Melbourne Enterprises Limited — Annual Report 2020

Jan 6, 2021

CONTENTS

GROUP STRUCTURE	2
CORPORATE INFORMATION	3
MANAGEMENT PROFILE	4
DIRECTORS' REPORT	5-13
CORPORATE GOVERNANCE REPORT	14-17
DIRECTORS' BUSINESS REVIEW	18
MANAGEMENT DISCUSSION AND ANALYSIS	19
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT	20-24
REPORT OF THE INDEPENDENT AUDITOR	25-28
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	29
CONSOLIDATED BALANCE SHEET	30-31
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	32
CONSOLIDATED STATEMENT OF CASH FLOWS	33
NOTES TO THE FINANCIAL STATEMENTS	34-67
FIVE-YEAR FINANCIAL SUMMARY	68

GROUP STRUCTURE

At 30 September 2020

PARENT COMPANY

Melbourne Enterprises Limited

SUBSIDIARY	Equity Holding	Principal Activities
Iau On Company Limited	100%	Property investment
ASSOCIATE
Chuen King Enterprises Limited	50%	Inactive

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Chung Ming Fai (Chairman) Mr. Chung Yin Shu, Frederick Mr. Tsang On Yip, Patrick (Mr. Kenneth Lau as his alternate)

Non-executive Director

Mr. Chung Wai Shu, Robert

Independent Non-executive Directors

Dr. Fong Yun Wah, G.B.S., J.P. Mr. Lo Pak Shiu Mr. Yuen Sik Ming, Patrick

COMPANY SECRETARY

Mr. Chung Yin Shu, Frederick

AUDIT COMMITTEE

Mr. Yuen Sik Ming, Patrick (Chairman) Mr. Chung Wai Shu, Robert Dr. Fong Yun Wah, G.B.S., J.P. Mr. Lo Pak Shiu

REMUNERATION COMMITTEE AND NOMINATION COMMITTEE

Mr. Yuen Sik Ming, Patrick (Chairman) Mr. Chung Yin Shu, Frederick (Secretary) Mr. Chung Wai Shu, Robert Dr. Fong Yun Wah, G.B.S., J.P. Mr. Lo Pak Shiu

AUDITOR

PricewaterhouseCoopers

SOLICITORS

Woo, Kwan, Lee & Lo

BANKERS

The Hongkong and Shanghai Banking Corporation Limited Hang Seng Bank Limited

SHARE REGISTRARS AND TRANSFER OFFICE

Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17/F., Hopewell Centre 183 Queen's Road East Hong Kong

REGISTERED OFFICE

Rooms 2102-4, Melbourne Plaza 33 Queen's Road Central Hong Kong

STOCK CODE

Hong Kong Stock Exchange 00158

WEBSITE

www.irasia.com/listco/hk/melbourneweb

MANAGEMENT PROFILE

EXECUTIVE DIRECTORS

Mr. Chung Ming Fai, aged 100, is one of the founders of the Company and has been Executive Director of the Company since December 1967. He is a director of Aik San Realty Limited, Fu Hop Investment Company Limited and Good Earning Investment Company Limited. He is the father of Mr. Chung Yin Shu, Frederick and Mr. Chung Wai Shu, Robert.

Mr. Chung Yin Shu, Frederick, aged 76, was appointed Executive Director of the Company in December 1967. He is a director of Aik San Realty Limited, Fu Hop Investment Company Limited and Good Earning Investment Company Limited. He is the son of Mr. Chung Ming Fai and brother of Mr. Chung Wai Shu, Robert. He is also the Company Secretary.

Mr. Tsang On Yip, Patrick, aged 49, was appointed Executive Director of the Company in April 2015. He is a director of Cheng Yu Tung Foundation Limited, CTF Foundation Limited and Chow Tai Fook Enterprises Limited. He is also an executive director of UMP Healthcare Holdings Limited and a non-executive director of i-CABLE Communications Limited, Integrated Waste Solutions Group Holdings Limited and Greenheart Group Limited.

Mr. Kenneth Lau, aged 44, was appointed as the alternate director to Mr. Tsang On Yip, Patrick, of the Company since 24 May 2019. He is a Senior Vice President of Chow Tai Fook Enterprises Limited. Mr. Lau has 20 years of experience in corporate finance, real estate and private equity investments. He holds a Master of Engineering degree from the University of Oxford in the United Kingdom.

NON-EXECUTIVE DIRECTOR

Mr. Chung Wai Shu, Robert, aged 72, was appointed Executive Director of the Company in December 1975 and became a Non-executive Director in June 1999. He is a director of Aik San Realty Limited, Fu Hop Investment Company Limited and Good Earning Investment Company Limited. He is the son of Mr. Chung Ming Fai and brother of Mr. Chung Yin Shu, Frederick.

INDEPENDENT NON-EXECUTIVE DIRECTORS

Dr. Fong Yun Wah, G.B.S., J.P., aged 96, was appointed Non-executive Director of the Company in November 1994. He is presently an Independent Non-executive Director of the Company. He is also the Chairman of Hip Shing Hong Development Company Limited and Kam Wah Investment Company Limited.

Mr. Lo Pak Shiu, aged 66, was appointed Executive Director of the Company in March 1989. He is presently an Independent Non-executive Director of the Company. He is also a director of Foo Hang Jewellery Limited.

Mr. Yuen Sik Ming, Patrick, aged 63, is a Certified Public Accountant (Practising) and a fellow of Association of Chartered Certified Accountants. Mr. Yuen has extensive experience in accounting and corporate finance and is currently a practising director of Kingston CPA Limited. He was appointed Independent Non-executive Director of the Company in September 2004.

SENIOR MANAGEMENT

Various businesses and functions of the Company are respectively under the direct responsibilities of the Executive Directors who are regarded as senior management of the Company.

The Directors present their annual report together with the audited financial statements for the financial year ended 30 September 2020.

PRINCIPAL ACTIVITIES

The principal activities of the Company are property investment and investment holding in Hong Kong. The principal activities of the subsidiary and associates are set out in notes 15 and 16 to the financial statements respectively.

RESULTS AND APPROPRIATIONS

The results of the Group for the year ended 30 September 2020 are set out in the consolidated statement of comprehensive income on page 29. A commentary on annual results is included in the Directors' Business Review on page 18.

An interim dividend of HK\$2.30 per share was paid in June 2020, totalling HK\$57,500,000. The Directors recommend the payment of a final dividend of HK\$2.80 per share, totalling HK\$70,000,000.

BUSINESS REVIEW

The business review of the Group for the year ended 30 September 2020 is set out in the sections headed "Directors' Business Review" and "Management Discussion and Analysis" on pages 18 and 19 respectively of this Annual Report.

FIVE-YEAR FINANCIAL SUMMARY

A summary of the results and the assets and liabilities of the Group for the last five financial years is set out on page 68.

DISTRIBUTABLE RESERVES

Distributable reserves of the Company at 30 September 2020, calculated under Part 6 of the new Hong Kong Companies Ordinance (Cap. 622), amounted to HK\$244,619,000 (2019: HK\$244,369,000).

DIRECTORS

The Directors during the financial year and at the date of this report were:

Mr. Chung Ming Fai Dr. Fong Yun Wah, G.B.S., J.P. Mr. Chung Yin Shu, Frederick Mr. Chung Wai Shu, Robert Mr. Lo Pak Shiu Mr. Yuen Sik Ming, Patrick Mr. Tsang On Yip, Patrick (Mr. Kenneth Lau as his alternate)

In accordance with Article 103(A) of the Company's Articles of Association, Mr. Chung Wai Shu, Robert, and Mr. Tsang On Yip, Patrick retire by rotation and, being eligible, offer themselves for re-election.

During the year and up to the date of this report, Mr. Chung Ming Fai, Mr. Chung Yin Shu, Frederick and Mr. Chung Wai Shu, Robert are also directors in the subsidiary of the Company. Other director of the Company's subsidiary during the year and up to the date of this report is: Mr. Lo Ka Chung.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

Except as disclosed in note 25 of the consolidated financial statements, no other transactions, arrangements or contracts of significance in relation to the Group's business to which the Company or Company's subsidiary was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS (cont'd)

No loan was made during the financial year to the Company's Directors or officers or body corporate controlled by them either by the Company or by its subsidiary or by a third party on the security or guarantee of the Company or its subsidiary.

CONTINUING CONNECTED TRANSACTIONS

Continuing connected transactions during the year and up to the date of this report are set out below:

(1) On 12 July 2018, the Company as lessor and Promising Realty Limited ("PR") as lessee renewed a lease agreement, pursuant to which the lessee leased Rooms 2401-2411 on 24th floor of Melbourne Plaza, 33 Queen's Road Central, Hong Kong (the "PR Premises") from the lessor for a fixed term of two years from 1 August 2018 to 31 July 2020 at a monthly rental of HK\$334,536 with monthly air-conditioning charges and management fees of HK\$42,920.

The PR Premises, the subject of the lease agreement, is owned by the Company. PR is a company whose shares are ultimately owned by two executive Directors, namely Mr. Chung Ming Fai and Mr. Chung Yin Shu, Frederick, and a non-executive Director, namely Mr. Chung Wai Shu, Robert, and their associates and is, accordingly, a connected person of the Company and the renewal of the lease agreement and all the transactions contemplated thereunder constitute continuing connected transactions for the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

As set out in the announcement of the Company dated 12 July 2018, the annual cap under the lease agreement for the year ended 30 September 2020 was HK\$3,900,000.

The total amount received from PR during the year ended 30 September 2020 under the lease agreement amounted to HK\$3,775,000 which did not exceed annual cap of HK\$3,900,000.

(2) On 30 July 2020, the Company as lessor and Fu Hop Investment Company Limited ("Fu Hop") as lessee entered into a lease agreement, pursuant to which the lessee leased Rooms 2401-2411 on 24th floor of Melbourne Plaza, 33 Queen's Road Central, Hong Kong (the "Fu Hop Premises") from the lessor for a fixed term of two years from 1 August 2020 to 31 July 2022 at a monthly rental of HK\$302,976 with monthly air-conditioning charges and management fees of HK\$42,920.

The Fu Hop Premises, the subject of the lease agreement, is owned by the Company. Fu Hop is a company whose shares are ultimately owned by two executive Directors, namely Mr. Chung Ming Fai and Mr. Chung Yin Shu, Frederick, and a non-executive Director, namely Mr. Chung Wai Shu, Robert, and their associates and is, accordingly, a connected person of the Company and the entering of the lease agreement and all the transactions contemplated thereunder constitute continuing connected transactions for the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

As set out in the announcement of the Company dated 30 July 2020, the annual cap under the lease agreement for the year ended 30 September 2020, the year ending 30 September 2021 and the year ending 30 September 2022 were HK\$695,000, HK\$4,200,000 and HK\$3,510,000 respectively.

The total amount received from Fu Hop during the year ended 30 September 2020 under the lease agreement amounted to HK\$692,000 which did not exceed annual cap of HK\$695,000.

CONTINUING CONNECTED TRANSACTIONS (cont'd)

(3) On 26 February 2019, the Company as lessor and Foo Hang Jewellery, Limited ("FH") as lessee renewed a lease agreement, pursuant to which the lessee would lease Rooms 1801-1814 on 18th floor of Melbourne Plaza, 33 Queen's Road Central, Hong Kong (the "FH Premises") for a fixed term of two years from 1 March 2019 to 28 February 2021 at a monthly rental of HK\$451,820 with monthly air-conditioning charges and management fees of HK\$58,180.

Pursuant to written requests from Foo Hang, the Company had by way of letters issued to Foo Hang on 10 October 2019, 28 February 2020, 15 May 2020 and 3 September 2020 (which letters were countersigned by Foo Hang) agreed to reduce the monthly rental, air-conditioning charges and management fee (collectively the "Monthly Total Amounts") payable by Foo Hang under the lease agreement for the period from 1 November 2019 to 30 April 2020, 1 March 2020 to 31 May 2020, 1 June 2020 to 31 August 2020 and 1 September 2020 to 30 November 2020 (the "Rental Revisions") to HK\$464,818 per month, HK\$419,636 per month, HK\$419,636 per month and HK\$419,636 per month respectively.

The FH Premises, the subject of the lease agreement, is owned by the Company. FH is a company whose shares are owned by associates of Mr. Lo Pak Shiu, an Independent Non-executive Director and is, accordingly, a connected person of the Company and the renewal of the lease agreement and all the transactions contemplated thereunder constitute continuing connected transactions for the Company under the Listing Rules.

As set out in the announcement of the Company dated 9 September 2020, the revised annual caps under the lease agreement, as revised by the Rental Revisions, for year ended 30 September 2020 and for the year ending 30 September 2021 were HK\$5,310,000 and HK\$2,400,000 respectively.

The total amount received from FH during the year ended 30 September 2020 under the lease agreement with Rental Revisions amounted to HK\$5,307,000 which did not exceed the annual cap of HK\$5,310,000.

CONTINUING CONNECTED TRANSACTIONS (cont'd)

The continuing connected transactions mentioned above have been reviewed by the Independent Non-executive Directors of the Company who have confirmed that the transactions have been entered into:

• (a) in the ordinary and usual course of business of the Company;
• (b) on normal commercial terms; and
• (c) in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the shareholders of the Company as a whole.

The Company's independent auditor was engaged to report on the Group's continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information" and with reference to Practice Note 740 "Auditor's Letter on Continuing Connected Transactions under the Hong Kong Listing Rules" issued by the Hong Kong Institute of Certified Public Accountants. The independent auditor has issued an unqualified letter containing the findings and conclusions in respect of the abovementioned continuing connected transactions disclosed by the Group in accordance with Main Board Listing Rule 14A.56. A copy of the auditor's letter has been provided by the Company to The Stock Exchange of Hong Kong Limited.

A summary of the related party transactions entered into by the Group during the year ended 30 September 2020 is disclosed in note 25 to the consolidated financial statements. The transactions entered into with Kin Fung Hong Limited and Dedicare Limited in respect of rental and related income on lease of investment properties, and Fu Hop Investment Company Limited in respect of provision of meal to employees of the Group, as described in note 25 to the consolidated financial statements also constitute continuing connected transactions under the Listing Rules. However, they are exempt from shareholders' approval, annual review and all disclosure requirements because it is below de minimis threshold under Rule 14A.76 of the Listing Rules.

DIRECTORS' INTERESTS IN COMPETING BUSINESSES

During the year and up to the date of this report, the following Directors are considered to have interests in the following businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group other than those businesses where the Directors of the Company were appointed as directors to represent the interests of the Company and/or the Group pursuant to the Listing Rules as set out below:

		Description of businesses
	Name of entity which businesses	of the entity which are	Nature of
	are considered to compete or	considered to compete	interest of
	likely to compete with the	or likely to compete	the Director
Name of Director	businesses of the Group	with the Group	in the entity
Mr. Chung Ming Fai	Aik San Realty Limited group of companies	Property investment	Director
	Fu Hop Investment Company Limited	Property investment	Director
	Good Earning Investment Company Limited	Property investment	Director
Mr. Chung Yin Shu, Frederick	Aik San Realty Limited group of companies	Property investment	Director
	Fu Hop Investment Company Limited	Property investment	Director
	Good Earning Investment Company Limited	Property investment	Director
Mr. Chung Wai Shu, Robert	Aik San Realty Limited group of companies	Property investment	Director
	Fu Hop Investment Company Limited	Property investment	Director
	Good Earning Investment Company Limited	Property investment	Director
Dr. Fong Yun Wah, G.B.S., J.P.	Hip Shing Hong Development Company Limited	Property investment	Director
	Kam Wah Investment Company Limited	Property investment	Director
Mr. Tsang On Yip, Patrick	Chow Tai Fook Enterprises Limited group of companies	Property investment	Director

As the Board of Directors of the Company is independent of the boards of these entities, the Group is therefore capable of carrying on such business independently of, and at arm's length from the businesses of these entities.

DIRECTORS' RIGHT TO ACQUIRE SHARES OR DEBENTURES

At no time during the financial year was the Company or its subsidiary a party to any arrangements to enable the Directors (including their spouses or children under 18 years of age) to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

SERVICE CONTRACTS OF DIRECTORS

None of the Directors has a service contract with the Company or its subsidiary, not terminable within one year without the payment of compensation (other than statutory compensation).

DIRECTORS' INTERESTS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at 30 September 2020, the interests or short positions of the Directors in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of the Securities and Futures Ordinance ("SFO")) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, were as follows:

	Number of shares held	Approximate
	Personal	Corporate interests	percentage of shareholding
	interests
Directors
Mr. Chung Ming Fai	12,000,500	1,000 (Note)	48.01
Mr. Chung Yin Shu, Frederick	1,875	—	0.01

Note:

Mr. Chung Ming Fai controls more than one-third of the voting power of Fu Hop Investment Company Limited which held 1,000 shares in the Company.

PERMITTED INDEMNITY PROVISION

The Company's Articles of Association provides that every Director is entitled to be indemnified out of the assets of the Company against all losses or liabilities which he/she may sustain or incur in or about the execution of the duties of his/ her office or otherwise in relation thereto.

SUBSTANTIAL SHAREHOLDERS' INTERESTS IN SHARES

As at 30 September 2020, the interests or short positions of substantial shareholders (as defined in the Listing Rules) in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO were as follows:

Long positions in shares

	Number of shares held
Name	Beneficial interests	Corporate interests	Total	Approximate percentage of shareholding
Cheng Yu Tung Family (Holdings)
Limited ("CYTF") (1)	—	6,731,250	6,731,250	26.93
Cheng Yu Tung Family (Holdings II)
Limited ("CYTF II") (1)	—	6,731,250	6,731,250	26.93
Chow Tai Fook Capital Limited ("CTFC") (1)	—	6,731,250	6,731,250	26.93
Chow Tai Fook (Holding) Limited
(formerly known as Centennial
Success Limited) ("CTFH") (1)	—	6,731,250	6,731,250	26.93
Chow Tai Fook Enterprises Limited ("CTF") (2)	2,981,250	3,750,000	6,731,250	26.93
New World Development Company
Limited ("NWD") (3)	—	3,750,000	3,750,000	15.00
Kin Kiu Enterprises, Limited ("KK") (3)	3,750,000	—	3,750,000	15.00

Notes:

• (1) CYTF and CYTF II hold 48.98% and 46.65% interests in CTFC, respectively. CTFC in turn owns 81.03% interest in CTFH which holds the entire interests in CTF. Therefore, CYTF, CYTF II, CTFC and CTFH are deemed to have interests in the shares in which CTF is deemed to be interested by virtue of its interests in NWD as mentioned in note 2 below.
• (2) CTF and its subsidiaries have interests in more than one-third of the issued shares of NWD and accordingly CTF is deemed to have an interest in the shares in which NWD is interested or deemed to be interested.
• (3) NWD holds 100% direct interest in KK and is accordingly deemed to have an interest in the shares deemed to be interested by KK.

Save as disclosed above, there is no other interest recorded in the register that is required to be kept under Section 336 of the SFO as at 30 September 2020.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the year. Neither the Company nor its subsidiary has purchased or sold any of the Company's shares during the year.

MANAGEMENT CONTRACTS

No contract concerning the management and administration of the whole or any substantial part of the business of the Company was entered into or existed during the financial year.

SUFFICIENCY OF PUBLIC FLOAT

According to information that is available to the Company, the percentage of the Company's shares which are in the hands of the public exceeds 25% of the Company's total number of issued shares.

MAJOR CUSTOMERS AND SUPPLIERS

The aggregate revenue during the year attributable to the Group's five largest customers was 29%, of which 12% was derived from the Group's largest customer.

The aggregate purchases of revenue items during the year attributable to the Group's five largest suppliers was 53%, of which 13%, was made from the Group's largest supplier.

None of the Directors, their associates, or shareholders (which to the knowledge of the Directors own more than 5% of the Company's share capital) had an interest in the share capital of the customers or suppliers noted above.

AUDIT COMMITTEE

An Audit Committee has been established for the purpose of reviewing and providing supervision on the Group's financial reporting process, risk management (including but not limited to business, operation as well as environmental, social and governance related risks) and internal controls. The results for the year have been reviewed by the Audit Committee. The composition of the Audit Committee is shown on page 3.

AUDITOR

The financial statements have been audited by Messrs PricewaterhouseCoopers, who retire and, being eligible, offer themselves for re-appointment.

On behalf of the Board Chung Yin Shu, Frederick Company Secretary

Hong Kong, 10 December 2020

CORPORATE GOVERNANCE REPORT

CORPORATE GOVERNANCE PRACTICES

The Company is committed to maintain a high standard of corporate governance practices and procedures to safeguard the interests of the shareholders and enhance the performance of the Group. The Company has complied with all the applicable code provisions of the Code on Corporate Governance Practices in Appendix 14 to the Listing Rules (the "CG Code") throughout the year ended 30 September 2020, except for the deviations as disclosed in this report.

DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules (the "Model Code") as its own code of conduct regarding securities transactions. Having made specific enquiry of all Directors, the Directors of the Company confirmed that they had complied with the required standard set out in the Model Code during the year ended 30 September 2020.

BOARD OF DIRECTORS

The Board is responsible for overseeing the management, businesses, strategic directions and financial performance of the Group. The Board holds regular meetings to discuss the Group's businesses and operations. All important issues are discussed in a timely manner.

The Board comprises 7 Directors, with 3 Executive Directors, 1 Non-executive Director and 3 Independent Nonexecutive Directors. The biographies of the Directors are set out in Management Profile on page 4 of this annual report. The Company has received annual confirmation of independence from all the Independent Non-executive Directors in accordance with Rule 3.13 of the Listing Rules. The Board is of the view that all the Independent Non-executive Directors are independent in accordance with the Listing Rules.

DIRECTORS' TRAINING

All Directors are provided with timely updates on the Company's performance, financial position and prospects to enable the Board as a whole and each Director to discharge their duties. In addition, all Directors are encouraged to participate in continuous professional development activities to develop and refresh their knowledge and skills.

NON-EXECUTIVE DIRECTORS

Non-executive Directors (including the Independent Non-executive Directors) serve the relevant function of bringing independent judgement on the development, performance and risk management of the Group. The Non-executive Directors are not appointed for a specific term as is stipulated in Code provision A.4.1, but are subject to retirement by rotation in accordance with the articles of association of the Company. Article 103(A) of the articles of association of the Company provides that at each annual general meeting, one-third of the Directors for the time being (or if their number is not a multiple of three, the number nearest to one-third) shall retire from office by rotation, provided that every Director (including those appointed for a specific term) shall be subject to retirement by rotation at least once every three years.

AUDIT COMMITTEE

The Audit Committee, established with specific written terms of reference, consists of three Independent Non-executive Directors and one Non-executive Director and is responsible for the review and supervision of the Group's financial reporting process and internal controls.

During the year, the Audit Committee reviewed the audited financial statements for the year ended 30 September 2020 and the unaudited interim financial statements for the six months ended 31 March 2020 with recommendations to the Board for approval, reviewed reports on internal control system of the Group, and discussed with the management and the external auditors the accounting policies and practices which may affect the Group and financial reporting matters.

Members of the Audit Committee are Mr. Yuen Sik Ming, Patrick (Chairman), Mr. Chung Wai Shu, Robert, Dr. Fong Yun Wah, G.B.S., J.P. and Mr. Lo Pak Shiu.

REMUNERATION COMMITTEE

The Remuneration Committee, established with specific written terms of reference, is responsible for making recommendations on the Company's policy and structure for the remuneration of all the Directors and senior management of the Company and on the establishment of a formal and transparent procedure for developing remuneration policy for approval by the Board. The Remuneration Committee met once during the year to review the remuneration policy for Directors and senior management of the Company.

The remuneration for the Directors and senior management comprises basic salary, retirement benefits and discretionary bonus. Details of the amount of emoluments of Directors paid for the financial year ended 30 September 2020 are set out in note 9 to the financial statements.

Members of the Remuneration Committee are Mr. Yuen Sik Ming, Patrick (Chairman), Mr. Chung Yin Shu, Frederick (Secretary), Mr. Chung Wai Shu, Robert, Dr. Fong Yun Wah, G.B.S., J.P. and Mr. Lo Pak Shiu.

NOMINATION COMMITTEE

The Nomination Committee, established in March 2012 with specific written terms of reference, is responsible for considering the suitability of a candidate to act as a Director on the basis of the candidate's qualification, experience, integrity and potential contribution to the Company, and approving and terminating the appointment of a Director. A candidate to be appointed as Independent Non-executive Director must also meet the independence requirement sets out in Rule 3.13 of the Listing Rules. During the year under review, one meeting was held by the Nomination Committee.

Members of the Nomination Committee are Mr. Yuen Sik Ming, Patrick (Chairman), Mr. Chung Yin Shu, Frederick (Secretary), Mr. Chung Wai Shu, Robert, Dr. Fong Yun Wah, G.B.S., J.P. and Mr. Lo Pak Shiu.

CORPORATE GOVERNANCE REPORT

Attendance at Meetings of the Board and Board Committees

	Number of meetings attended/ eligible to attend for the year ended 30 September 2020
	Board	Audit Committee	Remuneration Committee	Nomination Committee
Name of Director
Executive Directors
Mr. Chung Ming Fai (Chairman)	4/12	N/A	N/A	N/A
Mr. Chung Yin Shu, Frederick	12/12	N/A	1/1	1/1
Mr. Tsang On Yip, Patrick	11/12	N/A	N/A	N/A
(Attended by his alternate, Mr Kenneth Lau)	—	N/A	N/A	N/A
Non-executive Director
Mr. Chung Wai Shu, Robert	12/12	2/2	1/1	1/1
Independent Non-executive Directors
Dr. Fong Yun Wah, G.B.S., J.P.	10/12	1/2	0/1	1/1
Mr. Lo Pak Shiu	12/12	2/2	1/1	1/1
Mr. Yuen Sik Ming, Patrick	9/12	1/2	1/1	0/1

AUDITOR'S REMUNERATION

During the year ended 30 September 2020, the total fees paid/payable in respect of services provided by the Group's external auditor are set out below:

	2020	2019
	HK\$'000	HK\$'000
Audit and audit related services	887	807
Non-audit services	100	583
	987	1,390

DIRECTORS' RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Board, supported by the finance and accounts department, is responsible for the preparation of the financial statements of the Company and the Group. In preparing the financial statements, the Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants have been adopted. Appropriate accounting policies have also been used and applied consistently. The Directors are not aware of any material uncertainties relating to events or conditions which may cast significant doubt upon the Group's ability to continue as a going concern.

DIRECTORS' RESPONSIBILITY FOR THE FINANCIAL STATEMENTS (cont'd)

The statement by the auditor of the Company regarding their reporting responsibilities on the financial statements of the Group is included in the Report of the Independent Auditor on pages 25 to 28 of this annual report.

RISK MANAGEMENT AND INTERNAL CONTROL

The Board has the overall responsibility for overseeing and maintaining sound and effective risk management and internal control systems on an ongoing basis so as to safeguard the Group's assets and shareholders' interests. The Board is responsible for reviewing the risk management and internal control policies on an annual basis, and has delegated the responsibility of designing, implementing and monitoring internal controls and risk management to the Executive Directors.

The risk management and internal control systems provide reasonable but not absolute assurance against material misstatement or loss. They are designed to manage the risk of failure in the Group's operations, safeguard the Group's assets, maintain appropriate accounting records and financial reporting, and ensure effective compliance with the Listing Rules and all other applicable laws and regulations.

The Board will continue to take steps to provide sound and effective risk management, which include identification and assessment of significant business risks, monitoring and reporting of such risks and day-to-day operational management and control to reduce, mitigate or transfer risks. The identified risks are evaluated based on potential impact and likelihood of occurrence. Procedures have been established to identify and execute risk mitigation actions based on the Board's risk tolerance, provide ongoing monitoring of risks to ensure that they are effectively managed as well as to escalate and report any identified issues in a timely manner for effective control.

The Board regularly reviews the effectiveness and adequacy of the risk management and internal control systems and is satisfied that the Group's internal controls on key business processes and operations are sufficiently and reasonably implemented. The Group conducts an annual review on the need for setting up an internal audit department. Given the Group's simple operating structure, it was decided that the Board would be directly responsible for the ongoing review and assessment of the risk management and internal control systems of the Group to ensure overall effectiveness.

COMMUNICATION WITH SHAREHOLDERS

The Board and senior management maintain a continuing dialogue with the Company's shareholders and investors through various channels including the Company's annual general meeting. The Chairman and other members of the Board attend the annual general meeting. The Directors will answer questions raised by the shareholders on the performance of the Group. The Company also holds press and analysts' conferences at least once a year following the release of full year results announcements at which the Executive Directors and senior management of the Group are available to answer questions regarding the performance of the Group.

DIRECTORS' BUSINESS REVIEW

I would report to shareholders that the Group's loss after taxation for the financial year ended 30 September 2020 amounted to HK\$1,185.4 million (2019: HK\$548.8 million). The loss mainly resulted from the current year's decrease in fair value of investment properties of HK\$1,317.2 million compared with the HK\$701.1 million fair value loss for 2019. The Board of Directors recommend a final dividend of HK\$2.80 per share payable to the shareholders registered on 11 February 2021. In addition to the interim dividend of HK\$2.30 per share paid in June 2020, the total dividend for the year amounted to HK\$5.10 per share (2019: HK\$5.10 per share).

The Group's investment properties at Melbourne Plaza, 33 Queen's Road Central and Kimley Commercial Building at 142-146 Queen's Road Central were 92% and 81% leased as at 30 September 2020 respectively.

During the year, rental concessions are granted to certain tenants under the outbreak of coronavirus 2019 (COVID-19) epidemic, the Group's revenue decreased by 10.2% year-on-year as a result. Without any debt or commitment, the Group is in a healthy financial position.

For the Group's investment in Foshan Golf Club project, part of the residential properties have been sold. There are other project items under development and promotion.

Looking into the future, through close liaison with tenants and continuing with its prudent business approach, the Group hopes to bring optimal return to all shareholders.

Taking this opportunity, I would like to thank my fellow directors and staff members for their loyal services and continuing efforts.

Chung Yin Shu, Frederick Executive Director

Hong Kong, 10 December 2020

GROUP RESULTS

As a result of the outbreak of COVID-19 epidemic, the deterioration of the local economy has affected the Group's performance with rental concessions requested by tenants and shrinking demand for office and retail spaces. Loss attributable to equity holders for the year amounted to HK\$1,185.4 million (2019: HK\$548.8 million). The loss mainly resulted from the current year's decrease in fair value of investment properties of HK\$1,317.2 million compared with HK\$701.0 million fair value loss in 2019. After allowing for the effect of fair value changes of investment properties, the underlying operating profit from rental operations decreased 13.3% from HK\$181.5 million to HK\$157.3 million compared to last year. Revenue for the year amounted to HK\$203.7 million (2019: HK\$226.9 million), decreased by 10.2% year-on-year.

SIGNIFICANT INVESTMENTS

The Group's investment properties at Melbourne Plaza and Kimley Commercial Building in Central were approximately 92% and 81% let as at 30 September 2020 respectively (2019: approximately 95% and 83% let respectively).

LIQUIDITY AND FINANCIAL RESOURCES

The Group's working capital requirement was financed by its rental income. As at 30 September 2020, the Group had cash and bank balances totalling HK\$290.4 million (2019: HK\$300.6 million). During the year, the Group did not take up any borrowings or overdraft facilities.

EMPLOYEES AND REMUNERATION POLICIES

The Group employs a total of 17 employees. The Group recognises the importance of the strength of its human resources for its success. Remuneration of employees is maintained at competitive levels and promotion and salary increments are assessed on a performance basis.

MATERIAL ACQUISITIONS, DISPOSALS AND FUTURE DEVELOPMENTS

There were no acquisitions or disposals of subsidiaries and investments accounted for using the equity method during the year. There are no other plans for material capital investments or future developments.

ABOUT THIS REPORT

Melbourne Enterprises Limited (the "Company") and its subsidiaries (together the "Group" or "we") are pleased to present our annual Environmental, Social and Governance ("ESG") Report. The scope of this report covers our key business operations in property investment in Hong Kong. The report summarises our performances in sustainable development during the financial year ended 30 September 2020. The report is prepared based on the ESG Reporting Guide under Appendix 27 of the Main Board Listing Rules issued by the Stock Exchange of Hong Kong Limited.

The Group endeavours to create sustained growth and long-term value for its stakeholders. As a business with a lean employee team of 17 people, the Group embeds ESG considerations when investing in and managing its assets.

The Board of Directors (the "Board") oversees the overall direction of the Group's ESG strategies and the Group sets up ESG programs to align with the direction. ESG performance is measured, reviewed and reported to management regularly for continuous improvement.

We maintain an open and transparent dialogue with our stakeholders, including employees, customers, shareholders, suppliers, contractors, and the wider community, to understand their aspirations, collect their views and act on their feedback. We continue to interact with our stakeholders on an ongoing basis across various platforms and channels, such as meetings, interviews and surveys. The key interests and concerns of our stakeholders have been summarised and analysed to help us identify the key ESG issues, which are reflected via the respective disclosures in the rest of this report.

ENVIRONMENTAL PROTECTION

The Group is committed to operating its business in an environmentally conscious manner. Building energy consumption, waste management and water use during the use and occupancy of the Group's investment properties comprise the key parts of the Group's environmental footprint. Therefore, great emphasis has been put into resource conservation and emissions management at these properties.

We strive to reduce our greenhouse gas emissions through the lowering of our energy consumption from the major areas which include air conditioning, lift and lighting systems. We have installed high efficiency water-cooled chillers with variable-speed drives in air conditioning systems. Special coatings, which contain tight urethane resin-based paint, have been applied to the facades of our buildings in order to improve thermal insulation and reduce energy consumption from cooling. Our lifts have also been equipped with energy saving equipment with variable voltage and frequency to achieve a higher energy efficiency. Lighting systems in the corridors of some of our properties have been replaced with compact fluorescent or LED lamps that are more durable and energy efficient. Moreover, we have extended this initiative to all of the lighting systems within the properties of the Group.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

ENVIRONMENTAL PROTECTION (cont'd)

In addition to the continuous feature upgrades of some building facilities and installation, we communicate environmental targets and performance to employees, customers and other stakeholders. For example, our employees are educated to minimise the usage of energy, water and other resources at the workplace. We have been promoting double-sided printing and waste recycling. Our employees are also encouraged to turn off idle lightings and electrical appliances. Property management staff at our commercial buildings will turn off their building's lighting and reduce passenger lift service starting from 8 p.m. We work closely with tenants to minimise waste generation in their daily operations wherever practicable, through the prevention, reuse, recycling and recovery of waste.

Water conservation is another key focus of the Group. For example, our property management team encourages smart water use by installing water efficient taps in washrooms and promoting concepts of water conservation to our tenants.

Environmental Performance Data Table

Environmental KPIs	Unit	2019/20	2018/19
Total greenhouse gas (GHG) emissions	tonne CO2 e	3,805	3,873
Greenhouse gas emissions (Scope 1)	tonne CO2 e	715	715
Greenhouse gas emissions (Scope 2)	tonne CO2 e	3,090	3,158
Total non-hazardous waste produced	tonne	191	193
Total electricity consumption	kWh	3,814,630	3,997,525
Total electricity consumption intensity
by gross floor area	kWh/Square Feet	12.46	13.06
Total Water consumption	m3	20,187	12,595
Total Water consumption intensity by gross floor area	m3 /Square Feet	0.07	0.04

EMPLOYMENT AND LABOUR PRACTICES

EMPLOYMENT

The Group aspires to be an employer of choice. To offer employees fulfilling and rewarding careers, we put our people first by creating a secured, engaging and inclusive work environment.

Our human resources practices are established to align with the applicable laws and regulations with regard to recruitment, compensation, other benefits and welfare, promotion, working hours, resting periods, equal opportunity, diversity, anti-discrimination and dismissal.

EMPLOYMENT (cont'd)

The Group provides competitive remuneration to attract and retain talent. Salary increments are assessed objectively, on a performance basis. On top of salaries, we provide a range of benefits including medical allowance, transportation and study allowances. Employees are provided with a free lunch and refreshments every working day. In order to promote employee engagement and a sense of belonging, we distribute red pockets and mooncakes at traditional festivals such as the Lunar New Year and Mid-Autumn Festival.

The Group embraces diversity and provides employees with equal opportunity. A nurturing and collaborative workplace for all employees is highly advocated whilst zero tolerance to harassment and discrimination of any form is strictly enforced by the Group. Employees are assessed and hired based on their capabilities, regardless of their age, gender, nationality, cultural background, religious belief, etc.

HEALTH AND SAFETY

Protecting the health, safety and wellbeing of our employees is one of our key focuses. Maintenance and regular inspections are conducted in accordance with regulatory requirements. Fire equipment such as fire extinguishers and emergency lighting system are checked regularly to ensure proper functioning in the event of an emergency.

We believe that both physical and mental health is important to maintain a high standard of work. For example, flexible work arrangement is made available as far as practical in support of our employees to maintain work-life balance.

DEVELOPMENT AND TRAINING

The Group believes that professional development of the employees lays a solid foundation for its business growth and is key to maintaining its competitiveness. Our employees are encouraged to pursue work-related advanced studies and attend seminars and workshops to hone their skills. We support our people by providing study subsidies and flexibility in work scheduling to facilitate the professional development of our employees. Similar to the previous years, we subsidised our employees to attend property management training workshops.

LABOUR STANDARDS

The Group strictly prohibits the use of child and forced labour in its operations and takes rigorous measures to prevent such practices. Our suppliers and contractors are expected to adhere to the same standard. The Group extends its responsibilities beyond mere compliance with relevant laws and regulations to provide employees with quality working conditions.

OPERATING PRACTICES

SUPPLY CHAIN MANAGEMENT

The Group interacts with a number of suppliers and contractors when managing its investment properties. Adherence to environmental and social standards by suppliers and contractors forms an important part of our commitment to sustainable procurement. Through working with our suppliers and contractors, we strive to minimise the risks associated with our supply chain including those related to environmental, social and governance practices. The Group manages the performances of the suppliers and contractors through regular monitoring by the project manager. Annual performance review on the suppliers and contractors is conducted to ensure continuous compliance with the Group's environmental policy. In the event of unsatisfactory performance, the supplier will be asked to rectify this issue in a timely manner. We may also suspend the business relationships with the suppliers or contractors who fail to comply with our performance and ethical standards. For sizeable outsourcing work, we aim to implement a fair and transparent process for bidding, investigations, tender evaluations and decision-making to facilitate contractor selection.

PRODUCT RESPONSIBILITY

The Group is responsible for providing a quality, safe and healthy working environment to the tenants and visitors of its leased properties. Tenants' feedback is welcomed and helps guide the continuous improvement of our service quality. Daily site inspections are conducted and frequent communications with our tenants are maintained with an aim to uphold a high standard of service quality. Feedback and complaints are escalated as needed and followed up by designated teams in a timely manner. The Group is committed to continually improving its service quality. For example, in our facility renovation project, we enhance our facilities with barrier-free entrance as appropriate, in response to the Hong Kong SAR Government's policy on creating a barrier-free access physical environment for persons with disabilities. We care about the customer experience in our properties. We decorate the common areas with greenery, which creates a warm and welcoming environment for our tenants and visitors.

Protecting customer data privacy is a priority when it comes to managing our relationships with our tenants. We implement scrupulous procedures to protect customer data. Customer data are only accessible by authorised personnel and handled with care.

ANTI-CORRUPTION

The Group is committed to operating with a high level of integrity and accountability. We have zero tolerance for fraudulent behaviour, corruption and any forms of bribery. Our principles and strong stance against corruption, conflicts of interest and other malpractices are well conveyed to our employees and the parties that we work with.

COMMUNITY INVESTMENT

The Group is dedicated to serve the community and to creating a positive impact. For example, during the year, we continued to support the used clothes recycling campaign jointly organised by a non-profit making organisation. The campaign, championed by a family member of one of our senior management staff, is aimed to reduce waste and raise funds to help those in need. We provided our emptied shop as the premises to host the clothes sale. Donations raised in the clothes sale was used to support the underprivileged. Beneficiaries are local and international organisations including, but not limited to, Food Angel, Changing Young Lives Foundation, Chi Heng Foundation, Hong Kong Single Parents Association and the Hong Kong Federation of Youth Groups.

REGULATORY COMPLIANCE

The Group is committed to ensuring its businesses are operated in compliance with relevant laws, rules and regulations. Regulatory frameworks within which the Group operates are analysed and monitored; internal policies are prepared and updated accordingly. Workshops or trainings are also conducted where necessary to strengthen the awareness and understanding of the Group's internal controls and compliance procedures.

During the reporting period, the Group was not aware of any non-compliance with laws and regulations that have a significant impact on the Group relating to environmental protection, employment, labour practices and operating practices.

REPORT OF THE INDEPENDENT AUDITOR

INDEPENDENT AUDITOR'S REPORT

To the Members of Melbourne Enterprises Limited (incorporated in Hong Kong with limited liability)

OPINION

What we have audited

The consolidated financial statements of Melbourne Enterprises Limited (the "Company") and its subsidiary (the "Group") set out on pages 29 to 67, which comprise:

• the consolidated balance sheet as at 30 September 2020;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include a summary of significant accounting policies.

Our opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30 September 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter identified in our audit is valuation of investment properties.

Valuation of investment properties

Refer to notes 3(f), 5(a) and 14 to the consolidated financial statements.

As at 30 September 2020, the Group's investment properties were stated at fair value of HK\$7,519.8 million, with a fair value loss of HK\$1,317.2 million recorded in the consolidated statement of comprehensive income for the year.

Management has engaged an independent external valuer to perform a valuation of the investment properties. The external valuer used the direct comparison approach in the valuation of all the investment properties. The valuation of these investment properties requires significant judgment and estimates by the management and the valuer.

In determining a property's valuation, the valuer took into account properties of a similar nature, condition or location and made adjustments to comparable market transactions to arrive at the final valuation.

As the fair value changes were significant to the consolidated financial statements and significant judgment is required in determining the fair values, specific audit focus was placed on this area.

Key Audit Matter How our audit addressed the Key Audit Matter

We evaluated the valuer's qualifications, expertise and objectivity.

With the assistance of our internal valuation experts, we performed the following:

• we read the valuation reports for all properties, held discussions with the valuer to assess the appropriateness of the valuation approach and the market transactions used (including adjustments to comparable market transactions) for determining the fair value for the purpose of the Group's financial statements.
• we compared the market transactions used by the valuer to our knowledge of the property market and published external data, such as transaction records by property agencies and the Land Registry.

We found that management's valuation of the investment properties was supported by the available evidence.

OTHER INFORMATION

The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

OTHER INFORMATION (cont'd)

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF DIRECTORS AND THE AUDIT COMMITTEE FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

The audit committee is responsible for overseeing the Group's financial reporting process.

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. We report our opinion solely to you, as a body, in accordance with Section 405 of the Hong Kong Companies Ordinance and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

REPORT OF THE INDEPENDENT AUDITOR

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (cont'd)

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Mr. Ng Wai Lun.

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, 10 December 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 30 September

	Note	2020 HK\$' 000	2019 HK\$' 000
Revenue	6	203,704	226,921
Operating costs		(37,128)	(34,829)
Gross profit		166,576	192,092
Other income	7	3,207	2,457
Administrative expenses		(12,474)	(13,032)
Decrease in fair values of investment properties	14	(1,317,200)	(701,000)
Loss before taxation	8	(1,159,891)	(519,483)
Income tax expenses	10	(25,547)	(29,365)
Loss for the year attributable to equity holders		(1,185,438)	(548,848)
Other comprehensive (loss)/income
Item that will not be classified subsequently to profit or loss Fair value (loss)/gain on financial asset at fair value
through other comprehensive income		(22,794)	59,318
Total comprehensive loss attributable to equity holders		(1,208,232)	(489,530)
Loss per share
Basic and diluted	12	(HK\$47.42)	(HK\$21.95)

CONSOLIDATED BALANCE SHEET

		30 September	30 September
		2020	2019
	Note	HK\$' 000	HK\$' 000
Non-current assets
Property, plant and equipment	13	616	1,177
Investment properties	14	7,519,800	8,837,000
Investment accounted for using the equity method	16	—	—
Financial asset at fair value through other comprehensive income	18	86,287	109,081
Advances to an investee company	18	29,605	29,605
Deferred rent receivables	19	966	—
		7,637,274	8,976,863
Current assets
Debtors, other receivables, deposits and prepayments	19	13,897	7,643
Cash and bank balances	20	290,398	300,581
		304,295	308,224
Current liabilities
Creditors, accruals and deposits	21	46,045	50,997
Current tax payable		25,396	28,331
		71,441	79,328
Net current assets		232,854	228,896
Total assets less current liabilities		7,870,128	9,205,759
Non-current liabilities
Provision for long service payments		14,195	14,564
Deferred tax liabilities	22	2,248	1,778
		16,443	16,342
Net assets		7,853,685	9,189,417

CONSOLIDATED BALANCE SHEET (CONTINUED)

		30 September	30 September
		2020	2019
	Note	HK\$' 000	HK\$' 000
Equity
Share capital	23	125,000	125,000
Fair value through other comprehensive income reserve		86,286	109,080
Retained profits		7,642,399	8,955,337
Total equity		7,853,685	9,189,417

Chung Ming Fai Chung Yin Shu, Frederick

Director Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 30 September

	Share capital HK\$'000	Investment revaluation reserve HK\$'000	Fair value through other comprehensive income reserve HK\$'000	Retained profits HK\$'000	Total HK\$'000
Balance at 30 September 2018 as originally presented Changes in accounting policies	125,000	49,762	—	9,631,685	9,806,447
– HKFRS 9 Restated at 1 October 2018	— 125,000	(49,762) —	49,762 49,762	— 9,631,685	— 9,806,447
Loss for the year attributable to equity holders Fair value gain on financial asset at fair value through	—	—	—	(548,848)	(548,848)
other comprehensive income	—	—	59,318	—	59,318
Total comprehensive loss for the year	—	—	59,318	(548,848)	(489,530)
2018 final dividend paid 2019 interim dividend paid	— —	— —	— —	(70,000) (57,500)	(70,000) (57,500)
Balance at 30 September 2019 Loss for the year attributable	125,000	—	109,080	8,955,337	9,189,417
to equity holders Fair value loss on financial asset at fair value through other comprehensive income	— —	— —	— (22,794)	(1,185,438) —	(1,185,438) (22,794)
Total comprehensive loss for the year	—	—	(22,794)	(1,185,438)	(1,208,232)
2019 final dividend paid 2020 interim dividend paid	— —	— —	— —	(70,000) (57,500)	(70,000) (57,500)
Balance at 30 September 2020	125,000	—	86,286	7,642,399	7,853,685

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 30 September

	2020 HK\$'000	2019 HK\$'000
Cash flows from operating activities
Loss before taxation	(1,159,891)	(519,483)
Adjustments for:
Interest income	(3,037)	(2,278)
Depreciation	567	569
Impairment loss on trade debtors	56	145
Changes in fair values of investment properties	1,317,200	701,000
Operating profit before working capital changes Increase in deferred rent receivables, debtors, other receivables,	154,895	179,953
deposits and prepayments	(7,639)	(484)
(Decrease)/increase in creditors, accruals and deposits	(4,952)	1,701
(Decrease)/increase in provision for long service payments	(369)	1,073
Net cash generated from operations	141,935	182,243
Interest received	3,400	1,817
Hong Kong profits tax paid	(28,012)	(29,940)
Net cash generated from operating activities	117,323	154,120
Cash flows used in investing activity
Purchase of property, plant and equipment	(6)	—
Net cash used in investing activity	(6)	—
Cash flows used in financing activity
Dividends paid	(127,500)	(127,500)
Net cash used in financing activitiy	(127,500)	(127,500)
Net (decrease)/increase in cash and bank balances	(10,183)	26,620
Cash and bank balances at beginning of the year	300,581	273,961
Cash and bank balances at end of the year	290,398	300,581

1. GENERAL INFORMATION

Melbourne Enterprises Limited (the "Company") is a limited liability company incorporated in Hong Kong. The address of its registered office is Rooms 2102-4, Melbourne Plaza, 33 Queen's Road Central, Hong Kong. The shares of the Company are listed on the Main Board of The Stock Exchange of Hong Kong Limited.

The Company and its subsidiary (together the "Group") are principally engaged in property investment and investment holding in Hong Kong.

These financial statements have been approved for issue by the Board of Directors on 10 December 2020.

2. BASIS OF PREPARATION

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties and financial asset at fair value through other comprehensive income ("FVOCI"), which are measured at fair value, and in accordance with Hong Kong Financial Reporting Standards ("HKFRS") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

The preparation of consolidated financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 5 below.

(a) Adoption of new standard, interpretation, amendments and improvements to existing standards

The Group has adopted the following new standard, interpretation, amendments and improvements to existing standards that are mandatory and relevant to the Group's operation for the financial year ended 30 September 2020:

HKAS 19 Amendment	Plan Amendment, Curtailment or Settlement
HKAS 28 Amendment	Long-term Interests in Associates or Joint Ventures
HKFRS 9 Amendment	Prepayment Features with Negative Compensation
HKFRS 16	Leases
HK(IFRIC)-Int 23	Uncertainty over Income Tax Treatments
Annual Improvement Projects	Annual Improvements 2015-2017 Cycle

The adoption of these new standard, interpretation, amendments and improvements to existing standards does not have any significant effect on the results and financial position of the Group.

The Group leases out various properties under non-cancellable operating lease arrangements and classified these leases as operating leases. The accounting policies applicable to the Group as a lessor in the comparative period are not different from HKFRS 16. The Group is not required to make any adjustments on transition to HKFRS 16 for leases in which it acts as a lessor.

2. BASIS OF PREPARATION (cont'd)

(b) New standard, amendments and improvements to existing standards which are not yet effective

The following new standard, amendments and improvements to existing standards are mandatory for the Group's accounting periods beginning on 1 October 2020 or later periods and have not been early adopted by the Group:

HKAS 1 Amendment	Classification of Liabilities as Current or Non-current
HKAS 1 and HKAS 8 Amendment	Definition of Material
HKAS 16 Amendment	Property Plant and Equipment: Proceeds before Intended Use
HKAS 37 Amendment	Onerous Contracts – Cost of Fulfilling a Contract
HKAS 39, HKFRS 7 and HKFRS 9	Interest Rate Benchmark Reform
Amendment
HKFRS 3 Amendment	Definition of a Business
HKFRS 3 Amendment	Reference to the Conceptual Framework
HKFRS 10 and HKAS 28	Sale or Contribution of Assets between an Investor and its
Amendment	Associate or Joint Venture
HKFRS 16 Amendment	Covid-19-Related Rent Concessions
HKFRS 17	Insurance Contracts
Annual Improvement Projects	Annual Improvements to HKFRSs 2018-2020 Cycle
Conceptual Framework for	Revised Conceptual Framework for Financial Reporting
Financial Reporting 2018

The Group will apply these new standard, amendments and improvements to existing standards as and when they become effective. The Group has already commenced an assessment of the related impact to the Group and is not yet in a position to state whether any substantial changes to the Group's significant accounting policies and presentation of the financial information will be resulted.

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiary made up to 30 September and include the Group's share of the results for the year.

(b) Subsidiaries

A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity.

Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owner of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On the acquisition by acquisition basis, the Group recognises a noncontrolling interest in our acquiree either at fair value or at the non-controlling interest's proportionate share of the acquiree's net assets. If the business combination is achieved in stages, the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree at the date of acquisition over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the carrying amount for the purposes of subsequently accounting for the retained interest as associated companies, joint ventures or financial assets. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

The Company's investment in the subsidiary is carried at cost less provision for impairment losses. The result of the subsidiary is accounted for by the Company on the basis of dividend received and receivable.

(c) Associates

An associate is an entity over which the group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting and are initially recognised at cost. Investments in associates include goodwill (net of any accumulated impairment loss) identified on acquisition. Investments in associates are carried at cost less provision for impairment losses in the Company's financial statements. The results of associates are accounted for by the Company on the basis of dividend income.

The Group's share of post-acquisition profits or losses of associates is recognised in the Group's profit or loss and the share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. For equity accounting purpose, accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

(d) Investments and the financial assets

(i) Classification

The Group classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either through other comprehensive income ("OCI") or through profit or loss), and
• those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.

The Group reclassifies debt investments when and only when its business model for managing those assets changes.

(d) Investments and the financial assets (cont'd)

(ii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

(iii) Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in consolidated statement of comprehensive income.

Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.

Debt instruments

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. The Group classifies its debt instruments as amortised cost where assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in interest income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in consolidated statement of comprehensive income and presented in other gains/(losses) together with foreign exchange gains and losses.

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group's management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in consolidated statement of comprehensive income as other income when the Group's right to receive payments is established.

Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the consolidated statement of comprehensive income as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(d) Investments and the financial assets (cont'd)

(iv) Impairment

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. For other financial assets at amortised cost, as permitted by a transitional provision in HKFRS 9, the provision for these financial assets will be determined based on whether their credit risk are low at each reporting date, and, if so, by recognising a 12-month expected losses amount. If the financial asset is not of a low credit risk, the corresponding provision for doubtful debts will be recognised as equal to lifetime expected losses.

(e) Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of items. Subsequent costs are included in the carrying amount of the assets or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repair and maintenance costs are expensed in the consolidated statement of comprehensive income during the period in which they are incurred. The carrying amount of an asset is written down immediately to its recoverable amount if the carrying value of an asset is greater than its estimated recoverable amount.

Depreciation of property, plant and equipment is calculated to allocate their cost or carrying values less accumulated impairment losses to their estimated residual values over their estimated useful lives using the straight-line method at the rate of 10% or 20% per annum. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

The gain or loss on disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset, and is recognised in the consolidated statement of comprehensive income.

(f) Investment properties

Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the Group, is classified as investment property.

Investment property comprises land held under operating leases and buildings held under finance leases. Land held under operating leases are classified and accounted for as investment property when the rest of the definition of investment property is met. The operating lease is accounted for as if it was a finance lease.

Investment property is measured initially at its cost, including related transaction costs. After initial recognition, investment property is carried at fair value. Fair value is determined by professional qualified valuers on an open market value basis at the end of each reporting period. Changes in fair value are recognised in the consolidated statement of comprehensive income.

Subsequent expenditure is charged to the carrying amount of the asset only when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repairs and maintenance costs are expensed in the consolidated statement of comprehensive income during the financial period in which they are incurred.

(g) Impairment of investment in a subsidiary, associates and non-financial assets

Non-financial assets that have an indefinite useful life, for example goodwill, or have not yet been available for use are not subject to amortisation and are tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount of the asset is greater than its estimated recoverable amount. An impairment loss is recognised in the income statement for the amount by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of its fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped as cash-generating units for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

Impairment testing of the investments in a subsidiary and associates is required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the subsidiary or associates in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee's net assets including goodwill.

(h) Cash and bank balances

In the consolidated statement of cash flows, cash and bank balances includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts.

(i) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services provided, stated net of discounts returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group's activities, as described below. The Group bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(i) Rental

Rental is recognised in the consolidated statement of comprehensive income on a straight-line basis over the lease term. When the Group provides incentives to its tenants, the cost of incentives will be recognised over the lease term, on a straight-line basis, as a reduction of rental income. The difference between the gross invoiced amount of rental and operating lease rental recognised over the lease term is recognised as deferred rent receivables.

(ii) Service fees

Property management service fee is recognised when services are rendered.

(iii) Interest income

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For creditimpaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss allowance).

(iv) Dividend income

Dividend is recognised when the right to receive payment is established.

(j) Operating leases

Group as the lessor of operating leases

Lease income from operating leases where the Group acts as the lessor is recognised on a straight-line basis over the lease term. Initial direct costs incurred in obtaining the operating lease are added to the carrying amount of the underlying asset and recognised as expenses over the lease term on the same basis as lease income. Lease incentives are accounted as in note (i)(i) above. The respective leased assets are included in the balance sheet based on their nature.

(k) Current and deferred taxation

(a) Current income tax

The current taxation is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the country where the Company, its subsidiary company and associated companies operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authority.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

(k) Current and deferred taxation (cont'd)

(b) Deferred income tax (cont'd)

Outside basis differences

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for associates. Only where there is an agreement in place that gives the group the ability to control the reversal of the temporary difference not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiary and associates only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

(l) Employee benefits

(i) Employee long service payments

Employees' entitlements to long service payments are recognised when they accrue to employees. A provision is made for the estimated liability for long service payments as a result of services rendered by employees up to the balance sheet date.

(ii) Mandatory Provident Fund Scheme

The Company contributes to a Mandatory Provident Fund ("MPF") scheme under the Hong Kong Mandatory Provident Fund Schemes Ordinance. The scheme is a defined contribution scheme managed by an independent trustee and is available to all employees. The MPF is funded by payments from employees and by the Company, and provide benefits linked to contributions and investment returns on the scheme. Contributions to the scheme are recognised as an expense in the statement of comprehensive income (operating profit) in the year to which the contributions relate.

(iii) Bonus plan

Provision for bonus plan is recognised when the Company has a present legal or constructive obligation as a result of services rendered by employees and a reliable estimate of the obligation can be made.

(m) Foreign currencies

(i) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in HK dollars (HK\$), which is the Company's functional and the Group's presentation currency.

(ii) Transactions and balances

Changes in the fair value of debt securities denominated in foreign currency classified as available for sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in consolidated statement of comprehensive income, and other changes in carrying amount are recognised in other comprehensive income.

(n) Dividend distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's and the Company's financial statements in the financial period when the dividends are approved by the Company's shareholders/Directors, where appropriate.

(o) Trade and other debtors

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course of business. If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade and other receivables are recognised initially at the amount of consideration that is conditional unless they contain significant financing components, when they are recognised at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

In the event that lease incentives, including rent free periods are given, such incentives are recognised as deferred rent receivables. The aggregate benefit of incentives is recognised as a reduction of rental income on a straight-line basis.

(p) Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as noncurrent liabilities.

Trade creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

(q) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

(r) Share capital

Ordinary shares are classified as equity.

(s) Government subsidies

Subsidies from the government are recognised at their fair value where there is a reasonable assurance that the subsidy will be received and the Group will comply with all attached conditions. Government subsidies relating to costs are deferred and recognised in the consolidated statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate.

4. FINANCIAL RISK MANAGEMENT AND FAIR VALUE ESTIMATION

The Group's activities expose it to a variety of financial risks and the Group's overall risk management policy seeks to minimise potential adverse effects on the Group's financial performance. The Group continues to control financial risk in a conservative approach to safeguard the interest of shareholders.

(a) Credit risk

The credit risk of the Group mainly arises from deposits with banks, advances to an investee company, debtors, other receivables and deposits. The Group's maximum exposure to credit risk in the event of the counterparties' failure to perform their obligations as at the balance sheet dates in relation to each class of recognised financial asset is the carrying amount of those assets as stated in the balance sheets.

Debtors mainly include rental receivables. There is no concentration of credit risk with respect to these receivables as the customer bases are widely dispersed in different sectors and industries. The exposures to these credit risks are closely monitored on an ongoing basis using established credit policies. The Group carries out regular review and follow-up action on any overdue amounts to minimise exposures to credit risk, and monitors its credit control procedures and policies.

4. FINANCIAL RISK MANAGEMENT AND FAIR VALUE ESTIMATION (cont'd)

(a) Credit risk (cont'd)

The Group considers the probability of default from initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis by close monitoring against established credit policies in each of its core business. To assess whether there is a significant increase in credit risk, the Group compares the risk of a default occurring on the assets, generally on individual basis, as at the reporting date with the risk of default as at the date of initial recognition.

For trade debtors and deferred rent receivables in relation to rental income, the Group carries out regular review on these balances and follow-up action on any overdue amounts to minimise exposures to credit risk. The Group measures the lifetime expected credit losses based on the outstanding balances with debtors, offset with the deposit placed to the Group by the counterparties or the assets held by the counterparties expected to be frozen by the court for confiscation, and historical credit loss experience adjusted by the current and forecast economic conditions that may affect the ability of the counterparties to settle receivables.

Impairment on financial assistance provided to investee company such as loan receivable, is measured as either 12-month expected credit losses or lifetime expected credit losses, depending on whether there has been a significant increase in credit risk since initial recognition, through the management's critical assessment on the recoverable amounts based on underlying assets, historical repayment pattern, the actual and expected changes in business performance and general market default rate. If a significant increase in credit risk of a receivable has occurred since initial recognition, then loss allowance is measured as lifetime expected credit losses.

Deposits are placed with high credit-quality financial institutions.

(b) Liquidity risk

The Group aims to maintain prudent liquidity risk management and flexibility in funding by keeping sufficient cash and cash equivalents. The Group's working capital requirement is generally financed by its rental income.

Creditors and deposits are due within one year.

(c) Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares.

The Group did not have any borrowings at 30 September 2020 and 2019. The Group uses equity to finance its operation.

4. FINANCIAL RISK MANAGEMENT AND FAIR VALUE ESTIMATION (cont'd)

(d) Fair value estimation

Financial instruments that are measured in the statement of financial position at fair value are disclosed by level of the following fair value measurement hierarchy:

• ‧ Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• ‧ Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
• ‧ Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The fair values of financial instruments traded in active markets are based on quoted market prices at the end of the reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. None of the instruments is included in level 1 as at 30 September 2020 and 2019.

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. None of the instrument is included in level 2 as at 30 September 2020 and 2019.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Unobservable inputs were used to determine the fair value of financial asset at FVOCI, which is included in level 3.

For the year ended 30 September 2020, there were no transfer of financial assets of the Group between different levels of the fair value hierarchy.

The following table presents the Group's financial instruments that are measured at fair value at 30 September 2020 and 2019:

	2020	2019
	Level 3	Level 3
	HK\$'000	HK\$'000
Financial asset at fair value through other comprehensive income	86,287	109,081

Changes in financial asset at FVOCI in level 3 financial instrument for the year ended 30 September 2020 and 2019 were set out in note 18 (iii).

4. FINANCIAL RISK MANAGEMENT AND FAIR VALUE ESTIMATION (cont'd)

(d) Fair value estimation (cont'd)

As at 30 September 2020, the fair value of an unlisted financial asset at fair value through other comprehensive income is determined by adjusted net asset method with reference to market value of the golf courses and related commercial and residential properties assessed by an independent professional valuer, using direct market comparison, residual method and income capitalisation method for respective properties. The directors consider that this valuation technique is more relevant given that the golf courses and related commercial and residential properties are the major and principal underlying assets of the financial asset. This financial asset at fair value through other comprehensive income is included in level 3.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that may have a significant effect on the carrying amounts of assets are as follows:

(a) Valuation of investment properties

The fair value of each investment property is individually determined at each balance sheet date by independent valuers on a market value assessment. The fair value is based on the direct comparison method with reference to current sale prices in an active market for properties of similar nature, condition or location. In the absence of such information, the valuer determines the amount within a range of reasonable fair value estimates. In making its judgment, the valuer considers information from a variety of sources including current sale prices in an active market for properties of different nature, condition or location, adjusted to reflect those differences.

Judgment is required to determine the principal valuation assumptions to determine the fair value of the investment properties.

At 30 September 2020, if the market value of investment properties had been 10% higher/lower with all other variables held constant, the carrying value of the Group's investment properties would have been HK\$752.0 million (2019: HK\$883.7 million) higher/lower and the Group's loss before tax would have been decreased/ increased by HK\$752.0 million (2019: HK\$883.7 million).

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (cont'd)

(b) Fair value of financial asset at FVOCI

The fair value of financial asset at FVOCI that is not traded in an active market is determined by using valuation techniques. The Group uses its judgment to select a method (i.e. adjusted net asset method) and make assumptions that are mainly based on market conditions at the end of each reporting period.

6. SEGMENT INFORMATION

The Board collectively has been identified as the chief operating decision makers. The Board reviews the Group's internal reporting in order to assess performance and allocate resources.

The Board considers property investment in Hong Kong as the sole operating segment of the Group.

		2020	2019
		HK\$'000	HK\$'000
(a)	Revenue
	Property investment
	Rental income	183,919	205,784
	Property management fee income	19,785	21,137
		203,704	226,921
(b)	Contribution to loss before taxation
	Property investment – Rental operation	157,309	181,517
	Decrease in fair values of investment properties	(1,317,200)	(701,000)
	Loss before taxation	(1,159,891)	(519,483)

Revenue (representing turnover) comprises rental and service income from investment properties in Hong Kong.

7. OTHER INCOME

	2020	2019
	HK\$'000	HK\$'000
Bank interest income	3,037	2,278
Sundry income	170	179
	3,207	2,457

8. LOSS BEFORE TAXATION

	2020	2019
	HK\$'000	HK\$'000
Loss before taxation is stated after charging:
Outgoings in respect of investment properties	35,471	32,836
Directors' emoluments (note 9(a))	2,461	2,421
Auditor's remuneration	887	807
Depreciation	567	569
Impairment loss on trade debtors	56	145
Staff costs (excluding Directors' emoluments)
Salaries and other emoluments (note)	4,870	5,627
Long service payments	938	807
Contributions to mandatory provident fund scheme	133	131

Note:

For the year ended 30 September 2020, wages subsidies of HK\$540,000 (2019: Nil) from the Employment Support Scheme ("ESS") under the Anti-epidemic Fund of the HKSAR Government are net off in salaries and other emoluments. Wage subsidies for October and November 2020 from ESS of HK\$270,000 are to be net off for the year ending 30 September 2021. The ESS aims to provide time-limited financial support to employers to retain their employees who may otherwise be made redundant as a result of the coronavirus disease 2019 ("COVID-19").

9. DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS

		2020	2019
		HK\$'000	HK\$'000
(a)	Directors' emoluments
	Fees	1,050	1,050
	Salaries and other emoluments	1,152	1,106
	Long service payments	259	265
		2,461	2,421

Each Director receives a fixed fee of HK\$150,000 (2019: HK\$150,000) per annum. Fees paid to Non-executive Directors for the year amounted to HK\$600,000 (2019: HK\$600,000). During the year, the Group did not pay the Directors any inducement to join or upon joining the Group, any compensation for loss of office. None of the Directors has waived the right to receive their emoluments.

Details of the emoluments paid and accrued to the Directors are as follows:

For the year ended 30 September 2020

		Salaries		Long
		and		service
Name of Director	Fees	allowances	Bonus	payments	Total
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
Mr. Chung Ming Fai	150	—	—	—	150
Dr. Fong Yun Wah, G.B.S., J.P.	150	—	—	—	150
Mr. Chung Yin Shu, Frederick	150	1,027	125	259	1,561
Mr. Chung Wai Shu, Robert	150	—	—	—	150
Mr. Lo Pak Shiu	150	—	—	—	150
Mr. Yuen Sik Ming, Patrick	150	—	—	—	150
Mr. Tsang On Yip, Patrick	150	—	—	—	150
	1,050	1,027	125	259	2,461

9. DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS (cont'd)

For the year ended 30 September 2019

		Salaries		Long
		and		service
Name of Director	Fees	allowances	Bonus	payments	Total
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
Mr. Chung Ming Fai	150	—	—	—	150
Dr. Fong Yun Wah, G.B.S., J.P.	150	—	—	—	150
Mr. Chung Yin Shu, Frederick	150	986	120	265	1,521
Mr. Chung Wai Shu, Robert	150	—	—	—	150
Mr. Lo Pak Shiu	150	—	—	—	150
Mr. Yuen Sik Ming, Patrick	150	—	—	—	150
Mr. Tsang On Yip, Patrick	150	—	—	—	150
	1,050	986	120	265	2,421

Notes

• i) During the year, no payments or benefits in respect of termination of directors' services were paid or made, directly or indirectly, to the directors; nor are any payable (2019: HK\$Nil).
• ii) During the year, no consideration was provided to or receivable by third parties for making available directors' services (2019: HK\$Nil).
• iii) During the year, there are no loans, quasi-loans or other dealings in favour of the directors, their controlled bodies corporate and connected entities (2019: None).
• iv) Except as disclosed in note 25 to the consolidated financial statements, no significant transactions, arrangements and contracts in relation to the Company's business to which the Company was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year (2019: None).

9. DIRECTORS' AND SENIOR EXECUTIVES' EMOLUMENTS (cont'd)

(b) Senior executives' emoluments

The five individuals whose emoluments were the highest in the Group for the year include one Director (2019: one Director) whose emoluments are reflected in the analysis presented in note 9(a) above. Details of the emoluments paid to the remaining four (2019: four) individuals during the year are as follows:

	2020	2019
	HK\$'000	HK\$'000
Salaries and other emoluments	2,386	2,290
Long service payments	455	463
Contributions to mandatory provident fund scheme	—	1
	2,841	2,754

The emoluments of each of the individuals are below HK\$1,000,000.

10. INCOME TAX EXPENSES

The amount of taxation charged to the consolidated statement of comprehensive income represents:

	2020	2019
	HK\$'000	HK\$'000
Current income tax
– Hong Kong profits tax	25,157	29,365
– Over-provision in respect of prior year	(80)	—
	25,077	29,365
Deferred income tax (Note 22)	470	—
	25,547	29,365

10. INCOME TAX EXPENSES (cont'd)

For the years ended 30 September 2020 and 2019, the provision for Hong Kong profits tax has been calculated in accordance with the two-tiered profits tax rates regime. Under the two-tiered profits tax rates regime, the first HK\$2 million of assessable profits of a qualifying corporation of the Group will be taxed at 8.25%, and assessable profits above HK\$2 million of the qualifying corporation will be taxed at 16.5%. The assessable profits of the other entity of the Group in Hong Kong not qualifying for the two-tiered profits tax rates regime will continue to be taxed at the flat rate of 16.5%.

The taxation on the Group's loss before taxation differs from the theoretical amount that would arise using the taxation rate of Hong Kong as follows.

	2020	2019
	HK\$'000	HK\$'000
Loss before taxation	(1,159,891)	(519,483)
Calculated at a taxation rate of 16.5% (2019: 16.5%)	(191,382)	(85,715)
Income not subject to taxation	(728)	(514)
Expenses or loss not deductible for taxation purposes	217,432	115,759
Recognition of temporary difference previously unrecognised	470	—
Effect of different tax rate of a subsidiary	(165)	(165)
Over-provision in respect of prior year	(80)	—
Income tax expenses	25,547	29,365

11. DIVIDENDS

	2020	2019
	HK\$'000	HK\$'000
Interim dividend paid of HK\$2.30 (2019: HK\$2.30) per share	57,500	57,500
Final dividend proposed of HK\$2.80
(2019: HK\$2.80) per share	70,000	70,000
	127,500	127,500

At a meeting held on 10 December 2020, the Directors recommended a final dividend of HK\$2.80 per share. This proposed dividend will be accounted for as an appropriation of retained profits for the year ending 30 September 2021.

12. LOSS PER SHARE

The calculation of basic loss per share is based on the loss attributable to equity holders of HK\$1,185,438,000 (2019: HK\$548,848,000) and the 25,000,000 shares in issue throughout the two years ended 30 September 2020 and 2019.

Diluted loss per share equal basic loss per share because there were no potential dilutive shares outstanding during the two years ended 30 September 2020 and 2019.

13. PROPERTY, PLANT AND EQUIPMENT

	Fixtures and
	equipment
	HK\$'000
Cost
At 1 October 2018 and 30 September 2019	8,117
Additions	6
At 30 September 2020	8,123
Accumulated depreciation
At 1 October 2018	6,371
Charge for the year	569
At 30 September 2019	6,940
Charge for the year	567
At 30 September 2020	7,507
Net book value
At 30 September 2020	616
At 30 September 2019	1,177

14. INVESTMENT PROPERTIES

	HK\$'000
Valuation at 1 October 2018	9,538,000
Fair value changes	(701,000)
Valuation at 30 September 2019	8,837,000
Fair value changes	(1,317,200)
Valuation at 30 September 2020	7,519,800

		Floor area	Group
Principal investment properties	Type	(Sq ft)	interest
Melbourne Plaza	Commercial retail	257,036	100%
Kimley Commercial Building	Commercial retail	49,003	100%
On Hing Mansion Shop 9B	Retail	270	100%

Valuation process of the Group

The investment properties as at 30 September 2020 were revalued on an open market value basis by CS Surveyors Limited, independent professional valuer who holds a recognised professional qualification and has recent experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use.

The Group's finance department includes a team that reviews the valuation performed by the independent valuer for financial reporting purposes. This team reports directly to the senior management and the Audit Committee. Discussions of valuation processes and results are held between the management and valuer at least once every six months, in line with the Group's interim and annual reporting dates.

At each financial year end, the finance department verifies all major inputs to the independent valuation report; assesses property valuation movements when compared to the prior year valuation report; and holds discussions with the independent valuer.

The investment properties are commercial properties in Hong Kong held under long leases (over 50 years).

Fair values of the investment properties are derived using the direct comparison approach. Sales prices of comparable properties in close proximity are adjusted for differences in key attributes such as property size, location, time, layout, frontage and ancillary.

As at 30 September 2020, all investment properties are included in level 3 fair value hierarchy.

There were no changes to the valuation techniques during the year and there were no transfers between fair value hierarchy during the year.

14. INVESTMENT PROPERTIES (cont'd)

Valuation process of the Group (cont'd)

The most significant input into this valuation is price per square foot. Information about fair value measurement using significant unobservable inputs:

				Range of
Completed	2020	2019	Valuation	unobservable	Relationship of
properties	Fair value	Fair value	technique	inputs	unobservable inputs
	HK\$'000	HK\$'000		HK\$ per square foot
Melbourne Plaza	6,800,000	8,000,000	Direct Comparison	Market comparable	The higher the price,
				prices ranging from	the higher the fair value
				20,968 - 338,250
				(2019: 28,454 -
				338,250) and
				adjusted taking into
				account locations
				and other individual
				factors such as size,
				layout, frontage and
				conditions of the
				property.
Kimley Commercial	706,000	820,000	Direct Comparison	Market comparable	The higher the price,
Building				prices ranging from	the higher the fair value
				11,019 - 87,719
				(2019: 12,536 -
				77,805) and
				adjusted taking into
				account locations
				and other individual
				factors such as size,
				layout, frontage and conditions of the
				property.
On Hing Mansion	13,800	17,000	Direct Comparison	Market comparable	The higher the price,
Shop 9B				prices ranging from	the higher the fair value
				32,880 - 50,000
				(2019: 51,621 -
				72,998) and
				adjusted taking into
				account locations
				and other individual
				factors such as size,
				layout, frontage and
				conditions of the
				property.

15. SUBSIDIARY

Details of the subsidiary as at 30 September 2020 and 2019 are set out below:

Private company incorporated
in Hong Kong and directly		Equity
owned by the Company	Issued and paid up ordinary share capital	holding
Iau On Company Limited	HK\$10,000,000 of 100,000 shares	100%

The subsidiary is engaged in the business of property investment in Hong Kong.

16. INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD

	2020	2019
	HK\$'000	HK\$'000
Group's share of net assets of investment accounted for using the equity method	—	—
Advance to an investment accounted for using the equity method Less: Provision for impairment losses	5,428 (5,428)	5,427 (5,427)
	—	—
	—	—

The advance to an investment accounted for using the equity method is unsecured, interest free and not repayable within 12 months.

There is no investment accounted for using the equity method that is individually significant to the Group. The Group's share of aggregate results of the investments accounted for using the equity method is set out below:

	2020	2019
	HK\$'000	HK\$'000
Revenues	—	—
Loss and other comprehensive income for the year	—	—

16. INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD (cont'd)

Details of the investment accounted for using the equity method are set out below:

Private company incorporated
in Hong Kong and directly	Issued and paid up			Principal activities
owned by the Company	ordinary share capital	Equity holding		(in Hong Kong)
		2020	2019
Chuen King Enterprises Limited	HK\$100,000 of 1,000 shares	50%	50%	Inactive

17. FINANCIAL INSTRUMENTS BY CATEGORY

	2020	2019
	HK\$'000	HK\$'000
Financial assets
Financial assets at fair value through other comprehensive income	86,287	109,081
Financial assets at amortised cost
Long-term receivables	29,605	29,605
Trade and other debtors	13,376	6,129
Cash and bank balances	290,398	300,581
Financial liabilities
Financial liability at amortised cost
Trade creditors and deposits	45,033	49,617

18. FINANCIAL ASSET AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME AND ADVANCES TO AN INVESTEE COMPANY

Financial asset at FVOCI comprises equity investment which is not held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category. It is an strategic investments and the Group considers this classification to be more relevant.

	2020	2019
	HK\$'000	HK\$'000
Unlisted equity investment	86,287	109,081
Advances to an investee company	29,605	29,605

Notes:

• (i) Financial asset at FVOCI represents 14.29% equity interest in Billion Park Investment Limited ("Billion Park"), a private company incorporated in Hong Kong. The principal activity of Billion Park is to participate in Foshan International Country Club Company Limited, a co-operative joint venture formed in the People's Republic of China in which the Group has an effective interest of 5%, for the construction of commercial and residential properties and the operation of a golf course in Foshan.
• (ii) As at 30 September 2020, the fair value of unlisted financial asset at FVOCI is determined by adjusted net asset method with reference to market value of the golf courses facilities and related commercial and residential properties assessed by an independent professional valuer, using direct market comparison, residual method and income capitalisation method for respective properties.
• (iii) The following table presents the change during the year:

	2020	2019
	HK\$'000	HK\$'000
At 1 October	109,081	49,763
Changes in fair value	(22,794)	59,318
At 30 September	86,287	109,081

(iv) The advances are unsecured, interest free, have no fixed terms of repayment and not expected to be settled within 12 months. Their carrying amounts are not materially different from their fair values.

19. DEBTORS, OTHER RECEIVABLES, DEPOSITS, AND PREPAYMENTS
-----------------------------------------------------------

2020	2019
HK\$'000	HK\$'000
4,362	5,062
7,277	—
1,487	1,514
771	1,067
	7,643
	13,897

Note:

Deferred rent receivables represent the accumulated difference between effective rental revenue and actual invoiced rental amount. Deferred rent receivables amounted to HK\$966,000 which are expected to be realised twelve months after the balance sheet date are classified as non-current assets.

The Group normally does not grant credit period to trade debtors. As of 30 September 2020, trade receivables of the Group amounting to HK\$4,362,000 (2019: HK\$5,062,000) was not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of these trade receivables is as follows:

	2020 HK\$'000	2019 HK\$'000
Within 30 days	2,457	3,501
31 to 60 days	1,260	1,115
61 to 90 days	584	446
Over 90 days	61	—
	4,362	5,062

At 30 September 2020 and 2019, no loss allowance was made on the trade debtors. The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS 9. Trade debtors of HK\$56,274 (2019: HK\$145,312) were written off as at 30 September 2020.

The other classes within debtors, other receivables, deposits and prepayments do not contain impaired assets.

The Group does not hold any collateral as security, except that the Group holds rental deposits from tenants for leasing of properties.

The carrying amounts of debtors, other receivables and deposits were denominated in Hong Kong dollars and approximate their fair values.

20. CASH AND BANK BALANCES

	2020	2019
	HK\$'000	HK\$'000
Cash at banks and on hand	100,979	139,241
Time deposits	189,419	161,340
	290,398	300,581

The carrying amounts of cash and bank balances were denominated in Hong Kong dollars.

21. CREDITORS, ACCRUALS AND DEPOSITS

	2020	2019
	HK\$'000	HK\$'000
Trade creditors	1,012	1,380
Accruals and deposits	45,033	49,617
	46,045	50,997

The carrying amounts of creditors, accruals and deposits were denominated in Hong Kong dollars and approximate their fair values.

The ageing analysis of the trade creditors based on invoice date is as follows:

	2020	2019
	HK\$'000	HK\$'000
Trade creditors
Within 30 days	1,012	1,098
31 to 60 days	—	48
61 to 90 days	—	—
Over 90 days	—	234
	1,012	1,380

22. DEFERRED TAX LIABILITIES

Deferred taxation is calculated in full on temporary differences under the liability method using a taxation rate of 16.5% (2019: 16.5%).

The movements on the net deferred tax liabilities during the year are as follows:

	2020	2019
	HK\$'000	HK\$'000
Accelerated tax depreciation
At 1 October	1,778	1,778
Charged to consolidated statement of comprehensive income (Note 10)	470	—
At 30 September	2,248	1,778

23. SHARE CAPITAL

	2020		2019
	Number of shares	HK\$'000	Number of shares	HK\$'000
Ordinary shares, issued and fully paid: At beginning and end of the year	25,000,000	125,000	25,000,000	125,000

24. FUTURE MINIMUM LEASE RECEIVABLE

The future aggregate minimum lease receivables under non-cancellable operating leases are as follows:

	2020	2019
	HK\$'000	HK\$'000
Not later than 1 year	128,289	180,843
Between 1 and 2 years	44,732	73,648
Between 2 and 3 years	5,759	11,381
	178,780	265,872

The Group's operating leases are generally for terms of one to three years.

25. RELATED PARTY TRANSACTIONS

During the year, certain investment properties of the Group were leased to related companies, which are controlled by certain directors of the Company and/or their close family members, at terms in accordance with the relevant tenancy agreements. Rental and related income received from these related companies during the year were HK\$10,917,000 (2019: HK\$11,704,000).

During the year, the meal expenses for employees of HK\$192,000 (2019: HK\$192,000) were paid by the Group to a related company, Fu Hop Investment Company Limited, which is controlled by certain directors of the Company, at mutually agreed terms.

No significant transactions have been entered with the directors of the Company (being the key management personnel) during the year other than the emoluments paid to them (being the key management personnel compensation) as disclosed in note 9(a).

The advance to an investment accounted for using the equity method is disclosed in note 16.

26. COMPANY BALANCE SHEET

	30 September	30 September
	2020	2019
Note	HK\$'000	HK\$'000
Non-current assets
Property, plant and equipment	616	1,177
Investment properties	6,800,000	8,000,000
Investment in a subsidiary 15	10,000	10,000
Investment in an associate	50	50
Financial asset at fair value through other comprehensive income	86,287	109,081
Advances to an investee company	29,605	29,605
Deferred rent receivables	938	—
	6,927,496	8,149,913
Current assets
Debtors, other receivables, deposits and prepayments	12,812	7,317
Cash and bank balances	289,330	299,460
	302,142	306,777
Current liabilities
Creditors, accruals and deposits	42,827	47,423
Amount due to a subsidiary	6,672	4,951
Current tax payable	23,380	25,114
	72,879	77,488
Net current assets	229,263	229,289
Total assets less current liabilities	7,156,759	8,379,202
Non-current liabilities
Provision for long service payments	14,195	14,564
Deferred tax liabilities	2,248	1,778
	16,443	16,342
Net assets	7,140,316	8,362,860

26. COMPANY BALANCE SHEET (cont'd)

	30 September	30 September
	2020	2019
	HK\$'000	HK\$'000
Equity
Share capital	125,000	125,000
Fair value through other comprehensive income reserve	86,286	109,080
Retained profits	6,929,030	8,128,780
Total equity	7,140,316	8,362,860

Director Director

Chung Ming Fai Chung Yin Shu, Frederick

26. COMPANY BALANCE SHEET (cont'd)

Note

Reserves

The movements of the Company's reserves is as follows:

	Fair value
		through other
		Investment comprehensive
	revaluation	income	Retained
	reserve	reserve	profits	Total
	HK\$'000	HK\$'000	HK\$'000	HK\$'000
Company
Balance at 30 September 2018
as originally presented	49,762	—	8,770,040	8,819,802
Changes in accounting policies
– HKFRS9	(49,762)	49,762	—	—
Restated at 1 October 2018	—	49,762	8,770,040	8,819,802
Loss for the year	—	—	(513,760)	(513,760)
Fair value gain on financial asset at fair value through other
comprehensive income	—	59,318	—	59,318
Total comprehensive loss for the year	—	59,318	(513,760)	(454,442)
2018 final dividend paid	—	—	(70,000)	(70,000)
2019 interim dividend paid	—	—	(57,500)	(57,500)
Balance at 30 September 2019	—	109,080	8,128,780	8,237,860
Loss for the year Fair value loss on financial asset at fair value through other	—	—	(1,072,250)	(1,072,250)
comprehensive income	—	(22,794)	—	(22,794)
Total comprehensive loss for the year	—	(22,794)	(1,072,250)	(1,095,044)
2019 final dividend paid	—	—	(70,000)	(70,000)
2020 interim dividend paid	—	—	(57,500)	(57,500)
Balance at 30 September 2020	—	86,286	6,929,030	7,015,316

FIVE-YEAR FINANCIAL SUMMARY

	2020 HK\$'000	2019 HK\$'000	2018 HK\$'000	2017 HK\$'000	2016 HK\$'000
Investment properties, property, plant and equipment Investments accounted for using	7,520,416	8,838,177	9,539,746	7,390,881	6,030,025
the equity method	—	—	317	321	853
Investment and advances	115,892	138,686	79,368	58,134	87,707
Deferred rent receivables	966	—	—	—	—
Current assets	304,295	308,224	280,487	253,307	226,305
Total assets	7,941,569	9,285,087	9,899,918	7,702,643	6,344,890
Current liabilities	(71,441)	(79,328)	(78,202)	(76,560)	(82,854)
Non-current liabilities	(16,443)	(16,342)	(15,269)	(14,452)	(13,759)
Net assets	7,853,685	9,189,417	9,806,447	7,611,631	6,248,277
Share capital	125,000	125,000	125,000	125,000	125,000
Investment revaluation reserve	—	—	49,762	28,528	58,101
Fair value through other comprehensive
income reserve	86,286	109,080	—	—	—
Retained profits	7,642,399	8,955,337	9,631,685	7,458,103	6,065,176
Total equity	7,853,685	9,189,417	9,806,447	7,611,631	6,248,277
Revenue	203,704	226,921	220,088	232,319	232,111
Operating (loss)/profit	(1,159,891)	(519,483)	2,327,556	1,545,712	311,904
Share of results of investments accounted for using the equity method	—	—	(4)	17	(52)
(Loss)/profit before taxation	(1,159,891)	(519,483)	2,327,552	1,545,729	311,852
Income tax expense	(25,547)	(29,365)	(28,970)	(30,302)	(30,367)
(Loss)/profit attributable to equity holders	(1,185,438)	(548,848)	2,298,582	1,515,427	281,485
	HK\$	HK\$	HK\$	HK\$	HK\$
(Loss)/earnings per share Basic and diluted	(47.42)	(21.95)	91.94	60.62	11.26
Dividends per share
Interim	2.30	2.30	2.30	2.30	2.20
Final	2.80	2.80	2.80	2.70	2.60
	5.10	5.10	5.10	5.00	4.80