IRC Limited — Interim / Quarterly Report 2017

Mar 23, 2017

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

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(Stock Code: 488)

ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JANUARY 2017

RESULTS

The board of directors (the “ Board ”) of Lai Sun Development Company Limited (the “ Company ”) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the “ Group ”) for the six months ended 31 January 2017 together with the comparative figures of the last corresponding period as follows:

Condensed Consolidated Income Statement

For the six months ended 31 January 2017

Condensed Consolidated Income Statement For the six months ended 31 January 2017
		Six months ended
		31 January
		2017	2016
		(Unaudited)	(Unaudited)
	Notes	HK$’000	HK$’000
TURNOVER	3	818,436	1,082,924
Cost of sales		(333,965)	(511,720)
		__	__
Gross profit		484,471	571,204
Other revenue		21,776	27,810
Selling and marketing expenses		(20,212)	(22,510)
Administrative expenses		(136,132)	(126,445)
Other operating expenses		(132,907)	(115,575)
Fair value gains on investment properties, net		502,876	78,503
		__	__
PROFIT FROM OPERATING ACTIVITIES	4	719,872	412,987
Finance costs	5	(84,488)	(95,739)
Share of profits and losses of associates		6,960	8,564
Share of profits and losses of joint ventures		333,817	739,899
		__	__
PROFIT BEFORE TAX		976,161	1,065,711
Tax	6	(43,653)	(37,818)
		__	__
PROFIT FOR THE PERIOD		932,508 __	1,027,893 __
		__	__
Attributable to:
Owners of the Company		913,135	1,013,125
Non-controlling interests		19,373	14,768
		__	__
		932,508 __	1,027,893 __
		__	__
EARNINGS PER SHARE ATTRIBUTABLE TO
OWNERS OF THE COMPANY	7
Basic		HK$0.030	HK$0.049
		__	__
		__	__
Diluted		HK$0.030	HK$0.049
		_ _	_ _

1

Condensed Consolidated Statement of Comprehensive Income For the six months ended 31 January 2017

	Six months ended	Six months ended
	31 January
	2017	2016
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
PROFIT FOR THE PERIOD	932,508	1,027,893
	__	__
OTHER COMPREHENSIVE EXPENSE
Other comprehensive income/(expense) to be reclassified to profit or loss
in subsequent periods:
Changes in fair values of available-for-sale financial assets	52,177	(15,414)
Exchange realignments	(50,324)	(92,519)
Share of other comprehensive expense of associates	(135,542)	(230,839)
	__	__
OTHER COMPREHENSIVE EXPENSE FOR THE PERIOD	(133,689)	(338,772)
	__	__
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	798,819 __	689,121 __
	__	__
Attributable to:
Owners of the Company	779,318	674,353
Non-controlling interests	19,501	14,768
	__	__
	798,819 _ _	689,121 _ _

2

Condensed Consolidated Statement of Financial Position As at 31 January 2017

		31 January	31 July
		2017	2016
		(Unaudited)	(Audited)
	Notes	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment		3,375,081	2,983,985
Prepaid land lease payments		20,387	20,901
Investment properties		15,532,814	15,147,376
Properties under development for sale		1,418,604	1,322,403
Goodwill		5,161	5,161
Interests in associates		3,614,794	3,660,835
Interests in joint ventures		6,475,079	6,754,353
Available-for-sale financial assets		1,430,794	1,382,026
Pledged bank balances and time deposits		85,065	216,241
Deposits paid and other receivables		174,547 ____	181,062 ____
Total non-current assets		32,132,326	31,674,343
		____	____
CURRENT ASSETS
Completed properties for sale		321,509	321,509
Inventories		27,924	25,899
Debtors, deposits paid and other receivables	8	251,983	177,008
Pledged bank balances and time deposits		203,738	-
Cash and cash equivalents		2,568,181 ____	2,354,682 ____
Total current assets		3,373,335	2,879,098
		____	____
CURRENT LIABILITIES
Creditors, deposits received and accruals	9	379,704	460,588
Tax payable		103,447	132,282
Guaranteed notes		2,711,304	-
Bank borrowings		137,627 ____	126,709 ____
Total current liabilities		3,332,082	719,579
		____	____
NET CURRENT ASSETS		41,253	2,159,519
		____	____
TOTAL ASSETS LESS CURRENT LIABILITIES		32,173,579	33,833,862
		____	____
NON-CURRENT LIABILITIES
Bank borrowings		5,468,505	5,275,720
Guaranteed notes		-	2,709,227
Deferred tax		135,105	127,891
Provision for tax indemnity		729,387	729,387
Long term deposits received and other payables		241,491	90,063
Deferred rental		8,920	9,724
		____	____
Total non-current liabilities		6,583,408	8,942,012
		____	____
		25,590,171 ____	24,891,850 ____
		____	____
EQUITY
Equity attributable to owners of the Company
Share capital		4,062,941	4,050,252
Investment revaluation reserve		1,297,420	1,241,566
Share option reserve		64,735	65,633
Hedging reserve		2,222	9,114
Capital reduction reserve		4,692	4,692
General reserve		646,700	646,700
Other reserve		216,003	233,252
Statutory reserve		35,692	28,996
Exchange fluctuation reserve		(581,918)	(399,139)
Retained profits		19,325,804 ____	18,476,669 ____
		25,074,291	24,357,735
Non-controlling interests		515,880 ____	534,115 ____
		25,590,171 _ _	24,891,850 _ _

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The unaudited condensed consolidated interim financial statements of the Group for the six months ended 31 January 2017 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 2016 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 2016 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 2016.

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.

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3. SEGMENT INFORMATION

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

Segment revenue: Sales to external customers Intersegment sales Other revenue Total Segment results Interest income from bank deposits - unallocated Unallocated revenue Fair value gains on investment properties, net 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 and losses of joint ventures Profit before tax Tax Profit for the period

Six months ended 31 January (Unaudited)

Property development Property and sales investment Hotel operation Restaurant operation Others Eliminations Consolidated 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 HK$'000HK$'000HK$'000HK$'000HK$'000 HK$'000 HK$'000HK$'000 HK$'000 HK$'000 HK$'000 HK$'000HK$'000HK$'000 - 384,301 345,839 350,279 209,081 201,431 248,653 134,683 14,863 12,230 - - 818,4361,082,924 - - 7,955 7,511 90 180 - - 12,547 11,872 (20,592) (19,563) - - 3,637 2,157 757 278 16 9 180 142 4,683 3,698 - - 9,273 6,284 _ _ _ _ _ _ _ _ _ _ _ _ _ _ 3,637 386,458 354,551 358,068 209,187 201,620 248,833 134,825 32,093 27,800 (20,592) (19,563)827,7091,089,208 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (18,751)109,498 283,832 285,014 37,777 39,619 (7,800) (6,581) (6,927) (4,557) - - 288,131 422,993 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 5,487 1,260 7,016 20,266 - - 502,876 78,503 - - - - - - - - 502,876 78,503 (83,638)(110,035) _ _ 719,872 412,987 (84,488) (95,739) 16 1,060 - - - - (2,147) (1,159) 1,749 - - - (382) (99) 7,342 8,663 (26,026) (971)359,843 740,870 - - - - - - - - 333,817 739,899 _ _ 976,1611,065,711 (43,653) (37,818) _ _ 932,5081,027,893 _ _ _ _

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3. SEGMENT INFORMATION (continued)

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

	Property	Property	Property	Property
	development	and sales	investment		Hotel operation		Restaurant	operation	Others		Consolidated
	31 January	31 July	31 January	31 July	31 January	31 July	31 January	31 July	31 January	31 July	31 January	31 July
	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
	(Unaudited)	(Audited)	(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	HK$'000	HK$'000
Segment assets	1,819,658	1,690,614	15,733,862	15,312,609	3,478,480	3,070,692	613,662	626,357	152,466	152,583	21,798,128	20,852,855
Interests in associates	5,873	7,343	-	-	-	-	(7,771)	(1,061)	115,981	-	114,083	6,282
Interests in associates - unallocated											3,500,711	3,654,553
Interests in joint ventures	988,358	990,385	5,486,721	5,763,968	-	-	-	-	-	-	6,475,079	6,754,353
Unallocated assets											3,617,660	3,285,398
											___	___
Total assets											35,505,661 ___	34,553,441 ___
											___	___
Segment liabilities	126,810	62,467	181,545	187,129	231,745	195,510	42,357	47,472	7,487	6,163	589,944	498,741
Bank borrowings											5,606,132	5,402,429
Guaranteed notes											2,711,304	2,709,227
Other unallocated liabilities											1,008,110 ___	1,051,194 ___
Total liabilities											9,915,490 _ _	9,661,591 _ _

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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
	2017	2016
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Depreciation# Amortisation of prepaid land lease payments*	37,005 514	26,944 514
Interest income from bank deposits	(5,487)	(1,260)
Other interest income	(3,872)	(3,314)
Dividend income from unlisted available-for-sale financial assets	(7,740) _ _	(16,055) _ _

• Depreciation charge of approximately HK$34,884,000 (Six months ended 31 January 2016: HK$24,816,000) for property, plant and equipment is included in “other operating expenses” on the condensed consolidated income statement.

• Amortisation of prepaid land lease payments is 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 in the Group’s hotel operation in Vietnam of approximately HK$31,994,000 (Six months ended 31 January 2016: HK$33,484,000).

5. FINANCE COSTS

	Six months ended	Six months ended
	31 January
	2017	2016
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Interest on bank borrowings	57,356	54,213
Interest on guaranteed notes	79,490	79,608
Bank financing charges	24,256	20,523
	__	__
	161,102	154,344
Less: Amount capitalised in a hotel development project	(48,441)	(47,182)
Amount capitalised in properties under development for sale	(28,173)	(11,423)
	__	__
	84,488 _ _	95,739 _ _

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6. TAX

Hong Kong profits tax has been provided at the rate of 16.5% (Six months ended 31 January 2016: 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
	2017	2016
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Current tax
Hong Kong	21,999	19,352
Overseas	14,041	14,347
	__	__
	36,040	33,699
Deferred tax	7,800	2,772
Prior years’ (overprovision)/underprovision
Hong Kong	(85)	(20)
Overseas	(102)	1,367
	__	__
	(187)	1,347
	__	__
Tax charge for the period	43,653 _ _	37,818 _ _

7. EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY

	Six	months ended
		31 January
	2017	2016
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Earnings
Earnings for the purpose of basic earnings per share	913,135	1,013,125
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	(47) (4) _ _
Earnings for the purpose of diluted earnings per share	913,088 ___	1,013,121 ___
	___	___
	’000	’000
Number of shares
Weighted average number of ordinary shares for the purpose of basic
earnings per share	30,166,342	20,709,955
Effect of dilutive potential ordinary shares arising from share options	61,345	19,274
	___	___
Weighted average number of ordinary shares for the purpose of diluted
earnings per share	30,227,687	20,729,229
	_ _	_ _

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8. DEBTORS, DEPOSITS PAID AND OTHER RECEIVABLES

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 July
	2017	2016
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Trade debtors:
Not yet due or less than 30 days past due	14,606	15,653
31 - 60 days past due	4,074	2,102
61 - 90 days past due	569	853
Over 90 days past due	2,842	3,492
	__	__
	22,091	22,100
Other receivables	150,818	78,776
Deposits paid and prepayments	79,074	76,132
	__	__
	251,983 _ _	177,008 _ _

9. CREDITORS, DEPOSITS RECEIVED AND ACCRUALS

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 July
	2017	2016
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Trade creditors:
Not yet due or less than 30 days past due	17,639	19,288
31 - 60 days past due	524	1,176
61 - 90 days past due	270	143
Over 90 days past due	81	1,148
	__	__
	18,514	21,755
Other payables and accruals	216,675	285,696
Deposits received and other provisions	144,515	153,137
	__	__
	379,704 _ _	460,588 _ _

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10. EVENTS AFTER THE REPORTING PERIOD

On 9 February 2017, the Group’s associate, eSun Holdings Limited (“ eSun ”), completed a share placement which resulted in a dilution in the Group’s interest in eSun from 41.92% to 34.94%. Further details are set out in the eSun’s announcement dated 9 February 2017.

In February 2017, the Group acquired 2% additional interest in eSun from the public shareholders for a consideration of approximately HK$25 million and the Group’s interest in eSun increased from 34.94% to 36.94%.

Due to the timing of the transactions, the Group is still assessing the financial impact on the Group. Accordingly, certain disclosures in relation to the above transactions have not been presented.

10

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 2017. No interim ordinary dividend was declared in respect of the last corresponding period.

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW AND OUTLOOK

Major economies around the world continue to tread cautiously during the period under review. The conclusion of the US presidential election and the passing of the initial shock from Brexit seem to have renewed optimism as suggested by the capital markets. However, it is far from clear how such optimism will be sustained by the fundamentals. The new US president and his officials are still attempting to establish themselves whilst the exit terms for Brexit remain unclear. The impending leadership elections in Europe and the protracted conflicts in the Middle East still cast a shadow on the growth outlook.

The property sector in Hong Kong as a whole has shown resilience and recovered from an extended period of softening. During the period under review, the slowdown in the luxury end of the retail market has been most pronounced due to reduced visitor numbers. The office leasing market continued to stabilise due to tight supply but a slight softening of rent in areas outside Central area was observed. The residential market was rejuvenated, underpinned by a lack of supply with record prices being achieved in recent land tenders, as well as a sustained period of low interest rates. The effect of the recent rate hike just prior to this interim results has yet to be seen, however, interest rates remain low relative to recent history. Labour supply shortages in the construction industry continues to drive wage inflation and pose a challenge on the cost management side.

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 Gross Floor
		Area (“GFA”)		Expected
Date	Secured Projects	(square feet)	Use	Completion Date
Hong Kong	Development Properties
November 2012	Alto Residences	573,346	Commercial/	Q1 2018
			Residential
April 2014	93 Pau Chung Street	111,354	Commercial/	Q1 2018
			Residential
May 2014	The Hong Kong Ocean Park Marriott Hotel	366,000	Hotel	Q4 2017
	(“Ocean Hotel”)
September 2015	Sai Wan Ho Street Project	61,140	Residential	Q4 2019
May 2016	Ki Lung Street Project	42,878	Commercial/	Q1 2020
			Residential
London,	Investment Properties
United Kingdom
April 2014	107 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

* Gross internal area

** Net internal area

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The Group as a whole performed steadily against this challenging environment. The rental portfolio comprises of approximately 1.8 million square feet of which about 1.3 million square feet is located in Hong Kong. Despite the softened economic sentiment and weakened retail activity, the Group’s Hong Kong properties performed steadily at nearly full occupancy levels with most of the major lease renewals completed in the previous period.

The London properties weathered the uncertainties of Brexit well during the period under review if the currency translation effect of a depreciated Sterling was excluded. As at the date of this results announcement, over 70% floor area of 106 Leadenhall Street in London has been leased out. This multi-tenanted property located adjacent to our other two wholly-owned properties, namely 100 and 107 Leadenhall Street, is expected to enhance and enlarge the Group’s strategic property investment portfolio in the City of London. The Group has appointed DP9, one of the leading professional consultancies in planning, development and regeneration in the United Kingdom to advise on the redevelopment of the site comprising 100, 106 and 107 Leadenhall. Skidmore, Owings & Merrill LLP has also been engaged as architect for this project. The Group is encouraged that the adjacent building situated at 122 Leadenhall Street, commonly known as the “The Cheesegrater” was sold for a record price of £1.135 billion recently.

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. Its completion is expected to be in the fourth quarter of 2017. Set out below is the expected growth of the rental portfolio of the Group:

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The Urban Renewal Authority project in Ma Tau Kok, Kowloon, “93 Pau Chung Street” (“ 93 Pau Chung Street ”) and the joint venture project in Tseung Kwan O named “Alto Residences” (“ Alto Residences ”) were launched for pre-sale in September 2016 and October 2016, respectively. The 93 Pau Chung Street project offers 209 flats in total, including studios, one and two-bedroom units. Up to 19 March 2017, the Group has pre-sold 168 units in 93 Pau Chung Street with saleable area of approximately 58,000 square feet at an average selling price of approximately HK$15,900 per square foot. The Alto Residences project provides 605 flats, including 23 detached houses. Up to 19 March 2017, the Group has pre-sold 472 units in Alto Residences with saleable area of approximately 259,100 square feet at an average selling price of approximately HK$14,700 per square foot.

12

The Group has continued to participate in government tenders to grow the pipeline. The Sai Wan Ho Street project from the Urban Renewal Authority in Shau Kei Wan, Hong Kong is planned to provide about 144 residential units upon completion with a total GFA of 61,140 square feet. The Ki Lung Street project in Sham Shui Po, Kowloon, which comprises numbers 48-56 on Ki Lung Street and has a combined site area of 5,054 square feet is expected to be developed primarily into a commercial/residential development for sale with a total GFA of 42,878 square feet. Set out below is the pipeline for development projects for sale of the Group:

==> picture [426 x 241] intentionally omitted <==

In September 2016, the Group acquired an approximately 49.96% interest in Camper & Nicholsons International SA (“ CNI ”), a long established and internationally recognised brand for luxury yachts. The Group believed that the acquisition of CNI in partnership with Fincantieri S.p.A., one of the major shipbuilding companies in the world, will bolster its offering of high-end food and beverage and hospitality services.

The Group’s strong cash position of HK$2,857.0 million of cash on hand and HK$5,673.4 million of undrawn facilities with a net debt to equity ratio of 21.8% as at 31 January 2017 provides the Group with full confidence and the means to review opportunities more actively. The Group’s gearing excluding the net debt of the London portfolio all of which have a positive carry net of financing costs is 15.8%. The Group completed a rights issue in February 2016 and raised a total of HK$912.7 million after expenses. This has been and will continue to be deployed for general working capital purposes. However, the Group will continue its prudent and flexible approach in growing the landbank and managing its financial position.

13

OVERVIEW OF INTERIM RESULTS

For the six months ended 31 January 2017, the Group recorded turnover of HK$818.4 million (2016: HK$1,082.9 million) and a gross profit of HK$484.5 million (2016: HK$571.2 million), representing a decrease of approximately 24.4% and 15.2%, respectively over the same period last year. The decrease is primarily due to absence of turnover from sales of properties during the period under review. Set out below is the turnover by segment:

	Six months ended 31 January	Six months ended 31 January
	2017 (HK$ million)	2016 (HK$million)	Difference (HK$million)	% change
Propertyinvestment	345.8	350.3	-4.5	-1.3%
Propertydevelopment and sales	-	384.3	-384.3	-100.0%
Restaurant operation	248.7	134.7	114.0	84.6%
Hotel operation and others	223.9	213.6	10.3	4.8%
Total	818.4	1,082.9	-264.5	-24.4%

For the six months ended 31 January 2017, net profit attributable to owners of the Company was approximately HK$913.1 million (2016: HK$1,013.1 million), representing a decrease of approximately 9.9% over the same period last year. The decrease is primarily due to absence of sales of projects compared to the same period last year. Excluding the effect of property revaluations, net profit attributable to owners of the Company was approximately HK$80.0 million (2016: HK$199.7 million), representing a decrease of approximately 59.9% over the same period last year. Basic earnings per share including and excluding the effect of property revaluations was HK$0.030 (2016: HK$0.049) and HK$0.003 (2016: HK$0.010), respectively.

	Six months ended 31 January	Six months ended 31 January
Profit attributable to owners of the Company (HK$ million)	2017	2016
Reported	913.1	1,013.1
Less: Adjustments in respect of revaluation gains of investment properties
held by
- the Company and subsidiaries	(502.9)	(78.5)
- associates andjoint ventures	(330.2)	(734.9)
Net profit after tax excluding revaluation gains of investment properties	80.0	199.7

Equity attributable to owners of the Company as at 31 January 2017 amounted to HK$25,074.3 million, up from HK$24,357.7 million as at 31 July 2016. Net asset value per share attributable to owners of the Company increased by 2.6% to HK$0.829 per share as at 31 January 2017 from HK$0.808 per share as at 31 July 2016.

14

PROPERTY PORTFOLIO COMPOSITION

As at 31 January 2017, 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:

	Commercial /Retail	Office	Industrial	Residential	Hotel	Total (excluding car-parking spaces & ancillary facilities)	No. of car-parking spaces attributable to theGroup
Completed Properties Held for Rental1	485	1,172	64	-	-	1,721	1,027
Completed Hotel Properties	-	-	-	-	98	98	-
Properties Under Development2	79	-	-	423	366	868	196
Completed Properties Held for Sale	27	-	-	10	-	37	11
Total GFA of major properties of the Group	591	1,172	64	433	464	2,724	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$345.8 million (2016: HK$350.3 million), representing a 1.3% decrease over the same period last year. The decrease is primarily attributable to the lower contributions from London properties due to Sterling depreciation post Brexit in June 2016. The average Sterling exchange rate for the period under review depreciated by over 13% compared with the same period last year. Excluding the effect of currency translation against a depreciating Sterling, the change in the turnover from London properties went from a decrease of 10.6% to an increase of 3.6%.

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 is now fully leased. This is recognised as a component of “Share of profits and losses of joint ventures” in the condensed consolidated income statement.

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

	Six months ended 31 January	Six months ended 31 January	% Change	Period end occupancy (%)
	2017 HK$ million	2016 HK$million
Hong Kong
Cheung Sha Wan Plaza (includingcar-parkingspaces)	151.5	150.1	0.9	93.0
Causeway Bay Plaza 2 (includingcar-parkingspaces)	90.2	88.3	2.2	99.1
Lai Sun Commercial Centre (includingcar-parkingspaces)	29.3	29.6	-1.0	92.7
Others	6.2	5.6	10.7
Subtotal:	277.2	273.6	1.3
London, United Kingdom
36Queen Street	11.5	13.4	-14.2	100.0
107 Leadenhall Street	22.8	26.2	-13.0	100.0
100 Leadenhall Street	31.6	36.5	-13.4	100.0
106 Leadenhall Street	2.7	0.6	350.0	73.4
Subtotal:	68.6	76.7	-10.6
Total:	345.8	350.3	-1.3
Rental proceeds from joint venture projects
Hong Kong
CCB Tower# (50% basis)	60.4	55.0	9.8	100.0
8 ObservatoryRoad##(50% basis)	26.3	8.6	205.8	100.0
Total:	86.7	63.6	36.3

# 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 2017, the rental proceeds recorded by the joint venture is HK$120.7 million (2016: HK$110.0 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 2017, the rental proceeds recorded by the joint venture is HK$52.6 million (2016: HK$17.2 million).

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

	Six months ended 31 January 2017	Six months ended 31 January 2017	Six months ended 31 January 2017	Six months ended 31 January2016	Six months ended 31 January2016	Six months ended 31 January2016
	Group interest	Turnover (HK$ million)	Attributable GFA (square feet)	Group interest	Turnover (HK$million)	Attributable GFA (square feet)
Hong Kong
CheungSha Wan Plaza	100%			100%
Commercial		79.1	233,807		81.8	233,807
Office		63.8	409,896		59.9	409,896
Car-parkingspaces		8.6	N/A		8.4	N/A
Subtotal:		151.5	643,703		150.1	643,703
CausewayBayPlaza 2	100%			100%
Commercial		61.5	109,770		59.8	109,770
Office		26.2	96,268		26.1	96,268
Car-parkingspaces		2.5	N/A		2.4	N/A
Subtotal:		90.2	206,038		88.3	206,038
Lai Sun Commercial Centre	100%			100%
Commercial		15.6	95,063		17.3	95,063
Office		5.0	74,181		4.0	74,181
Car-parkingspaces		8.7	N/A		8.3	N/A
Subtotal:		29.3	169,244		29.6	169,244
Others		6.2	63,592*		5.6	63,592_*_
Subtotal:		277.2	1,082,577*		273.6	1,082,577_*_
**London, United Kingdom **
36Queen Street	100%			100%
Office		11.5	60,816		13.4	60,816
107 Leadenhall Street	100%			100%
Office		22.8	146,606		26.2	146,606
100 Leadenhall Street	100%			100%
Office		31.6	177,700		36.5	177,700
106 Leadenhall Street	100%			100%
Office		2.7	12,687		0.6	12,687
Subtotal:		68.6	397,809		76.7	397,809
Total:		345.8	1,480,386*		350.3	1,480,386_*_
Joint Venture Projects
Hong Kong
CCB Tower#(50% basis)	50%			50%
Office		60.1	114,555**		55.0	114,555_**_
Car-parkingspaces		0.3	N/A		-	N/A
Subtotal:		60.4	114,555**		55.0	114,555_**_
8 ObservatoryRoad##(50% basis)	50%			50%
Commercial		21.1	46,064***		5.0	46,064_***_
Office		4.0	36,521***		2.8	36,521_***_
Car-parkingspaces		1.2	N/A		0.8	N/A
Subtotal:		26.3	82,585***		8.6	82,585_***_
Total:		86.7	197,140		63.6	197,140

* 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 2017, the rental proceeds recorded by the joint venture is HK$120.7 million (2016: HK$110.0 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 2017, the rental proceeds recorded by the joint venture is HK$52.6 million (2016: HK$17.2 million).

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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 the rental portfolio of the Group. 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 is now fully leased out.

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 Charter 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).

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 gross internal area of office accommodation extending over basement, ground and six upper floors. The building is currently fully leased out.

107 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 gross internal area of office accommodation extending over basement, ground, mezzanine and seven upper floors. The building is currently fully leased out.

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100 Leadenhall Street, London EC3, United Kingdom

Following the acquisition of 107 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 gross internal area 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 offices including ancillary space. Up to the date of this results announcement, over 70% floor area of the property has been leased out.

PROPERTY DEVELOPMENT

No turnover from sales of properties was recognised for the six months ended 31 January 2017 (2016: HK$384.3 million).

Review of major projects for sale

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 approximately 30,400 square feet (excluding car-parking spaces). The total development cost (including land cost and lease modification premium) is approximately HK$670 million. The property is now open for sale. Up to the date of this results announcement, 7 out of 9 units of this project have been sold.

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 2 shops and 7 car-parking spaces.

Review of major projects under development

Alto Residences

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 a site area of 229,338 square feet with a total GFA of 573,346 square feet split into 458,676 square feet for residential use and 114,670 square feet for commercial use. Completion is expected to be in the first quarter of 2018.

This project providing 605 flats, including 23 detached houses was named “Alto Residences” and was launched for pre-sale in October 2016. Up to 19 March 2017, the Group has pre-sold 472 units in Alto Residences with saleable area of approximately 259,100 square feet at an average selling price of approximately HK$14,700 per square foot.

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.

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93 Pau Chung Street

In April 2014, the Group was successful 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 a site area of 12,599 square feet with a total GFA of 111,354 square feet split into 94,486 square feet for residential use and 16,868 square feet for commercial use. The total development cost is estimated to be approximately HK$1 billion and completion is expected to be in the first quarter of 2018.

This project was named “93 Pau Chung Street” and launched for pre-sale in September 2016, offering 209 flats in total, including studios, one and two-bedroom units. Up to 19 March 2017, the Group has pre-sold 168 units in this project with saleable area of approximately 58,000 square feet at an average selling price of HK$15,900 per square foot.

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 a site area of 7,642 square feet. Upon completion, it is planned to provide about 144 residential units with a total GFA of 61,140 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.

Ki Lung Street project

On 16 May 2016, the Group completed the purchase of the remaining unit for the proposed development on Ki Lung Street in Sham Shui Po, Kowloon. The site comprises numbers 48-56 on Ki Lung Street and has a combined site area of 5,054 square feet. It is planned to be developed primarily into a commercial/residential development for sale with a total GFA of 42,878 square feet. The total development cost is expected to be approximately HK$0.4 billion and construction is expected to be completed in the first quarter of 2020.

RESTAURANT OPERATION

For the six months ended 31 January 2017, the restaurant operation contributed HK$248.7 million (2016: HK$134.7 million) to the Group’s turnover, representing an increase of approximately 84.6% from the same period last year. The turnover from the restaurants segment was boosted by contributions from the newly opened restaurants, including China Tang Harbour City in Hong Kong, Howard’s Gourmet in CCB Tower, Hong Kong, CIAK – All Day Italian in Cityplaza, Hong Kong, Operetta in Pacific Place, Hong Kong and Beefbar in Central, Hong Kong.

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Up to the date of this results announcement, the restaurant operation includes the Group’s interests in 17 restaurants in Hong Kong and mainland China.

Cuisine	Restaurant	**Location **	Award
Western Cuisine	8½Otto e Mezzo BOMBANA Hong Kong	Hong Kong	Three Michelin stars (2012-2017)
	Otto e Mezzo BOMBANA Shanghai	Shanghai	Two Michelin stars (2017)
	Opera BOMBANA	Beijing
	CIAK-In The Kitchen	Hong Kong	One Michelin star (2015-2017)
	CIAK-All Day Italian	Hong Kong	Michelin Bib Gourmand (2017)
	Beefbar	Hong Kong	One Michelin star (2017)
	Operetta	HongKong
Chinese Cuisine	China TangLandmark	HongKong
	China TangHarbour City	HongKong
	Howard’s Gourmet	HongKong
	Chiu TangCentral	HongKong
	Chiu TangWanchai	HongKong
	Tang2	HongKong
	Old Bazaar Kitchen	HongKong
Japanese Cuisine	Wagyu Takumi	Hong Kong	One Michelin star (2017)
	Wagyu Kaiseki Den	Hong Kong	One Michelin star (2010-2017)
	Rozan	HongKong

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 2017, the hotel operation contributed HK$209.1 million (2016: HK$201.4 million) to the Group’s turnover.

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.

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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 soft opened in August 2013 and comprises two 16-storey blocks with 90 fully furnished serviced apartment units located in the Palm Lifestyle complex in Zhongshan Western district at Cui Sha Road, opposite to the new Zhongshan traditional Chinese medical centre. STARR Hotel Shanghai soft opened in November 2013 and is a 17-storey hotel with 239 fully furnished and equipped hotel units with kitchenette in Jing’an 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 2017, the Group’s interest in eSun Holdings Limited (“ eSun ”) is 41.92%. Post the period end, the Group’s interest in eSun was diluted to 34.94% immediately after the completion of eSun’s placing of shares on 9 February 2017 and as of the date of this results announcement, the Group’s interest in eSun is 36.94%.

During the period under review, share of profits of eSun amounting to HK$11.6 million (2016: HK$13.6 million). The decrease is primarily due to the weaker performance of the media and entertainment and cinema operations of eSun for the six months ended 31 January 2017 as compared to the same period last year.

INTERESTS IN JOINT VENTURES

During the period under review, contribution from joint ventures amounted to HK$333.8 million (2016: HK$739.9 million), representing a decrease of 54.9%. This is primarily due to stronger revaluation gains of CCB Tower and 8 Observatory Road being recognised in the six months ended 31 January 2016 as compared to the current period under review.

	Six months ended 31 January	Six months ended 31 January
	2017 (HK$ million)	2016 (HK$million)
Revaluationgains	303.0	699.6
Operating profits	30.8	40.3
Contribution fromjoint ventures	333.8	739.9

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LIQUIDITY AND FINANCIAL RESOURCES

As at 31 January 2017, cash and bank balances and undrawn facilities held by the Group amounted to HK$2,857.0 million and HK$5,673.4 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 2017, the Group had bank borrowings of approximately HK$5,606.1 million and guaranteed notes of approximately HK$2,711.3 million. The gearing 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 21.8%. The Group’s gearing excluding the net debt of the London portfolio all of which had a positive carry net of financing costs was approximately 15.8%. As at 31 January 2017, the maturity profile of the bank borrowings of HK$5,606.1 million was spread over a period of less than 5 years with HK$137.6 million repayable within 1 year, HK$471.8 million repayable in the second year and HK$4,996.7 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 2017, certain investment properties with carrying amounts of approximately HK$15,297.2 million, certain property, plant and equipment with carrying amounts of approximately HK$2,777.1 million, certain properties under development for sale of approximately HK$703.1 million and certain bank balances and time deposits with banks of approximately HK$288.8 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.

23

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

During the six months ended 31 January 2017, the Company did not redeem any of its shares listed and traded on The Stock Exchange of Hong Kong Limited (“ Stock Exchange ”) nor did the Company or any of its subsidiaries purchase or sell any of such shares.

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 on the Stock Exchange throughout the six months ended 31 January 2017 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 re-election. Further, in line with the relevant code provision of the CG Code, each of the Directors appointed to fill a casual vacancy would/will be subject to election by the Shareholders at the first general meeting after his/her appointment. In view of these, the Board considers that such requirements are sufficient to meet the underlying objective of the said code provision A.4.1 and, therefore, does not intend to take any remedial steps in this regard.

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

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

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

Due to other pre-arranged business commitments which must be attended to by Dr. Lam Kin Ngok, Peter, the Chairman, Dr. Lam was not present at the AGM held on 16 December 2016. 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.

24

EMPLOYEES AND REMUNERATION POLICIES

As at 31 January 2017, the Group employed a total of approximately 1,600 employees. The Group recognises the importance of maintaining a stable staff force in its continued success. Under the Group’s existing policies, employee pay rates are maintained at competitive levels whilst promotion and salary increments are assessed on a performance-related basis. Discretionary bonuses are granted to employees based on their merit and in accordance with industry practice. Other benefits including share option scheme, mandatory provident fund scheme, free hospitalisation insurance plan, subsidised medical care and sponsorship for external education and training programmes are offered to eligible employees.

INVESTOR RELATIONS

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

During the six months ended 31 January 2017, the Company has met with a number of research analysts and investors and attended non-deal roadshows as follows:

Month Event	Organiser Location
October 2016 Post results non-deal roadshow	DBS Hong Kong
November 2016 Post results non-deal roadshow	DBS Singapore
November 2016 Post results non-deal roadshow	Daiwa New York/Philadelphia/ Los Angeles/San Francisco
November 2016 Post results non-deal roadshow	Daiwa London/Amsterdam/Zurich

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

Firm	Analyst	Publication Date
HSBC	Keith CHAN	24 October 2016

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.

25

REVIEW OF INTERIM RESULTS

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 unaudited interim results (including the unaudited condensed consolidated financial statements) of the Company for the six months ended 31 January 2017.

By Order of the Board Lam Kin Ngok, Peter Chairman

Hong Kong, 23 March 2017

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

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

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

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

26