subsidiaries and its associates as at 31 October 1997 (the “ Property Interests ”). These tax indemnities given by the Company apply in so far as such tax is applicable to the difference between (i) the value of the Property Interests in the valuation thereon by Chesterton Petty Limited (currently known as “ Knight Frank Petty Limited ”), independent chartered surveyors, as at 31 October 1997 (the “ Valuation ”); and (ii) the aggregate costs of such Property Interests incurred up to 31 October 1997, together with the amount of unpaid land costs, unpaid land premium and unpaid costs of resettlement, demolition and public utilities and other deductible costs in respect of the Property Interests. The Lai Fung Tax Indemnity Deed assumes that the Property Interests are disposed of at the values attributed to them in the Valuation, computed by reference to the rates and legislation governing PRC income tax and LAT prevailing at the time of the Valuation.

The indemnities given by the Company do not cover (i) new properties acquired by Lai Fung subsequent to the listing of the shares of Lai Fung on The Stock Exchange of Hong Kong Limited (the “ Listing ”); (ii) any increase in the relevant tax which arises due to an increase in tax rates or changes to the legislation prevailing at the time of the Listing; and (iii) any claim to the extent that provision for deferred tax on the revaluation surplus has been made in the calculation of the adjusted net tangible asset value of Lai Fung as set out in Lai Fung’s prospectus dated 18 November 1997.

After taking into account the Property Interests currently held by Lai Fung as at 31 July 2014 which are covered under the Lai Fung Tax Indemnity Deed and the prevailing tax rates and legislation governing PRC income tax and LAT, the total amount of tax indemnity given by the Company is estimated to be HK$1,350,000,000 (2013: HK$1,350,000,000).

As at 31 July 2014, after taking into account the plan and status of the Property Interests and the prevailing tax rates and legislation governing PRC income tax and LAT, the Group recognised an additional provision for tax indemnity of HK$139,017,000 (2013: HK$267,537,000) in the consolidated income statement for the year ended 31 July 2014. Besides, the Group settled HK$24,302,000 (2013: Nil) of the tax indemnity upon receiving request from Lai Fung during the year. As a result, the Group recorded an aggregate provision for tax indemnity of approximately HK$729,387,000 (2013: HK$614,672,000) at 31 July 2014.

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6. PROFIT FROM OPERATING ACTIVITIES

The Group’s profit from operating activities is arrived at after charging:

	2014	2013
	HK$’000	HK$’000
Cost of inventories sold	74,980	52,556
Cost of completed properties sold	638,906	58,501
Depreciation#	34,487	29,076
Amortisation of prepaid land lease payments*	1,027	1,028
Loss on disposal of items of property, plant and equipment*	2,125	-
Loss on disposal of unlisted available-for-sale financial assets*	-	100
Fair value loss on a listed equity investment at fair value through profit or loss*	2,796 _ _	1,772 _ _

Depreciation charge of approximately HK$31,942,000 (2013: HK$26,301,000) for property, plant and equipment is included in “other operating expenses, net” on the consolidated income statement.

• These items are included in “other operating expenses, net” on the consolidated income statement.

7. FINANCE COSTS

	2014	2013
	HK$’000	HK$’000
Interest on bank borrowings wholly repayable within five years	66,635	67,727
Interest on guaranteed notes wholly repayable within five years	158,771	85,505
Bank financing charges	18,544 __	17,930 __
	243,950	171,162
Less: Amount capitalised in properties under development for sale	(1,227) __	(10,102) __
	242,723 _ _	161,060 _ _

8. DISCOUNT ON ACQUISITION OF ADDITIONAL INTEREST IN AN ASSOCIATE

During the period from November 2013 to December 2013, the Group acquired 1.33% additional interest in eSun Holdings Limited (“ eSun ”) from the public shareholders at a cost of approximately HK$18,545,000 and the Group's interest in eSun was increased from 39.93% to 41.26%. In May 2014, the Group further acquired 0.66% additional interest in eSun from the public shareholders at a cost of approximately HK$7,635,000 and the Group's interest in eSun was increased from 41.26% to 41.92%. Discount on acquisition of approximately HK$150,660,000 arose from these acquisitions.

In prior year, during the period from October 2012 to December 2012, the Group acquired 2% additional interest in eSun from the public shareholders at a cost of approximately HK$29,336,000 and the Group's interest in eSun was increased from 37.93% to 39.93%. A discount on acquisition of HK$134,930,000 arose from these acquisitions.

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9. TAX

Hong Kong profits tax has been provided at the rate of 16.5% (2013: 16.5%) on the estimated assessable profits arising in Hong Kong during the year.

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the places in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

		2014	2013
		HK$’000	HK$’000
	Current tax
	Hong Kong	64,149	28,563
	Overseas	18,199	13,356
		__	__
		82,348	41,919
	Deferred tax	5,565	4,814
	Prior years’ underprovision/(overprovision)
	Hong Kong	216	(30)
	Overseas	2,360	(1,009)
		__	__
		2,576	(1,039)
		__	__
	Tax charge for the year	90,489 __	45,694 __
		__	__
**10. **	DIVIDEND
		2014	2013
		HK$’000	HK$’000
	Proposed final – HK0.25 cent (2013: Nil) per ordinary share	50,157 _ _	- _ _

The proposed final dividend for the year is subject to the approval of the Company’s shareholders at the forthcoming annual general meeting.

11. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

	2014	2013
	HK$’000	HK$’000
Earnings
Earnings for the purpose of basic earnings per share	1,478,730	2,564,114
Effect of dilutive potential ordinary shares arising from adjustment to the
share of profit of an associate based on dilution of its earnings per share	(300) __	- __
Earnings for the purpose of diluted earnings per share	1,478,430 _ _	2,564,114 _ _

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11. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY (continued)

	’000	’000
Number of shares
Number of ordinary shares for the purpose of basic
earnings per share	20,062,893	20,062,893
Effect of dilutive potential ordinary shares arising from share options	90,749 __	102,974 __
Weighted average number of ordinary shares for the purpose of diluted
earnings per share	20,153,642 _ _	20,165,867 _ _

The exercise of share options of an associate and the conversion of the outstanding convertible notes issued by an associate have an anti-dilutive effect on the basic earnings per share as presented for the year ended 31 July 2013.

12. DEBTORS, DEPOSITS PAID AND OTHER RECEIVABLES/CREDITORS, DEPOSITS RECEIVED AND ACCRUALS

• (a) The Group maintains various credit policies for different business operations in accordance with business practices and market conditions in which the respective subsidiaries operate. Sales proceeds receivable from the sale of properties are settled in accordance with the terms of the respective contracts. Rent and related charges in respect of the leasing of properties are receivable from tenants, and are normally payable in advance with rental deposits received in accordance with the terms of the tenancy agreements. Hotel and restaurant charges are mainly settled by customers on a cash basis except for those corporate clients who maintain credit accounts with the respective subsidiaries, the settlement of which is in accordance with the respective agreements.

An ageing analysis of the Group’s trade debtors, based on the payment due date, as at the end of the reporting period is as follows:

	2014	2013
	HK$’000	HK$’000
Trade debtors:
Not yet due or less than 30 days past due	8,278	6,575
31 – 60 days past due	1,397	1,946
61 – 90 days past due	201	394
Over 90 days past due	1,059 __	1,491 __
	10,935	10,406
Other receivables	61,283	57,337
Deposits paid and prepayments	61,814 __	54,605 __
	134,032 _ _	122,348 _ _

• (b) An ageing analysis of the Group’s trade creditors, based on the payment due date, as at the end of the reporting period is as follows:

	2014	2013
	HK$’000	HK$’000
Trade creditors:
Not yet due or less than 30 days past due	8,967	8,161
31 – 60 days past due	770	546
61 – 90 days past due	199	87
Over 90 days past due	174 __	236 __
	10,110	9,030
Other payables and accruals	158,050	173,773
Deposits received and other provisions	131,563 __	153,475 __
	299,723 _ _	336,278 _ _

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13. GUARANTEED NOTES

On 18 January 2013, Lai Sun International Finance (2012) Limited, a wholly-owned subsidiary of the Company, issued guaranteed notes in an aggregate principal amount of US$350,000,000 (the “ Notes ”). The Notes are guaranteed by the Company, have a maturity term of five years and bear a fixed interest rate of 5.7% per annum with interest payable semi-annually in arrears.

The net proceeds from the offering were approximately US$347,000,000 and would be used for general corporate purposes.

14. SHARE CAPITAL

		2014	2013	2013
	Number of	Total	Number of	Total
	shares	amount	shares	amount
		HK$’000		HK$’000
Authorised (note a):
Ordinary shares of HK$0.01 each	-	-	38,000,000	380,000
Preference shares of HK$1.00 each	-	-	1,200,000	1,200,000
	_______	___	_______	__
	_______		_______
		- ___		1,580,000 __
		___		__
Ordinary shares in issue (note a)	20,062,893,286	3,129,961	20,062,893,286	200,629
	___ _____	_ _	___ _____	_ _

Movements in the Company’s share capital and other capital reserves during the year are summarised as follows:

			Share	Capital
	Number of	Issued	premium	redemption	Total
	shares in issue	capital	account	reserve	amount
		HK$'000	HK$'000	HK$'000	HK$'000
At 1 August 2012, 31 July 2013
and 1 August 2013	20,062,893,286	200,629	7,429,332	1,200,000	8,829,961
Transfer from share premium account
to issued capital (note b)	-	7,429,332	(7,429,332)	-	-
Transfer from capital redemption
reserve to issued capital (note b)	-	1,200,000	-	(1,200,000)	-
Transfer to capital reduction
reserve (note c)	-	(5,700,000)	-	-	(5,700,000)
	_______	___	___	___	___
At 31 July 2014	20,062,893,286 ___ _____	3,129,961 _ _	- _ _	- _ _	3,129,961 _ _

Notes:

(a) Under the Hong Kong Companies Ordinance (Cap. 622), which commenced operation on 3 March 2014, the concept of authorised share capital no longer exists. In accordance with Section 135 of the Hong Kong Companies Ordinance (Cap. 622), the Company’s shares no longer have a par or nominal value. There is no impact on the number of shares in issue or the relative entitlement of any of the members as a result of this transition.

• (b) With effect from 3 March 2014, amount standing to the credit of share premium account and the capital redemption reserve of the Company is deemed to be part of share capital of the Company pursuant to Section 37(1) of Schedule 11 of the Hong Kong Companies Ordinance (Cap. 622).

(c) On 25 July 2014, the reduction of the amount standing to the credit of the share capital account of the Company by a sum equal to HK$5,700,000,000 (“ Capital Reduction ”) became effective. The credit arising from the Capital Reduction was applied to a capital reduction reserve account of the Company. The Company used capital reduction reserve of approximately HK$5,695,308,000 to set off against the Company's accumulated realised losses.

15. COMPARATIVE AMOUNTS

Certain comparative amounts have been reclassified to conform with the current year’s presentation.

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FINAL DIVIDEND

The Directors have resolved to recommend a final dividend of HK0.25 cent per share in respect of the financial year ended 31 July 2014 to shareholders whose names appear on the Register of Members of the Company on Friday, 19 December 2014.

No interim dividend was declared during the year.

The Directors propose that shareholders be given the option to receive the final dividend in new shares in lieu of cash. The scrip dividend proposal is subject to: (1) the approval of the proposed final dividend at the Annual General Meeting to be held on 9 December 2014; and (2) The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) granting the listing of and permission to deal in the new shares to be issued pursuant to this proposal.

A circular containing details of the scrip dividend proposal will be despatched to shareholders together with the form of election for scrip dividend on or about Tuesday, 30 December 2014. It is expected that the final dividend warrants and share certificates for the scrip dividend will be despatched to shareholders on or about Friday, 30 January 2015.

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW AND OUTLOOK

2013/14 may be summarised as a year of consolidation for the Company. Notwithstanding robust equity and debt capital markets, the global economic fundamentals remain on a delicate recovery path. Despite continuous support from central banks around the world, major economies such as the United States and the Euro Zone continue to struggle. Geopolitical tensions around the world such as those in the Middle East and between Russia and Ukraine shroud the already uncertain outlook. As a global financial centre, Hong Kong’s economic performance is clearly not immune from the challenges faced by the major economies around the world.

The property sector in Hong Kong continues to perform well notwithstanding the challenging conditions. The retail market is supported by low unemployment with steady visitors arrivals and the office leasing market is stabilising with some improvements. The residential market continues to be slow due to the introduction of control measures in late 2012 and early 2013 but new launches report robust prices being achieved and arguably reflects strong underlying demand. It is very likely that these control measures, barring any unforeseen circumstances, are here to stay until land supply has caught up; which is likely to take some years notwithstanding the government’s emphasis and effort. Labour supply shortage in the construction industry is driving wage inflation and continues to pose a challenge on the cost management side.

The Group performed admirably against this challenging environment. The rental portfolio of approximately 1.6 million square feet generated steady rental income at high occupancy rates. Rental income increased through tenant mix adjustments, rental reversion and full year contribution from the CCB Tower since it was fully leased last year the latter of which is recognised as share of profits from joint ventures. Sale of the majority of remaining units in Ocean One were completed at the intended average selling price and substantially boosted the revenue and profit of the Group compared to last year. The sale of the 339 Tai Hang Road project, comprising 9 units and gross floor area (“ GFA ”) of 30,400 square feet, commenced in July 2014 and is expected to make a contribution in the coming financial years.

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The management believes it is paramount to prepare the Group for the challenges and opportunities ahead. The Group completed a series of corporate activities as part of the new strategy to improve funding sources, execution capabilities and overall coordination with the wider Lai Sun Group. Further to securing the Tseung Kwan O site in November 2012 and being awarded the hotel tender at Ocean Park in May 2014, the Group continued to participate in government tenders to grow the pipeline. In April 2014, the Group successfully secured the Urban Renewal Authority project in Ma Tau Kok which will be developed into middle class residential units for sale with permitted GFA of approximately 113,400 square feet and this project will complete in 2018. The completion of the Observatory Road project in 2015 will add an attributable rental GFA of approximately 82,600 square feet in the prime Tsim Sha Tsui area of Hong Kong when it is completed in the third quarter of 2015.

The acquisition of 107 Leadenhall during the year bolstered our portfolio in London, United Kingdom which is a freehold commercial property located in the heart of the City of London. It consists of a basement, ground floor, a mezzanine and seven upper floors with total area of approximately 146,600 square feet and provides office accommodation above retail shops on the ground floor and is fully leased out. The historical rental income with the relevant rental guarantee equated to a 6% yield on cost of investment and expected to generate good rental income to the Group in the long run. The renovation work for 36 Queen Street has been completed and is being leased out. It is now almost fully leased out and we expect steady rental income contribution for the coming financial year.

The Group’s strong cash position of HK$1,809.5 million of cash on hand with a net debt to equity ratio of 17% as at 31 July 2014 provides the Group full confidence and the means to review opportunities more actively. However, the Group will continue its prudent and flexible approach in growing the landbank and managing its financial position.

OVERVIEW OF FINAL RESULTS

For the year ended 31 July 2014, the Group recorded turnover of HK$2,109.6 million (2013: HK$963.8 million) and a gross profit of HK$1,057.9 million (2013: HK$589.0 million), representing an increase of approximately 118.9% and 79.6%, respectively over last year. Turnover from rental income, sales of properties, restaurant and hotel and other operations during the year was HK$502.3 million (2013: HK$434.2 million), HK$1,046.9 million (2013: HK$100.3 million), HK$167.1 million (2013: HK$82.9 million) and HK$393.3 million (2013: HK$346.4 million), representing an increase of 15.7%, 943.8%, 101.6% and 13.5%, respectively.

Net profit attributable to owners of the Company was approximately HK$1,478.7 million (2013: HK$2,564.1 million), representing a decrease of approximately 42.3% over last year. Excluding the effect of property revaluations, net profit attributable to owners of the Company was approximately HK$333.2 million (2013: net loss attributable to owners of the Company of HK$201.4 million), primarily due to the successful sale of the majority of the units at Ocean One. Basic earnings/(loss) per share including and excluding the effect of property revaluations was HK$0.074 (2013: HK$0.128) and HK$0.017 (2013: HK$(0.010)), respectively.

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	Year ended 31 July	Year ended 31 July
Profit attributable to owners of the Company (HK$ million)	2014	2013
Reported	1,478.7	2,564.1
Less: Adjustments in respect of revaluation gains of investment properties
held by
- the Company and subsidiaries	(928.8)	(2,076.0)
- associates andjoint ventures	(216.7)	(689.5)
Net profit after tax excluding revaluation gains of investment properties	333.2	(201.4)

Equity attributable to owners of the Company as at 31 July 2014 amounted to HK$20,774.5 million, up from HK$19,127.8 million as at 31 July 2013. Net asset value per share attributable to owners of the Company increased by 9% to HK$1.035 per share as at 31 July 2014 from HK$0.953 per share as at 31 July 2013.

PROPERTY PORTFOLIO COMPOSITION

As at 31 July 2014, the Group maintained a property portfolio with attributable GFA of approximately 2.5 million square feet. Approximate attributable GFA (in ‘000 square feet) of the Group’s major properties and number of car-parking spaces is as follows:

	Commercial /Retail	Office	Industrial	Residential	Hotel	Total (excluding car-parking spaces & ancillary facilities)	No. of car-parking spaces attributable to theGroup
Completed Properties Held for Rental1	434	1,018	62	-	-	1,514	965
Completed Hotel Properties	-	-	-	-	98	98	-
Properties Under Development2	159	-	-	324	366	849	206
Completed Properties Held for Sale	18	-	-	36	-	54	34
Total GFA of major properties of the Group	611	1,018	**62 **	360	**464 **	2,515	1,205

1. Completed and rental generating properties

2. All properties under construction

The above table does not include GFA of properties held by Lai Fung Holdings Limited (“ Lai Fung ”).

PROPERTY INVESTMENT

Rental Income

During the year under review, the Group’s rental operations recorded a turnover of HK$502.3 million (2013: HK$434.2 million), representing a 15.7% increase over last year. The increase is primarily due to continued management of tenant mix and rental reversion at major investment properties during the year.

The Group wholly owns three major investment properties in Hong Kong, namely Cheung Sha Wan Plaza, Causeway Bay Plaza 2 and Lai Sun Commercial Centre. The Group also owns 50% of CCB Tower through its equity interest in a joint venture with China Construction Bank Corporation (“ CCB ”).

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Breakdown of rental turnover by major investment properties is as follows:

	**For the year **	ended 31 July	% Change	Year end occupancy (%)
	2014 HK$ million	2013 HK$million
Hong Kong
Cheung Sha Wan Plaza (includingcar-parkingspaces)	275.3	249.9	10.2	98.8
Causeway Bay Plaza 2 (includingcar-parkingspaces)	153.9	131.1	17.4	97.9
Lai Sun Commercial Centre (includingcar-parkingspaces)	**50.2 **	48.0	4.6	92.0
**London, United Kingdom **
36Queen Street	3.5	-	N/A	40.8
107-112 Leadenhall Street	**8.4 **	-	N/A	100.0
Others	11.0	5.2	111.5	N/A
Total:	502.3	434.2	15.7
Rental proceeds from joint venture project
CCB Tower(50% basis)	108.0	25.1	330.3	94.4

Review of major investment properties

Hong Kong Properties

Cheung Sha Wan Plaza

The asset comprises of a 8-storey and a 7-storey office towers erected on top of a retail podium which was completed in 1989. It is located on top of the Lai Chi Kok MTR station with a total GFA of approximately 689,600 square feet (excluding car-parking spaces). The arcade is positioned to serve the local communities nearby with major banks and recognised restaurants chains as the key tenants.

Causeway Bay Plaza 2

The asset comprises of a 28-storey commercial/office building with car-parking facilities at basement levels which was completed in 1992. It is located at the heart of Causeway Bay with a total GFA of approximately 208,500 square feet (excluding car-parking spaces). Key tenants include the HSBC’s branch and commercial offices and major restaurants.

Lai Sun Commercial Centre

The asset comprises a 13-storey commercial/carpark complex completed in 1987. It is located near the Lai Chi Kok MTR station with a total GFA of approximately 188,500 square feet (excluding car-parking spaces).

CCB Tower, 3 Connaught Road Central

The Group has a 50:50 interest with CCB in the joint redevelopment project of the former Ritz-Carlton Hotel in Central. This office tower is a landmark property in Central featuring underground access to the MTR station in Central. The property has a total GFA of approximately 229,000 square feet (excluding car-parking spaces). CCB Tower was completed in 2013 and added approximately 115,000 square feet of attributable GFA to our portfolio. Subsequent to the year end, CCB Tower was fully leased out with 15 floors of the office floors and 2 banking hall floors leased by CCB for its Hong Kong operations.

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Overseas Property

36 Queen Street, London EC4 1HJ, United Kingdom

In February 2011, the Group acquired an office building in the city in central London located at 36 Queen Street. Completed in 1986, it comprises approximately 60,800 square feet of office accommodation extending over basement, ground and six upper floors. Comprehensive refurbishment and renovation work has been completed and the building is being leased out during the year.

107-112 Leadenhall Street, London EC3A 4AF, United Kingdom

In April 2014, the Group acquired a property located at the core of the insurance district in central London, surrounded by 30 St Mary Axe (commonly known as the Gherkin), Lloyd’s of London and Willis Building at 51 Lime Street. It is a freehold commercial property housing both commercial and offices. The building comprises approximately 146,600 square feet of office accommodation extending over basement, ground, mezzanine and seven upper floors. The building is currently fully leased out.

PROPERTY DEVELOPMENT

For the year ended 31 July 2014, recognised turnover from sales of properties was HK$ 1,046.9 million (2013: HK$100.3 million), representing an increase of 943.8% over last year. The exceptional performance was due to the sale of residential units in Ocean One.

Review of major projects for sale

Ocean One, 6 Shung Shun Street, Yau Tong

The Group wholly owns this development project, namely “Ocean One” located at No. 6 Shung Shun Street, Yau Tong, Kowloon. This property is a residential-cum-commercial property with a total GFA of about 122,000 square feet (excluding car-parking spaces) or 124 residential units and 2 commercial units. The estimated total development cost (including land cost and lease modification premium) is about HK$730 million. Pre-sales commenced in December 2012.

Up to at 31 July 2014, we have completed the sale of 117 residential units and 8 car-parking spaces. Total sales proceeds of HK$892 million was recognised during the year and the average selling price based on saleable area is approximately HK$13,289 per square foot. Subsequent to the year end, we have completed the sale of a further 5 residential units up to 9 October 2014 with total sales proceeds of HK$40 million.

335-339 Tai Hang Road, Hong Kong

The Group wholly owns the site located at 335-339 Tai Hang Road, Hong Kong. The Group is developing the site into a luxury residential property with a total GFA of about 30,400 square feet (excluding car-parking spaces). The total development cost (including land cost and lease modification premium) is estimated to be about HK$670 million. This project has been completed during the year under review and is now open for sale.

Review of major projects under development

2-12 Observatory Road

The Group completed the acquisition of a 50% interest in a project at Observatory Road, Kowloon with the buildings previously erected there known as Nos. 2-12, Observatory Road, Kowloon in November 2011. The joint venture partner is Henderson Land.

The site is being planned to be redeveloped into a multi-storey commercial building with a total GFA of approximately 165,000 square feet (excluding car-parking spaces). The total development cost is estimated to be approximately HK$2.3 billion including an estimated land value of approximately HK$1.8 billion. The new building is expected to be completed in the third quarter of 2015.

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Area 68A2, Tseung Kwan O

In November 2012, the Group successfully tendered for and secured a site located at Area 68A2, Tseung Kwan O, New Territories, through a 50% joint venture vehicle. The lot has an area of approximately 229,000 square feet with a permitted total GFA of approximately 573,000 square feet split into approximately 459,000 square feet for residential use and approximately 114,000 square feet for non-industrial use. The current intention is to develop the lot primarily into a residential project for sale, comprising residential towers as well as houses. Completion is expected to be in the fourth quarter of 2017.

Ocean Hotel project

The Group was named the most preferred proponent by Ocean Park for the Ocean Hotel project in October 2013 and was officially awarded the project in May 2014. The Ocean Hotel, to be operated by the Marriott group, will provide a total of 495 rooms and approximately 366,000 square feet of attributable rental space to the existing rental portfolio attributable to the Group of approximately 1.6 million square feet. The total development cost is estimated to be approximately HK$4.2 billion. Completion is expected to be in the fourth quarter of 2017.

Ma Tau Kok project

Since securing the Tseung Kwan O site in November 2012, the Group participated in a number of government tenders. Other than the Ocean Park Hotel project, the Group was successful in April 2014 in its bid for the development right to the San Shan Road/Pau Chung Street project from the Urban Renewal Authority, Hong Kong in Ma Tau Kok, Kowloon, Hong Kong. The lot has an area of approximately 12,600 square feet with a permitted total GFA of approximately 113,400 square feet split into approximately 94,500 square feet for residential use and approximately 18,900 square feet for non-industrial use. The total development cost is estimated to be approximately HK$1 billion and the completion is expected to be in the first quarter of 2018.

RESTAURANT OPERATION

For the year ended 31 July 2014, the restaurant operation contributed HK$167.1 million to the Group’s turnover (2013: HK$82.9 million), representing an increase of approximately 101.6% from last year. The contribution from the restaurants segment was boosted by the new restaurants added during the year, including CIAK-In The Kitchen and China Tang Hong Kong at Landmark in Central, Hong Kong which had a grand opening in December 2013.

The restaurant operation includes the Group’s interests in 11 restaurants in Hong Kong and Mainland China, including the Michelin 3-star Italian restaurant 8[½] Otto e Mezzo BOMBANA Hong Kong, Michelin 2-star Japanese restaurant Wagyu Takumi, Michelin 1-star Japanese restaurant Wagyu Kaiseki Den, 8[½] Otto e Mezzo BOMBANA Shanghai, CIAK-In The Kitchen at Landmark, Gin Sai, Rozan, Kowloon Tang, Island Tang, Chiu Tang and China Tang Hong Kong at Landmark.

HOTEL OPERATION

Turnover from hotel operation was mainly derived from the Group’s operation of the Caravelle Hotel in Ho Chi Minh City, Vietnam. For the year ended 31 July 2014, the hotel operation contributed HK$372.1 million to the Group’s turnover (2013: HK$327.0 million).

Caravelle Hotel is a leading international 5-star hotel in the centre of the business, shopping and entertainment district in Vietnam. It is an elegant 24-storey tower with a mixture of French colonial and traditional Vietnamese style and has 335 superbly appointed rooms, suites, exclusive Signature Floors, Signature Lounge and a specially equipped room for the disabled. Total GFA attributable to the Group is approximately 98,400 square feet.

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The Group was awarded the hotel tender at Ocean Park in May 2014 and the Ocean Hotel, to be operated by the Marriott group, will provide a total of 495 rooms upon its completion in 2017. The Group is optimistic about the prospects of the Ocean Hotel project given the strong popularity of Ocean Park, which is underpinned by robust growth in visitor numbers to Hong Kong coinciding with its expansion.

The hotel operation has extensive experience in providing consultancy and management services to hotels in Mainland China, Hong Kong and other Asian countries. The division’s key strategy going forward will continue to focus on providing management services, particularly to capture opportunities arising from the developments of Lai Fung in Shanghai, Guangzhou, Zhongshan and Hengqin. The hotel division will manage Lai Fung’s serviced apartments in Shanghai, Guangzhou and Zhongshan under the “STARR” brand. STARR Resort Residence Zhongshan soft opened in August 2013 and comprises two 16-storey blocks with 90 fully furnished serviced apartment units located in the Palm Lifestyle complex in Zhongshan Western district at Cui Sha Road, opposite to the new Zhongshan traditional Chinese medical centre. STARR Mayflower Hotel Residence Shanghai soft opened in November 2013 and is a 17-storey hotel with 287 fully furnished and equipped hotel units with kitchenette located in the Mayflower Lifestyle complex right in the heart of the Zhabei inner ring road district, within walking distance to Lines 1, 3 and 4 of the Shanghai Metro Station with easy access to major motorways.

INTERESTS IN ASSOCIATES (eSun)

During the year under review, the Group’s interest in eSun Holdings Limited (“ eSun ”) increased from 39.93% to 41.92%.

Film production and distribution and media and entertainment divisions held up well as a whole against a difficult economic environment. The acquisition of Intercontinental Group Holdings Limited (“ IGHL ”) bolstered its cinema network and film distribution capability. Lai Fung’s results were encouraging given the challenging operating environment in the property sector in Mainland China.

The steady fundamental performance translated to improved contribution from eSun increased from a loss to a profit of HK$109.3 million (2013: loss of HK$6.3 million). This was primarily due to the substantial increase in revaluation of Lai Fung’s investment properties during the Year.

INTERESTS IN JOINT VENTURES

During the year under review, contribution from joint ventures decreased to HK$110.7 million (2013: HK$616.1 million), representing a decrease of 82.0%. This is primarily due to lower revaluation gains of CCB Tower and the Observatory Road project.

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LIQUIDITY AND FINANCIAL RESOURCES

As at 31 July 2014, cash and bank balances and undrawn facilities held by the Group amounted to HK$1,809.5 million and HK$1,102.7 million, respectively.

The Group’s sources of funding comprise mainly internal funds generated from the Group’s business operations, loan facilities provided by banks and guaranteed notes issued to investors.

As at 31 July 2014, the Group had bank borrowings of approximately HK$2,691.2 million and guaranteed notes of approximately HK$2,698.1 million. The net debt to equity ratio expressed as a percentage of the total outstanding net debt (being the total outstanding bank borrowings and guaranteed notes less the pledged and unpledged bank balances and time deposits) to consolidated net assets attributable to owners of the Company was approximately 17%. As at 31 July 2014, the maturity profile of the bank borrowings of HK$2,691.2 million was spread over a period of less than 2 years with HK$416.8 million repayable within 1 year and HK$2,274.4 million repayable in the second year. All the Group’s borrowings carried interest on a floating rate basis except for the guaranteed notes issued in January 2013 which has a fixed rate of 5.7% per annum.

As at 31 July 2014, certain investment properties with carrying amounts of approximately HK$11,696.6 million, and certain bank balances and time deposits with banks of approximately HK$138.0 million were pledged to banks to secure banking facilities granted to the Group. In addition, certain shares in a subsidiary held by the Group were also pledged to a bank to secure a loan facility granted to the Group. Certain shares in joint ventures held by the Group were pledged to banks to secure loan facilities granted to joint ventures of the Group. Certain shares of an investee company held by the Group were pledged to a bank to secure a loan facility granted to this investee company. The Group’s secured bank borrowings were also secured by floating charges over certain assets held by the Group.

The Group’s major assets and liabilities and transactions were denominated in Hong Kong dollars and United States dollars. Considering that Hong Kong dollars are pegged against United States dollars, the Group believes that the corresponding exposure to exchange rate risk arising from United States dollars is nominal. In addition, the Group has investments in United Kingdom with the assets and liabilities denominated in Pounds Sterling. The investments were partly financed by bank borrowings denominated in Pounds Sterling in order to minimise the net foreign exchange exposure. Other than the abovementioned, the remaining monetary assets and liabilities of the Group were denominated in Renminbi and Vietnamese Dong which were also insignificant as compared with the Group’s total assets and liabilities. No hedging instruments were employed to hedge for the foreign exchange exposure. The Group manages its foreign currency risk by closely reviewing the movement of the foreign currency rate and considers hedging significant foreign currency exposure should the need arise.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the year ended 31 July 2014, the Company did not redeem any of its shares listed and traded on the Stock Exchange nor did the Company or any of its subsidiaries purchase or sell any of such shares.

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CORPORATE GOVERNANCE

The Company is committed to achieving and maintaining high standards of corporate governance and has established policies and procedures for compliance with the principles and code provisions set out from time to time in the Corporate Governance Code (“ CG Code ”) contained in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange.

The Company has complied with all the code provisions set out in the CG Code throughout the year ended 31 July 2014 save for the deviations from code provisions A.4.1, A.5.1 and E.1.2.

Under code provision A.4.1, non-executive directors should be appointed for a specific term and subject to re-election.

None of the existing non-executive directors (“ NEDs ”, including the independent non-executive directors (“ INEDs ”)) of the Company is appointed for a specific term. However, all directors of the Company (“ Directors ”) are subject to the retirement provisions of the Articles of Association of the Company (“ Articles of Association ”), which require that the Directors for the time being shall retire from office by rotation once every three years since their last election by shareholders of the Company (“ Shareholders ”) and the retiring Directors are eligible for re-election. In addition, any person appointed by the board of Directors (“ Board ”) as an additional Director (including a NED) will hold office only until the next annual general meeting of the Company (“ AGM ”) and will then be eligible for re-election. Further, in line with the relevant code provision of the CG Code, each of the Directors appointed to fill a casual vacancy would/will be subject to election by the Shareholders at the first general meeting after his/her appointment. In view of these, the Board considers that such requirements are sufficient to meet the underlying objective of the said code provision A.4.1 and, therefore, does not intend to take any remedial steps in this regard.

Under code provision A.5.1, a nomination committee comprising a majority of the independent non-executive directors should be established and chaired by the chairman of the board or an independent non-executive director.

The Company has not established a nomination committee whose functions are assumed by the full Board. Potential new Directors will be recruited based on their knowledge, skills, experience and expertise and the requirements of the Company at the relevant time and candidates for the INEDs must meet the independence criterion. The process of identifying and selecting appropriate candidates for consideration and approval by the Board has been, and will continue to be, carried out by the executive Directors (“ EDs ”). As the above selection and nomination policies and procedures have already been in place and the other duties of the nomination committee as set out in the CG Code have long been performed by the full Board effectively, the Board does not consider it necessary to establish a nomination committee at the current stage.

Under code provision E.1.2, the chairman of the board should attend the annual general meeting.

Due to other pre-arranged business commitments which must be attended to by him, Dr. Lam Kin Ngok, Peter, the Chairman, was not present at the AGM held on 22 November 2013. However, Mr. Chew Fook Aun, the Deputy Chairman and an ED present at that AGM took the chair of that AGM pursuant to Article 71 of the Articles of Association to ensure an effective communication with the Shareholders thereat.

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EMPLOYEES AND REMUNERATION POLICIES

As at 31 July 2014, the Group employed a total of approximately 1,300 employees. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to employees based on their merit and in accordance with industry practice. Other benefits including share option scheme, mandatory provident fund scheme, free hospitalisation insurance plan, subsidised medical care and sponsorship for external education and training programmes are offered to eligible employees.

INVESTOR RELATIONS

To ensure our investors have a better understanding of the Company, our management engages in a pro-active investor relations programme. Our Executive Directors and Investor Relations Department communicate with research analysts and institutional investors on an on-going basis and meet with research analysts and the press after our results announcements, attend major investors’ conferences and participate in international non-deal roadshows to communicate the Company’s financial performance and global business strategy.

During the year, the Company has met with a number of research analysts and investors, attended conferences as well as non-deal roadshows as follows:

Month	Event	Organiser	Location
August 2013	Investors luncheon	Bank of China International	Hong Kong
October 2013	Post full year results non-deal roadshow	UBS	Hong Kong
October 2013	Post full year results non-deal roadshow	UOB Kay Hian	Singapore
October 2013	Post full year results non-deal roadshow	DBS	New York/Los Angeles/ Denver/San Francisco
October 2013	Post full year results non-deal roadshow	UBS	Paris/London
November 2013	Post full year results non-deal roadshow	CIMB	Kuala Lumpur
November 2013	Post full year results non-deal roadshow	UOB Kay Hian	Taipei
December 2013	Post full year results non-deal roadshow	UBS	Sydney
January 2014	The Pulse of Asia Conference	DBS	Singapore
February 2014	Investors luncheon	China Merchants Securities	Hong Kong
March 2014	Post results non-deal roadshow	Daiwa Securities	Hong Kong
April 2014	Post results non-deal roadshow	HSBC	Utrecht/Amsterdam/Paris/London
April 2014	Post results non-deal roadshow	Daiwa Securities	New York/San Francisco/Los Angeles
May 2014	The Pulse of Asia Conference	DBS	Hong Kong

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May	2014	Barclays Select Series 2014: Asia Financial and Property Conference	Barclays	Hong Kong
June	2014	Deal roadshow – eSun CNY secured guaranteed notes	ANZ/DBS/HSBC/UBS	Singapore/Hong Kong
July	2014	Deal roadshow – LSG CNY secured guaranteed notes	BNP/DBS/HSBC/Standard Chartered Bank	Singapore/Hong Kong

During the year under review, the Company also had research reports published as follows:

Firm	Analyst	Publication Date
UOB Kay Hian	Cynthia CHAN, Sylvia WONG	10 September 2013
DBS	Allen CHAN, Jeff YAU	10 October 2013
DBS	Allen CHAN, Jeff YAU	2 May 2014

Subsequent to the year end, on 3 October 2014, BNP also published a report on the Company.

The Company is keen on promoting investor relations and enhancing communication with the Shareholders and potential investors. It welcomes suggestions from investors, stakeholders and the public who may contact the Investor Relations Department by phone on (852) 2853 6116 during normal business hours, by fax at (852) 2853 6651 or by e-mail at ir@laisun.com.

REVIEW OF ANNUAL RESULTS

The audit committee of the Company currently comprises two INEDs, namely Mr. Leung Shu Yin, William and Mr. Lam Bing Kwan, and a NED, Dr. Lam Kin Ming. The Audit Committee has reviewed the consolidated results (including the consolidated financial statements) of the Company for the year ended 31 July 2014.

REVIEW OF PRELIMINARY ANNOUNCEMENT OF RESULTS BY INDEPENDENT AUDITORS

The figures in respect of the Group’s results for the year ended 31 July 2014 as set out in this preliminary announcement have been agreed by the Group’s independent auditors, Ernst & Young, Certified Public Accountants (“ Ernst & Young ”) to the amounts set out in the Company’s consolidated financial statements for the year. The work performed by Ernst & Young in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the HKICPA and consequently, no assurance has been expressed by Ernst & Young on this preliminary results announcement.

ANNUAL GENERAL MEETING

The AGM of the Company will be held on Tuesday, 9 December 2014. Notice of the AGM together with proxy form and the Company’s Annual Report for the year ended 31 July 2014 will be published on the respective websites of the Stock Exchange and the Company and despatched to Shareholders in about early November 2014.

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PROPOSED AMENDMENTS TO THE MEMORANDUM AND ARTICLES OF ASSOCIATION

The Board proposes to make certain amendments (“ Proposed Amendments ”) to the Company’s existing memorandum and articles of association to align them with the new Companies Ordinance (Chapter 622 of the Laws of Hong Kong) which has come into effect on 3 March 2014.

The Proposed Amendments will be subject to the approval of the shareholders of the Company by way of special resolution at the AGM. A circular containing the full text of the Proposed Amendments will be despatched to Shareholders together with the Annual Report.

CLOSURE OF REGISTER OF MEMBERS

In order to be eligible to attend and vote at the AGM, Shareholders should ensure that all transfers accompanied by the relevant share certificates are lodged with the Company’s share registrar, Tricor Tengis Limited, Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, for registration no later than 4:30 p.m. on Thursday, 4 December 2014.

The proposed final dividend is subject to the approval of the Shareholders at the AGM. The record date for the proposed final dividend is at the close of business on Friday, 19 December 2014. For determining the entitlement to the proposed final dividend, the register of members of the Company will be closed from Thursday, 18 December 2014 to Friday, 19 December 2014, both dates inclusive, during which period no transfer of shares will be effected. In order to qualify for the proposed final dividend, all relevant transfer document(s) and share certificate(s) must be lodged with the Company’s share registrar, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong for registration no later than 4:30 p.m. on Wednesday, 17 December 2014.

On behalf of the Board Lam Kin Ngok, Peter Chairman

Hong Kong, 16 October 2014

As at the date of this announcement, the Board comprises the following members:

Executive Directors: Dr. Lam Kin Ngok, Peter (Chairman) and Messrs. Chew Fook Aun (Deputy Chairman), Lau Shu Yan, Julius (Chief Executive Officer) and Lam Hau Yin, Lester;

Non-Executive Directors: Dr. Lam Kin Ming and Madam U Po Chu; and

Independent Non-Executive Messrs. Lam Bing Kwan, Leung Shu Yin, William and Ip Shu Kwan, Stephen. Directors:

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