IRC Limited — Interim / Quarterly Report 2016

Apr 14, 2016

==> picture [251 x 808] intentionally omitted <==

==> picture [158 x 83] intentionally omitted <==

Lai Sun Development Company Limited (Stock Code: 488)

For the six months ended 31 January 2016

Corporate Information

PlaCe of InCorPoratIon Hong Kong

authorIsed rePresentatIves

Chew Fook Aun Chow Kwok Wor

Board of dIreCtors

Executive Directors

Lam Kin Ngok, Peter, GBS (Chairman) Chew Fook Aun (Deputy Chairman) Lau Shu Yan, Julius (Chief Executive Officer) Lam Hau Yin, Lester

Non-executive Directors

Lam Kin Ming U Po Chu

Independent Non-executive Directors

Ip Shu Kwan, Stephen, GBS, JP Lam Bing Kwan Leung Shu Yin, William

audIt CommIttee

Leung Shu Yin, William (Chairman) Lam Bing Kwan Lam Kin Ming

remuneratIon CommIttee

Leung Shu Yin, William (Chairman) Chew Fook Aun Lam Bing Kwan

ComPany seCretary

share regIstrar and transfer offICe

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

IndePendent audItors

Ernst & Young Certified Public Accountants

PrInCIPal Bankers

Bank of China (Hong Kong) Limited The Bank of East Asia, Limited China Construction Bank (Asia) Corporation Limited DBS Bank Ltd. Hang Seng Bank Limited The Hongkong and Shanghai Banking Corporation Limited Industrial and Commercial Bank of China (Asia) Limited Shanghai Pudong Development Bank Co., Ltd.,

Hong Kong Branch United Overseas Bank Limited

shares InformatIon Place of Listing The Main Board of The Stock Exchange of Hong Kong Limited

Chow Kwok Wor

Stock Code

regIstered offICe / PrInCIPal offICe

11th Floor Lai Sun Commercial Centre 680 Cheung Sha Wan Road Kowloon, Hong Kong

488

Board Lot

15,000 Shares

WeBsIte

Tel: (852) 2741 0391 Fax: (852) 2785 2775

www.laisun.com

Investor relatIons

Tel: (852) 2853 6116 Fax: (852) 2853 6651 E-mail: ir@laisun.com

1

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

The board of directors (the “ Board ”) of Lai Sun Development Company Limited (the “ Company ”) is pleased to present the unaudited consolidated results of the Company and its subsidiaries (the “ Group ”) for the six months ended 31 January 2016 together with the comparative figures of the last corresponding period as follows:

Condensed Consolidated Income statement

For the six months ended 31 January 2016

			Six months ended	Six months ended
			31 January
			2016	2015
			(Unaudited)	(Unaudited)
		Notes	HK$’000	HK$’000
	TURNOVER	3	1,082,924	777,643
	Cost of sales		(511,720)	(330,720)
	Gross profit		571,204	446,923
	Other revenue		27,810	33,764
	Selling and marketing expenses		(22,510)	(11,631)
	Administrative expenses		(126,445)	(123,867)
	Other operating expenses		(115,575)	(100,045)
	Fair value gains on investment properties		78,503	709,727
	PROFIT FROM OPERATING ACTIVITIES	4	412,987	954,871
	Finance costs	5	(95,739)	(84,100)
	Share of profits and losses of associates		8,564	(9,571)
	Share of profits of joint ventures		739,899	103,305
	PROFIT BEFORE TAX		1,065,711	964,505
	Tax	6	(37,818)	(40,606)
	PROFIT FOR THE PERIOD		1,027,893	923,899
	Attributable to:
	Owners of the Company		1,013,125	908,382
	Non-controlling interests		14,768	15,517
			1,027,893	923,899
	EARNINGS PER SHARE ATTRIBUTABLE TO
	OWNERS OF THE COMPANY	7		(Adjusted)
	Basic		HK$0.049	HK$0.044
	Diluted		HK$0.049	HK$0.044

2 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Condensed Consolidated statement of Comprehensive Income For the six months ended 31 January 2016

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	PROFIT FOR THE PERIOD	1,027,893	923,899
	OTHER COMPREHENSIVE EXPENSE
	Other comprehensive (expense)/income to be reclassified to profit or loss
	in subsequent periods:
	Change in fair values of available-for-sale financial assets	(15,414)	(14,944)
	Exchange realignments	(92,519)	(58,614)
	Share of other comprehensive (expense)/income of associates	(230,839)	18,675
	OTHER COMPREHENSIVE EXPENSE FOR THE PERIOD	(338,772)	(54,883)
	TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	689,121	869,016
	Attributable to:
	Owners of the Company	674,353	853,499
	Non-controlling interests	14,768	15,517
		689,121	869,016

3

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

As at 31 January 2016

Condensed Consolidated statement of financial Position

			31 January	31 July
			2016	2015
			(Unaudited)	(Audited)
		Notes	HK$’000	HK$’000
	NON-CURRENT ASSETS
	Property, plant and equipment	8	2,620,437	2,380,267
	Prepaid land lease payments		21,414	21,928
	Investment properties		15,362,865	15,236,780
	Properties under development for sale		690,102	653,845
	Interests in associates		3,710,752	3,930,309
	Interests in joint ventures		6,688,783	5,937,793
	Available-for-sale financial assets		1,224,479	1,215,485
	Pledged bank balances and time deposits		153,839	—
	Depositspaid and other receivables		663,835	141,968
	Total non-current assets		31,136,506	29,518,375
	CURRENT ASSETS
	Completed properties for sale		389,560	641,048
	Equity investment at fair value through profit or loss		3,238	5,574
	Inventories		13,744	12,704
	Debtors, deposits paid and other receivables	9(a)	266,409	175,672
	Pledged bank balances and time deposits		7,925	185,467
	Cash and cash equivalents		1,586,873	1,068,038
	Total current assets		2,267,749	2,088,503
	CURRENT LIABILITIES
	Creditors, deposits received and accruals	9(b)	390,576	409,301
	Tax payable		124,808	170,783
	Bank borrowings		1,372,076	1,012,594
	Total current liabilities		1,887,460	1,592,678
	NET CURRENT ASSETS		380,289	495,825
	TOTAL ASSETS LESS CURRENT LIABILITIES		31,516,795	30,014,200
	NON-CURRENT LIABILITIES
	Bank borrowings		3,764,538	3,270,608
	Guaranteed notes		2,715,201	2,703,324
	Deferred tax		123,792	121,020
	Provision for tax indemnity	12(b)	729,387	729,387
	Long term rental deposits received		93,144	81,907
	Deferred rental		4,705	4,380
	Total non-current liabilities		7,430,767	6,910,626
			24,086,028	23,103,574
	EQUITY
	Equity attributable to owners of the Company
	Share capital		3,137,569	3,135,561
	Investment revaluation reserve		1,091,995	1,117,849
	Share option reserve		65,172	65,172
	Hedging reserve		(898)	(963)
	Capital reduction reserve		4,692	4,692
	General reserve		646,700	646,700
	Other reserve	10	631,153	263,684
	Statutory reserve		27,405	24,518
	Exchange fluctuation reserve		(290,610)	22,373
	Retainedprofits		18,342,996	17,382,957
			23,656,174	22,662,543
	Non-controllinginterests		429,854	441,031
			24,086,028	23,103,574

4

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Condensed Consolidated statement of Changes in equity For the six months ended 31 January 2016

	Attributable to owners of the Company Investment Share Capital Exchange Non- Share revaluation option Hedging reduction General Other Statutory fluctuation Retained controlling capital reserve reserve reserve reserve reserve reserve reserve reserve profits Sub-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 HK$’000
At 31 July 2015 and 1 August 2015 (Audited) 3,135,561 1,117,849 65,172 (963) 4,692 646,700 263,684 24,518 22,373 17,382,957 22,662,543 441,031 23,103,574 Profit for the period — — — — — — — — — 1,013,125 1,013,125 14,768 1,027,893 Other comprehensive income for the period: Change in fair values of available-for-sale financial assets — (15,414) — — — — — — — — (15,414) — (15,414) Exchange realignments — — — — — — — — (92,519) — (92,519) — (92,519) Share of other comprehensive (expense)/income of associates — (10,440) — 65 — — — — (220,464) — (230,839) — (230,839)
Total comprehensive (expense)/ income for the period — (25,854) — 65 — — — — (312,983) 1,013,125 674,353 14,768 689,121 2015 Final Dividend — — — — — — — — — (50,236) (50,236) — (50,236) Share of reserve movements of an associate — — — — — — (10,939) 2,887 — (2,850) (10,902) — (10,902) Net proceeds from rights issue (note 10) — — — — — — 378,408 — — — 378,408 — 378,408 Capital contribution from non-controlling shareholders of subsidiaries — — — — — — — — — — — 35,060 35,060 Shares issued in lieu of cash dividend* 2,008 — — — — — — — — — 2,008 — 2,008 Dividend paid to non-controlling shareholders of a subsidiary — — — — — — — — — — — (61,005) (61,005)
At 31 January 2016 (Unaudited) 3,137,569 1,091,995 65,172 (898) 4,692 646,700 631,153 27,405 (290,610) 18,342,996 23,656,174 429,854 24,086,028

On 11 December 2015, the Company’s shareholders approved at the annual general meeting a final dividend of HK$0.0025 per share payable in cash with a scrip dividend alternative (the “ 2015 Scrip Dividend Scheme ”) for the year ended 31 July 2015 (the “ 2015 Final Dividend* ”). During the six months ended 31 January 2016, 17,308,363 new shares were issued by the Company at a deemed price of HK$0.116 per share, credited as fully paid, to shareholders of the Company who had elected to receive scrip shares in lieu of cash under the 2015 Scrip Dividend Scheme to settle HK$2,008,000 of the 2015 Final Dividend. The remaining of the 2015 Final Dividend of HK$48,228,000 was satisfied by cash.

Further details of the 2015 Scrip Dividend Scheme are set out in the Company’s circular dated 30 December 2015.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 5

Condensed Consolidated statement of Changes in equity (Continued)

For the six months ended 31 January 2016

	Attributable to owners of the Company Investment Share Capital Exchange Non- Share revaluation option Hedging reduction General Other Statutory fluctuation Retained controlling capital reserve reserve reservee reserve reserve reserve reserve reserve profits Sub-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 HK$’000
At 31 July 2014 and 1 August 2014 (Audited) 3,129,961 1,131,735 64,469 (963) 4,692 646,700 256,582 — 111,712 15,429,660# 20,774,548 449,947 21,224,495 Profit for the period — — — — — — — — — 908,382 908,382 15,517 923,899 Other comprehensive (expense)/ income for the period: Change in fair values of available-for-sale financial assets — (14,944) — — — — — — — — (14,944) — (14,944) Exchange realignments — — — — — — — — (58,614) — (58,614) — (58,614) Share of other comprehensive income of an associate — 152 — — — — — — 18,523 — 18,675 — 18,675
Total comprehensive (expense)/ income for the period — (14,792) — — — — — — (40,091) 908,382 853,499 15,517 869,016 2014 Final Dividend — — — — — — — — — (50,157) (50,157) — (50,157) Share of reserve movements of an associate — — 175 — — — (6,960) 20,469 — (20,411) (6,727) — (6,727) Recognition of share-based payments — — 528 — — — — — — — 528 — 528 Capital contribution from non-controlling shareholders of a subsidiary — — — — — — — — — — — 8,100 8,100 Shares issued in lieu of cash dividend** 5,600 — — — — — — — — — 5,600 — 5,600 Dividend paid to non-controlling shareholders of a subsidiary — — — — — — — — — — — (41,468) (41,468)
At 31 January 2015 (Unaudited) 3,135,561 1,116,943 65,172 (963) 4,692 646,700 249,622 20,469 71,621 16,267,474 21,577,291 432,096 22,009,387

On 9 December 2014, the Company’s shareholders approved at the annual general meeting a final dividend of HK$0.0025 per share payable in cash with a scrip dividend alternative (the “ 2014 Scrip Dividend Scheme ”) for the year ended 31 July 2014 (the “ 2014 Final Dividend** ”). During the six months ended 31 January 2015, 31,640,277 new shares were issued by the Company at a deemed price of HK$0.177 per share, credited as fully paid, to shareholders of the Company who had elected to receive scrip shares in lieu of cash under the 2014 Scrip Dividend Scheme to settle HK$5,600,000 of the 2014 Final Dividend. The remaining of the 2014 Final Dividend of HK$44,557,000 was satisfied by cash.

Further details of the 2014 Scrip Dividend Scheme are set out in the Company’s circular dated 30 December 2014.

# Retained profits have been adjusted for the proposed 2014 Final Dividend in accordance with the current period’s presentation.

6

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Condensed Consolidated statement of Cash flows For the six months ended 31 January 2016

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	NET CASH FLOWS (USED IN)/FROM OPERATING ACTIVITIES	(337,819)	182,352
	CASH FLOWS FROM INVESTING ACTIVITIES
	Purchases of items of property, plant and equipment	(210,895)	(1,518,346)
	Additions to investment properties	(285,243)	(1,358,553)
	Acquisition of available-for-sale financial assets	(24,408)	(7,919)
	Advances to associates	(15,171)	(2,665)
	Advances to joint ventures	(15,000)	(60,017)
	Repayment from a joint venture	75	550,000
	Dividend received from a joint venture	—	10,000
	Dividends received from unlisted available-for-sale financial assets	97,149	22,149
	Decrease/(increase) in pledged bank balances and time deposits	23,703	(29,078)
	Others	(4,462)	6,729
	NET CASH FLOWS USED IN INVESTING ACTIVITIES	(434,252)	(2,387,700)
	CASH FLOWS FROM FINANCING ACTIVITIES
	New bank borrowings raised	2,096,500	1,885,620
	Repayment of bank borrowings	(1,032,642)	(105,252)
	Bank financing charges	(71,910)	(28,051)
	Dividend paid	(48,228)	(44,557)
	Dividend paid to a non-controlling shareholder of a subsidiary	(61,005)	(41,468)
	Net proceeds from rights issue	378,408	—
	Capital contribution from non-controlling shareholders	35,060	8,100
	NET CASH FLOWS FROM FINANCING ACTIVITIES	1,296,183	1,674,392
	NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	524,112	(530,956)
	Cash and cash equivalents at beginning of period	1,068,038	1,671,478
	Effect of foreign exchange rate changes	(5,277)	(676)
	CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,586,873	1,139,846
	ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
	Cash and bank balances	1,005,465	601,793
	Time deposits	581,408	538,053
		1,586,873	1,139,846

7

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

notes to Condensed Consolidated Interim financial statements 31 January 2016

1. BasIs of PreParatIon

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 31 January 2016 have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and with Hong Kong Accounting Standard (“ HKAS ”) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants.

The financial information relating to the year ended 31 July 2015 that is included in the condensed consolidated statement of financial position as comparative information does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to those statutory financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:

The Company has delivered the financial statements for the year ended 31 July 2015 to the Registrar of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.

The Company’s auditors have reported on those financial statements. The auditors’ report was unqualified; did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

The condensed consolidated interim financial statements have not been audited by the Company’s auditors but have been reviewed by the Company’s audit committee.

2. sIgnIfICant aCCountIng PolICIes

The significant accounting policies and basis of presentation used in the preparation of these interim financial statements are the same as those used in the Group’s audited consolidated financial statements for the year ended 31 July 2015.

The Group has adopted the new and revised Hong Kong Financial Reporting Standards (“ HKFRSs ”, which also include HKASs and Interpretations) which are applicable to the Group and are effective in the current period. The adoption of these new and revised HKFRSs has had no material impact on the reported results or financial position of the Group.

3. segment InformatIon

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

	Six months ended 31 January (Unaudited)
	Property Property development and sales investment Hotel operation Restaurant operation Others Eliminations 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Consolidated 2016 2015 HK$’000 HK$’000
Segment revenue: Sales to external customers Intersegment sales Other revenue	384,301 177,644 350,279 299,942 201,431 186,481 134,683 102,293 12,230 11,283 — — — — 7,511 6,128 180 180 — — 11,872 11,434 (19,563) (17,742) 2,157 2,037 278 1,169 9 25 142 507 3,698 2,313 — —	1,082,924 777,643 — — 6,284 6,051
Total	386,458 179,681 358,068 307,239 201,620 186,686 134,825 102,800 27,800 25,030 (19,563) (17,742)	1,089,208 783,694
Segment results	109,498 53,290 285,014 240,113 39,619 35,838 (6,581) 2,245 (4,557) (5,562) — —	422,993 325,924 1,260 2,427 20,266 25,286 78,503 709,727 (110,035) (108,493)
Interest income from bank deposits — unallocated Unallocated revenue Fair value gains on investment properties Unallocated expenses Profit from operating activities Finance costs Share of profits and losses of associates Share of profits and losses of associates — unallocated Share of profits of joint ventures Profit before tax Tax Profit for the period	— — 78,503 709,727 — — — — — — — — 1,060 445 — — — — (1,159) (541) — — — — (971) (219) 740,870 103,524 — — — — — — — —
		412,987 954,871 (95,739) (84,100) (99) (96) 8,663 (9,475) 739,899 103,305
		1,065,711 964,505 (37,818) (40,606)
		1,027,893 923,899

8

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

3. segment InformatIon (CoNtINuED)

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

Property Property development and sales investment Hotel operation Restaurant operation Others 31 January 31 July31 January 31 July31 January 31 July31 January 31 July31 January 31 July 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 (Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited)(Unaudited) (Audited) HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000	Consolidated 31 January 31 July 2016 2015 (Unaudited) (Audited) HK$’000 HK$’000
Segment assets 1,716,567 1,349,28315,468,736 15,367,059 2,776,587 2,503,471 409,150 381,659 140,137 135,991 Interests in associates 8,185 7,114 — — — — 34,223 21,669 — — Interests in associates — unallocated Interests in joint ventures 958,540 948,346 5,730,243 4,989,447 — — — — — — Unallocated assets Total assets Segment liabilities 51,115 99,813 186,520 184,020 157,216 122,509 25,553 20,976 7,076 8,344 Bank borrowings Guaranteed notes Other unallocated liabilities Total liabilities	20,511,177 19,737,463 42,408 28,783 3,668,344 3,901,526 6,688,783 5,937,793 2,493,543 2,001,313
	33,404,255 31,606,878
	427,480 435,662 5,136,614 4,283,202 2,715,201 2,703,324 1,038,932 1,081,116
	9,318,227 8,503,304

4. ProfIt from oPeratIng aCtIvItIes

(a) The Group’s profit from operating activities is arrived at after charging/(crediting):

		Six months ended	Six months ended
		31 January
		2016		2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Depreciation#	26,944		24,061
	Amortisation of prepaid land lease payments*	514		513
	Fair value loss/(gain) on a listed equity investment
	at fair value through profit or loss	2,336*		(3,061)
	Interest income from bank deposits	(1,260)		(2,427)
	Other interest income	(3,314)		(1,997)
	Dividend income from unlisted available-for-sale financial assets	(16,055)		(22,149)

# Depreciation charge of approximately HK$24,816,000 (Six months ended 31 January 2015: HK$22,107,000) for property, plant and equipment is included in “other operating expenses” on the condensed consolidated income statement.

* These items are included in “other operating expenses” on the condensed consolidated income statement.

(b) Other than those mentioned in note 4(a) above, “other operating expenses” also included service fee for operation of a club of approximately HK$33,484,000 (Six months ended 31 January 2015: HK$31,870,000).

9

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

5. fInanCe Costs

	fInanCe Costs
		Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Interest on bank borrowings	54,213	38,547
	Interest on guaranteed notes	79,608	79,412
	Bank financing charges	20,523	7,343
		154,344	125,302
	Less: Amount capitalised in a hotel development project (note 8)	(47,182)	(31,000)
	Amount capitalised in properties under development for sale	(11,423)	(10,202)
		95,739	84,100

6. taX

Hong Kong profits tax has been provided at the rate of 16.5% (Six months ended 31 January 2015: 16.5%) on the estimated assessable profits arising in Hong Kong during the period.

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.

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Current tax
	Hong Kong	19,352	22,138
	Overseas	14,347	15,100
		33,699	37,238
	Deferred tax	2,772	3,368
	Prior years’ (overprovision)/underprovision
	Hong Kong	(20)	—
	Overseas	1,367	—
		1,347	—
	Tax charge for theperiod	37,818	40,606

10 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

7. earnIngs Per share attrIButaBle to oWners of the ComPany

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Earnings
	Earnings for the purpose of basic earnings per share	1,013,125	908,382
	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	(4)	(47)
	Earnings for thepurpose of diluted earningsper share	1,013,121	908,335
		‘000	‘000
			(Adjusted)
	Number of shares
	Weighted average number of ordinary shares for the purpose of basic
	earnings per share	20,709,955	20,677,241
	Effect of dilutive potential ordinaryshares arising from share options	19,274	87,379
	Weighted average number of ordinary shares for the purpose of diluted
	earningsper share	20,729,229	20,764,620

The basic and diluted earnings per share for the six months ended 31 January 2015 have been adjusted to reflect the effect of a rights issue of the Company (note 10) during the current period.

8. ProPerty, Plant and eQuIPment

During the current period, increase in property, plant and equipment (net of depreciation and disposals) of approximately HK$240 million (Six months ended 31 January 2015: HK$1,705 million) mainly includes additions to a hotel development project amounting to approximately HK$242 million (Six months ended 31 January 2015: HK$1,730 million).

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 11

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

9. 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 trade debtors, based on payment due date, as at the end of the reporting period is as follows:

	31 January	31 January	31 July
		2016	2015
	(Unaudited)		(Audited)
		HK$’000	HK$’000
	Trade debtors:
	Not yet due or less than 30 days past due	14,046	7,257
	31 — 60 days past due	3,488	1,358
	61 — 90 days past due	590	403
	Over 90 days past due	1,750	2,088
		19,874	11,106
	Other receivables	158,084	50,112
	Deposits paid and prepayments	88,451	114,454
		266,409	175,672

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

	31 January	31 January	31 July
		2016	2015
	(Unaudited)		(Audited)
		HK$’000	HK$’000
	Trade creditors:
	Not yet due or less than 30 days past due	15,789	11,611
	31 — 60 days past due	2,903	458
	61 — 90 days past due	120	22
	Over 90 days past due	500	479
		19,312	12,570
	Other payables and accruals	219,480	194,668
	Deposits received and other provisions	151,784	202,063
		390,576	409,301

12 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

10. other reserve

Pursuant to the prospectus dated 18 January 2016, the Company proposed a rights issue of 10,047,266,781 shares on the basis of one rights share for every two existing shares of the Company at a subscription price of HK$0.092 each. The rights issue, with a total estimated net proceeds of approximately HK$912 million, was subsequently completed on 5 February 2016 (the “ Completion ”).

Up to 31 January 2016, the proceeds from the rights issue were approximately HK$378,408,000 and were recorded as other reserve as at 31 January 2016. Following the Completion, such amount would be credited to share capital.

The Company’s ultimate holding company, Lai Sun Garment (International) Limited (“ LSG ”), was the underwriter of the rights issue. In addition to the provisional allotment to LSG of 5,212,849,676 rights shares, LSG has underwritten 3,038,279,753 rights shares which resulted in a total subscription of approximately HK$759 million. Following the Completion, LSG’s shareholding in the Company increased from 51.84% to 61.93%.

11. CaPItal CommItments

The Group had the following commitments not provided for in the condensed consolidated interim financial statements at the end of the reporting period:

		31 January	31 July
		2016	2015
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Contracted, but not provided for
	Purchase of property, plant and equipment	24,844	27,974
	Development and operation of a hotel project	185,125	375,123
	Additions to investment properties	7,946	7,698
		217,915	410,795

In addition, the Group’s share of a joint venture’s own capital commitments, in respect of future development expenditure of its investment properties, is as follows:

		31 January	31 July
		2016	2015
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Contracted, but notprovided for	11,427	13,926

13

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

12. ContIngent lIaBIlItIes

Saved as disclosed elsewhere in the condensed consolidated interim financial statements, the Group also had the following contingent liabilities at the end of the reporting period:

• (a) Contingent liabilities not provided for in the condensed consolidated interim financial statements:

		31 January	31 July
		2016	2015
		(Unaudited)	(Audited)
		HK$’000	HK$’000
	Guarantees given to banks in connection with facilities
	granted to and utilised byajoint venture	806,500	703,000

• (b) 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 (the “ 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 (the “ Listing ”) on The Stock Exchange of Hong Kong Limited; (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 January 2016 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 approximately HK$1,350,000,000 (31 July 2015: HK$1,350,000,000).

After taking into account the plan and status of the Property Interests held by Lai Fung as at 31 January 2016 and 31 July 2015 which are covered under the Lai Fung Tax Indemnity Deed and the prevailing tax rates and legislation governing PRC income tax and LAT, the Group recorded an aggregate provision for tax indemnity of approximately HK$729,387,000.

14

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

13. related Party transaCtIons

In addition to the related party transactions and balances detailed elsewhere in the condensed consolidated interim financial statements, the Group entered into the following material transactions with related parties during the period:

(a) transactions with related parties

			Six months ended	Six months ended
			31 January
			2016	2015
			(Unaudited)	(Unaudited)
			HK$’000	HK$’000
	Rental income and building management fee from
	eSun Holdings Limited (“eSun”) and its subsidiaries
	(collectively the “eSun Group”), an associate	(Note)	5,711	5,757
	Sharing of corporate salaries on a cost basis allocated to:
	— LSG		4,612	3,634
	— the eSun Group		25,573	23,779
	Sharing of administrative expenses on a cost basis allocated to:
	— LSG		959	1,447
	— the eSun Group		3,149	4,603
	Rental expenses and building management fees to:
	— an associate of LSG	(Note)	1,047	976
	— the eSun Group	(Note)	35	—
	Sharing of corporate salaries on a cost basis allocated from:
	— LSG		2,972	2,743
	— the eSun Group		2,870	2,359
	Sharing of administrative expenses on a cost basis
	allocated from:
	— LSG		1	12
	— the eSun Group		337	186

Note: These transactions were entered into based on terms stated in the respective agreements or contracts and were charged on bases mutually agreed by the respective parties.

(b) Compensation of key management personnel of the group

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Short term employee benefits	17,852	16,969
	Post-employment benefits	131	130
	Total compensationpaid to keymanagementpersonnel	17,983	17,099

15

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

14. faIr value hIerarChy of fInanCIal Instruments

financial instruments for which fair value is disclosed

Except for the guaranteed notes with fair values in aggregate of approximately HK$2,740,300,000 (31 July 2015: HK$2,747,300,000), of which the fair value was determined by reference to the closing price of the guaranteed notes published by a leading global financial market data provider as at 31 January 2016, the directors consider the carrying amounts of all other financial assets and financial liabilities measured at amortised cost approximate to their fair values as at the end of the reporting period.

financial instruments measured at fair value

		Level 1	Level 2	Level 3	Total
		(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
		HK$’000	HK$’000	HK$’000	HK$’000
	As at 31 January 2016
	Available-for-sale financial assets, at fair value	—	150,177	1,061,050	1,211,227
	Equity investments at fair value through
	profit or loss	3,238	—	—	3,238
		3,238	150,177	1,061,050	1,214,465
	As at 31 July 2015
	Available-for-sale financial assets, at fair value	—	151,215	1,051,018	1,202,233
	Equity investments at fair value through
	profit or loss	5,574	—	—	5,574
		5,574	151,215	1,051,018	1,207,807

The movements in fair value measurements in Level 3 during the period are as follows:

		Six months ended	Six months ended
		31 January
		2016	2015
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
	Available-for-sale financial assets, at fair value
	At beginning of period	1,051,018	1,115,780
	Total gains/(losses) recognised in other comprehensive income	10,032	(3,367)
	At end ofperiod	1,061,050	1,112,413

16

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

notes to Condensed Consolidated Interim financial statements (Continued)

31 January 2016

14. faIr value hIerarChy of fInanCIal Instruments (CoNtINuED)

valuation techniques

Fair value measurement using significant unobservable inputs (Level 3)

Fair value of the equity interest in the investee company has been estimated using the fair value of investment property held by an investee company, which is determined by the direct comparison and the income capitalisation methods detailed below.

The properties are valued by the direct comparison method on the assumption that each property can be sold in its existing state subject to existing tenancies or otherwise with the benefit of vacant possession and by referring to comparable sales transactions as available in the relevant markets. Comparison is based on prices realised on actual transactions or asking prices of comparable properties. Comparable properties with similar sizes, characters and locations are analysed, and carefully weighed against all respective advantages and disadvantages of each property in order to arrive at a fair comparison of value.

The properties are also valued by the income capitalisation approach taking into account the rents passing of the properties and the reversionary potential of the tenancies, and reconciling the two approaches, if applicable.

Information about fair value measurement using significant unobservable inputs (Level 3)

31 January 2016

			Relationship of unobservable
Valuation technique	Unobservable inputs		inputs to fair value
Income capitalisation	Average monthly market	HK$111	The higher the market rent,
method	rent per square foot		the higher the fair value
	Capitalisation rate	3.1%	The higher the capitalisation rate,
			the lower the fair value
31 July 2015
			Relationship of unobservable
Valuation technique	Unobservable inputs		inputs to fair value
Income capitalisation	Average monthly market	HK$107	The higher the market rent,
method	rent per square foot		the higher the fair value
	Capitalisation rate	3.0%	The higher the capitalisation rate,
			the lower the fair value

15. ComParatIve fIgures

Certain comparative amounts have been reclassified to conform with the current period’s presentation. In the opinion of the directors of the Company, this presentation would better reflect the financial performance of the Group.

17

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

Interim ordinary dividend

The Board of the Company has resolved not to declare the payment of an interim ordinary dividend for the financial year ending 31 July 2016. No interim ordinary dividend was declared in respect of the last corresponding period.

management discussion and analysis

BusIness revIeW and outlook

Major global economies continue to struggle despite continuous support from central banks around the world. The run up to the presidential election in the US and geopolitical uncertainties around the world such as those in the Middle East cast a shadow over the already delicate economic environment. As a global financial centre, Hong Kong’s economic performance is obviously influenced by the challenges faced by the major economies around the world.

The property sector in Hong Kong as a whole has shown resilience despite softening markets. The retail market is supported by low unemployment with steady visitor arrivals and the office leasing market remains steady. The residential market continues to be slow generally since the introduction of control measures in 2012 and the US interest rate hike towards the end of 2015 weakened the sentiment further. However, the Hong Kong Government implemented new rounds of policy measures in 2015 to cool down price increases particularly for smaller units which suggest that underlying demand remains strong. This coupled with ample liquidity and questions over the execution of the government’s plan on residential supply are expected to provide support to residential housing prices in the medium to long term. 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 attributable rental portfolio of approximately 1.8 million square feet generated steady rental income at high occupancy rates. Rental income increased through tenant mix adjustments, rental reversion and robust contribution from the London properties. The completion of the 8 Observatory Road property in June 2015 added an attributable gross floor area (“ GFA ”) of 82,585 square feet in the prime Tsim Sha Tsui area of Hong Kong. As at the date of this Report, approximately 78% of the floor area of the building has been leased or has offers to lease with another approximately 13% of floor area under negotiation. 3 out of 9 units of the 339 Tai Hang Road luxury residential property were sold during the period under review with another 1 unit sold post period end.

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 since refocusing the strategy in 2012. Set out below are the projects the Group secured after the implementation of the new rental focused strategy:

		Total GFA		Expected
Date	Secured Projects	(square feet)	Use	Completion Date
Hong Kong	Development Properties
November 2012	Tseung Kwan O Project	572,894	Commercial/Residential	Q4 2017
April 2014	Ma Tau Kok Project	111,368	Commercial/Residential	Q1 2018
May 2014	The Hong Kong Ocean Park	366,000	Hotel	Q4 2017
	Marriott Hotel (“Ocean Hotel”)
September 2015	Sai Wan Ho Street Project	61,139	Residential	Q4 2019
London, United Kingdom	Investment Properties
April 2014	107-112 Leadenhall Street	146,606	Office	N/A
November 2014	100 Leadenhall Street	177,700	Office	N/A
December 2015	106 Leadenhall Street	12,687	Office	N/A

18 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) management discussion and analysis

BusIness revIeW and outlook (CoNtINuED)

The acquisition of 106 Leadenhall Street in London in December 2015, adjacent to our other two wholly-owned properties, namely 100 and 107 Leadenhall Street, added approximately 12,687 square feet of office space to our rental portfolio in the United Kingdom. This multi-tenanted property is expected to enhance and enlarge the Group’s strategic property investment portfolio in the City of London. The Ocean Hotel, to be operated by the Marriott group, will provide a total of 471 rooms and approximately 366,000 square feet of attributable rental space to the existing rental portfolio attributable to the Group of approximately 1.8 million square feet. Set out below is the expected growth of the rental portfolio of the Group:

==> picture [369 x 196] intentionally omitted <==

----- Start of picture text -----

2,185 Ocean Hotel
Hong Kong
1,819 366 • Cheung Sha Wan Plaza
• Causeway Bay Plaza 2
• Lai Sun Commercial Centre
• CCB Tower
• 8 Observatory Road
• AIA Central
• others
1,323 1,323
London, United Kingdom
• 107-112 Leadenhall Street
• 100 Leadenhall Street
• 36 Queen Street
• 106 Leadenhall Street
398 398
Vietnam
• Caravelle Hotel
98 98
31 Jan 2016 FY 2018
----- End of picture text -----

Attributable rental GFA (’000 square feet)

Further to securing the Tseung Kwan O site and the Urban Renewal Authority project in Ma Tau Kok, Kowloon, Hong Kong in November 2012 and April 2014 respectively, the Group continued to participate in government tenders to grow the pipeline. In September 2015, the Group was successful in its bid for the development rights to the Sai Wan Ho Street project from the Urban Renewal Authority in Shau Kei Wan, Hong Kong. Upon completion, it is planned to provide about 144 residential units with a total GFA of approximately 61,139 square feet. Set out below is the pipeline for development projects for sale of the Group:

==> picture [380 x 202] intentionally omitted <==

----- Start of picture text -----

397
111 Ocean One
339 Tai Hang Road
Tseung Kwan O project
Ma Tau Kok project
286 Sai Wan Ho Street project
37
10
61
27
31 Jan 2016 FY 2018 FY 2020
Attributable rental GFA (’000 square feet)
----- End of picture text -----

19

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) management discussion and analysis

BusIness revIeW and outlook (CoNtINuED)

Subsequent to the period end, the rights issue of 10,047,266,781 shares on the basis of one rights share for every two existing shares of the Company at a subscription price of HK$0.092 each in November 2015 (“ Rights Issue ”) was completed in February 2016. The Rights Issue was fully underwritten by the controlling shareholder of the Company, LSG. The total net proceeds of the Rights Issue, after deduction of estimated rights issue expenses, was approximately HK$912.1 million and immediately after the completion of the Rights Issue, LSG’s interest in the Company increased from 51.84% to 61.93%.

The Group’s strong cash position of HK$1,748.6 million of cash on hand with a net debt to equity ratio of 25.8% as at 31 January 2016 provides the Group full confidence and the means to review opportunities more actively. The Group’s gearing excluding the London portfolio all of which have a positive carry net of financing costs is 19.3%. However, the Group will continue its prudent and flexible approach in growing the landbank and managing its financial position.

overvIeW of InterIm results

For the six months ended 31 January 2016, the Group recorded turnover of HK$1,082.9 million (2015: HK$777.6 million) and a gross profit of HK$571.2 million (2015: HK$446.9 million), representing an increase of approximately 39.3% and 27.8%, respectively over the same period last year. Set out below is the turnover by segment:

	Six months ended 31 January	Six months ended 31 January
	2016	2015	Difference
	(HK$ million)	(HK$ million)	(HK$ million)	% change
Property investment	350.3	299.9	50.4	16.8%
Property development and sales	384.3	177.6	206.7	116.4%
Restaurant operation	134.7	102.3	32.4	31.7%
Hotel operation and others	213.6	197.8	15.8	8.0%
Total	1,082.9	777.6	305.3	39.3%

For the six months ended 31 January 2016, net profit attributable to owners of the Company was approximately HK$1,013.1 million (2015: HK$908.4 million), representing an increase of approximately 11.5% over the same period last year. The increase is primarily due to profit contribution from the recognition of the sale of residential units in 339 Tai Hang Road during the period under review. Excluding the effect of property revaluations, net profit attributable to owners of the Company was approximately HK$199.7 million (2015: HK$92.8 million), representing an increase of approximately 115.2% over the same period last year. Basic earnings per share including and excluding the effect of property revaluations was HK$0.049 (2015: HK$0.044) and HK$0.010 (2015: HK$0.004), respectively.

	Six months ended	Six months ended
	31 January
Profit attributable to owners of the Company (HK$ million)	2016	2015
Reported	1,013.1	908.4
Adjustments in respect of revaluation gains of investment properties held by
— the Company and subsidiaries	(78.5)	(709.7)
— associates and joint ventures	(734.9)	(105.9)
Net profit after tax excluding revaluation gains of investment properties	199.7	92.8

Equity attributable to owners of the Company as at 31 January 2016 amounted to HK$23,656.2 million, up from HK$22,662.5 million as at 31 July 2015. Net asset value per share attributable to owners of the Company increased by 4.3% to HK$1.176 per share as at 31 January 2016 from HK$1.128 per share as at 31 July 2015.

20 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) management discussion and analysis

ProPerty PortfolIo ComPosItIon

As at 31 January 2016, the Group maintained a property portfolio with attributable GFA of approximately 2.7 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:

						Total
						(excluding
						car-parking	No. of
						spaces &	car-parking
	Commercial/					ancillary	spaces
	Retail	Office	Industrial	Residential	Hotel	facilities)	attributable
	(in ’000	(in ’000	(in ’000	(in ’000	(in ’000	(in ’000	to the
	square feet)	square feet)	square feet)	square feet)	square feet)	square feet)	Group
Completed Properties Held for Rental1	485	1,172	64	—	—	1,721	1,027
Completed Hotel Properties	—	—	—	—	98	98	—
Properties Under Development2	74	—	—	385	366	825	196
Completed Properties Held for Sale	27	—	—	10	—	37	11
Total attributable GFA of major properties
of the Group	586	1,172	64	395	464	2,681	1,234

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 period under review, the Group’s rental operations recorded a turnover of HK$350.3 million (2015: HK$299.9 million), representing a 16.8% increase over the same period last year. The increase is primarily due to the contributions from newly acquired rental properties in London, as well as continued management of tenant mix and rental reversion at major investment properties during the period under review.

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 50:50 joint venture with Henderson Land Development Company Limited (“ Henderson Land ”) at 8 Observatory Road, Kowloon was completed in June 2015 and has started to contribute to the Group’s results in the current period. This is recognised as a component of “Share of profits of joint ventures” in the condensed consolidated income statement.

21

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) management discussion and analysis

ProPerty Investment (CoNtINuED)

rental Income (Continued)

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

	Six months ended 31 January	Six months ended 31 January		Period end
	2016	2015	%	occupancy
	HK$ million	HK$ million	Change	(%)
Hong Kong
Cheung Sha Wan Plaza
(including car-parking spaces)	150.1	146.2	2.7	92.5
Causeway Bay Plaza 2
(including car-parking spaces)	88.3	81.7	8.1	98.5
Lai Sun Commercial Centre
(including car-parking spaces)	29.6	27.7	6.9	98.3
Others	5.6	5.8	-3.4
Subtotal:	273.6	261.4	4.7
London, United Kingdom
36 Queen Street	13.4	11.2	19.6	100.0
107-112 Leadenhall Street	26.2	24.1	8.7	100.0
100 Leadenhall Street	36.5	3.2	1,040.6	100.0
106 Leadenhall Street	0.6	—	N/A	100.0
Subtotal:	76.7	38.5	99.2
Total:	350.3	299.9	16.8
Rental proceeds from joint venture project
Hong Kong
CCB Tower#(50% basis)	55.0	57.1	-3.7	97.4
8 Observatory Road##(50% basis)	8.6	—	N/A	68.4

# CCB Tower is a joint venture project with China Construction Bank Corporation (“ CCB ”) in which each of the Group and CCB has an effective 50% interest. For the six months ended 31 January 2016, the rental proceeds recorded by the joint venture is HK$110.0 million (2015: HK$114.1 million).

## 8 Observatory Road is a joint venture project with Henderson Land in which each of the Group and Henderson Land has an effective 50% interest. For the six months ended 31 January 2016, the rental proceeds recorded by the joint venture is HK$17.2 million.

22 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) management discussion and analysis

ProPerty Investment (CoNtINuED)

rental Income (Continued)

Breakdown of turnover by usage of our major rental properties is as follows:

	Six months ended 31 January 2016	Six months ended 31 January 2016	Six months ended 31 January 2016	Six months ended 31 January 2016	Six months ended 31 January 2015	Six months ended 31 January 2015	Six months ended 31 January 2015
				Attributable			Attributable
	Group	Turnover		GFA	Group	Turnover	GFA
	**interest(HK$ million) **			(square feet)	interest(HK$ million)		(square feet)
Hong Kong
Cheung Sha Wan Plaza	100%				100%
Commercial			81.8	233,807		78.7	233,807
Office			59.9	409,896		58.7	409,896
Car-parkingspaces			8.4	N/A		8.8	N/A
Subtotal:			150.1	643,703		146.2	643,703
Causeway Bay Plaza 2	100%				100%
Commercial			59.8	109,770		53.0	109,770
Office			26.1	96,268		26.4	96,268
Car-parkingspaces			2.4	N/A		2.3	N/A
Subtotal:			88.3	206,038		81.7	206,038
Lai Sun Commercial Centre	100%				100%
Commercial			17.3	95,063		16.8	95,063
Office			4.0	74,181		3.7	74,181
Car-parkingspaces			8.3	N/A		7.2	N/A
Subtotal:			29.6	169,244		27.7	169,244
Others			5.6	63,592*		5.8	59,302*
Subtotal:			273.6	1,082,577*		261.4	1,078,287*
London, United Kingdom
36 Queen Street	100%				100%
Office			13.4	60,816		11.2	60,816
107-112 Leadenhall Street	100%				100%
Office			26.2	146,606		24.1	146,606
100 Leadenhall Street	100%				100%
Office			36.5	177,700		3.2	177,700
106 Leadenhall Street	100%				100%
Office			0.6	12,687		—	—
Subtotal:			76.7	397,809		38.5	385,122
Total:			350.3	1,480,386*		299.9	1,463,409*
Joint Venture Project
Hong Kong
CCB Tower#(50% basis)	50%				50%
Office			55.0	114,555**		57.1	114,555**
8 Observatory Road##(50% basis)	50%				—
Office/Commercial			8.6	82,585***		—	—

* Excluding 10% interest in AIA Central.

** Referring to GFA attributable to the Group. The total GFA of CCB Tower is 229,110 square feet.

*** Referring to GFA attributable to the Group. The total GFA of 8 Observatory Road is 165,170 square feet.

# CCB Tower is a joint venture project with CCB in which each of the Group and CCB has an effective 50% interest. For the six months ended 31 January 2016, the rental proceeds recorded by the joint venture is HK$110.0 million (2015: HK$114.1 million).

## 8 Observatory Road is a joint venture project with Henderson Land in which each of the Group and Henderson Land has an effective 50% interest. For the six months ended 31 January 2016, the rental proceeds recorded by the joint venture is HK$17.2 million.

23

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) management discussion and analysis

ProPerty Investment (CoNtINuED)

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 643,703 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 206,038 square feet (excluding car-parking spaces). Key tenants include a HSBC 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 169,244 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 27-storey office tower is a landmark property in Central featuring underground access to the Central MTR station. The property has a total GFA of 229,110 square feet (excluding car-parking spaces). CCB Tower was completed in 2012 and added 114,555 square feet of attributable GFA to our portfolio. CCB Tower is now fully leased out with 18 floors of the office floors and 2 banking hall floors leased to CCB for its Hong Kong operations.

8 Observatory Road

The Group has a 50:50 interest with Henderson Land in this joint development project at Observatory Road, Kowloon. The property is a 19-storey commercial building with a total GFA of 165,170 square feet (excluding car-parking spaces). The property was completed in June 2015 and as at the date of this Report, approximately 78% of the floor area of the building has been leased or has offers to lease with another approximately 13% of floor area under negotiation.

AIA Central

The Group has 10% interest in AIA Central which is situated in the central business district of Hong Kong and commands spectacular views over Victoria Harbour, to Kowloon Peninsula to the north, and across Chater Garden and The Peak to the south. This 39-storey office tower provides prime office space with a total GFA of approximately 428,962 square feet (excluding car-parking spaces).

24 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) management discussion and analysis

ProPerty Investment (CoNtINuED)

review of major investment properties (Continued)

overseas Properties

36 Queen Street, London EC4, 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 60,816 square feet of office accommodation extending over basement, ground and six upper floors. The building is currently fully leased out.

107-112 Leadenhall Street, London EC3, United Kingdom

In April 2014, the Group acquired a property located at the core of the insurance district in the City of London, surrounded by 30 St Mary Axe (commonly known as the Gherkin), Lloyd’s of London and the Willis Building at 51 Lime Street. It is a freehold commercial property housing commercial, offices and retail space. The building comprises 146,606 square feet of office accommodation extending over basement, ground, mezzanine and seven upper floors. The building is currently fully leased out.

100 Leadenhall Street, London EC3, United Kingdom

Following the acquisition of 107-112 Leadenhall Street in April 2014, the Group announced the acquisition of 100 Leadenhall Street in November 2014 which was completed in January 2015. This property comprises a basement, a lower ground floor, ground floor and nine upper floors and provides 177,700 square feet of offices and ancillary accommodation. The property is currently fully let to ACE Global Markets Limited.

106 Leadenhall Street, London EC3, United Kingdom

In December 2015, the Group acquired the property located adjacent to 100 and 107 Leadenhall Street, namely 106 Leadenhall Street, which is a multi-tenanted asset with approximately 12,687 square feet of office space.

ProPerty develoPment

For the six months ended 31 January 2016, recognised turnover from sales of properties was HK$384.3 million (2015: HK$177.6 million), representing an increase of 116.4% over the same period last year. The significant increase was mainly contributed by the sale of residential units in 339 Tai Hang Road during the period under review.

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. All units have been sold other than two shops and seven car-parking spaces.

339 Tai Hang Road, Hong Kong

The Group wholly owns the development project located at 339 Tai Hang Road, Hong Kong. The development project is 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 about HK$670 million.

The property is now open for sale. For the six months ended 31 January 2016, we have completed the sale of 3 residential units with total saleable area of 8,511 square feet and total sales proceeds of HK$384.3 million recognised during the period under review and the average selling price based on saleable area is approximately HK$45,000 per square foot.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 25

(Continued) management discussion and analysis

ProPerty develoPment (CoNtINuED)

review of major projects under development

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 229,338 square feet with a total GFA of 572,894 square feet split into 458,418 square feet for residential use and 114,476 square feet for commercial 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 471 rooms and add 366,000 square feet of attributable rental space to the existing rental portfolio of the Group of approximately 1.8 million square feet. The total development cost is estimated to be approximately HK$4.4 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 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 in Ma Tau Kok, Kowloon, Hong Kong. The lot has an area of 12,599 square feet with a total GFA of 111,368 square feet split into 94,486 square feet for residential use and 16,882 square feet for commercial use. It is planned to provide about 209 residential units upon completion. The total development cost is estimated to be approximately HK$1 billion and completion is expected to be in the first quarter of 2018.

Sai Wan Ho Street project

The Group was successful in September 2015 in its bid for the development rights to the Sai Wan Ho Street project from the Urban Renewal Authority in Shau Kei Wan, Hong Kong. The project site covers an area of 7,642 square feet. Upon completion, it is planned to provide about 144 residential units with a total residential GFA of 61,139 square feet. The total development cost is estimated to be approximately HK$0.9 billion and completion is expected to be in the fourth quarter of 2019.

restaurant oPeratIon

For the six months ended 31 January 2016, the restaurant operations contributed HK$134.7 million to the Group’s turnover (2015: HK$102.3 million), representing an increase of approximately 31.7% from the same period last year. The contribution from the restaurants segment was boosted by contributions from the newly added restaurants, including Tang[2] in Cheung Sha Wan Plaza and Beefbar in Central, Hong Kong which opened in August 2015 and October 2015, respectively.

As at 31 January 2016, the restaurant operation includes the Group’s interests in 15 restaurants in Hong Kong and Mainland China, including the Michelin 3-star Italian restaurant 8[1/2] Otto e Mezzo BOMBANA Hong Kong, Michelin 2-star Japanese restaurant Wagyu Takumi, Michelin 1-star Italian restaurant CIAK-In The Kitchen at Landmark, Michelin 1-star Japanese restaurant Wagyu Kaiseki Den, 8[1/2] Otto e Mezzo BOMBANA Shanghai, Opera BOMBANA in Beijing, Gin Sai, Rozan, Kowloon Tang, Island Tang, Chiu Tang, China Tang Hong Kong, Tang[2] , Beefbar and Howard’s Gourmet (好酒好蔡).

26 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) management discussion and analysis

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 six months ended 31 January 2016, the hotel operation contributed HK$201.4 million to the Group’s turnover (2015: HK$186.5 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 98,376 square feet.

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 471 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 manages Lai Fung’s serviced apartments in Shanghai and Zhongshan under the “STARR” brand. STARR Resort Residence Zhongshan 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 Hotel Shanghai is a 17-storey hotel with 239 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.

Interest In assoCIates (esun)

As at 31 January 2016, the Group’s interest in eSun Holdings Limited (“ eSun ”) is 41.92%.

Film production and distribution, media and entertainment divisions and cinema operations performed steady across the board. Lai Fung’s results were encouraging given the challenging operating environment in the property sector in Mainland China. Increased profit contribution from the recognition of the sale of properties and no fair value loss arising on the cross currency swap which was entered into in relation to Lai Fung’s RMB1.8 billion senior notes issued in 2013 being recorded in the income statement in the period under review led to an increase in share of profits of associates amounting to HK$13.6 million (2015: losses of HK$9.3 million).

Interests In JoInt ventures

During the period under review, contribution from joint ventures increased to HK$739.9 million (2015: HK$103.3 million), representing an increase of 616.3%. This is primarily due to stronger revaluation gains of the newly completed 8 Observatory Road project and CCB Tower.

	Six months ended	Six months ended
	31 January
	2016	2015
	(HK$ million)	(HK$ million)
Revaluation gains	699.6	64.3
Operating profits	40.3	39.0
Contribution from joint ventures	739.9	103.3

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 27

(Continued) management discussion and analysis

lIQuIdIty and fInanCIal resourCes

As at 31 January 2016, cash and bank balances and undrawn facilities held by the Group amounted to HK$1,748.6 million and HK$4,993.5 million, respectively.

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

As at 31 January 2016, the Group had bank borrowings of approximately HK$5,136.6 million and guaranteed notes of approximately HK$2,715.2 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 25.8%. The Group’s gearing excluding the London portfolio all of which had a positive carry net of financing costs was approximately 19.3%. As at 31 January 2016, the maturity profile of the bank borrowings of HK$5,136.6 million was spread over a period of less than 5 years with HK$1,372.1 million repayable within 1 year, HK$74.4 million repayable in the second year and HK$3,690.1 million repayable in the third to fifth years. 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 January 2016, certain investment properties with carrying amounts of approximately HK$14,978.5 million, certain properties, plant and equipment with carrying amounts of approximately HK$2,078.9 million, certain properties under development for sale of approximately HK$581.3 million and certain bank balances and time deposits with banks of approximately HK$161.8 million were pledged to banks to secure banking facilities granted to the Group. In addition, certain shares in subsidiaries held by the Group were also pledged to banks to secure banking facilities granted to the Group. Certain shares in joint ventures held by the Group were pledged to banks to secure banking facilities granted to joint ventures of the Group. 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. Majority of 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.

ContIngent lIaBIlItIes

Details of contingent liabilities of the Group are set out in note 12 to the condensed consolidated interim financial statements.

28 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Particulars of major Properties

ComPleted ProPertIes held for rental

Group Property Name Location Interest Tenure	Approximate Attributable Gross Floor Area(square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Office Industrial facilities) to the Group
Hong Kong Properties Cheung Sha Wan Plaza 833 Cheung Sha Wan Road, 100% The property is held 233,807 409,896 — 643,703 355 Cheung Sha Wan, Kowloon, for a term expiring Hong Kong on 30 June 2047 (New Kowloon Inland Lot No. 5955) Causeway Bay Plaza 2 463-483 Lockhart Road, 100% The property is held 109,770 96,268 — 206,038 57 Causeway Bay, Hong Kong for a term of 99 years (Section J and commencing on the Remaining Portions 15 April 1929 and of Sections D,E,G,H,K,L,M renewable for and O, Subsection 4 of a further term Section H and of 99 years the Remaining Portion of Inland Lot No. 2833) Lai Sun Commercial Centre 680 Cheung Sha Wan Road, 100% The property is held 95,063 74,181 — 169,244 538 Cheung Sha Wan, for a term of which Kowloon, Hong Kong expired on 27 June 1997 (New Kowloon Inland Lot and has been extended No. 5984) upon expiry until 30 June 2047 CCB Tower 3 Connaught Road Central, 50% The property is held — 114,555 — 114,555 19 Hong Kong for a term commencing (Inland Lot No. 8736) from 28 June 1989 and expiring on 30 June 2047 8 Observatory Road 2,4,6,8,10 and 50% The property is held 46,064 36,522 — 82,586 30 12 Observatory Road, for a term of 50 years Tsim Sha Tsui, commencing on Kowloon, Hong Kong 10 January 2014 (Inland Lot No. 11231) Wyler Centre, Phase II 192-200 Tai Lin Pai Road, 100% The property is held — — 47,932 47,932 3 (20/F and 27/F and Kwai Chung, New Territories, for a term of which expired car-parking spaces Hong Kong on 27 June 1997 and nos. 17, 18 and 59 has been extended on 2/F) upon expiry until 30 June 2047 AIA Central 1 Connaught Road Central, 10% The property is held — 42,896 — 42,896 6 Hong Kong (Marine Lot for a term of 999 years No. 275, Section A and commencing from the Remaining Portion 9 September 1895 of Marine Lot No. 278) (for Marine Lot No. 275) and 999 years commencing from 12 October 1896 (for Marine Lot no. 278) Metropolitan Factory Metropolitan Factory and 100% The property is held — — 11,370 11,370 4 and Warehouse Building Warehouse Building, for a term of which (Units A and B on 10/F 30-32 Chai Wan Kok Street, expired on 27 June 1997 and car-parking space Tsuen Wan, New Territories, and has been extended nos. 1, 2, 13 and 14 Hong Kong upon expiry until on G/F) 30 June 2047 Luen Fa Loong Luen Fat Loong 100% The property is held — — 4,290 4,290 — Factory Building Factory Building, for a term of 75 years (4/F) 19 Cheung Lee Street, commencing on Chai Wan, Hong Kong 4 November 1963 and renewable for a further term of 75years
Subtotal of Hong Kong properties held for rental: 484,704 774,318 63,592 1,322,614 1,012

29

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

(Continued) Particulars of major Properties

ComPleted ProPertIes held for rental (Continued)

Group Property Name Location Interest Tenure	Approximate Attributable Gross Floor Area (square feet) Total No. of (excluding car-parking carpark & spaces Commercial/ ancillary attributable Retail Office Industrial facilities) to the Group
Overseas Properties 107-112 Leadenhall Street 107-112 Leadenhall Street, 100% The property is held freehold — 146,606 — 146,606 — London_(Note 1) London EC3, United Kingdom 100 Leadenhall Street 100 Leadenhall Street, 100% The property is held freehold — 177,700 — 177,700 15 London(Note 1) London EC3, United Kingdom 36 Queen Street 36 Queen Street, 100% The property is held freehold — 60,816 — 60,816 — London(Note 1) London, EC4, United Kingdom 106 Leadenhall Street 106 Leadenhall Street, 100% The property is held freehold — 12,687 — 12,687 — London(Note 2)_ London EC3, United Kingdom
Subtotal of overseasproperties held for rental: — 397,809 — 397,809 15
Total of completedproperties held for rental: 484,704 1,172,127 63,592 1,720,423 1,027

Note 1: Gross internal area Note 2: Net internal area

ComPleted hotel ProPerty

ComPleted hotel ProPerty	ComPleted hotel ProPerty
Approximate No. of Attributable car-parking Gross Floor Area spaces Group (square feet) attributable Hotel Name Location Interest Tenure Hotel to the Group
Caravelle Hotel 19 Lam Son Square, 26.01% The property is held District 1, under a land use Ho Chi Minh City, right due to expire Vietnam on 8 October 2040	98,376 —

30 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

(Continued) Particulars of major Properties

ProPertIes under develoPment

					Approximate Attributable Gross Floor Area	Approximate Attributable Gross Floor Area	Approximate Attributable Gross Floor Area	Approximate Attributable Gross Floor Area
						(square feet)
								Total	No. of
			Site Area					(excluding car-parking
			(approximate	Expected				carpark &	spaces
		Group	square feet)	completion	Commercial/			ancillary attributable
Location	Stage of construction interest		(Note)	date	Retail	Hotel	Residential	facilities) to	the Group
Area 68A2,	Foundation works	50%	229,338	Q4 2017	57,238	—	229,209	286,447	150
Tseung Kwan O,	in progress
New Territories,
Hong Kong
The Hong Kong	Foundation works	100%	183,460	Q4 2017	—	366,000	—	366,000	16
Ocean Park	in progress
Marriott Hotel,
Hong Kong
20-32 San Shan Road	Superstructure works	100%	12,599	Q1 2018	16,882	—	94,486	111,368	22
and 93 Pau Chung Street,	in progress
Ma Tau Kok, Kowloon,
Hong Kong
Sai Wan Ho Street,	Ground investigation	100%	7,642	Q4 2019	—	—	61,139	61,139	8
Shau Kei Wan,	works in progress
HongKong
		Total ofproperties under		development:	74,120	366,000	384,834	824,954	196

Note: On project basis

ComPleted ProPertIes held for sale

Approximate Attributable Gross Floor Area (square feet)

					Total	No. of
					(excluding	car-parking
					carpark &	spaces
		Group	Commercial/		ancillary	attributable
Property Name	Location	interest	Retail	Residential	facilities)	to the Group
Ocean One	6 Shung Shun Street, Yau Tong,	100%	27,306	—	27,306	7
	Kowloon, Hong Kong
339 Tai Hang Road	335-339 Tai Hang Road, Hong Kong	100%	—	9,571	9,571	4
	Total of completed	properties held for sale:	27,306	9,571	36,877	11

31

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

disclosure Pursuant to Paragraph 13.21 of Chapter 13 of the listing rules

In August 2014, the Group entered into a facility agreement related to a term loan facility of GBP48,480,000 to be made available to a wholly-owned subsidiary of the Company, as borrower, for a period of five years up to 6 August 2019. Pursuant to the facility agreement, the Company has undertaken to procure that Dr. Lam Kin Ngok, Peter and his family will, at all times during the relevant facility period, remain as the single largest shareholder of the Company (directly or indirectly) and will maintain control over the management of the Company.

At 31 January 2016, the outstanding loan balance of the above facility amounted to approximately HK$507,700,000.

32

LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

disclosure Pursuant to Paragraph 13.22 of Chapter 13 of the listing rules

financial assistance and guarantees to affiliated companies

As at 31 January 2016, the aggregate amount of financial assistance and guarantee given for facilities granted to affiliated companies has exceeded the assets ratio of 8% under the Listing Rules.

In compliance with paragraph 13.22 of Chapter 13 of the Listing Rules, the pro forma combined statement of financial position of the affiliated companies as at 31 January 2016 is disclosed as follows:

	HK$’000
Property, plant and equipment	2,847,981
Properties under development	1,468,837
Investment property under construction	3,567,323
Investment properties	19,550,712
Film rights	23,630
Film products	80,859
Music catalogs	12,537
Goodwill	137,521
Other intangible assets	34,914
Interests in associates	45,749
Interests in joint ventures	1,151,637
Available-for-sale investments	136,564
Deposits, prepayments and other receivables	356,819
Deferred tax assets	9,301
Deferred rental benefits	88,099
Pledged bank balances	267,673
Amounts due from shareholders	10,612
Net current assets	2,218,596
Total assets less current liabilities	32,009,304
NON-CURRENT LIABILITIES
Long term deposits received	165,739
Long term borrowings	2,975,043
Convertible notes	158,714
Fixed rate senior notes	2,105,311
Guaranteed notes	754,645
Derivative financial instruments	253,269
Deferred tax liabilities	2,750,227
Deferred income	42,872
Amounts due to shareholders	4,967,358
	14,173,178
	17,836,186
CAPITAL AND RESERVES
Issued capital	643,917
Share premium account	4,230,797
Contributed surplus	891,289
Investment revaluation reserve	17,778
Share option reserve	15,293
Hedging reserve	(2,071)
Exchange reserve	(426,017)
Statutory reserve	66,937
Other reserve	653,220
Accumulatedprofits	4,117,839
	10,208,982
Non-controllinginterests	7,627,204
	17,836,186

33

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

Corporate governance and other Information

CorPorate governanCe

The Company has complied with all the code provisions set out in the Corporate Governance Code (“ CG Code ”) contained in Appendix 14 to the Rules Governing the Listing of Securities (“ Listing Rules ”) on The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) throughout the six months ended 31 January 2016 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 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 reelection. 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 Dr. Lam Kin Ngok, Peter, the Chairman, he was not present at the AGM held on 11 December 2015. 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.

Board

The Board oversees the overall management of the Company’s business and affairs. The Board’s primary duty is to ensure the viability of the Company and to ascertain that it is managed in the best interests of its Shareholders as a whole while taking into account the interests of other stakeholders.

The Board has delegated the day-to-day management of the Company’s business to the management and the Executive Committee and focuses its attention on matters affecting the Company’s long-term objectives and plans for achieving these objectives, the overall business and commercial strategy of the Company and its subsidiaries (“ Group ”) as well as overall policies and guidelines.

The Board currently comprises nine members, of whom four are EDs, two are NEDs and three are INEDs. The current composition of the Board is characterised by diversity, whether considered in terms of gender, nationality, professional background and skills.

34 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

CorPorate governanCe (CoNtINuED)

Board (Continued)

The Board meets at least four times a year with meeting dates scheduled prior to the beginning of the year. Additional board meetings will be held when warranted. Directors also participate in the consideration and approval of matters of the Company by way of written resolutions circulated to Directors together with supporting explanatory materials as and when required.

All Directors have been provided, on a monthly basis, with the Group’s management information updates, giving a balanced and understandable assessment of the Group’s performance, position, recent developments and prospects in sufficient detail to keep them abreast of the Group’s affairs and facilitate them to discharge their duties under the relevant requirements of the Listing Rules.

Chairman and Chief executive officer

During the six months ended 31 January 2016 and up to the date of this Report, Dr. Lam Kin Ngok, Peter (an ED) was the Chairman of the Company while Mr. Chew Fook Aun (an ED) and Mr. Lau Shu Yan, Julius (an ED) was the Deputy Chairman and Chief Executive Officer of the Company, respectively. The segregation ensures a clear distinction between the Chairman’s responsibilities to manage the Board and the Chief Executive Officer’s responsibilities to manage the Company’s businesses. The division of responsibilities between the Chairman and the Chief Executive Officer is defined.

seCurItIes transaCtIons By dIreCtors and desIgnated emPloyees

The Company has adopted a Code of Practice for Securities Transactions by Directors and Designated Employees (“ Securities Code ”) on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 to the Listing Rules. The Company has made specific enquiry of all Directors and they have confirmed in writing their compliance with the required standard set out in the Securities Code during the six months ended 31 January 2016.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 35

Corporate governance and other Information (Continued)

dIreCtors’ Interests

The following Directors and the chief executive of the Company who held office on 31 January 2016 and their respective close associates (as defined in the Listing Rules) were interested or were deemed to be interested in the following interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of the Securities and Futures Ordinance, Chapter 571 of the Laws of Hong Kong (“ SFO ”)) on that date (a) as required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions, if any, which they were taken or deemed to have under such provisions of the SFO); or (b) as recorded in the register required to be kept by the Company pursuant to section 352 of the SFO (“ Register of Directors and Chief Executive ”); or (c) as otherwise notified to the Company and the Stock Exchange pursuant to the Securities Code; or (d) as known by the Directors:

(1) the Company

Long positions in the ordinary shares of the Company (“Shares”) and the underlying Shares

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	Shares
Lam Kin Ngok, Peter	Beneficial	21,461,617	Nil	20,472,966,134	20,062,893	20,514,490,644	68.02%
	owner/	(Note 1)		(Note 1)	(Note 3)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	Nil	200,628,932	200,628,932	0.67%
	owner				(Note 3)
Lau Shu Yan, Julius	Beneficial	13,174,999	Nil	Nil	100,314,466	113,489,465	0.38%
	owner	(Note 1)			(Note 3)
Lam Hau Yin, Lester	Beneficial	Nil	Nil	Nil	200,628,932	200,628,932	0.67%
	owner				(Note 3)
U Po Chu_(Note 2)_	Beneficial	1,345,974	Nil	Nil	Nil	1,345,974	0.01%
	Owner	(Note 1)

Notes:

• (1) These Shares include the Rights Shares provisionally allotted on 18 January 2016 pursuant to the 1-for-2 rights issue of the Company (“ Rights Issue ”).

Lai Sun Garment (International) Limited (“ LSG ”) and two of its wholly-owned subsidiaries, namely Zimba International Limited (“ Zimba International ”) and Joy Mind Limited (“ Joy Mind ”), beneficially owned 20,472,966,134 Shares which include 10,425,699,353 shares*, the committed 5,212,849,676 Rights Shares and the 4,834,417,105 Rights Shares underwritten by LSG, representing approximately 67.88% of the issued share capital of the Company as enlarged by the Rights Issue. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 20,472,966,134 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 42.33% in the issued share capital of LSG. LSG is approximately 12.63% owned by Dr. Lam Kin Ngok, Peter and is approximately 29.70% owned by Wisdoman Limited which in turn is 100% beneficially owned by Dr. Lam Kin Ngok, Peter.

• These 10,425,699,353 Shares held by LSG, Zimba International and Joy Mind, respectively were pledged as security by LSG pursuant to its 7.70% secured guaranteed notes due 2018 under a Share Charge dated 24 July 2014.

36 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

dIreCtors’ Interests (CoNtINuED)

• (1) the Company (Continued)

• Notes: (Continued)

• (2) Madam U Po Chu is the widow of the late Mr. Lim Por Yen whose estate includes an interest of 197,859,550 Shares, representing approximately 0.66% of the issued share capital of the Company as enlarged by the Rights Issue.

• (3) A share option scheme was adopted by the Company on 22 December 2006 and commenced with effect from 29 December 2006 (“ Old Scheme ”). A share option was granted to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester under the Old Scheme, particulars of which are set out below, and remained exercisable though the Old Scheme was terminated on 23 December 2015 when a new share option scheme became effective after adoption by the shareholders of the Company at the annual general meeting held on 11 December 2015:

		Number of
		underlying
		Shares
		comprised
Registered Name	Date ofgrant	in the option	Optionperiod	Subscriptionprice
Lam Kin Ngok, Peter	18/01/2013	20,062,893	18/01/2013-17/01/2023	HK$0.335 per Share
Chew Fook Aun	05/06/2012	200,628,932	05/06/2012-04/06/2022	HK$0.112 per Share
Lau Shu Yan, Julius	18/01/2013	100,314,466	18/01/2013-17/01/2023	HK$0.335 per Share
Lam Hau Yin, Lester	18/01/2013	200,628,932	18/01/2013-17/01/2023	HK$0.335 per Share

(2) associated Corporations

• (i) lai sun garment (International) limited (“lsg”) — the ultimate holding company of the Company

Long positions in the ordinary shares and the underlying shares in LSG

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	237,464,979	Nil	562,590,430	1,876,211	801,931,620	42.33%
	owner/			(Note 1)	(Note 3)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	7,292,000	8,012,111	15,304,111	0.81%
	owner			(Note 2)	(Note 3)
Lam Hau Yin, Lester	Beneficial	60,623,968	Nil	Nil	18,762,111	79,386,079	4.19%
	owner				(Note 3)
Lam Kin Ming	Beneficial	5,008,263	Nil	Nil	Nil	5,008,263	0.26%
	owner
U Po Chu	Beneficial	4,127,625	Nil	Nil	Nil	4,127,625	0.22%
	owner

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 37

Corporate governance and other Information (Continued)

dIreCtors’ Interests (CoNtINuED)

• (2) associated Corporations (Continued)

• (i) lai sun garment (International) limited (“lsg”) — the ultimate holding company of the Company (Continued)

Notes:

• (1) Dr. Lam Kin Ngok, Peter was deemed to be interested in 562,590,430 shares (representing approximately 29.70% of LSG’s issued share capital) by virtue of his 100% interests in the issued share capital of Wisdoman Limited.

• (2) These shares were held by The Orchid Growers Association Limited, a company wholly-owned by Mr. Chew Fook Aun.

• (3) A share option scheme was adopted by LSG on 22 December 2006 and commenced with effect from 29 December 2006 (“ Old Scheme ”). A share option was granted by LSG to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester under the Old Scheme and remained exercisable though the Old Scheme was terminated on 23 December 2015 when a new share option scheme became effective after adoption by the shareholders of LSG at the annual general meeting held on 11 December 2015. On 7 February 2014, the subscription price and the number of underlying shares comprised in the option have been adjusted following the completion of rights issue of LSG (“ Rights Issue ”), particulars of which are set out below:

		Number of	Number of
		underlying	underlying
		shares	shares
		comprised in	comprised in
		the option	the option		Subscription	Subscription
		before the	after the		price before	price after
Registered Name	Date ofgrant	Rights Issue	Rights Issue	Option period	the Rights Issue	the Rights Issue
Lam Kin Ngok, Peter	18/01/2013	1,617,423	1,876,211	18/01/2013-17/01/2023	HK$1.41 per share	HK$1.21 per share
Chew Fook Aun	05/06/2012	16,174,234	18,762,111	05/06/2012-04/06/2022	HK$0.582 per share	HK$0.501 per share
Lam Hau Yin, Lester	18/01/2013	16,174,234	18,762,111	18/01/2013-17/01/2023	HK$1.41 per share	HK$1.21 per share

• (ii) esun holdings limited (“esun”) — an associate of the Company

Long positions in the ordinary shares and the underlying shares in eSun

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	2,794,443	Nil	521,204,186	1,243,212	525,241,841	42.25%
	owner/			(Note 1)	(Note 2)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	Nil	6,216,060	6,216,060	0.50%
	owner				(Note 2)
Lam Hau Yin, Lester	Beneficial	2,794,443	Nil	Nil	12,432,121	15,226,564	1.22%
	owner				(Note 2)

38 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

dIreCtors’ Interests (CoNtINuED)

• (2) associated Corporations (Continued)

• (ii) esun holdings limited (“esun”) — an associate of the Company (Continued)

Notes:

• (1) LSG was interested in 20,472,966,134 Shares in the Company, representing approximately 67.88% of the issued share capital of the Company. Transtrend Holdings Limited, a wholly-owned subsidiary of the Company, was interested in 521,204,186 shares in eSun, representing approximately 41.92% of the issued share capital of eSun. As such, Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 521,204,186 shares in eSun (representing approximately 41.92% of eSun’s issued share capital) by virtue of, in aggregate, his personal and deemed interests of approximately 42.33% and 68.02% in the issued share capital of LSG and the Company, respectively.

• (2) A share option scheme was adopted by eSun on 23 December 2005 and commenced with effect from 5 January 2006 (“ Old Scheme ”). A share option was granted to each of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun and Mr. Lam Hau Yin, Lester under the Old Scheme, particulars of which are set out below, and remained exercisable though the Old Scheme was terminated on 23 December 2015 when a new share option scheme became effective after adoption by the shareholders of eSun at the annual general meeting held on 11 December 2015:

		Number of
		underlying
		shares
		comprised in
Registered Name	Date ofgrant	the option	Optionperiod	Subscriptionprice
Lam Kin Ngok, Peter	18/01/2013	1,243,212	18/01/2013-17/01/2023	HK$1.612 per share
Chew Fook Aun	05/06/2012	6,216,060	05/06/2012-04/06/2022	HK$0.92 per share
Lam Hau Yin, Lester	18/01/2013	12,432,121	18/01/2013-17/01/2023	HK$1.612 per share

(iii) lai fung holdings limited (“lai fung”) — a subsidiary of esun

Long positions in the ordinary shares and the underlying shares in Lai Fung

							Approximate
							% of total
							interests to
		Personal	Family	Corporate	Other	Total	total issued
Name of Director	Capacity	interests	interests	interests	interests	interests	shares
Lam Kin Ngok, Peter	Beneficial	Nil	Nil	8,274,270,422	16,095,912	8,290,366,334	51.18%
	Owner/			(Note 1)	(Note 2)
	Owner of
	controlled
	corporations
Chew Fook Aun	Beneficial	Nil	Nil	Nil	80,479,564	80,479,564	0.50%
	owner				(Note 2)
Lau Shu Yan, Julius	Beneficial	417,658	Nil	Nil	48,287,738	48,705,396	0.30%
	owner				(Note 2)
Lam Hau Yin, Lester	Beneficial	Nil	Nil	Nil	160,959,129	160,959,129	0.99%
	owner				(Note 2)

39

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED

Corporate governance and other Information (Continued)

dIreCtors’ Interests (CoNtINuED)

• (2) associated Corporations (Continued)

• (iii) lai fung holdings limited (“lai fung”) — a subsidiary of esun (Continued) Notes:

  • (1) eSun was interested in 8,274,270,422 shares in Lai Fung, representing approximately 51.08% of the issued share capital of Lai Fung. As such, Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 8,274,270,422 issued shares in Lai Fung by virtue of, in aggregate, his personal and deemed shareholding interests of approximately 42.25% in the issued share capital of eSun.

  • (2) A share option scheme was adopted by Lai Fung on 21 August 2003 and commenced with effect from 28 August 2003 (“ Old Scheme ”). A new share option scheme was adopted by Lai Fung on 18 December 2012 and commenced with effect from 20 December 2012 (“ New Scheme ”). A share option was granted to Mr. Chew Fook Aun under the Old Scheme and remains exercisable though the Old Scheme was terminated on 20 December 2012 when the New Scheme became effective. A share option was also granted to each of Dr. Lam Kin Ngok, Peter, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester under the New Scheme, particulars of the share options granted in the above schemes are set out below:

		Number of
		underlying
		shares
		comprised in
Registered Name	Date ofgrant	the option	Optionperiod	Subscriptionprice
Lam Kin Ngok, Peter	18/01/2013	16,095,912	18/01/2013-17/01/2023	HK$0.228 per share
Chew Fook Aun	12/06/2012	80,479,564	12/06/2012-11/06/2020	HK$0.133 per share
Lau Shu Yan, Julius	18/01/2013	48,287,738	18/01/2013-17/01/2023	HK$0.228 per share
Lam Hau Yin, Lester	18/01/2013	160,959,129	18/01/2013-17/01/2023	HK$0.228 per share

• (iv) media asia group holdings limited (“maghl”) — a subsidiary of esun

Long positions in the shares and underlying shares in MAGHL

				Total
				number of	Approximate
		Number of	Number of	issued	% of total
		ordinary	underlying	shares and	interests to
		shares	shares	underlying	total issued
Name of Director	Capacity	held	held	shares	shares
Lam Kin Ngok, Peter	Owner of	1,264,012,837	218,340,611	1,482,353,448	69.40%
	controlled	(Note 1)	(Note 2)
	corporations

Notes:

• (1) As at 31 January 2016, these interests in MAGHL represented the shares beneficially owned by Perfect Sky Holdings Limited (“ Perfect Sky ”), a wholly-owned subsidiary of eSun, representing approximately 59.18% of the issued share capital of MAGHL. eSun is owned as to approximately 41.92% by the Company which in turn is owned as to approximately 67.88% by LSG. As LSG is approximately 12.63% owned by Dr. Lam Kin Ngok, Peter and approximately 29.70% owned by Wisdoman Limited which is turn 100% beneficially owned by Dr. Lam Kin Ngok, Peter, he was deemed to be interested in the said 1,264,012,837 shares in MAGHL.

• (2) By virtue of Dr. Lam Kin Ngok, Peter’s interests through the controlled corporations described in Note (1) above, he was also deemed to be interested in the 218,340,611 underlying shares of MAGHL comprised in the convertible notes issued to Perfect Sky by MAGHL pursuant to a subscription agreement dated 17 April 2015.

Save as disclosed above, as at 31 January 2016, none of the Directors and the chief executive of the Company and their respective close associates was interested or was deemed to be interested in the long and short positions in the shares, underlying shares and/or debentures of the Company or any of its associated corporations, which were required to be notified to the Company and the Stock Exchange, or recorded in the Register of Directors and Chief Executive as aforesaid, notified under the Securities Code or otherwise known by the Directors.

40 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

suBstantIal shareholders and other Persons’ Interests

As at 31 January 2016, so far as was known by or otherwise notified by any Director or the chief executive of the Company, the particulars of the corporations or individuals (one being a Director), who had 5% or more interests in the following long positions in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept under section 336 of the SFO (“ Register of Shareholders ”) or were entitled to exercise, or control the exercise of, 10% or more of the voting power at any general meeting of the Company (“ Voting Entitlements ”) (i.e. within the meaning of Substantial Shareholders of the Listing Rules) were as follows:

Long positions in the Shares and the underlying Shares of the Company

			Approximate%	Approximate%
		Nature of	Number of	of Shares
Name	Capacity	interests	Shares	in issue
Substantial
Shareholders
Lai Sun Garment	Beneficial owner	Corporate	20,472,966,134	67.88%
(International) Limited
(Note)
Lam Kin Ngok, Peter	Beneficial owner/	Personal and	20,514,490,644	68.02%
	Owner of	corporate
	controlled
	corporation

Note:

LSG and two of its wholly-owned subsidiaries, namely Zimba International Limited and Joy Mind Limited, beneficially owned 20,472,966,134 Shares, representing approximately 67.88% of the issued share capital of the Company. Dr. Lam Kin Ngok, Peter was deemed to be interested in the same 20,472,966,134 Shares by virtue of, in aggregate, his personal and deemed interests of approximately 42.33% in the issued share capital of LSG. Dr. Lam Kin Ngok, Peter is an ED of LSG.

Save as disclosed above, the Directors are not aware of any other corporation or individual (other than a Director or the chief executive of the Company) who, as at 31 January 2016, had the Voting Entitlements or 5% or more interests or short positions in the Shares or underlying Shares of the Company recorded in the Register of Shareholders.

share oPtIon sCheme

At the annual general meeting of the Company held on 11 December 2015, the shareholders of the Company approved the adoption of a new share option scheme (“ New Scheme ”). The share option scheme adopted by the Company on 22 December 2006 (“ Old Scheme ”) terminated when the New Scheme became effective on 23 December 2015 (“ Effective Date ”). No more options will be granted under the Old Scheme but the subsisting options granted prior to its termination will continue to be valid and exercisable in accordance with the terms of the Old Scheme.

The purpose of the New Scheme is designed to recognize the contribution or future contribution of the Eligible Participants (as defined in the New Scheme) to the Group by granting share options to them as incentives or rewards and to attract and motivate high-caliber Eligible Participants in line with the performance goals of the Relevant Companies (as defined in the New Scheme). Eligible Participants include but are not limited to the directors and any employees of the Group. Unless otherwise cancelled or amended, the New Scheme will remain in force for 10 years from the Effective Date.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 41

Corporate governance and other Information (Continued)

share oPtIon sCheme (CoNtINuED)

During the six-month period ended 31 January 2016, there were 15,000,000 options granted to eligible employees under the New Scheme. Apart from that, no options were granted, exercised, cancelled or lapsed in accordance with the terms of the schemes during the six-month period ended 31 January 2016. Particulars of the outstanding options at the beginning and at the end of the financial period are as follows:

Name and category of participant	Number of share options Exercisable Exercise price Outstanding at Outstanding at Date of grant Period of of share 01/08/2015 31/01/2016 of options the Options options HK$ per share
Directors Lam Kin Ngok, Peter Chew Fook Aun Lau Shu Yan, Julius Lam Hau Yin, Lester Other employees, in aggregate Other employees, in aggregate Other employees, in aggregate Other employees, in aggregate	20,062,893 20,062,893 18/01/2013 18/01/2013 - 0.335 (Note) 17/01/2023 (Note) 200,628,932 200,628,932 05/06/2012 05/06/2012 - 0.112 (Note) 04/06/2022 (Note) 100,314,466 100,314,466 18/01/2013 18/01/2013 - 0.335 (Note) 17/01/2023 (Note) 200,628,932 200,628,932 18/01/2013 18/01/2013 - 0.335 (Note) 17/01/2023 (Note) 177,188,680 177,188,680 18/01/2013 18/01/2013 - 0.335 (Note) 17/01/2023 (Note) 4,000,000 4,000,000 26/07/2013 26/07/2013 - 0.235 (Note) 25/07/2023 (Note) 11,000,000 11,000,000 21/01/2015 21/01/2015 - 0.174 (Note) 20/01/2025 (Note) — 15,000,000 22/01/2016 22/01/2016 - 0.094 21/01/2026
Total:	713,823,903 728,823,903

42 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

share oPtIon sCheme (CoNtINuED)

Note:

On 17 February 2016, the exercise price of and the number of shares entitled to be subscribed for under the outstanding share options granted under the Old Scheme have been adjusted in the following manner following the completion of the Rights Issue:

			Adjusted
	Number of		number of
	underlying		underlying	Adjusted
	shares		shares	exercise price
	comprised in	Exercise price	comprised in of share options
Name and	share options	per share	share options	per share
Category of	before the	prior to the	after the	after the
participant	Rights Issue	Rights Issue	Rights Issue	Rights Issue
		HK$		HK$
Directors
Lam Kin Ngok, Peter	20,062,893	0.335	20,865,408	0.322
Chew Fook Aun	200,628,932	0.112	208,654,089	0.107
Lau Shu Yan, Julius	100,314,466	0.335	104,327,044	0.322
Lam Hau Yin, Lester	200,628,932	0.335	208,654,089	0.322
Other employees, in aggregate	177,188,680	0.335	184,276,227	0.322
Other employees, in aggregate	4,000,000	0.235	4,160,000	0.225
Other employees, in aggregate	11,000,000	0.174	11,440,000	0.167
Total	713,823,903		742,376,857

The above adjustments satisfy the requirements of the Main Board Listing Rules 17.03(13) and the supplementary guidance issued by the Stock Exchange on 5 September 2005.

No adjustment was required to be made to the share options granted under the New Scheme.

PurChase, sale or redemPtIon of lIsted seCurItIes

During the six months ended 31 January 2016, 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.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 43

Corporate governance and other Information (Continued)

uPdate of dIreCtors’ InformatIon

Pursuant to Rule 13.51B(1) of the Listing Rules, changes in Directors’ and Chief Executive Officer’s information since the disclosure made in the Company’s annual report 2014-2015 are set out as follows:

• (1) The Group usually makes annual adjustment to basic salaries and pays discretionary bonuses in January. The basic salaries of Dr. Lam Kin Ngok, Peter, Mr. Chew Fook Aun, Mr. Lau Shu Yan, Julius and Mr. Lam Hau Yin, Lester were adjusted upward with effect from 1 January 2016 (within the range from 3.0% to 4.5%). Directors’ remuneration for the six months ended 31 January 2016 and 2015 are as follows:

		Salaries,
		allowances,	Pension
		and benefits	scheme	Total
	Fees	in kind	contributions	remuneration
	HK$’000	HK$’000	HK$’000	HK$’000
For the six months ended 31 January 2016
EDs:
Lam Kin Ngok, Peter_(Chairman)_	—	9,541	9	9,550
Chew Fook Aun_(Deputy Chairman)_	—	4,305	9	4,314
Lau Shu Yan, Julius_(Chief Executive Officer)_	—	2,415	104	2,519
Lam Hau Yin, Lester	—	966	9	975
	—	17,227	131	17,358
NEDs:
Lam Kin Ming	125	—	—	125
U Po Chu	125	—	—	125
	250	—	—	250
INEDs:
Ip Shu Kwan, Stephen	125	—	—	125
Lam Bing Kwan	125	—	—	125
Leung Shu Yin, William	125	—	—	125
	375	—	—	375
	625	17,227	131	17,983

44 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016

Corporate governance and other Information (Continued)

uPdate of dIreCtors’ InformatIon (CoNtINuED)

(1) (Continued)

(Continued)
		Salaries,
		allowances,	Pension
		and benefits	scheme	Total
	Fees	in kind	contributions	remuneration
	HK$’000	HK$’000	HK$’000	HK$’000
For the six months ended 31 January 2015
EDs:
Lam Kin Ngok, Peter_(Chairman)_	—	8,176	9	8,185
Chew Fook Aun_(Deputy Chairman)_	—	4,666	9	4,675
Lau Shu Yan, Julius_(Chief Executive Officer)_	—	2,577	103	2,680
Lam Hau Yin, Lester	—	925	9	934
	—	16,344	130	16,474
NEDs:
Lam Kin Ming	125	—	—	125
U Po Chu	125	—	—	125
	250	—	—	250
INEDs:
Ip Shu Kwan, Stephen	125	—	—	125
Lam Bing Kwan	125	—	—	125
Leung Shu Yin, William	125	—	—	125
	375	—	—	375
	625	16,344	130	17,099

• (2) Dr. Lam Kin Ngok, Peter was re-appointed the Chairman of Hong Kong Tourism Board for 3 years from 1 April 2016 to 31 March 2019.

(3) Mr. Chew Fook Aun’s appointment as a council member of the Financial Reporting Council ended on 30 November 2015.

emPloyees and remuneratIon PolICIes

As at 31 January 2016, the Group employed a total of approximately 1,400 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.

Interim Report 2015-2016 • LAI SUN DEVELOPMENT COMPANY LIMITED 45

Corporate governance and other Information (Continued)

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 six months ended 31 January 2016, 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
October 2015	Post results non-deal roadshow	BNP	Hong Kong
October 2015	Post results non-deal roadshow	DBS	New York/
			Philadelphia/
			Boston/
			San Francisco
October 2015	Post results non-deal roadshow	Daiwa	Paris/Basel/
			Zurich/
			London
November 2015	Post results non-deal roadshow	BNP	Singapore
January 2016	DBS Vickers Pulse of Asia Conference	DBS	Singapore
January 2016	Asia Pacific Financials, Property
	& Logistics Conference	BNP	Hong Kong
January 2016	The Sixth Hong Kong Corporate Summit	Daiwa	Hong Kong

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

Firm	Analyst	Publication Date
BNP	Patrick C WONG, Wee Liat LEE	15 October 2015

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 InterIm rePort

The audit committee of the Company (“ Audit Committee ”) currently comprises two INEDs, Mr. Leung Shu Yin, William and Mr. Lam Bing Kwan and a NED, Dr. Lam Kin Ming. The Audit Committee has reviewed the interim report (including the unaudited condensed consolidated financial statements) of the Company for the six months ended 31 January 2016.

By Order of the Board Lam Kin Ngok, Peter Chairman

Hong Kong, 23 March 2016

46 LAI SUN DEVELOPMENT COMPANY LIMITED • Interim Report 2015-2016