S E A Holdings Limited - Annual Report 2020

Highlights 3
Location of the Group's Properties/Projects 6
Property Portfolio 7
Chairman's Statement 12
Chief Executive's Report 14
Directors' Biographical Information 19
Financial Highlights 22
Management Discussion and Analysis 25
Financial Calendar 34
Corporate Governance Report 35
Directors' Report 52
Independent Auditor's Report 68
Consolidated Statement of Profit or Loss 73
Consolidated Statement of Profit or Loss and Other Comprehensive Income 75
Consolidated Statement of Financial Position 76
Consolidated Statement of Changes in Equity 78
Consolidated Statement of Cash Flows 79
Notes to the Consolidated Financial Statements 81
Glossary 167

NOMINATION COMMITTEE

Mr. Lu Wing Chi, Jesse (Chairman) Mr. Walujo Santoso, Wally Mr. Leung Hok Lim

REMUNERATION COMMITTEE

Mr. Chung Pui Lam (Chairman) Mr. Lu Wing Chi, Jesse Mr. Lambert Lu Mr. Walujo Santoso, Wally Mr. Leung Hok Lim

AUTHORISED REPRESENTATIVES

Mr. Lambert Lu Ms. Chow Siu Yin, Dora

COMPANY SECRETARY

Ms. Chow Siu Yin, Dora

LEGAL ADVISERS

Mayer Brown Clifford Chance Stephenson Harwood Conyers Dill & Pearman

INDEPENDENT AUDITOR

Deloitte Touche Tohmatsu

PRINCIPAL BANKERS

The Hongkong and Shanghai Banking Corporation Limited Bank of China (Hong Kong) Limited Credit Suisse AG Hong Kong Branch Standard Chartered Bank (Hong Kong) Limited Hang Seng Bank Limited

REGISTERED OFFICE

Clarendon House 2 Church Street Hamilton HM11 Bermuda

PRINCIPAL PLACE OF BUSINESS

26/F., Everbright Centre 108 Gloucester Road Wanchai, Hong Kong Tel: (852) 2828 6363 Fax: (852) 2598 6861 E-mail: [email protected]

BRANCH REGISTRAR IN HONG KONG

Tricor Standard Limited Level 54, Hopewell Centre 183 Queen's Road East Hong Kong Tel: (852) 2980 1333 Fax: (852) 2528 3158

LISTING

The shares of the Company are listed and traded on the Main Board of The Stock Exchange of Hong Kong Limited.

STOCK CODE AND BOARD LOT

251/2,000 shares

WEBSITE

www.seagroup.com.hk

HIGHLIGHTS For the year ended 31 December 2020

Rendering, Grand Victoria, Hong Kong

Location of the Group's Properties/PROJECTS

UNITED KINGDOM

London

20 Moorgate
33 Old Broad Street

CHINA Hong Kong

• 1 Shouson Hill Road East
• Crowne Plaza Hong Kong Causeway Bay
• Grand Victoria
• Winway Building

CHINA

Queensland

AUSTRALIA

AUSTRALIA Queensland

• Lizard Island Resort

Property Portfolio List of All Properties

At 31 December 2020

Particulars of Development Properties / Properties under Development

Name of Project	Location	Expected Completion	Usage	Approximate Gross Floor Area (sq. ft.)	Group's Interest (%)
HONG KONG, CHINA
Grand Victoria	6 Lai Ying Street and 8 Lai Ying Street, South West Kowloon, Hong Kong	March 2023	Residential	987,812	10

Particulars of Investment Properties

Name of Project	Location	Lease Expiry	Usage	Approximate Gross Floor Area ("GFA") / Saleable Floor Area ("SFA") (sq. ft.)	Group's Interest (%)
HONG KONG, CHINA
1 Shouson Hill Road East	1 Shouson Hill Road East, Deep Water Bay, Hong Kong	30 June 2047	Residential	SFA: 30,000	100 (10 houses, each with 2 car parking spaces)
Winway Building	50 Wellington Street, Central, Hong Kong	999 years commencing from 26 June 1843	Commercial	GFA: 58,207	58.83
LON DON, THE UNITED KINGDOM
33 Old Broad Street	33-41 Old Broad Street and 1-6 Union Court, London EC2	Freehold	Office	GFA: 191,165	100
20 Moorgate	20 Moorgate, London EC2R 6DA	Long lease	Office	GFA: 155,000	100
QUEENSLAN D, AUSTRAL	IA
Lizard Island Resort	Lizard Island, Tropical North, Queensland	30 September 2050	Resort Hotel	GFA: 113,000	100

Particulars of Hotel Building

Name of Project	Location	Lease Expiry	Usage	Approximate Gross Floor Area (sq.ft.)	Group's Interest (%)
HONG KONG, CHINA
Crowne Plaza Hong Kong Causeway Bay	8 Leighton Road, Causeway Bay, Hong Kong	6 November 2049	Hotel	200,000	100

At 31 December 2020

Hong Kong, China

Rendering, Grand Victoria, Hong Kong

Project name: grand Victoria

development Address:

6 Lai Ying Street and 8 Lai Ying Street, South West Kowloon, Hong Kong

district: South West Kowloon

Property Website: www.grandvictoria.hk

Usage: Residential

Approximate Site Area: 208,262 sq.ft.

Approximate gross Floor Area: 987,812 sq. ft.

number of Residential Units: Approximate 1,437

Expected Completion: March 2023

mode of development: Joint Venture (the Group holds 10% interest)

geographical Environment:

Located at the South West Kowloon waterfront. The location enjoying panoramic harbour views while having the West Kowloon Cultural District and Guangzhou – Shenzhen – Hong Kong Express Rail Link Terminus in the vicinity. It enjoys excellent connectivity with MTR stations and lines linking Central, airport, the Express Rail Link Terminus and all the commercial hubs in the city.

Planning and design:

Crafted by world-renowned, award-winning visionaries- architect and designer:

Arquitectonica
Rottet Studio
Champalimaud Design
Hirsch Bedner Associates (HBA)

Project Highlight:

The project consists of 3 Phases, Phase I provides 524 units; Phase II provides 525 units and Phase III provides 388 units.
Amenities worthy of a luxury resort will include, but not limited to:
Swimming Pools, steam room and sauna
Fitness studio
Yoga Retreat
Sports Court
Kids' Voyage, Kids' Land
Director's Villa, Voyage Room
The Lounge
Tailor-made property management with distinguished service.
Smart Living delivered with innovation.

At 31 December 2020

Hong Kong, China

1 Shouson Hill Road East, Hong Kong

Project name: 1 Shouson Hill Road East

development Address:

1 Shouson Hill Road East, Deep Water Bay, Hong Kong

district: Deep Water Bay

Usage: Residential

Approximate Site Area: 75,649 sq.ft.

Approximate Saleable Floor Area: 30,000 sq. ft.

number of Residential Units: 20 Houses

ownership Status:

Wholly-owned 10 houses, each with 2 car parking spaces

geographical Environment:

Prestigiously situated in the luxurious residential area in the Deep Water Bay area of Island South, the project possesses the lush panoramic views of Mount Nicholson and residents could enjoy the convenience of commuting to Central and Causeway Bay by just a few minutes of driving.

Planning and design:

Crafted by internationally renowned, award-winning designer, Steve Leung.

Project Highlight:

Features 20 blocks of 3-storey detached houses, each with a sizable private garden, roof top and covered car parking spaces accessible directly from the house.
Residential Amenities:
22m heated swimming pool
Gym
Banquet room
Outdoor BBQ and children playground
Home to numerous reputable International schools.

At 31 December 2020

London, the United Kingdom

33 Old Broad Street, London

Project name: 33 old Broad Street

development Address:

33-41 Old Broad Street and 1-6 Union Court, London EC2

district: Central Business District, London

Usage: Office

Approximate gross Floor Area: 191,165 sq. ft.

lease Expiry: Freehold

ownership Status: Wholly-owned

geographical Environment:

33 Old Broad Street is prominently located at the core of the City of London with only 150 metres away from the Liverpool Street Crossrail Station. This strategic location appeals to global occupiers from the financial, insurance and professional sectors.

Project Highlight:

the 9-storey property is located in "the Eastern Cluster" identified by the City of London Corporation, which is identified as suitable for development of high-rise buildings, providing a promising redevelopment opportunity as a landmark development.
Currently leased to Bank of Scotland as their London Headquarter.

At 31 December 2020

London, the United Kingdom

20 Moorgate, London

Project name: 20 moorgate

development Address:

20 Moorgate, London EC2R 6DA

district: Central Business District, London

Usage: Office

Approximate gross Floor Area: 155,000 sq. ft.

lease Expiry: Long lease

ownership Status: Wholly-owned

Project Highlight:

20 Moorgate is a 7-storey office building located in the heart of London with less than 100 metres of walking distance from the Bank of England. The development provides a sizable floor space of Grade A office, retail and ancillary accommodation. The commercial part of the property is fully let as the Headquarter of United Kingdom Prudential Regulation Authority (a regulatory body of the Bank of England).

Chairman's Statement

The world today is undergoing unprecedented changes, and our businesses in Hong Kong suffered from the double blow of social unrest and the outbreak of COVID-19 which particularly hit our hotel business. Fortunately, the Group has diversified its asset class and geographical business, which successfully balanced the impact of these incidents. I am pleased to announce to our Shareholders that the Group continued to be profitable in FY2020.

Our hotel business has suffered from a significant decline in both business and leisure travelers and the situation remains uncertain. Despite the uncertainty on the changes in the global travel trends, we see potential demand from shorthaul travel tourists. Hong Kong remains Mainland China's perfect choice. Consumer sentiment for outbound tours is building up and this potential demand stands to benefit our hotel in Hong Kong. Further, I believe that the promulgation of National Security Law in Hong Kong helps strengthen the social stability of Hong Kong. Upon re-open of border after pandemic, we are of the view that the Mainland tourists will travel to Hong Kong again.

Property development and investment remain the core businesses of the Group. With the Group's prudent investment strategy, we have built up a high quality property development and investment portfolio to maintain future growth and liquidity. The Group's Joint Venture project -

the West Kowloon waterfront residential project "Grand Victoria", launched pre-sale in March 2021 and provides visibility to the Group's future profit. The Group is also well diversified geographically and therefore able to take advantage of different territory cycles. We continue to focus on reputable tenants under long leases with investment grade covenants for contribution of stable rental income to the Group. With the Group's robust financial position, we are ready to take advantage of opportunities as they arise.

Making profits and achieving sustainable development are both important to the Group. To maintain success of the Group, we have established an excellent management team and good corporate governance practices. In FY2020, the Group won a number of international awards and I am very proud of the widespread recognition for our efforts in this regard.

Chairman's Statement

On the ESG front, global trends, such as growing customers' and shareholders' interest in sustainability, are re-shaping the business environment. Investors are emphasizing ESG factors when evaluating companies. Therefore, we are actively establishing a sound sustainability governance model and integrating it into our business operations. We believe that is what our Shareholders expect of us.

The general economy remains challenging with the double-strike of social unrest and COVID-19. We keep cautious about land acquisition and exploration of investment opportunities. The healthy gearing level and strong cashflow of the Group provide room for the Group to grasp opportunities when available. Looking ahead, the economy of the world and Hong Kong still face difficulties and challenges. However, China is tackling the problems effectively by putting more resources in maintaining employment as well as fostering social stability. We expect the global economy will recover gradually and are confident that the economic growth of China and Hong Kong will still be stronger than the rest of the world.

I am confident that the Group will be able to cope with the current global economic headwinds and provide stable dividends to its Shareholders. I would also like to take the opportunity to thank our Shareholders, partners and colleagues for their concerted effort, which underpins the steady growth of our business. They are the key elements for the Group's success.

Lu Wing Chi, Jesse Chairman

26 March 2021

1 Shouson Hill Road East, Hong Kong Rendering, Grand Victoria, Hong Kong

Balance Sheet and Management

FY2020 HIGHLIGHTS

For the Group, 2020 is a year full of challenge and uncertainty. The global economy was impacted by outbreak of COVID-19 and the US-China trade tensions. Despite the significant slowdown in the global economy, I am pleased to report that the Group recorded a profit of HK\$151 million this year.

Property Development

We continue our effort in the residential development project in West Kowloon Waterfront "Grand Victoria"1. The project is progressed well with construction entering the superstructure work. Pre-sale of the project has been launched in March 2021 and over 270 units of the residential project have been sold with approximately HK\$4 billion of sale proceeds.

Hotel Operations and Management

• COVID-19 hit our hotel operations significantly but immediate measures were taken to mitigate the impact. We streamlined our manpower resources, cut costs and reviewed thoroughly all our expenses. Moreover, we are introducing marketing and sales recovery strategies, rebranding our existing restaurant outlets and introducing a new Italian restaurant for having an all-new dining experience to the guests. All-in-all, whilst it has been a difficult period for the hotel industry, we have taken actions to deal with this period of uncertainty.
• We fully repaid USD200 million guaranteed note which matured in January 2020 by cash and we continue to keep a large balance of cash and highly liquid investments.

Furthermore, we have access to approximately HK\$9.1 billion of available fund2 to maintain maximum financial flexibility.

• Cost control initiatives were implemented to navigate the unforeseen challenge of COVID-19.

¹ The Group is being a part of the consortium comprised of well-known property developers.

² It includes cash, undrawn facilities and highly liquid marketable securities, net of leverage.

RESULTS HIGHLIGHTS

In FY2020, the Group recorded revenue of HK\$602.9 million (FY2019: HK\$816.4 million), a 26.2% decrease as compared to FY2019. This decrease in revenue was mainly due to the significant drop in hotel operating results due to COVID-19 outbreak.

Net profit attributable to the Shareholders for the year amounted to HK\$151.0 million (FY2019: HK\$173.1 million), a 12.8% decrease as compared to last year, mainly due to the sharp decline in hotel performance caused by COVID-19 outbreak, which was offset by surplus in the fair value of investment properties and increase in return from financial investment, net of finance cost, in FY2020.

The Group remains resilient and continues to generate sustainable value for its Shareholders. As a result, the Board recommended a final dividend of HK3 cents per share. Together with an interim dividend of HK2 cents per share, the total dividend for the year will amount to HK5 cents per share. The Group is committed to maintaining a stable dividend policy in the long run.

For more details on our financial results, please refer to the section entitled "Management Discussion and Analysis".

STRENGTHENING OUR BUSINESS RESILIENCE

The Group adheres to prudent investment strategy. Our performance in FY2020 has been slightly affected by the outbreak of COVID-19 and the general uncertainty in the global economy except for hotel business. The Group has worked very hard to position itself to weather the global economic headwinds and to get itself ready to take advantage of a rebound in business activity during the recovery phase. We have taken the following specific measures:

• Reducing overheads in the hotel operations through trimming down operating workforce as well as cutting fixed costs; and
• Streamlining of operations including reducing workforce in other operations.

20 Moorgate, London Rendering, Grand Victoria, Hong Kong

Furthermore, the Group also benefited from government incentives and compensation programs such as the Employment Support Scheme under the Anti-epidemic Fund in which the HKSAR government will provide a wage subsidy to eligible employers. With incentives offered, the Group received approximately HK\$7.7 million, the financial impacts of COVID-19 in FY2020 had been, to some extent, mitigated.

The Group remains much disciplined in reviewing investment opportunities. The current market environment is starting to force certain owners of assets or businesses to consider selling or introducing a partner. The Group will seek to take advantage of the environment to expand its business.

We will also seek partnerships with companies that own land in good locations to jointly develop their sites for regeneration or repositioning which provides us with an attractive strategy to property development.

We will continue with our prudent approach in allocating capital across the different divisions and regions to allow us to generate higher returns on equity as compared with our peer groups in Hong Kong. We firmly believe this approach should drive share price outperformance.

CAPITAL STRUCTURE AND LIQUIDITY

Adhering to prudent management of our capital, the Group continued to optimize its capital structure to ensure sufficient liquidity.

As at 31 December 2020, the Group's cash position amounted to HK\$3,384.2 million (2019: HK\$5,526.1 million). Together with the Group's undrawn banking facilities stood at HK\$3,332.1 million (2019: HK\$2,412.4 million), total available fund to the Group amounts to HK\$6,716.3 million (2019: HK\$7,938.5 million).

Our net gearing ratio (adjusting for hotel revaluation surplus of HK\$5,033.8 million, which is not recognized on the balance sheet) stood at 17.6% as at 31 December 2020. Although hotel valuations were affected by COVID-19, the Group's credit standing remains healthy.

For equity, we repurchased approximately 20 million shares during the year for a total consideration of approximately HK\$194.2 million. We believe this is an effective way to increase earnings per share and capital gain to our Shareholders along with the declared dividends.

C O R P O R A T E GO VER N A N CE A ND C O R P O R A T E S O C I A L RESPONSIBILITY

We believe a high standard of corporate governance is an essential element to enhance sustainable development and provide a high degree of transparency to our investors. During the year, the Group received a number of international awards that recognized our efforts in its corporate governance and corporate social responsibility.

Examples of awards include:

Hong Kong – S E A Holdings Limited

• Caring Company 2020
• Happy Company 2020
• Good Employer Charter 2020
• Good MPF Employer 2020: "Good MPF Employer" "MPF Support Award"

Hong Kong – Crowne Plaza Hong Kong Causeway Bay

• Booking.com: Traveler Review Awards 2020
• Caring Company: 10 Year Plus Caring Company (2010 2020 Award)
• Hotels.com: Loved by Guests Award 2020
• TripAdvisor: Travelers' Choice 2020

Australia – Lizard Island Resort

• Travel + Leisure World's Best Awards 2020

The Group is committed to continuing its efforts to strengthen corporate social responsibility in all aspects and will continue to provide investors with a high degree of transparency in information disclosures.

OUTLOOK

Since the recovery of COVID-19 is still uncertain, it is difficult to predict the short-term and long-term effects on the economy. The economic outlook has become more challenging. The Group has adopted a series of mitigation and control measures to overcome this challenging period and will continue to closely monitor the economic recovery condition. We are ready to take more measures to tackle different situation. If the economy can rebound in rapid succession, we can react quickly and actively seek more opportunities.

Revenue from property investment in the coming years is expected to remain good given that we have reputable tenants under long leases. The rental income generated from these investment properties amounted to HK\$212.9 million as at 31 December 2020. These provide clear visibility of revenue recognition of our business in the coming years.

Revenue from our hotel operations was impacted by COVID-19 and we do not expect a quick return to normality. Under the current environment, we will continue to review and control operating costs to ensure that the business can endure a long period of adverse conditions.

It is our target to improve return on equity by optimizing capital structure. The Group will continue to adopt a prudent approach to manage its balance sheet in order to maintain its good credit standing.

In conclusion, our strategic direction remains unchanged. Our core strategy is to seek sustainable growth through our strong financial position, quality corporate governance and adherence to its philosophy of "Building with the Times". The Group's prudent financial management policy aims to optimize its capital structure through active capital reallocation in order to increase return on equity.

I am optimistic about the Group's future and I very much believe that we are well-positioned for the recovery of the global economy. We have a number of existing projects on the way that will provide very strong cash flows to the Group in the years to come.

Rendering, Grand Victoria, Hong Kong

Crowne Plaza Hong Kong Causeway Bay, Hong Kong

33 Old Broad Street, London

Lambert Lu Chief Executive

26 March 2021

Directors' Biographical Information

MR. LU WING CHI, JESSE

Chairman Executive Director

Mr. Lu Wing Chi, Jesse, aged 74, joined the Group in 1969 and is currently the Chairman and Executive Director. He is also the chairman of the Nomination Committee and the Executive Committee and a member of the Remuneration Committee.

Mr. Lu is a director of various members of the Group and holds directorship in NLI (the controlling shareholder of the Company), NYH, Port Lucky, SEA Fortune and Ambleside Glory (all of them are substantial shareholders of the Company). He has more than 50 years of experience in property development and investment in Hong Kong and overseas as well as godown and factory operations.

Mr. Lu is the son of Mr. Lu Chu Mang (the founder of the Group) and the father of Mr. Lambert Lu (the Executive Director and Chief Executive) and Mr. Lincoln Lu (the Non-executive Director).

MR. LAMBERT LU

Executive Director Chief Executive

Mr. Lambert Lu, aged 44, joined the Group in 1999 and is currently the Executive Director and Chief Executive. He is also a member of the Executive Committee and Remuneration Committee.

Mr. Lu is a director of a number of companies within the Group and holds directorship in NLI (the controlling shareholder of the Company), NYH, Port Lucky, SEA Fortune and Ambleside Glory (all of them are substantial shareholders of the Company).

Mr. Lu is a member of the Henan Committee of Chinese People's Political Consultative Conference and the Advisory Board of the MBA Programmes of The Chinese University of Hong Kong. He was previously the vice chairman of The Chamber of Hong Kong Listed Companies. He holds a Bachelor's degree from the University of British Columbia in Canada.

Mr. Lu is the son of Mr. Lu Wing Chi, Jesse (the Chairman and Executive Director) and the brother of Mr. Lincoln Lu (the Non-executive Director).

Mr. Yap Shee Liam

Executive Director Chief Financial Officer

Mr. Yap Shee Liam, FCPA, aged 47, joined the Group as the Financial Controller in 2015 and has been appointed as Executive Director and Chief Financial Officer since January 2021. He is also a member of the Executive Committee and a director of a number of companies within the Group.

Prior to joining the Group, Mr. Yap was an assistant finance director of Fortune Real Estate Investment Trust (a real estate investment trust listed in Hong Kong and also listed in Singapore prior to 2019) from 2012 to 2015. He was a deputy financial controller of Lai Sun Development Company Limited (a company listed in Hong Kong) from 2008 to 2012. Previous to that he was senior manager of Messrs. Deloitte Touche Tohmatsu from 1997 to 2008. Mr. Yap has more than 20 years of experience in finance, accounting, treasury and auditing.

He holds a Bachelor Degree in Business Administration with major in Accounting from Hong Kong Baptist University.

Directors' Biographical Information

Mr. Lam Sing Tai

Non-executive Director

Mr. Lam Sing Tai, aged 74, joined the Group in 1973 and has acted as a Non-executive Director since April 2006. Mr. Lam is a director of various members of the Group. He has over 45 years of solid experience in property development and investment.

Mr. Lincoln Lu

Non-executive Director

Mr. Lincoln Lu, aged 46, has acted as a Non-executive Director since May 2017. Mr. Lu joined the Group in 1998 and served as an Executive Director during the period from December 2003 to May 2017. He holds directorship in NYH, Port Lucky and SEA Fortune (all of them are substantial shareholders of the Company). Mr. Lu is the Managing Director of Orion Land Limited. In addition, he was a director of NLI (the controlling shareholder of the Company) until August 2018.

Mr. Lu holds a Bachelor of Arts degree from the University of British Columbia in Canada. He is currently a member of the 10th and 11th Sichuan Committee of Chinese People's Political Consultative Conference ("CPPCC") and a standing member of the 12th Sichuan Committee of CPPCC. He is also an executive member of the 11th and 12th All-China Federation of Industry and Commerce.

Mr. Lu is the son of Mr. Lu Wing Chi, Jesse (the Chairman and Executive Director) and the brother of Mr. Lambert Lu (the Executive Director and Chief Executive).

Mr. Walujo Santoso, Wally

Independent Non-executive Director

Mr. Walujo Santoso, Wally, aged 67, has acted as an Independent Non-executive Director since December 1994. He is a member of the Audit Committee, Nomination Committee and Remuneration Committee.

Mr. Santoso is also the Managing Director of Grand Ocean (International) Limited (a private company in which Mr. Santoso is a shareholder) and has over 40 years of experience in international trading and manufacturing. He holds a Diploma in Accounting.

Mr. Santoso did not hold any directorship in other listed public companies in the last three years.

Directors' Biographical Information

Mr. Leung Hok Lim

Independent Non-executive Director

Mr. Leung Hok Lim, FCPA(Aust.), CPA(Macau), aged 85, has acted as an Independent Non-executive Director since February 1999. He is the chairman of the Audit Committee and a member of the Nomination Committee and Remuneration Committee.

Mr. Leung is the founding and senior partner of PKF. He is the independent non-executive director of High Fashion International Limited and Phoenix Media Investment (Holdings) Limited (both are companies listed in Hong Kong).

Mr. Chung Pui Lam

Independent Non-executive Director

Mr. Chung Pui Lam, GBS, OBE, JP, aged 80, has acted as an Independent Non-executive Director since September 2004. He is the chairman of the Remuneration Committee and a member of the Audit Committee.

Mr. Chung is a practicing solicitor in Hong Kong. He is also a non-executive director of Chow Sang Sang Holdings International Limited and an independent non-executive director of Datronix Holdings Limited (both are listed companies in Hong Kong). In addition, Mr. Chung is serving as consultant for numerous district organisations, industrial and commercial associations, trade unions and body corporates.

Mr. Chan Kwok Wai

Independent Non-executive Director

Mr. Chan Kwok Wai, FCCA, FCPA, FCPA(Aust.), ACIS, TEP, AFP, aged 64, has acted as an Independent Non-executive Director since June 2019. He is a member of the Audit Committee.

Mr. Chan is currently an executive director of South Asia Textiles (Holdings) Limited (a private company incorporated in Hong Kong) which he joined in May 2020. Prior to that, Mr. Chan was an executive director and the head of greater China at Hang Seng Bank Limited from February 2016 to May 2017. He also served as an executive director of Sun Hung Kai Properties Limited from July 2009 to November 2015 and the chief financial officer of the same company from July 2009 to January 2016. From 1995 to 2009, Mr. Chan held various roles at Hang Seng Bank Limited including executive director and general manager, chief financial officer, deputy general manager, assistant general manager and head of Financial Control Division. Mr. Chan served as an independent non-executive director of IntelliCentrics Global Holdings Ltd. (a company listed in Hong Kong) for the period from March 2019 to January 2020. He was appointed as an accounting consultant of the Ministry of Finance of the People's Republic of China. Mr. Chan has more than 20 years of experience in accounting, banking and professional services industries. Mr. Chan holds a Master of Business Administration degree from the University of Warwick England.

Financial Highlights Statement of Profit or Loss Highlights

HK\$ million, unless otherwise stated

			For the year ended 31 December
	2016	2017	2018	2019	2020
Revenue Note 1	566.0	627.6	778.8	816.4	602.9
Profit attributable to the Shareholders	684.3	267.3	121.0	173.1	151.0
Total dividends declared (per share) (HK cents) Note 2	11.0	305.0	5.0	5.0	5.0
Basic earnings per share for profit attributable to the
S hareholders (HK\$)	1.01	0.39	0.18	0.26	0.23

Total dividends declared (per share) (HK cents)

Profit attributable to the Shareholders (HK\$ million)

Note 1: The revenue for 2017 represented continuing operations HK\$576.5 million and discontinued operations HK\$51.1 million respectively.

Note 2: Other than the above cash dividend declared, the distribution of a special non-cash dividend by way of distribution in specie of HK\$3,883.8 million was completed on 15 May 2017.

Financial Highlights Statement of Financial Position Highlights

HK\$ million, unless otherwise stated

	As at 31 December
	2016	2017	2018	2019	2020
Total assets Total liabilities	17,279.9 (4,947.2)	19,011.1 (12,867.0)	19,986.1 (13,974.5)	20,537.8 (14,287.4)	16,961.7 (10,721.1)
Adjusted NA V attributable to 25,000 the Shareholders Note 1 25,000 Adjusted NA V per share attributable	15,000 14,831.0	15,000 9,516.4	11,405.4	11,564.2	11,274.4
20,000 20,000 to the Shareholders (HK\$) Note 1 15,000 15,000	12,000 21.9 9,000	12,000 14.1 9,000	17.2	17.5	17.6

Total liabilities (HK\$ million)

15,000 15,000 Note 1: The adjusted NAV and adjusted NAV per share attributable to the Shareholders are calculated on the basis of the Group's respective book NAV after adjusting hotel property (which is on cost basis in the book) to fair market value determined by independent property valuers.

Rendering, Grand Victoria, Hong Kong

Segment Revenue for External Sales

Revenue for External Customers by Geographical Location of Properties

Property Assets by Geographical Segment

Rendering, Grand Victoria, Hong Kong

Financial Summary

Revenue for the year ended 31 December 2020 amounted to HK\$602.9 million (2019: HK\$816.4 million). The revenue was principally attributable to the recognition of rental income from investment properties, revenue from hotel operation and income from financial investment.

Profit attributable to the Shareholders for the year amounted to HK\$151.0 million (2019: HK\$173.1 million), equivalent to a basic earnings per share of HK23.0 cents (2019: HK26.1 cents). The decrease in profit attributable to the Shareholders in current year was mainly because of the significant drop in hotel operating results due to COVID-19 outbreak, but largely offset by fair value surplus in investment properties and increase in return from financial investment, net of finance cost.

The reported profit attributable to the Shareholders included a revaluation surplus on investment properties net of deferred taxation of HK\$37.7 million (2019: HK\$38.5 million). By excluding the effect of such surplus, the Group's net profit attributable to the Shareholders was HK\$113.3 million (2019: HK\$134.6 million), equivalent to HK17.2 cents (2019: HK20.3 cents) per share.

As at 31 December 2020, the Group's equity attributable to the Shareholders amounted to HK\$6,240.6 million (2019: HK\$6,250.4 million). The net asset value per share attributable to the Shareholders as at 31 December 2020 was HK\$9.7 as compared with HK\$9.4 as at 31 December 2019.

The Group's property assets (including interests in joint venture) by geographical location at the year end were as follows:

	31 December 2020 HK\$' million	31 December 2019 HK\$' million
Hong Kong The United Kingdom Australia	4,243.8 4,697.2 171.0	4,365.2 4,542.3 156.1
Total	9,112.0	9,063.6

The Group's hotel property is stated at cost less accumulated depreciation charges at a carrying value of HK\$566.2 million (2019: HK\$586.2 million), whereas the market value as at 31 December 2020 as determined by valuation carried out by an independent property valuer is HK\$5,600.0 million (2019: HK\$5,900.0 million). For the purpose of providing supplementary information, if the carrying value of the Group's hotel property was restated to its market value as at 31 December 2020, the adjusted total property assets, the adjusted net asset value and adjusted net asset value per share attributable to the Shareholders would be HK\$14,145.8 million (2019: HK\$14,377.4 million), HK\$11,274.4 million (2019: HK\$11,564.2 million) and HK\$17.6 (2019: HK\$17.5) respectively.

Dividends

The Board has resolved to recommend for Shareholders' approval at the forthcoming 2021 AGM the payment of a final dividend of HK3 cents (2019: HK3 cents) per share for the year ended 31 December 2020 to the Shareholders whose names appear on the register of members at the close of business on Monday, 7 June 2021. The relevant dividend warrants are expected to be despatched on or before Friday, 18 June 2021.

Together with the interim dividend of HK2 cents per share already paid (2019: HK2 cents), the total dividends for the year will be HK5 cents (2019: HK5 cents) per share.

Business Review

Property Investment and Development

The Group continues to focus on property development and property investment projects, but has not committed to limit its sphere of activities solely to outside the PRC or to property related development and investments. The strategy of the Group will be determined by the Board taking into consideration market opportunities, the Group's financial resources and its core competence. It is the Group's approach to review and optimize the project portfolios from time to time. Currently, the Group's core projects mainly consist of a residential project (No. 1 Shouson Hill Road East), an investment property in Hong Kong (a portion of Winway Building) and a joint venture residential development project "Grand Victoria" at West Kowloon Waterfront in Hong Kong, two investment properties in London, the United Kingdom (20 Moorgate and 33 Old Broad Street) and an investment property in Australia (Lizard Island).

Hong Kong

During the year, the Group continues our effort in the residential development project in West Kowloon Waterfront "Grand Victoria"1. The project is being developed into a premium-graded residential project with its unique locational advantages and design. The location enjoys excellent connectivity with the MTR station providing seamless linkages with Central, the airport, the highspeed rail terminus as well as most of the commercial districts in the region. Superstructure work is in progress as scheduled and the development is expected to be completed by 2023. Pre-sale of the residential units has been launched in March 2021. In the first launch of the presale, over 270 units of the project have been sold with total sale procceds of nearly HK\$4.0 billion.

Rendering, Grand Victoria, Hong Kong

Located at No. 50 Wellington Street, Central, Hong Kong, "Winway Building"2, one of the Group's investment properties, is at the prime location of central business district of Hong Kong and is a high quality commercial property with gross floor area of approximately 58,207 sq.ft.. The rental income generated from the property for the year ended 31 December 2020 was HK\$17.3 million which slightly decreased primarily due to the impact of COVID-19, including rental relief granted to selective tenants to help them weather through this difficult time. As at 31 December 2020, the occupancy rate declined to 87% (2019: 95%). Following to the slowdown of COVID-19 pandemic, the occupancy rate has recovered to 95% in March 2021.

The Group owns 10 houses of residential properties at Shouson Hill Road East, prime situated in the Deep Water Bay of Hong Kong South, also known as the traditional supreme luxury residential zone, surrounded by lush landscaping with wide Mount Nicholson view. Parts of the renovation works were completed during the year with remaining works to be completed in 2021 by phases. Despite the COVID-19 during the year, the demand for luxury home continues to show resilience amid limited new supply.

The United Kingdom

The Group owns two investment properties located in the heart of London in the United Kingdom.

20 Moorgate, London, a commercial and office property, is a seven-storey high-quality office building and located in London, less than 100 metres north of the Bank of England. It comprises approximately 154,854 sq. ft. (14,386 sq. m.) of Grade A office, retail and ancillary facilities arranged over lower ground, ground and seven upper floors. The property is almost fully let to the Prudential Regulatory Authority (a regulatory body of the Bank of England) as a headquarter under longterm lease agreements. Rental income generated from the property of £7.5 million, approximately HK\$75.3 million (2019: HK\$75.5 million) during the year.

¹ The Group is being a part of the consortium comprised of well-known property developers.

² The Group owns approximately 59% of the gross floor area of Winway Building.

33 Old Broad Street, London, a high quality commercial property, is prominently positioned in the core of the City of London, only 150 metres away from the new Crossrail station - Liverpool Street Station. This strategic location appeals to global occupiers from the financial, insurance and professional sectors. Moreover, the 9-storey property is located in an area known as the Eastern Cluster, identified by the City of London Corporation as suitable for development of tall buildings, providing a landmark tower redevelopment opportunity. With a floor space of 191,165 sq. ft. (17,760 sq. m.), the property is fully leased to Bank of Scotland as their London Headquarter and guaranteed by HBOS Plc (a wholly owned subsidiary of the Lloyds Banking Group) for a fixed term until 2039 with fixed uplift every five years on rental. The property generated rental income of £10.3 million, approximately HK\$103.2 million (2019: HK\$103.2 million) during the year.

33 Old Broad Street, London

Despite the prolonged lockdown in the United Kingdom and world economy uncertainties during the COVID-19 pandemic, the Group did not have any rent arrear from the above tenants in the United Kingdom, reflecting the Group's success in making investment strategy and the Group's capability to withstand in any market instability.

Australia

Lizard Island Resort, an Australia's northern-most island resort, uniquely locates on the Great barrier Reef, 240 kilometres north of Cairns, and has 24 powdery-white beaches, over 1000 hectares of national park, 40 luxurious beach lodges. Lizard Island has been consistently ranked as one of the world's top luxury island resorts. As at 31 December 2020, the property was fully let to a hotel operator on a long-term lease guaranteed by an investment grade conglomerate. The rental income generated from the property for year ended 31 December 2020 was HK\$13.4 million (2019: HK\$15.4 million).

Lizard Island Resort, Queensland

Hotel Operation

Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star hotel comprising 263 guest rooms with ancillary facilities and is operated under the brand of Crowne Plaza of the InterContinental Hotels Group. Due to the outbreak of COVID-19 and its adverse impact on cross border and international travel since January 2020, the global hotel industry and the performance of our hotel have been negatively affected. For the year ended 31 December 2020, the hotel revenue and operating results dropped significantly, which was HK\$44.8 million (2019: HK\$192.3 million).

Sushi Ikkon at Crowne Plaza Hong Kong Causeway Bay, Hong Kong

The Group is taking all practicable measures to cope with the challenges. We prioritize in delivering feeling of safety to our guests, putting in place strict sanitisation and hygiene protocol. Moreover, we have finished rebranding of our existing restaurant outlets and introducing a new Italian restaurant for having an all-new dining experience to the guests, and at the same time, taking decisive decision to reduce operating costs. The Group will continue to improve the quality of its hotel services to ensure our guests have enjoyable experiences during their stays in our hotel.

Financial Investment

Adhering to prudent management of our capital, the Group continues to optimize its capital structure and prioritise access to ample liquidity under the low interest rate environment. During the year, the Group has stragetically invested in pre-IPO shares of China Evergrande Property Services Group Limited, which was classified under equity instruments at fair value through other comprehensive income. As at 31 December 2020, the Group held financial investment of approximately HK\$4,412.3 million (31 December 2019: HK\$5,880.8 million), which are comprised of listed equity and debt securities and unlisted investments.

Financial Resources and Liquidity

Working Capital and Loan Facilities

As at 31 December 2020, the Group's total pledged bank deposits, bank balances and cash was HK\$3,384.2 million (2019: HK\$5,526.1 million), total financial investments (including debt instruments at fair value through other comprehensive income, financial assets at fair value through profit or loss and equity instruments at fair value through other comprehensive income) were HK\$4,412.3 million (2019: HK\$5,880.8 million) and unutilised facilities were HK\$3,332.1 million (2019: HK\$2,412.4 million).

As at 31 December 2020, the Group's bank borrowings was HK\$9,123.0 million (2019: HK\$11,060.0 million) and the guaranteed notes was HK\$1,158.2 million (2019: HK\$2,718.3 million). After netting off the bank balance, cash and the financial investments, the Group had a net debt position of HK\$2,484.7 million (2019: HK\$2,371.5 million) with gearing ratio of 17.6% (2019: 16.5%) (calculated on the basis of net debt as a percentage of the adjusted total property assets with hotel property adjusted to fair market value of HK\$5,600.0 million (2019: HK\$5,900.0 million)).

As at 31 December 2020, maturity of the Group's outstanding borrowings (including the guaranteed notes) was as follows:

	31 December 2020 HK\$' million	31 December 2019 HK\$' million
Due
Within 1 year	3,516.3	7,327.3
1-2 years	1,118.4	1,382.7
3-5 years	5,681.8	5,109.2
	10,316.5	13,819.2
Less: Unamortised front-end fee and notes issued expenses	(35.3)	(40.9)
	10,281.2	13,778.3

Pledge of Assets

For the Company's subsidiaries operating in Hong Kong, the total bank borrowings drawn as at 31 December 2020 amounted to HK\$6,274.3 million (2019: HK\$8,303.2 million) which comprised of secured bank borrowings of HK\$4,722.8 million (2019: HK\$6,144.2 million) and unsecured bank borrowings of HK\$1,551.5 million (2019: HK\$2,159.0 million). The secured bank borrowings were secured by properties valued at HK\$3,020.2 million (2019: HK\$2,330.2 million), listed debt securities of HK\$3,879.6 million (2019: HK\$4,891.5 million) and pledged cash of HK\$29.8 million (2019: HK\$499.0 million).

Subsidiaries of the Company operating in Australia and the United Kingdom pledged its investment properties with an aggregate carrying value of HK\$4,868.2 million (2019: HK\$4,698.5 million) as at 31 December 2020 to secure bank borrowings of HK\$2,879.5 million (2019: HK\$2,790.7 million).

Treasury Policies

The Group adheres to prudent treasury policies. As at 31 December 2020, all of the Group's borrowings except the guaranteed notes were raised through its wholly-owned subsidiaries on a nonrecourse basis.

Staff and Emolument Policy

As at 31 December 2020, the Group had a total of 133 employees (2019: 225 employees) in Hong Kong. Employee costs, including the emoluments of the directors of the Group, amounted to HK\$77.8 million for the year ended 31 December 2020 (2019: HK\$115.8 million).

The Group maintains a good working relationship with its employees and continues to recruit, retain and develop competent individuals committed for its long-term success and growth. Salary and benefits of employees are reviewed at least annually both in response to market conditions and trends, and in conjunction with individual appraisals based on qualifications, experience, skills, responsibilities, performance and development potentials. Discretionary bonuses are granted in line with the Group's financial results and employees' performance. Fringe benefits including medical insurance scheme, study and training allowances, examination leave and voluntary employer contributions to retirement schemes are offered to employees. In addition, to retain and motivate management staff and good performers, the Company has adopted an employee share option scheme and a share award scheme with options to subscribe for shares in the Company and awards of shares being granted by the Group to its employees (including Directors) on a discretionary basis. To further enhance employee relations and communications, recreational activities for general staff with senior management's participation are arranged.

Lizard Island Resort, Queensland

Outlook

After hard hit by the COVID-19 pandemic, the Mainland economy contracted by 6.8% in the first quarter of 2020. However, through effective measures against COVID-19, the COVID-19 pandemic has been rapidly controlled and the economy has swiftly recovered since the second quarter of 2020. The Mainland becomes the only major economy with positive annual growth for 2020. Despite the evolving US-China relations, the Mainland economy is likely to sustain robust growth in 2021.

For Hong Kong, the already weak economy has been hammered by the COVID-19 pandemic. In 2020, the economy contracted by 6.1%, which is the biggest annual contraction on record, and registered a contraction for the second consecutive years. Although the vaccination programmes have been launched in Hong Kong since February 2021, the pace of recovery will be slow.

Trading and office rental for property dropped in the first quarter of 2020 due to the rising unemployment rate and vacancy rate. Nevertheless, after adjusting upward the loan-to-value ratio caps for mortgage loans from 40% to 50% in August 2020 and abolishment of the Doubled Ad Valorem Stamp Duty in late November 2020 on non-residential property transactions, the market has slightly revived. Looking ahead, as the business environment remains tough and the local epidemic situation remains volatile, the property market will face pressure in the near term. Nonetheless, taking into account the tight demand-supply balance of private flats and the sustained low interest rate environment, we expect the residential property market to stay resilient in the long run, especially if border re-opening and economy recovery help to release demand from Mainland China. Demand for luxury home continues to show resilience amid limited new supply. Luxury home market may see stronger rebound.

The hospitality industry in Hong Kong has gone through an extremely tough year. Following the social unrest a year ago, the COVID-19 pandemic and the resultant stringent travel restrictions imposed by governments across the globe further hard hit the industry in 2020. Even if availability of vaccines across the world and more stable local epidemic situation have raised hopes for lifting of border controls and social distancing measures, the road ahead for hospitality still looks challenging. Having said that, we see potential demand from tourists, especially the Mainland Chinese, who consider Hong Kong their preferred leisure travel and shopping destination. After pandemic, we are of the view that the Mainland tourists will come and visit Hong Kong again. As such, our Group has proactively renovated our guest rooms, rebranded our restaurant outlets, improved our efficiency and cost management to sustain our business while prepared to restore our performance once tourism industry recovers its momentum. Crowne Plaza Hong Kong Causeway Bay, Hong Kong

The United Kingdom is one of the countries which were seriously suffered from the COVID-19 pandemic in 2020. Since March 2020, the COVID-19 pandemic outbreak and the resultant disruption of market activities by the ongoing lockdown have took a heavy toll to the United Kingdom. Supported by the speedy rollout of vaccines, as well as a significant decrease in recent infection rates, the lockdown restrictions have been gradually lifting. In spite of the prospect that life may be back to normal soon, the United Kingdom, as one of the countries hardest hit by the coronavirus pandemic, is predicted to have a weak economic growth prospects in 2021. Nonetheless, having reputable tenants under long leases with high grade covenants, the Group's property portfolio in the United Kingdom is expected to continue to contribute stable rental income to the Group. After Brexit, London continues to be a key global financial center. The Group remains confident in London to maintain this status and will continue to look for investment opportunities in London.

2021 will be a challenging year. Over its long history, SEA Group has witnessed the economic turbulence and social upheavals in Hong Kong and the world. Throughout the years, the Group had weathered these storms with equanimity. Our Group has been monitoring the global and local economy development and performed prudent risk and crisis management over the Group's financial liquidity and investment and property portfolio. With the Group's professional management team, robust financial capabilities, quality corporate governance practice and adherence to its philosophy of "Building with the Times", we are confident that our Group will withstand the current market instability and grow as opportunities arise.

Financial Calendar

Results Announcements

2020 Annual results announcement 26 March 2021 (Friday) 2021 Interim results announcement on or before 31 August 2021 (Tuesday)

Book Close Dates

For ascertaining Shareholders' eligibility to attend and vote at the 2021 Annual General Meeting

Latest time to lodge transfer documents 4:30 p.m. on 21 May 2021 (Friday)

For ascertaining Shareholders' entitlement to the proposed final dividend

Latest time to lodge transfer documents 4:30 p.m. on 2 June 2021 (Wednesday) Closure of register of members 3 June 2021 (Thursday) to 7 June 2021 (Monday)

Record date 7 June 2021 (Monday)

Annual General Meeting

Final Dividend

Ex-dividend date for 2020 final dividend 1 June 2021 (Tuesday)

Payment of 2020 final dividend (subject to Shareholders' approval at the 2021 AGM) 18 June 2021 (Friday)

2021 AGM 28 May 2021 (Friday)

Closure of register of members 24 May 2021 (Monday) to 28 May 2021 (Friday) (both days inclusive)

Record date 24 May 2021 (Monday)

(both days inclusive)

The Company recognises the importance of good corporate governance to the Company's development and has devoted considerable efforts to identifying, formulating, establishing and enhancing corporate governance practices appropriate to the Company's needs. The Board, having regard to the size and nature of businesses of the Group, periodically reviews the Company's corporate governance practices to meet the rising expectations of Shareholders and comply with increasingly stringent regulatory requirements.

I. Corporate Governance Practices

Throughout the year ended 31 December 2020, the Company has applied the principles and complied with all the code provisions set out in the CG Code contained in Appendix 14 to the Listing Rules.

II. Board of Directors

Composition

As at the date of this report, the Board have nine members comprising three Executive Directors, two Non-executive Directors and four INED.

Board of Directors
Executive Directors
Mr. Lu Wing Chi, Jesse (Chairman) Mr. Lambert Lu (Chief Executive) Mr. Yap Shee Liam (Chief Financial Officer) (appointed on 1 January 2021)
Non-executive Directors
Mr. Lam Sing Tai
Mr. Lincoln Lu
Independent Non-executive Directors
Mr. Walujo Santoso, Wally
Mr. Leung Hok Lim
Mr. Chung Pui Lam
Mr. Chan Kwok Wai

The Board, with the recommendation of the Nomination Committee, appointed Mr. Yap Shee Liam as the Executive Director and Chief Financial Officer on 1 January 2021.

Messrs Yap Shee Liam, Lam Sing Tai, Walujo Santoso, Wally and Leung Hok Lim will retire by rotation at the forthcoming 2021 AGM in accordance with the Company's Bye-laws and the CG Code. Messrs Lam Sing Tai and Leung Hok Lim have informed the Board that they will not offer themselves for re-election as Directors at the 2021 AGM.

An updated list of Directors and their respective roles and functions has been maintained on the websites of the Company and HKEX. Biographical particulars of the existing Directors are set out in the section headed "Directors' Biographical Information" on pages 19 to 21.

More than one-third of the Board are INED and at least an INED possesses appropriate professional qualifications or accounting or related financial management expertise.

The Company has received from each of the INED an annual confirmation in writing of his independence pursuant to Rule 3.13 of the Listing Rules and considers all of the INED including their immediate family members (as defined in the Listing Rules) are independent.

Role and Function

The Company is governed by the Board and the Directors are accountable to the Shareholders for the activities and performance of the Group. To oversee the Group's business and development, the Board has reserved for its decision and consideration the following matters:

(i) adoption and overall oversight of objectives and strategic plans;
(ii) amendment to memorandum of association and bye-laws as well as alteration of share capital;
(iii) approval of interim dividends and other distribution and recommendation of final dividends for Shareholders' approval;
(iv) establishment of Board committees and delegation of powers of the Board to the Board committees;
(v) appointment, re-appointment, re-designation and removal of Board members;
(vi) approval of significant accounting policies and practices;
(vii) oversight of corporate governance, risk management and internal controls; and

(viii) other significant matters.

Matters other than mentioned above have been delegated by the Board to the management and the major ones are execution of the Board's decisions (including business strategies and initiatives it has adopted) and daily operations, preparation of annual and interim financial statements for the Board's approval before public reporting, implementation of adequate systems of internal control and risk management as well as compliance with relevant requirements, rules and regulations.

The Non-executive Directors (including INED) serve the relevant function of bringing independent judgement and valuable guidance and advice on the development, performance and risk management of the Group.

The four INED come from diverse business and professional backgrounds in the fields of international trading, financial, accounting, laws and business management, rendering valuable expertise and experience to promote the best interests of the Company and its Shareholders as a whole and ensuring that issues are considered in an independent and a more objective manner. The INED also serve on the Audit, Remuneration and Nomination Committees. Compositions of these Board committees are set out on pages 41 to 45.

Corporate Governance Function

The Board is also responsible for performing the corporate governance duties including:

(i) to develop and review the Company's policies and practices on corporate governance;
(ii) to review and monitor the training and continuous professional development of Directors and senior management;
(iii) to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements;
(iv) to develop, review and monitor the code of conduct applicable to employees and Directors; and
(v) to review the Company's compliance with the CG Code and disclosure in the Corporate Governance Report.

During the year ended 31 December 2020, the Board reviewed the Company's corporate governance practices.

Directors' Appointment, Retirement and Re-election

All Non-executive Directors (including INED) have entered into letters of appointment with the Company for a term of three years. Pursuant to the Company's Bye-laws and the CG Code, every Director shall retire from office no later than the third AGM after he was last elected or re-elected. Further, any Director appointed by the Board as an additional Board member or to fill a casual vacancy shall hold office only until the next general meeting of the Company and shall then be eligible for re-election.

For an INED who has served the Company for more than nine years, his further appointment will be subject to a separate resolution to be approved by the Shareholders. The papers to the Shareholders accompanying that resolution will include the reasons why the Board believes he is still independent and should be re-elected.

Board Diversity Policy

The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance and adopted the Board Diversity Policy in August 2013.

Under the Board Diversity Policy, all Board appointments will be based on meritocracy, and candidates will be considered against objective criteria, having due regard for the benefits of diversity on the Board. Selection of candidates will be considered by the Company from a number of aspects, including but not limited to cultural and educational background, experience, skills, knowledge, length of service, age and gender. The Company's business model and specific needs will also be taken into account in determining the optimum composition of the Board.

The Nomination Committee will monitor the implementation of the Board Diversity Policy and will from time to time review the Board Diversity Policy, as appropriate, and recommend revisions to the Board for consideration and approval.

Meetings

The Board conducts meetings on a regular basis with at least 14 days' notice and on an ad hoc basis with reasonable notice that are required for significant and important issues. Before each Board and committee meetings, relevant agendas and documents with appropriate information are sent to Directors who are consulted for including matters in the agendas. The Board has four scheduled meetings a year to, amongst other matters, approve the final results and interim results respectively and consider financial and operating performances of the Company. All businesses transacted at the Board meetings are well-documented and the records are maintained properly. The Board members are provided with appropriate and sufficient information in a timely manner to keep abreast of the Group's latest developments.

During the year ended 31 December 2020, the Board held four meetings and the attendance record of each Director is set out in the following table:

Directors	Attendance/Number of Board meetings held in 2020

Executive Directors
Mr. Lu Wing Chi, Jesse (Chairman)	4/4
Mr. Lambert Lu (Chief Executive)	4/4
Mr. Yap Shee Liam (Chief Financial Officer) N	ote
(appointed on 1 January 2021)
Non-executive Directors
Mr. Lam Sing Tai	4/4
Mr. Lincoln Lu	4/4

INED Mr. Walujo Santoso, Wally	4/4

Mr. Leung Hok Lim	4/4
Mr. Chung Pui Lam	4/4
Mr. Chan Kwok Wai	4/4

Note: Mr. Yap Shee Liam as the Financial Controller of the Company attended the four regular board meetings held in 2020.

The Chairman met all INED without the presence of other Directors in 2020.

Relationship

Mr. Lu Wing Chi, Jesse (the Chairman and Executive Director) is the father of Mr. Lambert Lu (the Executive Director and Chief Executive) and Mr. Lincoln Lu (the Non-executive Director). Other than this, there is no financial, business, family and other material relationship among other members of the Board.

Notwithstanding the above relationships, there has been an effective and balanced board collectively responsible for the Company's activities and affairs. In addition, the roles of the Chairman and the Chief Executive are separate and performed by different Directors. Their roles and responsibilities had been clearly set out and approved by the Board.

During the year 2020, more than half of the Board members were Non-executive Directors (including INED) whose views carry significant weight in the Board's decisions. Directors have been free to discuss issues properly put to the Board meetings and express their views and concerns. No individual or small group can dominate the Board's decision-making process.

Training, Professional Development and Insurance for Directors

When a newly-appointed Director joins the Group, he/she will receive an induction briefing that will give him/her an understanding of the Group, its businesses and Director's responsibilities. The Company has provided the new Director, Mr. Yap Shee Liam, with an induction on his appointment in 2021.

Directors are provided with timely updates on changes in laws and compliance issues relevant to the Group. The Company also encourages its Directors to enroll in relevant professional development courses to continually update and further improve their relevant knowledge and skills. An in-house training session conducted by a solicitors' firm was organised by the Company in the year 2020 as part of the continuous professional development for its Directors to update them on the latest developments regarding the Listing Rules and applicable regulatory requirements in discharging their duties.

During the year ended 31 December 2020, Directors were also provided with monthly updates on the Company's performance, position and prospects to enable the Board as a whole and each Director to discharge their duties.

A summary of training participated by the Directors during the year ended 31 December 2020 is as follows:

Directors	Attend seminars and/or reading materials in relation to updates on laws, rules and regulations	Reading regulatory updates and information relevant to the Group or its business
Executive Directors Mr. Lu Wing Chi, Jesse (Chairman) Mr. Lambert Lu (Chief Executive) Mr. Yap Shee Liam (Chief Financial Officer) N (appointed on 1 January 2021)	✓ ✓ ote	✓ ✓ N/A
Non-executive Directors Mr. Lam Sing Tai Mr. Lincoln Lu	✓ ✓	✓ ✓
INED Mr. Walujo Santoso, Wally Mr. Leung Hok Lim Mr. Chung Pui Lam Mr. Chan Kwok Wai	✓ ✓ ✓ ✓	✓ ✓ ✓ ✓

Note: Mr. Yap Shee Liam as the Financial Controller of the Company attended the in-house training session held in 2020.

The Company has also arranged for appropriate liability insurance for the Directors for indemnifying their liabilities arising out of corporate activities.

III. Delegation — Board Committees

The Board has properly delegated its powers and established the Audit Committee, Nomination Committee, Remuneration Committee and Executive Committee with specific written terms of reference that clearly deal with their authority and duties, to oversee particular aspects of the Company's affairs and assist in the execution of the Board's responsibilities.

Audit Committee

Composition

The Audit Committee was established in 1999. The terms of reference of the Audit Committee were published on the websites of the Company and HKEX. The Audit Committee currently comprises of four members and all of them are INED. The attendance record of the committee members at the meetings held during the year ended 31 December 2020 is set out below:

Committee Members	Attendance/Number of Audit Committee meetings held in 2020
INED Mr. Leung Hok Lim (chairman) Mr. Walujo Santoso, Wally Mr. Chung Pui Lam Mr. Chan Kwok Wai	2/2 2/2 2/2 2/2

Role and Function

The primary duties of the Audit Committee are to ensure the objectivity and credibility of financial reporting, the effectiveness of the audit process in accordance with applicable standards, the effectiveness and adequacy of the Group's risk management and internal control systems as well as to maintain an appropriate relationship with the independent external auditor of the Company.

During the year ended 31 December 2020, the Audit Committee met twice with representatives of the management and Deloitte (the independent auditor of the Company) to discuss the auditing and financial reporting matters. During the meetings, the Audit Committee in particular reviewed and discussed about:

(i) the accounting principles and policies adopted by the Group;
(ii) the annual results (including the announcement thereof) and the audited financial statements for the year ended 31 December 2019;
(iii) the interim results (including the announcement thereof) and the financial statements for the six months ended 30 June 2020;
(iv) any significant findings by the independent auditor during the financial audit and other audit issues;
(v) the letters of management representations issued to the independent auditor in connection with the audit or review of the Group's relevant financial statements; and
(vi) the risk management and internal control systems including the adequacy of resources, qualifications and experience of staff of the Company's accounting and financial reporting function, and their training programmes and budget.

The Audit Committee also recommended to the Board for the re-appointment of Deloitte and reviewed the relevant audit fees. In March 2021, the Audit Committee reviewed with representatives of the management and Deloitte the audited consolidated financial statements of the Company for the year ended 31 December 2020 and was of the opinion that such financial statements had been prepared in compliance with applicable financial reporting standards and requirements and adequate disclosure had been made.

Nomination Committee

Composition

The Nomination Committee was established in 2012. Its terms of reference can be found on the websites of the Company and HKEX. The Nomination Committee currently comprises of three members including the Chairman and two INED. The attendance record of the committee members at the meeting held during the year ended 31 December 2020 is set out in the following table:

Committee Members	Attendance/Number of Nomination Committee meeting held in 2020
Executive Director Mr. Lu Wing Chi, Jesse (chairman)	1/1
INED Mr. Walujo Santoso, Wally Mr. Leung Hok Lim	1/1 1/1

Role and Function

The principal role of the Nomination Committee includes, inter alia, reviewing the structure, size and composition of the Board with due regard to the Board Diversity Policy, making recommendations on any proposed changes to the Board to complement the Company's corporate strategy.

The Board adopted the Nomination Policy in March 2014 setting out the criteria, procedures and process for nomination of Directors. When identifying candidates to be appointed as Director, the Nomination Committee shall make evaluation of the proposed candidate pursuant to the nomination criteria and make recommendation to the Board if appropriate. The Board shall make decisions on the appointment based on the recommendation of the Nomination Committee. The Nomination Policy contains a number of factors in assessing the suitability of a proposed candidate which include the candidate's skills, competence, experience, professional and educational qualifications, time commitment, diversity perspectives set out in the Board Diversity Policy and the independence criteria under Rule 3.13 of the Listing Rules if the candidate is proposed to be appointed as an INED.

The Nomination Committee also reviews the expertise and overall contribution of the retiring Directors who standing for re-election at the AGM to the Company and recommends such retiring Directors to the Board for re-election at the AGM.

The Nomination Committee held a meeting in the financial year under review and a meeting in January 2021 to review the structure, size, composition of the Board and the Board Diversity Policy, assess the independence of INED and make recommendations in relation to the re-appointment of retiring Directors who will offer themselves for re-election at the coming AGM.

In December 2020, the Nomination Committee recommended the Board to appoint Mr. Yap Shee Liam as an Executive Director and Chief Financial Officer. In arriving the decision of nomination of Mr. Yap, the Nomination Committee considered various factors including the size, structure and composition of the Board, Mr. Yap's qualification, past working experience, proven performance with the Group and diversity of the Board. The Board accepted the Nomination Committee's recommendation and appointed Mr. Yap as Executive Director and Chief Financial Officer on 1 January 2021.

In the meeting held in January 2021, the Nomination Committee also considered the proposed changes to the memberships of the Audit Committee, the Nomination Committee and the Remuneration Committee following the retirement of Mr. Leung Hok Lim at the 2021 AGM in order to comply with the relevant CG Code and Listing Rules' requirements.

Remuneration Committee

Composition

The Remuneration Committee was established in 2005. Its terms of reference can be found on the websites of the Company and HKEX. The Remuneration Committee currently comprises of five members including three INED and two Executive Directors. The attendance record of the committee members at the meeting held during the year ended 31 December 2020 is set out in the following table:

Committee Members	Attendance/Number of Remuneration Committee meeting held in 2020

INED Mr. Chung Pui Lam (chairman) Mr. Walujo Santoso, Wally Mr. Leung Hok Lim	1/1 1/1 1/1
Executive Directors Mr. Lu Wing Chi, Jesse Mr. Lambert Lu	1/1 1/1

Role and Function

The Remuneration Committee is responsible for, amongst other matters, establishing a formal and transparent procedure for developing remuneration policies and overseeing the remuneration packages for the Executive Directors and Non-executive Directors and ensuring that no Director will be involved in deciding his own remuneration. The Remuneration Committee has adopted the operation model where it determines the remuneration packages of individual Executive Directors and makes recommendations to the Board on the remuneration packages of individual Non-executive Directors.

In determining the Directors' emoluments, the Remuneration Committee takes into consideration factors such as the qualifications, experience, time commitment, responsibilities, performance, contribution and remuneration of the Directors for previous years, the Company's profitability, emoluments paid by comparable companies and employment conditions elsewhere in the Group.

At 2019 AGM, the Shareholders passed an ordinary resolution to authorise the Directors to fix the directors' fees for an aggregate amount not exceeding HK\$5.0 million per annum.

The Remuneration Committee held a meeting in the financial year under review and a meeting in January 2021 for the purposes of determining matters relating to the remuneration packages of the Executive Directors as well as making recommendation to the Board on the remuneration packages of the Non-executive Directors (including INED).

Details of the Directors' emoluments for the year ended 31 December 2020 are set out in note 15 to the consolidated financial statements.

Executive Committee

Composition

The Executive Committee was set up in 1990 and is currently comprised of three Executive Directors.

Mr. Lu Wing Chi, Jesse (Chairman) Mr. Lambert Lu (Chief Executive) Mr. Yap Shee Liam (Chief Financial Officer) (appointed on 1 January 2021)

Role and Function

The Executive Committee is primarily responsible for supervising and undertaking the dayto-day operations of the Group. It exercises leadership and develops and keeps under review business development initiatives of the Group and monitors their implementation. The Executive Committee meets as and when necessary.

IV. Securities Transactions by Directors and Employees

The Company has adopted the Model Code set out in Appendix 10 to the Listing Rules as its own code of conduct regarding securities transactions by the Directors.

In response to the specific enquiry made on them by the Company, all Directors have confirmed in writing that they had complied with the required standard as set out in the Model Code throughout the year ended 31 December 2020.

Directors' interests in shares and underlying shares in the Company are contained in the section headed "Directors' Report" on pages 60 to 62.

The Company has also adopted a code with no less exacting terms than the Model Code for the directors and employees of the Group (other than the Directors) to regulate their dealings in the shares of the Company, as they are likely to be in possession of inside information in relation to such shares because of their office or employment.

V. Directors' Responsibility for Preparing Financial Statements

The Directors acknowledge their responsibilities for preparing the financial statements of the Group which give a true and fair view of the state of the Group's affairs and of its results. Their responsibilities have also been stated in the section headed "Independent Auditor's Report" on page 70. In doing so, the Directors select suitable accounting policies and apply them consistently and make accounting estimates that are appropriate in the circumstances. With the assistance of the accounting and finance department of the Company, the Directors ensure that the financial statements of the Group are prepared in accordance with statutory requirements and appropriate financial reporting standards.

In addition, the Directors ensure timely publication of the financial statements of the Group.

VI. Risk Management and Internal Control

The Board has overall responsibility for maintaining and ensuring effective implementation of the risk management and internal control systems of the Group and reviewing their effectiveness by the Audit Committee to safeguard the Shareholders' interest and the Company's assets. However, these systems are designed to manage rather than eliminate risk of failure in operational system, and can only provide reasonable but not absolute assurance against material misstatement or loss.

The Group has implemented an effective internal control system which includes a defined management structure with clear lines of responsibility and limits of authority, proper procedures for income and expenditure, monthly review by the Executive Directors of operational and financial reports provided by the management, regular business meetings between the Executive Directors and the core management team and periodic review of the Group's financial results by the Board.

The Board, through the Audit Committee, reviews regularly the effectiveness and adequacy of the Group's internal control system which includes financial, operational and compliance mechanisms and risk management functions in order to identify, evaluate and manage risks and take appropriate measures to avoid or mitigate those risks that could adversely impact the Group's business activities. The review also includes the adequacy of resources, qualifications and experience of staff of the Company's accounting and financial reporting function, and their training programmes and budget. The review process consists of, amongst other matters, assessment and implementation of material control issues identified by an independent external auditor during the statutory audit.

During the year 2020, the Company has engaged an independent consultant to perform an internal audit review on the operations of the Group in order to assist the Group to assess its internal control system in general.

The work approach of the review conducted by the independent consultant includes:

(i) making enquiries with appropriate management and key process owners to obtain a thorough understanding of the operations of the in-scope processes and to identify major risks, respective internal controls and significant design deficiencies of the internal control system;

(ii) performing walkthrough tests and identified deficiencies for the key internal control procedures;
(iii) performing necessary substantive procedures to identify operating deficiencies of the key internal control procedures; and
(iv) following completion of the review, the independent consultant makes appropriate recommendations for improving and strengthening the Group's internal control system to the Audit Committee for approval.

In the year under review, no material issues on the Group's internal control system have been identified in the reviewed areas and the findings of the review have been reported to the Audit Committee. The independent consultant also performed follow-up review on the remedial actions undertaken by the management of the Group on the control deficiencies identified during the course of the internal audit review conducted in 2019. The Board considered that the risk management and internal control system was adequate and effective.

VII. Handling and Dissemination of Inside Information

The Group acknowledges its responsibilities under the SFO and the Listing Rules and the overriding principle that inside information should be announced immediately when it is the subject of a decision.

The Board adopted the Inside Information Policy in August 2019 which provides a general guide to the Group's officers and employees in handling confidential information and ensure that inside information of the Company is to be disseminated to the public in a timely manner in accordance with the applicable laws and regulations.

Below is a summary of key provisions of the Inside Information Policy:

(i) officers and employees must follow the reporting channels for disclosing the inside information and take reasonable care for safeguard the confidentiality of all inside information;
(ii) the Executive Directors are empowered to take appropriate actions to ensure compliance with the disclosure requirements including issuing announcements and making a request to the Stock Exchange for a trading halt in case the Company is facing an unexpected and significant event; and
(iii) Directors and employees of the Group must not deal in the Company's securities when they are in possession of unpublished inside information.

The Group also keeps the Directors and employees appraised of the latest regulatory updates on disclosure requirements of inside information.

VIII. Dividend Policy

The Board adopted the Dividend Policy in December 2018 which sets out the frequency, forms and criteria of dividend payout in order to provide stable and sustainable returns to the Shareholders that allows the Shareholders to participate in the Company's profits and for the Company to retain adequate reserves for future development.

The Company may distribute dividends by way of cash and/or by way of distribution in specie, subject to the applicable rules and requirements under the Bermuda law and the Company's constitutional documents. The Board takes into account, inter alia, the following factors in deciding whether to propose a dividend and in determining the dividend amount:-

(i) the Group's actual and expected financial performance;
(ii) retained earnings and distributable reserves of the Company and its subsidiaries;
(iii) the cash flow position of the Group;
(iv) the Group's working capital requirements and future expansion plans; and
(v) general economic conditions and other internal and external factors that may have an impact on the business or financial performance and position of the Group.

The Company will review the Dividend Policy from time to time and reserves the right in its sole and absolute discretion to update, amend and/or modify the Dividend Policy at any time. The Dividend Policy shall in no way constitute a legally binding commitment by the Company that dividends will be paid in any particular amount and/or in no way to obligate the Company to declare a dividend for any given period.

IX. Independent Auditor's Reporting Responsibility

The statement of Deloitte, Certified Public Accountants, the independent auditor of the Company, about their reporting responsibility on the financial statements of the Group is set out in the section headed "Independent Auditor's Report" on pages 71 and 72. Representatives of Deloitte also attend the AGMs to answer questions which the Shareholders may have.

X. Independent Auditor's Remuneration

At the AGM held on 26 May 2020, Deloitte was re-appointed by the Shareholders as independent auditor of the Company at a fee to be agreed by the Board. The total fees paid/ payable to Deloitte in respect of the audit and non-audit services provided during the year ended 31 December 2020 are set out as follows:

	HK\$'000
Audit services Non-audit services (reviewing and other reporting services)	1,834 870
Total	2,704

XI. Going Concern

The Directors confirm that, to the best of their knowledge, information and belief and having made all reasonable enquiries, they are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern.

XII. Communication with Shareholders

The Board has adopted the shareholders' communication policy with the objective of ensuring that its communications with the Shareholders are timely, transparent, accurate and open. Information of the Company is disseminated to the Shareholders through a number of channels as follows:

(i) corporate communication such as annual reports, interim reports and circulars are available in printed form and electronic form on the websites of the Company and HKEX;
(ii) periodic announcements are made through the Stock Exchange and published on the respective websites of the Company and HKEX;
(iii) corporate information is made available on the Company's website;
(iv) AGMs and SGMs provide a forum for Shareholders to make comments and exchange views with the Directors and senior management; and
(v) the Company's Hong Kong branch share registrar serves the Shareholders in respect of share registration, election of means of receipt of corporate communications and related matters.

To preserve environment and increase efficiency in communication with the Shareholders, the Company made arrangements pursuant to Rule 2.07A of the Listing Rules and the Bye-laws of the Company for the Shareholders to elect to receive future corporate communications in printed form or by electronic means through the Company's website. Shareholders have the right to change their choice of receipt of our corporate communications at any time by giving reasonable notice to the Company. The change request form may be downloaded from the websites of the Company and HKEX.

Separate resolutions are proposed at general meetings on each substantial issue including the election of individual Directors.

During the year ended 31 December 2020, an AGM was held on 26 May 2020. All resolutions relating to ordinary businesses and special businesses proposed at the AGM were duly passed.

The attendance records of the existing Directors at the AGM are set out in the following table:

Directors	Attendance at the 2020 AGM
Executive Directors Mr. Lu Wing Chi, Jesse (Chairman) Mr. Lambert Lu (Chief Executive) Mr. Yap Shee Liam (Chief Financial Officer) N (appointed on 1 January 2021)	✓ ✓ /A
Non-executive Directors Mr. Lam Sing Tai Mr. Lincoln Lu	✓ ✓
INED Mr. Walujo Santoso, Wally Mr. Leung Hok Lim Mr. Chung Pui Lam Mr. Chan Kwok Wai	✓ ✓ ✓ ✓

XIII. Shareholders' Rights

Convening Special General Meeting

Shareholder(s) holding not less than one-tenth of the paid-up capital of the Company may request the Board to convene a SGM. The purposes of the meeting must be stated in the related requisition and deposited at the Company's registered office and principal place of business in Hong Kong. If the Directors do not within 21 days from the date of the deposit of a request (after being verified to be valid) proceed to convene a SGM, the Shareholders concerned, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a SGM, but any SGM so convened shall not be held after the expiration of three months from the date of the deposit of the request.

Putting forward proposals at general meetings

Shareholders holding not less than one-twentieth of the total voting rights of those Shareholders having the right to vote at a general meeting or not less than one hundred Shareholders can submit a written request to move a resolution at a general meeting. The written request must state the resolution, accompanied by a statement of not more than 1,000 words with respect to the matter referred to in the proposed resolution and deposited at the Company's registered office and principal place of business in Hong Kong not less than six weeks before the meeting in the case of a requisition requiring notice of a resolution, and not less than one week before the meeting in the case of any other requisition. Upon the request verified to be valid, the Company will give notice of the resolution or circulate the statement provided that the Shareholders concerned have deposited a sum reasonably sufficient to meet the Company's expenses in regard thereto.

XIV. Constitutional Documents

The constitutional documents of the Company are available on the websites of the Company and HKEX. There is no change in the constitutional documents during the year ended 31 December 2020.

XV. Investor Relations

The Company keeps on promoting investor relations and enhancing communication with the Shareholders and potential investors. It welcomes suggestions from investors, stakeholders and the public who may contact the Company by the following means:

(i) By phone at (852) 2828 6363 during normal business hours
(ii) By fax at (852) 2598 6861
(iii) By e-mail to [email protected]
(iv) By post to 26/F., Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong

XVI. Looking Forward

The above corporate governance practices will be monitored, reviewed, amended and revoked from time to time as considered necessary by the Board. The Company will take appropriate actions to ensure compliance with the required practices and standards including the code provisions and if reasonably practicable, the recommended best practices of the CG Code at all times.

The Directors have pleasure in presenting their report together with the audited consolidated financial statements of the Group for the year ended 31 December 2020.

Principal Activities

During the year 2020, the Company acted as an investment holding company and the activities of its principal subsidiaries were property investment, property development, hotel operation and financial investment in Hong Kong, Australia and the United Kingdom.

Other particulars of the principal subsidiaries of the Company as at 31 December 2020 are set out in note 45 to the consolidated financial statements.

Business Review and Performance

A review of the business of the Group during the year ended 31 December 2020 and a discussion on the Group's future business development, possible risks and uncertainties that the Group may be facing are provided in the "Chairman's Statement" on pages 12 and 13, "Chief Executive's Report" on pages 14 to 18 and "Management Discussion and Analysis" on pages 25 to 33 of this Annual Report.

Description of the financial risk management objectives and policies of the Group can be found in note 35 to the consolidated financial statements.

An analysis of the Group's performance during the year ended 31 December 2020 using financial key performance indicators is provided in the "Chairman's Statement" on pages 12 and 13, "Chief Executive's Report" on pages 14 to 18 and "Management Discussion and Analysis" on pages 25 to 33 of this Annual Report.

Environmental Protection

The Group recognises its responsibility to protect and preserve the environment from its business operations and has formulated a corporate social responsibility policy statement to demonstrate its determination to care for the environment. The Group continually seeks to identify and manage environmental impacts attributable to its operational activities and strives to minimise these impacts.

Energy saving measures have been implemented at the main office in order to reduce power and paper consumption. Use of power-saving mode in office equipment, LED lighting and indoor temperature control are applied to minimise power consumption. Application of e-system, setting printers from single-sided printing mode to double-sided printing mode, and recycling of papers and stationery are carried out to reduce paper consumption and to achieve cost savings. The Group also makes an effort to raise its staff's energy-saving awareness and regularly reminds them to switch off lighting and electronic devices after use.

The Group has also actively promoted material-savings and implemented policies to reduce waste generated from its business activities. Water saving practices such as water saving signage is posted at the pantry to remind staff to save water resources. Its financial reports have also been printed on Forest Stewardship Council-certified (FSC) papers since 2015. To further save paper resources, the Company has made arrangements to its Shareholders to receive corporate documents like financial reports and circulars in electronic form instead of printed copies since 2019. After implementation of the e-communication arrangements, the number of printed copies of corporate documents issued by the Company to its Shareholders during the year 2020 reduced by approximately 36%. Waste Electrical and Electronic Equipment (WEEE) such as computers, printers and photocopiers were sent to recyclers for processing. The recycling of materials in our operations, including papers, plastic bottles, stationery and office equipment, are highly encouraged. Hazardous waste such as used ink and toner cartridges are returned to the service providers to minimise adverse impacts on the environment.

Crowne Plaza Hong Kong Causeway Bay ("Crowne Plaza") has also adopted a number of supportive measures in its hotel operations to reduce energy consumption. It has adopted LED lighting in the hotel and switched off lighting and electronic devices when not in use. Besides, all equipment is serviced and maintained ensuring maximum efficiency and major equipment including chiller plants is subject to seasonal adjustments for reducing electricity consumption but without affecting the comfort of the hotel's occupants.

At Crowne Plaza, water is mainly used for guests rooms and outlets kitchens. To implement watersaving measures, Crowne Plaza has implemented water consumption system designated for real-time data collection on the amount of water used. Besides, it has installed water-saving taps in kitchens and washrooms since 2018 to reduce water consumption.

Crowne Plaza deploys the concept of waste management in its operation for proper waste handling. The drop off points of recyclable items such as cardboards, newspapers and metals are identified and plotted while hazardous materials mainly chemicals are disposed of at an approved hazardous waste disposal facility. It also conducts audit of hazardous materials annually and performs regular checks of their storage area. Crowne Plaza also strives to minimize waste generation by reusing and recycling of papers, battery and card boards.

Compliance with Laws and Regulations

The Group complies with applicable rules and regulations governing property development and property investment in Hong Kong and holds relevant required licences for provision of services. With respect to the overseas properties held by the Group, it engages external professional advisors to ensure the compliance with applicable laws and regulations of that jurisdictions. During the year under review, there was no reported incident of material non-compliance with the relevant laws and regulations that had a significant impact on the Group's business.

The Group establishes and protects its intellectual property rights and has registered its domain name. Various trademarks have been applied for or registered in various classes in Hong Kong, the PRC and other relevant jurisdictions. The Group takes all appropriate actions to enforce its intellectual property rights.

It is the policy of the Group to strictly prohibit bribery, corruption and money laundering activities to ensure the conduct of the Group companies and employees are in compliance with the applicable rules and regulations. All staff members are required to strictly adhere to the provisions of the Prevention of Bribery Ordinance and may not solicit or accept for his personal benefit any advantage which includes benefits in money or in any kind from any business partners. The Company has provided sufficient information on the Group's anti-corruption principles to all employees. Any changes in the applicable laws, rules and regulations are brought to the attention of relevant employees and relevant operation units from time to time. During the year under review, the Group organized a seminar conducted by the Independent Commission Against Corruption (ICAC) to enhance employees' awareness on anti-corruption legislation and equip employees with the necessary skills to handle ethical dilemmas at the workplace.

Workplace Quality

The Group believes that a motivated and balanced workforce is crucial for building a substantial business model and delivering long-term returns.

The Group has formulated an employee handbook which clearly sets out company policies and procedures, expectations for employees' conduct and behavior, employees' rights and benefits. We establish and implement policies that promote a harmony and respectful workplace. The Group encourages staff of all levels to serve the community and care for those in need. We have participated in the "Dress Casual Day" which is the annual charity event organised by the Community Chest. Besides, we have made donation and provided surgical masks to Yang Memorial Methodist Social Service in responding to anti-epidemic work. The Group has been awarded the Caring Company Logo by the Hong Kong Council of Social Service (HKCSS) in 2020 in recognition of our commitment in caring for our community, employees and environment over the past year.

The Group believes that people are the valuable assets of an enterprise and commits to attracting and retaining talent with diverse backgrounds for achieving sustainable growth. As at 31 December 2020, approximately 40% of the staff have been working for the Group for more than five years. Service awards were presented as tribute to staff members and senior management who have contributed to the Group for 5, 10 and 15 years.

The Group provides a fair workplace, promoting non-discrimination and diversity to our staff, together with competitive remuneration and benefits, as well as opportunities for career advancement based on employees' merits and performance. It is the policy of the Group to encourage employees to attend appropriate courses to keep them abreast of the latest developments in the market and industry. They are encouraged to enrol in external job-related seminars and training programmes to improve their knowledge and maximise their potentials.

The Group considers employee health and safety as a priority at all times across its business operations. The Group follows the Guidelines from the Occupational Safety and Health Council and Labour Department which outline relevant measures and tips covering use of equipment, hygiene, first aid and fire precaution. During the year under review, the Group arranged free on-site flu vaccinations for its employees.

In view of the COVID-19 outbreak in early 2020, the Company has implemented several precautionary measures in its main office to enhance employees' hygiene awareness and to minimize their exposure to virus in the community as much as possible. During the year, the Company introduced special working arrangements including flexible office and lunch hours to avoid crowds during peak hours and also allowed staff to work from home if necessary. Health tips, face masks and hand sanitizers are also provided to the employees and all of them are required to measure body temperature and wear surgical masks upon entering into the office to help them stay healthy and infection-free. Employees who have symptoms of COVID-19 such as fever, malaise, dry cough and shortness of breath should at once notify the Company, seek medical advice, do a coronavirus test and stay home. In addition, employees are encouraged to receive free COVID-19 testing in response to the Universal Community Testing Programme launched by the Government in September 2020 for early detection and control virus transmission. Office cleaning schedule has been increased to provide a safe workplace to the staff.

Crowne Plaza has also adopted a wide range of preventive measures to ensure occupational health and safety in the hotel premises. Anti-epidemic items such as surgical masks, hand sanitizers and disinfectant spray are provided to hotel staff to reduce the risks of virus infection. Crowne Plaza also provided personal protective equipment such as gloves, facial shields and disposable gowns to those staff who are carrying out high risk operations. All operational employees are required to conduct COVID-19 testing provided by the hotel. All personnel entering into the hotel premises are required to measure body temperature and wear surgical masks to protect them from a possible virus infection. In addition, all room guests are required to submit health declaration form and their travel history. Crowne Plaza has strengthened the frequency of cleaning and disinfection works in its ventilation system and public amenities in order to minimize the spread of pandemic.

Further discussions on the Group's environmental policies, compliance with relevant laws and regulations and relationships with its key stakeholders which have a significant impact on the Group's operations will be provided in the 2020 Environmental, Social and Governance Report to be published on the websites of the Stock Exchange and the Company by July 2021.

Segmental Analysis of Operations

An analysis of the Group's performance for the year by reportable segments is set out in note 6 to the consolidated financial statements.

Results

The results of the Group for the year ended 31 December 2020 are set out in the consolidated statement of profit or loss on pages 73 and 74 and the consolidated statement of profit or loss and other comprehensive income on page 75.

The state of affairs of the Group as at 31 December 2020 is set out in the consolidated statement of financial position on pages 76 and 77.

Dividends

An interim dividend of HK2 cents per share (2019: HK2 cents) amounting to HK\$13.2 million (2019: HK\$13.2 million) was paid to the Shareholders during the year.

The Board has resolved to recommend for the Shareholders' approval at the forthcoming 2021 AGM the payment of a final dividend of HK3 cents (2019: HK3 cents) per share for the year under review, amounting to HK\$19.3 million (2019: HK\$19.9 million) to the Shareholders whose names appear on the register of members at the close of business on Monday, 7 June 2021. The relevant dividend warrants are expected to be despatched on or before Friday, 18 June 2021.

Share Capital

Details of the movements in the share capital of the Company during the year are set out in note 33 to the consolidated financial statements.

Reserves

Details of the movements in the reserves of the Group during the year 2020 are set out in the consolidated statement of changes in equity on page 78. The Company's reserves available for distribution to the Shareholders as at 31 December 2020 were as follows:

	2020 HK\$'000	2019 HK\$'000
Contributed surplus Retained profits	190,081 4,691,180	190,081 4,938,184
	4,881,261	5,128,265

Under the Companies Act 1981 of Bermuda (as amended), the amount of the contributed surplus account of the Company is available for distribution. However, the Company cannot declare or pay a dividend or make a distribution out of contributed surplus if after the payment:

(i) it is or would be unable to pay its liabilities as they become due; or
(ii) the realisable value of its assets would thereby be less than its liabilities.

Pre-emptive Rights

There are no provisions for pre-emptive rights under the Company's Bye-laws and there is no restriction against such rights under the laws of Bermuda, which would oblige the Company to offer new shares on a pro-rata basis to its existing Shareholders.

Investment Properties

All the investment properties of the Group were revalued at 31 December 2020. The net increase in fair value of investment properties amounting to HK\$39.1 million (2019: net increase of HK\$50.4 million) has been credited directly to the consolidated statement of profit or loss.

Details of the movements in the investment properties of the Group during the year are set out in note 19 to the consolidated financial statements.

Property, Plant and Equipment

Details of the movements in the property, plant and equipment of the Group during the year are set out in note 21 to the consolidated financial statements.

Properties

Details of the properties of the Group held for investment and sale purposes at 31 December 2020 are set out in the section headed "Property Portfolio" on pages 7 to 11.

Permitted Indemnity Provision

Pursuant to the Company's Bye-law 148, every Director for the time being acting in relation to any of the affairs of the Company, and their respective executors or administrators, shall be indemnified and secured harmless out of the assets of the Company from and against all actions, costs, charges, losses, liabilities, damages and expenses which they or any of them, their or any of their executors or administrators, shall or may incur or sustain by reason of any act done, concurred in or omitted in or about the execution of their duty or supposed duty in their respective offices or trusts, except such (if any) as they shall incur or sustain through their own wilful neglect or default respectively. During the year under review, the Company had arranged directors' and officers' liability insurance for the Directors.

Directors

The Directors who served during the year and up to the date of this Annual Report were set out below.

Executive Directors

Mr. Lu Wing Chi, Jesse (Chairman) Mr. Lambert Lu (Chief Executive) Mr. Yap Shee Liam (Chief Financial Officer) (appointed on 1 January 2021)

Non-executive Directors

Mr. Lam Sing Tai Mr. Lincoln Lu

Independent Non-executive Directors

Mr. Walujo Santoso, Wally Mr. Leung Hok Lim Mr. Chung Pui Lam Mr. Chan Kwok Wai

In accordance with Bye-laws 88(A), 88(B) and 89 of the Company's Bye-laws and in compliance with code provision A.4.2 of the CG Code set out in Appendix 14 to the Listing Rules, Messrs Lam Sing Tai, Walujo Santoso, Wally and Leung Hok Lim will retire as Directors by rotation at the 2021 AGM. Messrs Lam Sing Tai and Leung Hok Lim had informed the Board that they will not offer themselves for re-election. Mr. Walujo Santoso, Wally, being eligible, has offered himself for re-election at the 2021 AGM.

Pursuant to Bye-law 95 of the Company's Bye-laws and in compliance with code provision A.4.2 of the CG Code set out in Appendix 14 to the Listing Rules, any Director appointed by the Board shall hold office only until the next general meeting of the Company. Mr. Yap Shee Liam who was appointed as the Executive Director and Chief Financial Officer by the Board on 1 January 2021 will retire and being eligible, has offered himself for re-election at the 2021 AGM.

All other Directors shall continue in office.

Directors' Biographical Particulars

Biographical particulars of the present Directors are set out on pages 19 to 21 of this Annual Report.

Further particulars of the Directors to be re-elected at the 2021 AGM are set out in the circular to be despatched to the Shareholders in April 2021.

Update of Directors' Information

Save as the appointment of Mr. Yap Shee Liam as the Executive Director and Chief Financial Officer on 1 January 2021, there is no other information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.

Directors' Service Contracts

None of the Directors proposed for re-election at the 2021 AGM has a service contract which is not determinable by the Company or any of its subsidiaries within one year without payment of compensation other than statutory compensation.

Particulars of the emoluments of Directors on a named basis for the year are set out in note 15 to the consolidated financial statements.

Directors' Interests in Transactions, Arrangements or Contracts of Significance

There were no transactions, arrangements or contracts of significance in relation to the Group's business to which the Company or any of its holding companies, subsidiaries or fellow subsidiaries was a party and in which a Director or a controlling Shareholder had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Arrangements for Directors to Acquire Shares and Debentures

At no time during the year was the Company or any of its holding companies, subsidiaries or fellow subsidiaries a party to any arrangements to enable the Directors or any of their spouse or children under the age of 18 to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors' Interests in Competing Businesses

Pursuant to Rule 8.10 of the Listing Rules, the following Directors and their associates (as defined in the Listing Rules) are considered by the Company to have interests in businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses where such Directors have been appointed to represent the interests of the Company and/or other members of the Group:

(i) Mr. Lu Wing Chi, Jesse (the Chairman and Executive Director) has shareholdings (for himself and on behalf of his associates) and holds directorships in a number of private companies controlled by, or owned in conjunction with, his close relatives and associates. From time to time, such companies are involved in real estate development and investment. In this regard, Mr. Lu is considered to have interests in businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group.
(ii) Mr. Lambert Lu (the Executive Director and Chief Executive) and Mr. Lincoln Lu (the Nonexecutive Director) are the sons of Mr. Lu Wing Chi, Jesse. In this regard, Messrs Lambert Lu and Lincoln Lu are considered to have interests in the competing businesses in which Mr. Lu Wing Chi, Jesse is deemed interested. Messrs Lambert Lu and Lincoln Lu also have shareholdings (for themselves and on behalf of their associates) and hold directorships in certain private companies controlled by, or owned in conjunction with, their close relatives and associates. From time to time, such companies are involved in real estate development and investment. In this regard, Messrs Lambert Lu and Lincoln Lu are considered to have interests in businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group.

Currently, nearly half of the Board members are INED whose views carry significant weight in the Board's decisions. Fundamentally, it is independent of the above individuals and the respective boards of directors of the above companies in which the relevant directors have personal interests. Further, all the Directors are fully aware of, and have been discharging, their fiduciary duty to the Company and have acted and will continue to act in the best interest of the Company and the Shareholders as a whole. Therefore, the Group is capable of carrying on its businesses independently of, and at arm's length from, the said competing businesses.

Management Contracts

No contracts of significance concerning the management and administration of the whole or any substantial part of the business of the Company or any of its holding companies or subsidiaries were entered into with third parties or subsisted during the year.

Directors' In te res ts and Sho r t Pos i t ions in Sha res and Underlying Shares

As at 31 December 2020, the interests and short positions of the Directors in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the 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 pursuant to the Model Code, were as follows:

1. Long positions in shares of the Company

		Number of ordinary shares held		Number of underlying shares held under equity derivatives
Name of Directors	Personal interests (held as beneficial owner)	Corporate interests (held by I controlled corporations)	Family nterests (interests of spouse)	Personal interests (held as beneficial owner)	Total interests	Approximate % of interest in the issued share capital
Lu Wing Chi, Jesse	—	446,392,255 (i)	—	—	446,392,255	69.51
Lambert Lu	550,000	338,779,740 (ii)	—	—	339,329,740	52.84
Yap Shee Liam (iii)	648,000	—	—	350,000	998,000	0.16
Lam Sing Tai	4,493,030	—	7,558	—	4,500,588	0.70
Lincoln Lu	24,438,162	—	—	—	24,438,162	3.81
Walujo Santoso, Wally	1,680,400	—	—	—	1,680,400	0.26
Leung Hok Lim	2,545,574	—	—	—	2,545,574	0.40
Chung Pui Lam	894,800	—	—	—	894,800	0.14
Chan Kwok Wai	—	—	—	—	—	—

Notes:

(i) Among these 446,392,255 shares, 107,612,515 shares were held by Port Lucky, 78,548,387 shares were held by Ambleside Glory and 260,231,353 shares were held by NLI. Port Lucky is 100% owned by SEA Fortune, which in turn is 100% owned by NYH. NYH is 100% owned by Mr. Lu Wing Chi, Jesse. Ambleside Glory is 100% owned by NLI, which in turn is owned by Mr. Lu Wing Chi, Jesse and Mr. Lambert Lu as to 60% and 40% respectively (as disclosed in the section of "Long positions in shares of associated corporation" below). By virtue of Mr. Lu Wing Chi, Jesse's interests in NLI, Port Lucky and Ambleside Glory, he is deemed to be interested in these shares.
(ii) As disclosed in Note (i) above, among these 338,779,740 shares, 78,548,387 shares were held by Ambleside Glory and 260,231,353 shares were held by NLI. Ambleside Glory is 100% owned by NLI, which in turn is owned by Mr. Lu Wing Chi, Jesse and Mr. Lambert Lu as to 60% and 40% respectively. By virtue of Mr. Lambert Lu's interests in NLI and Ambleside Glory, he is also deemed to be interested in these shares.
(iii) Mr. Yap Shee Liam was appointed as the Executive Director and Chief Financial Officer on 1 January 2021.
(iv) The total number of issued shares of the Company as at 31 December 2020 was 642,238,726 shares.

	Number of ordinary shares held
Name of associated N corporation D	ame of irectors	Personal interests (held as beneficial owner)	Corporate interests (held by controlled corporation)	Family interests (interests of spouse)	Total interests	Approximate % of interest in the issued share capital
NLI	Lu Wing Chi, Jesse	93,876	—	—	93,876	60.00
L	ambert Lu	62,584	—	—	62,584	40.00

2. Long positions in shares of associated corporation

Saved as disclosed herein, as at 31 December 2020, none of the Directors had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register kept by the Company under Section 352 of the SFO or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

Substantial Shareholders' and Other Persons' Interests and Short Positions in Shares and Underlying Shares

As at 31 December 2020, so far as is known to the Directors, the following substantial Shareholders and other persons (other than Directors) had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO:

		number of ordinary shares
name of Shareholders	Held as beneficial owner	Held by controlled corporations	total interests	Approximate % of interest in the issued share capital
NLI	260,231,353	78,548,387 (i)	338,779,740	52.75
Ambleside Glory	78,548,387	—	78,548,387	12.23
NYH	—	107,612,515 (ii)	107,612,515	16.76
SEA Fortune	—	107,612,515 (ii)	107,612,515	16.76
Port Lucky	107,612,515	—	107,612,515	16.76

Long positions in shares of the Company

Notes:

(i) NLI holds 100% of the issued share capital of Ambleside Glory. The above 78,548,387 shares held by Ambleside Glory are also deemed to be interest of NLI and such shares are, therefore, duplicated between these shareholders for the purpose of the SFO.
(ii) NYH holds 100% of the issued share capital of SEA Fortune, which holds 100% of the issued share capital of Port Lucky. The above 107,612,515 shares held by Port Lucky are also deemed to be interest of SEA Fortune and NYH and such shares are, therefore, duplicated between these shareholders for the purpose of the SFO.
(iii) Messrs Lu Wing Chi, Jesse and Lambert Lu, both being Directors, are also directors of NLI and Ambleside Glory.
(iv) Messrs Lu Wing Chi, Jesse, Lambert Lu and Lincoln Lu, all being Directors, are also directors of NYH, SEA Fortune and Port Lucky.
(v) The total number of issued shares of the Company as at 31 December 2020 was 642,238,726 shares.

Saved as disclosed herein, as at 31 December 2020, none of the substantial Shareholders and other persons (other than Directors) had any interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

Share Option Scheme

The Company adopted the 2015 Share Option Scheme on 29 May 2015. A summary of the principal terms of the 2015 Share Option Scheme is set out below:

Purpose: To provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants (as defined under the 2015 Share Option Scheme).
1. Participants: Eligible participants include any (i) director or employee of the Company or any of its affiliate; (ii) representative, manager, agent, contractor, advisor, consultant, distributor or supplier engaged by the Company or any of its affiliate; (iii) customer, promoter, business ally or joint-venture partner of the Company or any of its affiliate; or (iv) trustee of any trust established for the benefit of employees of the Company or any of its affiliate.
1. T o t a l n u m b e r o f s h a r e s available for issue under the 2015 Share Option Scheme and percentage of the issued share capital that it represents as at the date of this Annual Report: The maximum number of shares which could be issued upon exercise of all options granted or to be granted under the 2015 Share Option Scheme was 69,186,772 shares (the "Scheme Mandate Limit"), representing approximately 10% of the shares of the Company in issue as at 29 May 2015, the date on which an ordinary resolution was passed by the shareholders of the Company to approve the 2015 Share Option Scheme.

As at 26 March 2021, a total of 55,806,772 shares (excluding the underlying shares comprised in share options that have been granted but not yet lapsed, cancelled or exercised) were available for issue under the 2015 S hare O ption S c h e m e , w h i c h r e p r e s e n t e d approximately 8.69% of the issued share capital of the Company on that date.

Maximum entitlement of each participant: Unless approved by shareholders of the Company, the total number of shares issued and to be issued upon exercise of the share options already granted or to be granted to each eligible participant (including both exercised and outstanding options) in any 12-month period must not exceed 1% of the shares of the Company then in issue.

In addition, for any grant of share options to a substantial shareholder or an independent non-executive director of the Company or any of their respective associates would result in the shares issued and to be issued upon exercise of all options already granted or to be granted (including options exercised, cancelled and outstanding) to such person in any 12-month period exceed 0.1% of the shares of the Company then in issue and with an aggregate value in excess of HK\$5 million, then the proposed grant is also subject to the approval of shareholders of the Company in general meeting.

Period within which the shares must be taken up under an option:

The period during which an option may be exercised is determined by the Board at its absolute discretion, save that no option may be exercised more than 10 years after it has been granted.

Minimum period for which an option must be held before it can vest:
Amount payable on acceptance of an option and the period within which payments shall be made:

HK\$10 is payable to the Company upon acceptance of the option which must be taken up within 28 days from the date of offer.

Basis of determining the exercise price: The exercise price is determined by the Board which must be at least the highest of (i) the closing price of the share of the Company on the Stock Exchange on the date of grant of the option; (ii) the average of the closing price of the share of the Company on the Stock Exchange for the five business days immediately preceding the date of grant of the option; and (iii) the nominal value of the share of the Company.

As determined by the Board.

Remaining life of the 2015 Share Option Scheme: Valid and effective for a term of ten years from the date of adoption until 28 May 2025.

The following table shows the movements in share options under the 2015 Share Option Scheme during the year ended 31 December 2020 and the options outstanding at the beginning and end of the year:

				Number of underlying shares comprised in share options
Name	Date of grant	Exercise price per share (HK\$)	Exercise period	L As at 01.01.2020	apsed during the year	As at 31.12.2020
Eligible employees in aggregate	02.07.2015 22.01.2018	6.302 12.800	01.07.2018 to 30.06.2020 01.01.2019 to 31.12.2020	270,000 275,000	(270,000) (100,000)	— 175,000
			01.07.2019 to 30.06.2021 01.01.2020 to 31.12.2021	275,000 500,000	(75,000) —	200,000 500,000
			01.07.2020 to 30.06.2022 01.01.2021 to 31.12.2022 01.07.2021 to 30.06.2023	225,000 1,300,000 1,225,000	— (325,000) (200,000)	225,000 975,000 1,025,000
Total				4,070,000	(970,000)	3,100,000

Notes:

(i) The vesting period of the share options granted is from the date of grant until the commencement of the exercisable period.
(ii) No share options had been granted, exercised or cancelled under the 2015 Share Option Scheme for the year ended 31 December 2020.

Share Award Scheme

The Share Award Scheme was approved by the Shareholders at the SGM held on 27 May 2010. The Share Award Scheme commenced on 15 June 2010 and will continue in force until the day immediately before the fifteenth anniversary of such date.

The purpose of the Share Award Scheme is to provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants. Under the Share Award Scheme, the Board (or any committee delegated by the Board) may at its absolute discretion grant awards, which may comprise (a) new shares of the Company; (b) existing shares of the Company in issue and are listed on the Stock Exchange; (c) cash in lieu of the shares of the Company; or (d) a combination of (a), (b) and (c), to any eligible participants as it thinks fit and appropriate and subject to the terms and conditions of the Share Award Scheme. No award may be granted under the Share Award Scheme if the aggregate number of shares which may be issued and/or transferred upon vesting of all outstanding awards granted under the Share Award Scheme and any other share award scheme of the Company and which may be issued upon exercise of all outstanding options granted and yet to be exercised under any share option scheme of the Company exceed 30% of the shares of the Company in issue from time to time.

No award was granted by the Company under the Share Award Scheme during the year ended 31 December 2020.

Purchase, Sale or Redemption of the Company's Listed Securities

During the year ended 31 December 2020, the Company repurchased a total of 20,050,000 Shares on the Stock Exchange at an aggregate cash consideration of HK\$194,171,783 (excluding expenses). All the purchased shares were then cancelled and the number of issued shares of the Company was reduced accordingly. Particulars of the repurchases are as follows:

Period of	Total number of shares	Price paid per share	Aggregate
repurchase	repurchased	Highest L HK\$	owest HK\$	consideration HK\$
September 2020	10,446,000	10.00	9.00	101,712,939
October 2020	9,604,000	9.90	7.28	92,458,844
	20,050,000			194,171,783

The Directors considered that the aforesaid shares were repurchased at a discount to the underlying fair value per share and such purchases resulted in an increase in the net asset value and earnings of every remaining share of the Company.

Apart from the above, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company during the year ended 31 December 2020.

Major Customers and Major Suppliers

During the year, the revenue and aggregate revenue attributable to the Group's largest customer and five largest customers accounted for approximately 17% and 33% of the Group's total revenue respectively.

The aggregate purchases attributable to the five largest suppliers of the Group accounted for less than 30% of the total purchases of the Group for the year.

At no time during the year did a Director, a close associate of a Director or a Shareholder (which to the knowledge of the Directors own more than 5% of the Company's share capital) had an interest in any of the Group's five largest customers.

Related Party Transactions

Details of the significant related party transactions undertaken in the usual course of business are set out in note 43 to the consolidated financial statements. All such related party transactions are fully exempt connected transactions under Chapter 14A of the Listing Rules.

Corporate Governance

The Company is committed to maintain high corporate governance standards so as to ensure better transparency and protection of Shareholders' interests. Information on the corporate governance practices adopted by the Company is set out in the section headed "Corporate Governance Report" on pages 35 to 51.

Sufficiency of Public Float

Based on the information that is publicly available to the Company and within the knowledge of the Directors, at least 25% of the issued shares in the Company was held by the public (i.e. the prescribed public float applicable to the Company under the Listing Rules) during the year and up to the date of this Annual Report.

Charitable Donations

During the year, the Group made charitable donations amounting to about HK\$29,000 (2019: HK\$109,000).

Five-Year Financial Summary

A summary of the results, assets and liabilities of the Group for the past five financial years is set out in the section headed "Financial Highlights" on pages 22 and 23.

Review by Audit Committee

The Audit Committee comprises four members, namely Messrs Leung Hok Lim, Walujo Santoso, Wally, Chung Pui Lam and Chan Kwok Wai, all being INED. The Audit Committee has reviewed with the management the audited consolidated financial statements of the Company for the year ended 31 December 2020.

Independent Auditor

The consolidated financial statements of the Company for the year under review have been audited by Deloitte, who will retire and, being eligible, offer themselves for re-appointment. Approved by the Board upon the Audit Committee's recommendation, a resolution to re-appoint Deloitte as independent auditor of the Company for the ensuing year will be put to the 2021 AGM for the Shareholders' approval.

On behalf of the Board

Lu Wing Chi, Jesse Chairman

Hong Kong, 26 March 2021

To the Shareholders of S E A Holdings Limited

(incorporated in Bermuda with limited liability)

Opinion

We have audited the consolidated financial statements of S E A Holdings Limited (the "Company") and its subsidiaries (collectively referred to as "the Group") set out on pages 73 to 166, which comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 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 disclosure requirements of 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 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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 How our audit addressed the key audit matter

Valuation of investment properties

We identified the valuation of investment properties as a key audit matter as the valuation is subject to management estimate and has a significant impact on the financial result and financial position of the Group.

As disclosed in note 19 to the consolidated financial statements, the carrying value of the investment properties amounted to HK\$7,338,649,000 as at 31 December 2020 and the increase in fair value of the investment properties recorded in the profit for the year was HK\$39,067,000. In estimating the fair value of investment properties, it is the Group's policy to engage independent qualified professional valuers (the "Valuers") to perform the valuation.

The Valuers have determined the fair value of the Group's investment properties by the use of different valuation methodologies, and key inputs such as: (i) capitalisation rate under income capitalisation approach; (ii) discount rate under discounted cash flow analysis; and (iii) adjusting factors such as location, size, age and maintenance under direct comparison approach.

Our procedures in relation to the valuation of investment properties included:

• Evaluating the competence, capabilities and objectivity of the Valuers;
• Obtaining an understanding of the valuation process and significant assumptions to assess if the methodologies meet relevant accounting requirements and industry norms;
• O b t ai ni n g the valuation reports and interviewing with the Valuers to assess the reasonableness of the key inputs used by the Valuers by comparing them to comparable market transactions and other publicly available information of the property market; and
• Assessing the completeness and accuracy of information provided by the Group to the Valuers.

Other Information

The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include 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.

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 Those Cha rged w i th Governance 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 disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors of the Company 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 of the Company 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 of the Company either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are 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 solely to you, as a body, in accordance with Section 90 of the Bermuda Companies Act, 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 skepticism 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.
• 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 those charged with governance 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 those charged with governance 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 those charged with governance, 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 the independent auditor's report is Tan Wei Ming.

Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 26 March 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

NOTES		2020 HK\$'000	2019 HK\$'000
Revenue	7
— Renting of investment properties		212,934	200,055
— Hotel operation — Return from financial investment		44,769	192,318
— Interest income and others		345,246	424,056
Total revenue		602,949	816,429
Other income	8	10,467	7,023
Costs:
P roperty and related costs S taff costs	9	(5,227) (77,752)	(4,036) (115,816)
Depreciation and amortisation		(36,908)	(39,337)
O ther expenses	10	(52,237)	(96,010)
		(172,124)	(255,199)
Profit before fair value changes
on investment properties, impairment loss
and other gains and losses		441,292	568,253
Fair value changes on investment properties		39,067	50,408
Profit after fair value changes on investment
properties Other gains and losses	11	480,359 (29,897)	618,661 8,978
Impairment loss recognised on a listed debt
instrument at fair value through other
comprehensive income Share of result of a joint venture		— (61)	(10,033) (53)
Finance costs	12	(273,679)	(420,047)
Profit before taxation	13	176,722	197,506
Income tax expense	14	(25,754)	(24,388)
Profit for the year		150,968	173,118

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

NOTE		2020 HK\$'000	2019 HK\$'000
Profit for the year attributable to the Company's shareholders		150,968	173,118
Earnings per share for profit attributable to the Company's shareholders		HK cents	HK cents
— Basic — Diluted		23.0 23.0	26.1 26.1
Earnings per share excluding fair value changes on investment properties net of deferred tax — Basic	18	17.2	20.3
— Diluted		17.2	20.3

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

NOTE		2020 HK\$'000	2019 HK\$'000
Profit for the year		150,968	173,118
Other comprehensive income (expense): Item that will not be reclassified subsequently to profit or loss: Fair value gain on equity instruments at fair value through other comprehensive income		668	—
Items that may be reclassified subsequently to profit or loss: Fair value (loss) gain on debt instruments at fair value through other comprehensive income R eclassification to profit or loss upon disposal		(35,601)	43,769
of debt instruments at fair value through other comprehensive income E xchange differences arising on translation of foreign operations		24,000 76,963	— 43,009
Impairment loss recognised on a listed debt instrument at fair value through other comprehensive income	20	—	10,033
Other comprehensive income for the year		66,030	96,811
Total comprehensive income for the year attributable to the Company's shareholders		216,998	269,929

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2020

NOTES		2020 HK\$'000	2019 HK\$'000

Non-current assets
Investment properties Property, plant and equipment	19 21	7,338,649 615,936	7,313,892 650,003
Investment in a joint venture	22	1,169,992	1,114,627
Equity instruments at fair value through other
comprehensive income	23	431,485	—
Debt instruments at fair value through other
comprehensive income	24	3,073,053	3,153,121
Financial assets at fair value through profit or loss	25	20,874	280,325
Pledged bank deposits	27	—	16,512
Other assets	26	6,839	6,899

		12,656,828	12,535,379

Current assets
Inventories		941	1,020
Debt instruments at fair value through other
comprehensive income Financial assets at fair value through profit or loss	24 25	806,575 80,309	2,447,346 —
Trade and other receivables, deposits and prepayments	28	32,794	44,468
Tax recoverable		7	1
Pledged bank deposits	27	29,768	482,525
Bank balances and cash	27	3,354,456	5,027,037

		4,304,850	8,002,397

Current liabilities
Payables, rental deposits and accrued charges	29	153,344	226,980
Tax liabilities		28,123	23,860
Lease liabilities	32	12,901	10,323
Guaranteed notes Bank borrowings — due within one year	31 30	— 3,511,586	1,557,139 5,765,168

		3,705,954	7,583,470

Net current assets		598,896	418,927
Total assets less current liabilities		13,255,724	12,954,306

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2020

NOTES		2020 HK\$'000	2019 HK\$'000
Capital and reserves
Share capital	33	64,224	66,229
Reserves		6,176,381	6,184,158
Total equity		6,240,605	6,250,387
Non-current liabilities
Lease liabilities	32	190,911	197,580
Bank borrowings — due after one year	30	5,611,388	5,294,791
Guaranteed notes	31	1,158,222	1,161,220
Deferred taxation	34	54,598	50,328
		7,015,119	6,703,919
Total equity and non-current liabilities		13,255,724	12,954,306

The consolidated financial statements on pages 73 to 166 were approved and authorised for issue by the Board of Directors on 26 March 2021 and are signed on its behalf by:

LU WING CHI, JESSE LAMBERT LU AND EXECUTIVE DIRECTOR AND CHIEF EXECUTIVE

CHAIRMAN EXECUTIVE DIRECTOR

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2020

	Attributable to the Company's shareholders
	Share capital HK\$'000	premium HK\$'000	surplus HK\$'000 (note i)	Share Contributed Translation redemption reserve HK\$'000	Capital reserve HK\$'000	reserve HK\$'000	Share Investment N option revaluation O reserve HK\$'000	ther reserves HK\$'000 (note ii)	Retained profits HK\$'000	Sub-total HK\$'000	on controlling interests T HK\$'000	otal HK\$'000
At 1 January 2019	66,206	19,068	277,707	(7,887)	4,451	2,390	(55,258)	20,159	5,684,718	6,011,554	4	6,011,558
Profit for the year	—	—	—	—	—	—	—	—	173,118	173,118	—	173,118
Exchange differences arising on translation of foreign operations Fair value gain on debt instruments at fair value through other comprehensive income Impairment loss recognised on a listed debt instrument	— —	— —	— —	43,009 —	— —	— —	— 43,769	— —	— —	43,009 43,769	— —	43,009 43,769
at fair value through other comprehensive income	—	—	—	—	—	—	10,033	—	—	10,033	—	10,033
Other comprehensive income for the year	—	—	—	43,009	—	—	53,802	—	—	96,811	—	96,811
Total comprehensive income for the year Recognition of equity-settled	—	—	—	43,009	—	—	53,802	—	173,118	269,929	—	269,929
share-based payments — share options (note 41)	—	—	—	—	—	565	—	—	—	565	—	565
Shares issued upon exercise of share options	23	1,677	—	—	—	(251)	—	—	—	1,449	—	1,449
Dissolution of a subsidiary Dividends paid (note 17)	— —	— —	— —	— —	— —	— —	— —	— —	— (33,110)	— (33,110)	(4) —	(4) (33,110)
At 31 December 2019	66,229	20,745	277,707	35,122	4,451	2,704	(1,456)	20,159	5,824,726	6,250,387	—	6,250,387
Profit for the year	—	—	—	—	—	—	—	—	150,968	150,968	—	150,968
Exchange differences arising on translation of foreign operations Fair value loss on debt instruments at fair value through other	—	—	—	76,963	—	—	—	—	—	76,963	—	76,963
comprehensive income Fair value gain on equity instruments	—	—	—	—	—	—	(35,601)	—	—	(35,601)	—	(35,601)
at fair value through other comprehensive income Reclassification to profit or loss upon disposal of debt instruments at fair value through other	—	—	—	—	—	—	668	—	—	668	—	668
comprehensive income	—	—	—	—	—	—	24,000	—	—	24,000	—	24,000
Other comprehensive income (expense) for the year	—	—	—	76,963	—	—	(10,933)	—	—	66,030	—	66,030
Total comprehensive income (expense) for the year Recognition of equity-settled share based payments	—	—	—	76,963	—	—	(10,933)	—	150,968	216,998	—	216,998
— share options (note 41)	—	—	—	—	—	464	—	—	—	464	—	464
Lapse of share options Shares repurchased and cancelled	— (2,005)	— (192,167)	— —	— —	— —	(831) —	— —	— —	831 —	— (194,172)	— —	— (194,172)
Transfer of excess share premium to retained profits Dividends paid (note 17)	— —	171,422 —	— —	— —	— —	— —	— —	— —	(171,422) (33,072)	— (33,072)	— —	— (33,072)
At 31 December 2020	64,224	—	277,707	112,085	4,451	2,337	(12,389)	20,159	5,772,031	6,240,605	—	6,240,605

Notes:

(i) Contributed surplus represents the excess of the nominal value of the shares of the acquired subsidiaries over the nominal value of the Company's shares issued for the acquisition pursuant to the Group reorganisation in previous years.
(ii) Other reserves represent the excess of the consideration paid for acquisition of additional interest in subsidiaries from non-controlling interests over the carrying amount of non-controlling interests.

CONSOLIDATED STATEMENT OF CASH FLOWS

	2020 HK\$'000	2019 HK\$'000

Operating activities
Profit before taxation	176,722	197,506
Adjustments for:
Interest expense	273,679	420,047
Depreciation and amortisation	36,908	39,337
Fair value changes on investment properties	(39,067)	(50,408)
Fair value gain on financial assets at fair value through
profit or loss	(1,014)	(31,334)
L oss on disposal of debt instruments at fair value
through other comprehensive income	24,000	—
L oss on early redemption of debt instruments
at fair value through other comprehensive income	—	2,335
Impairment loss recognised on a listed debt instrument
at fair value through other comprehensive income	—	10,033
Gain on disposal of an investment property	—	(6,375)
S hare of result of a joint venture Interest income	61 (345,248)	53 (424,391)
Dividend from equity investments	(224)	—
(Gain) loss on disposal of property, plant and equipment	(10)	20
E quity-settled share-based payment expenses	464	565
N et exchange losses	6,911	26,396

Operating cash flows before movements in working capital	133,182	183,784
Decrease (increase) in inventories	79	(105)
Decrease (increase) in trade and other receivables, deposits
and prepayments	7,871	(12,038)
(Decrease) increase in payables, rental deposits
and accrued charges	(36,854)	20,635

Cash generated from operations Interest received from financial investment	104,278 377,357	192,276 453,048
Dividend received	224	—
Tax paid	(21,309)	(14,139)
Tax refunded	4	1

Net cash from operating activities	460,554	631,186

CONSOLIDATED STATEMENT OF CASH FLOWS

NOTE		2020 HK\$'000	2019 HK\$'000

Investing activities
Interest received from bank deposits		226	335
Placement of pledged bank deposits		(12,255)	(2,250)
Release of pledged bank deposits		479,759	1,102,267
Redemption of debt instruments at fair value
through other comprehensive income Redemption of financial assets at fair value		3,251,110	1,625,956
through profit or loss		184,379	84,775
Purchase of property, plant and equipment		(2,781)	(3,173)
Purchase of club membership		—	(180)
Additions to investment properties		(12,433)	(979,680)
Proceeds from disposal of an investment property		—	71,626
Proceeds from disposal of a subsidiary	37	196,565	—
Proceeds from disposal of property,
plant and equipment		10	20
Purchase of debt instruments at fair value
through other comprehensive income		(1,617,000)	(2,839,945)
Purchase of equity instruments at fair value
through other comprehensive income		(430,817)	—
Purchase of financial assets at fair value
through profit or loss		(5,374)	—
Advances to a joint venture in form of loan		(55,426)	(64,220)
Net cash from (used in) investing activities		1,975,963	(1,004,469)

Financing activities
Drawdown of bank borrowings Repayments of bank borrowings		2,370,569 (4,370,164)	3,262,024 (3,265,364)
Repayment of lease liabilities		(10,323)	(11,864)
Repayment of guaranteed notes		(1,554,060)	—
Payment of bank borrowings front-end fee		(10,028)	(18,113)
Issue of new ordinary shares		—	1,449
Repurchase of ordinary shares		(194,172)	—
Interest paid		(296,569)	(398,904)
Dividends paid		(33,057)	(33,102)
Net cash used in financing activities		(4,097,804)	(463,874)
Net decrease in cash and cash equivalents		(1,661,287)	(837,157)

Cash and cash equivalents at beginning of the year		5,027,037	5,870,023
Effect of foreign exchange rate changes		(11,294)	(5,829)
Cash and cash equivalents at end of the year
represented by bank balances and cash		3,354,456	5,027,037

For the year ended 31 December 2020

1. GENERAL

S E A Holdings Limited (the "Company") is an exempted company incorporated in Bermuda with limited liability and its shares are listed on The Stock Exchange of Hong Kong Limited (the ''Stock Exchange''). Nan Luen International Limited, an exempted company incorporated in Bermuda with limited liability, is the immediate and ultimate holding company of the Company. The addresses of the registered office and principal place of business of the Company are disclosed in the directory of the annual report.

The Company acts as an investment holding company. The principal activities of its subsidiaries and a joint venture are set out in notes 45 and 22 respectively.

The consolidated financial statements are presented in Hong Kong dollars ("HK\$"), which is also the functional currency of the Company.

2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs")

Amendments to HKFRSs that are mandatorily effective for the current year

In the current year, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to HKAS 1	Definition of Material
and HKAS 8
Amendments to HKFRS 3	Definition of a Business
Amendments to HKFRS 9,	Interest Rate Benchmark Reform
HKAS 39 and HKFRS 7

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group's financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

Impacts on application of Amendments to HKAS 1 and HKAS 8 Definition of Material

The Group has applied the Amendments to HKAS 1 and HKAS 8 for the first time in the current year. The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments in the current year had no impact on the consolidated financial statements.

For the year ended 31 December 2020

2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs") — continued

New and amendments to HKFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 17	Insurance Contracts and the related Amendments1
Amendment to HKFRS 16	COVID-19-Related Rent Concessions4
Amendments to HKFRS 3 R	eference to the Conceptual Framework2
Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16	Interest Rate Benchmark Reform — Phase 25
Amendments to HKFRS 10 S and HKAS 28	ale or Contribution of Assets between an Investor and its Associate or Joint Venture3
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)1
Amendments to HKAS 16 P	roperty, Plant and Equipment — Proceeds before Intended Use2
Amendments to HKAS 37 O	nerous Contracts — Cost of Fulfilling a Contract2
Amendments to HKFRSs A	nnual Improvements to HKFRSs 2018-20202

1 Effective for annual periods beginning on or after 1 January 2023.
2 Effective for annual periods beginning on or after 1 January 2022.
3 Effective for annual periods beginning on or after a date to be determined.
4 Effective for annual periods beginning on or after 1 June 2020.
5 Effective for annual periods beginning on or after 1 January 2021.

Except for the new and amendments to HKFRSs mentioned below, the Directors anticipate that the application of all other new and amendments to HKFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

Amendment to HKFRS 16 COVID-19-Related Rent Concessions

The amendment is effective for annual reporting periods beginning on or after 1 June 2020.

The amendment introduces a new practical expedient for lessees to elect not to assess whether a COVID-19-related rent concession is a lease modification. The practical expedient only applies to rent concessions occurring as a direct consequence of the COVID-19 that meets all of the following conditions:

• the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
• any reduction in lease payments affects only payments originally due on or before 30 June 2021; and
• there is no substantive change to other terms and conditions of the lease.

For the year ended 31 December 2020

2. APPLICATION OF AMENDMENTS TO HONG KONG FINANCIAL REPORTING STANDARDS ("HKFRSs") — continued

New and amendments to HKFRSs in issue but not yet effective — continued Amendment to HKFRS 16 COVID-19-Related Rent Concessions — continued

A lessee applying the practical expedient accounts for changes in lease payments resulting from rent concessions the same way it would account for the changes applying HKFRS 16 Leases if the changes are not a lease modification. Forgiveness or waiver of lease payments are accounted for as variable lease payments. The related lease liabilities are adjusted to reflect the amounts forgiven or waived with a corresponding adjustment recognised in the profit or loss in the period in which the event occurs.

The application is not expected to have impact on the Group's financial position and performance as the Group does not intend to apply the practical expedient.

Amendments to HKAS 1 Classification of Liabilities as Current or Non-current and related amendments to Hong Kong Interpretation 5 (2020)

The amendments provide clarification and additional guidance on the assessment of right to defer settlement for at least twelve months from reporting date for classification of liabilities as current or non-current, which:

• specify that the classification of liabilities as current or non-current should be based on rights that are in existence at the end of the reporting period. Specifically, the amendments clarify that:
(i) the classification should not be affected by management intentions or expectations to settle the liability within 12 months; and
(ii) if the right is conditional on the compliance with covenants, the right exists if the conditions are met at the end of the reporting period, even if the lender does not test compliance until a later date; and
• clarify that if a liability has terms that could, at the option of the counterparty, result in its settlement by the transfer of the entity's own equity instruments, these terms do not affect its classification as current or non-current only if the entity recognises the option separately as an equity instrument applying HKAS 32 Financial Instruments: Presentation.

In addition, Hong Kong Interpretation 5 was revised as a consequence of the Amendments to HKAS 1 to align the corresponding wordings with no change in conclusion.

Based on the Group's outstanding liabilities as at 31 December 2020, the application of the amendments will not result in reclassification of the Group's liabilities.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation of consolidated financial statements

The consolidated financial statements have been prepared in accordance with HKFRSs issued by the HKICPA. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong Kong Companies Ordinance.

The consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are measured at fair values at the end of each reporting period, as explained in the accounting policies set out below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2 Share-based Payment, leasing transactions that are accounted for in accordance with HKFRS 16, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 Inventories or value in use in HKAS 36 Impairment of Assets.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

For financial instruments and investment properties which are transacted at fair value and a valuation technique that unobservable inputs is to be used to measure fair value in subsequent periods, the valuation technique is calibrated so that at initial recognition the results of the valuation technique equals the transaction price.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.1 Basis of preparation of consolidated financial statements — continued

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

3.2 Significant accounting policies Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Basis of consolidation — continued

Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Changes in the Group's interests in existing subsidiaries

When the Group loses control of a subsidiary, the assets and liabilities of that subsidiary and non-controlling interests (if any) are derecognised. A gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the owners of the Company. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable HKFRSs).

Investment in a joint venture

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Investment in a joint venture — continued

The results and assets and liabilities of the joint venture are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of the joint venture used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the joint venture. Changes in net assets of the joint venture other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group's share of losses of a joint venture exceeds the Group's interest in that joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

An investment in a joint venture is accounted for using the equity method from the date on which the investee becomes a joint venture. On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The Group assesses whether there is an objective evidence that the interest in a joint venture may be impaired. When any objective evidence exists, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with HKAS 36 as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases.

When a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint venture are recognised in the Group's consolidated financial statements only to the extent of interest in the joint venture that are not related to the Group.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Revenue from contracts with customers

The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

• the customer simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs;
• the Group's performance creates or enhances an asset that the customer controls as the Group performs; or
• the Group's performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct good or service.

Hotel room revenue is recognised over time by using output method; while revenue from food and beverage sales and ancillary services are recognised at point in time.

Over time revenue recognition: measurement of progress towards complete satisfaction of a performance obligation

Output method

The progress towards complete satisfaction of a performance obligation is measured based on output method, which is to recognise revenue on the basis of direct measurements of the value of the goods or services transferred to the customer to date relative to the remaining goods or services promised under the contract, that best depict the Group's performance in transferring control of goods or services.

As a practical expedient, if the Group has a right to consideration in an amount that corresponds directly with the value of the Group's performance completed to date (i.e. hotel room revenue in which the Group bills a fixed amount for each day of the room provided), the Group recognises revenue in the amount to which the Group has the right to invoice.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at their fair values, adjusted to exclude any prepaid or accrued operating lease income.

Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

Construction costs incurred for investment properties under construction are capitalised as part of the carrying amount of the investment properties under construction.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use or no future economic benefits are expected from its disposal. A leasehold land under head lease which is recognised as a right-of-use asset is derecognised if the Group as intermediate lessor classifies the sublease as a finance lease. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

Property, plant and equipment

Property, plant and equipment are tangible assets that held for use in the supply of services, or for administrative purpose. Property, plant and equipment other than crockery, utensils and linen are stated in the consolidated statement of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.

When the Group makes payments for ownership interests of properties which includes both leasehold land and building elements, the entire consideration is allocated between the leasehold land and the building elements in proportion to the relative fair values at initial recognition. To the extent the allocation of the relevant payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as "right-of-use assets" in the consolidated statement of financial position except for those that are classified and accounted for as investment properties under the fair value model. When the consideration cannot be allocated reliably between non-lease building element and undivided interest in the underlying leasehold land, the entire properties are classified as property, plant and equipment.

Depreciation is recognised so as to write off the cost of assets, other than crockery, utensils and linen, less their residual values over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Property, plant and equipment — continued

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Intangible asset — club membership

Intangible asset — club membership acquired separately

The club membership with finite useful lives that are acquired separately are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets-club membership with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of a club membership measured at the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in the consolidated statement of profit or loss when the asset is derecognised.

Impairment on property, plant and equipment and intangible assets

At the end of the reporting period, the Group reviews the carrying amounts of its property, plant and equipment, and intangible assets with finite useful lives to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated in order to determine the extent of the impairment loss (if any).

The recoverable amount of property, plant and equipment, and intangible assets are estimated individually. When it is not possible to estimate the recoverable amount individually, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

In testing a cash-generating unit for impairment, corporates assets are allocated to individual cash generating units when a reasonable and consistent basis of allocation can be established, or otherwise they are allocated to the smallest group of cash generating units for which a reasonable and consistent allocation basis can be established. The Group assesses whether there is indication that corporate assets may be impaired. If such indication exists, the recoverable amount is determined for the cash-generating unit or group of cash-generating units to which the corporate asset belongs, and is compared with the carrying amount of the relevant cash-generating unit or group of cash-generating units.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Impairment on property, plant and equipment and intangible assets — continued

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset (or a cash-generating unit) for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverable amount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable and consistent basis to a cash-generating unit, the Group compares the carrying amount of a group of cash-generating units, including the carrying amounts of the corporate assets or portion of corporate assets allocated to that group of cash-generating units, with the recoverable amount of the group of cashgenerating units. In allocating the impairment loss, the impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit or the group of cash-generating units. The carrying amount of an asset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or a cash-generating unit or a group of cash-generating units) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or a cash-generating unit or a group of cash-generating units) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Inventories

Inventories comprising food and beverage are stated at the lower of cost and net realisable value. Cost of inventories are determined on a weighted average method. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are measured in accordance with HKFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets at fair value through profit or loss ("FVTPL")) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at FVTPL are recognised immediately in profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Interest income which is derived from the Group's ordinary course of business is presented as revenue.

Financial assets

Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to collect contractual cash flows; and
• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are subsequently measured at fair value through other comprehensive income ("FVTOCI"):

• the financial asset is held within a business model whose objective is achieved by both selling and collecting contractual cash flows; and
• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Classification and subsequent measurement of financial assets — continued

All other financial assets are subsequently measured at FVTPL, except that at initial recognition of a financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income ("OCI") if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which HKFRS 3 Business Combinations applies.

In addition, the Group may irrevocably designate a financial asset that are required to be measured at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch.

(i) Amortised cost and interest income

Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and debt instruments subsequently measured at FVTOCI. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit-impaired.

(ii) Debt instruments classified as FVTOCI

Subsequent changes in the carrying amounts for debt instruments classified as FVTOCI as a result of interest income calculated using the effective interest method, and foreign exchange gains and losses are recognised in profit or loss. All other changes in the carrying amount of these debt instruments are recognised in OCI and accumulated under the heading of investment revaluation reserve. Impairment allowances are recognised in profit or loss with corresponding adjustment to OCI without reducing the carrying amounts of these debt instruments. When these debt instruments are derecognised, the cumulative gains or losses previously recognised in OCI are reclassified to profit or loss.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Classification and subsequent measurement of financial assets — continued

(iii) Equity instruments designated as at FVTOCI

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, and will be transferred to retained profits.

Dividend from these investments in equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established, unless the dividend clearly represent a recovery of a part of the cost of the investment. Dividends are included in the "revenue" line item in profit or loss.

(iv) Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI or designated as FVTOCI are measured at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset and is included in the "other gains and losses" line item.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Impairment allowance in respect of financial assets and financial guarantee contract

The Group performs impairment assessment under expected credit loss model ("ECL") on financial assets (including trade receivables, other receivables, pledged bank deposits, bank balances, debt instruments at FVTOCI), loan to a joint venture and financial guarantee contract which are subject to impairment assessment under HKFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL ("12m ECL") represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Group always recognises lifetime ECL for trade receivables. The ECL on these assets are assessed individually.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless there has been a significant increase in credit risk since initial recognition, in which case the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

(i) Significant increase in credit risk

In assessing whether the credit risk has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Impairment allowance in respect of financial assets and financial guarantee contract — continued

(i) Significant increase in credit risk — continued

In particular, the following information is taken into account when assessing whether credit risk has increased significantly:

• an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;
• significant deterioration in external market indicators of credit risk, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;
• an actual or expected significant deterioration in the operating results of the debtor;
• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Impairment allowance in respect of financial assets and financial guarantee contract — continued

(i) Significant increase in credit risk — continued

Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has not increased significantly since initial recognition if the debt instrument is determined to have low credit risk at the reporting date. A debt instrument is determined to have low credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a debt instrument to have low credit risk which has either investment grades or issued by a large institution.

For financial guarantee contracts, the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing impairment. In assessing whether there has been a significant increase in credit risk since initial recognition of financial guarantee contracts, the Group considers the changes in the risk that the specified debtor will default on the contract.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

(ii) Definition of default

For internal credit risk management, the Group considers an event of default occurs when information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).

Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Impairment allowance in respect of financial assets and financial guarantee contract — continued

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
(e) the disappearance of an active market for that financial asset because of financial difficulties.
(iv) Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over one year past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. A writeoff constitutes a derecognition event. Any subsequent recoveries are recognised in profit or loss.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Impairment allowance in respect of financial assets and financial guarantee contract — continued

(v) Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

For a financial guarantee contract, the Group is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed. Accordingly, the ECL is the present value of the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder, the debtor or any other party.

For ECL on financial guarantee contract for which the effective interest rate cannot be determined, the Group will apply a discount rate that reflects the current market assessment of the time value of money and the risks that are specific to the cash flows but only if, and to the extent that, the risks are taken into account by adjusting the discount rate instead of adjusting the cash shortfalls being discounted.

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortised cost of the financial asset.

Except for investments in debt instruments that are measured at FVTOCI and the financial guarantee contract, the Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade receivables where the corresponding adjustment is recognised through a loss allowance account. For investments in debt instruments that are measured at FVTOCI, the loss allowance is recognised in OCI and accumulated in the investment revaluation reserve without reducing the carrying amount of these debt instruments. Such amount represents the changes in the investment revaluation reserve in relation to accumulated loss allowance.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial assets — continued

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

On derecognition of an investment in a debt instrument classified as at FVTOCI, the cumulative gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.

On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not reclassified to profit or loss, but is transferred to retained profits.

Financial liabilities and equity

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Repurchase of the Company's own equity instruments is recognised and deducted directly in equity.

Financial liabilities at amortised cost

Financial liabilities including trade and other payables, bank borrowings, and guaranteed notes are subsequently measured at amortised cost, using the effective interest method.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Financial instruments — continued

Financial liabilities and equity — continued

Financial guarantee contract

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are measured initially at their fair values. It is subsequently measured at the higher of:

• the amount of the loss allowance determined in accordance with HKFRS 9; and
• the amount initially recognised less, where appropriate, cumulative amortisation recognised over the guarantee period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

Offsetting a financial asset and a financial liability

A financial asset and a financial liability are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the recognised amounts; and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Leases

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified on or after the date of initial application or arising from business combinations, the Group assesses whether a contract is or contains a lease based on the definition under HKFRS 16 at inception, modification date or acquisition date, as appropriate. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Leases — continued The Group as a lessee Right-of-use assets The cost of right-of-use asset includes:

• the amount of the initial measurement of the lease liability; and
• any lease payments made at or before the commencement date, less any lease incentives received.

Except for those that are classified as investment properties and measured under fair value model, right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property in "property, plant and equipment", the same line item within which the corresponding underlying assets would be presented if they were owned. Right-of-use assets that meet the definition of investment property are presented within "investment properties".

Refundable rental deposits

Refundable rental deposits paid are accounted under HKFRS 9 and initially measured at fair value.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.

The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable.

Variable lease payments that do not depend on an index or a rate are not included in the measurement of lease liabilities and right-of-use assets, and are recognised as expense in the period in which the event or condition that triggers the payment occurs.

After the commencement date, lease liabilities are adjusted by changes in interest and lease payments.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Leases — continued The Group as a lessee — continued

Lease liabilities — continued

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever:

• the lease term has changed in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.
• the lease payments change due to changes in market rental rates following a market rent review in which cases the related lease liability is remeasured by discounting the revised lease payments using the initial discount rate.

The Group presents lease liabilities as a separate line item on the consolidated statement of financial position.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

• the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
• the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use asset. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Leases — continued

The Group as lessor

Classification and measurement of leases

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, such costs are recognised as an expense on a straight-line basis over the lease term except for investment properties measured under fair value method. Variable lease payments for operating leases that depend on an index or a rate are based on the market or rate at commencement date of the lease and included in the total lease payments to be recognised on a straight-line basis over the lease term. Variable lease payments that do not depend on an index or a rate are recognised as income when they arise.

Rental income which is derived from the Group's ordinary course of business is presented as revenue.

Sublease

When the Group is an intermediate lessor, it accounts for the head lease and the sublease as two separate contracts. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Government grants — continued

Government grants related to income that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. Such grants are presented under "other income".

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items are recognised in profit or loss in the period in which they arise.

For the purpose of presenting the consolidated financial statements, the assets and liabilities of the Group's operations are translated into the presentation currency of the Group (i.e. Hong Kong dollars) using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of translation reserve (attributed to noncontrolling interests as appropriate).

On the disposal of a foreign operation (that is, a disposal of the Group's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint arrangement that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued Share-based payment

Equity-settled share-based payment transactions

Share options/share awards granted to employees

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.

The fair value of the equity-settled share-based payments determined at the grant date without taking into consideration all non-market vesting conditions is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity (share option reserve/share award reserve). At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest based on assessment of all relevant non-market vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the share option reserve/share award reserve. For share options/share awards that vest immediately at the date of grant, the fair value of the share options/share awards granted is expensed immediately to profit or loss.

When share options are exercised, the amount previously recognised in share option reserve will be transferred to share premium. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share option reserve will be transferred to retained profits.

Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

Short-term employee benefits

Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All shortterm employee benefits are recognised as an expense unless another HKFRS requires or permits the inclusion of the benefit in the cost of an asset.

A liability is recognised for benefits accruing to employees (such as wages and salaries, annual leave and sick leave) after deducting any amount already paid.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before taxation because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and interest in a joint venture, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interest are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

For the year ended 31 December 2020

3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES — continued

3.2 Significant accounting policies — continued

Taxation — continued

For the purposes of measuring deferred tax for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale.

For the purpose of measuring deferred tax for leasing transactions in which the Group recognises the right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are attributable to the right-of-use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group applies HKAS 12 Income Taxes requirements to the leasing transaction as a whole. Temporary differences relating to right-of-use assets and lease liabilities are assessed on a net basis. Excess of depreciation on right-of-use assets over the lease payments for the principal portion of lease liabilities results in net deductible temporary differences.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the same taxation authority.

Current and deferred tax is recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group's accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

For the year ended 31 December 2020

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY — continued

Critical judgements in applying accounting policies

The following are the critical judgements, apart from those involving estimations (see below), that the management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Deferred taxation on investment properties

For the purposes of measuring deferred tax arising from investment properties that are measured using the fair value model, the Directors have determined that the Group's investment properties situated in Hong Kong and in the United Kingdom (the "UK") are not held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, whereas those situated in Australia are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time. Therefore, the presumption that the carrying amounts of investment properties are recovered entirely through sale is not rebutted for properties situated in Hong Kong and the UK. For the Group's investment properties situated in Hong Kong, the Group has not recognised any deferred taxes on changes in fair value of these investment properties as the Group is not subject to any income taxes on disposal of these investment properties. For the Group's investment properties situated in the UK, the Group has recognised deferred tax on changes in fair value of these investment properties due to changes of tax regulation in April 2019. The presumption that the carrying amounts of the Group's investment properties situated in Australia are recovered entirely through sale has been rebutted and the deferred tax on the changes in fair value of those investment properties is recognised according to the relevant tax rules.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Deferred tax asset

As at 31 December 2020, a deferred tax asset of HK\$26,276,000 (2019: HK\$21,427,000) in relation to unused tax losses of HK\$153,634,000 (2019: HK\$124,737,000) has been recognised to offset with the deferred tax liabilities arisen from same entities. No deferred tax asset has been recognised on the remaining tax losses of HK\$352,776,000 (2019: HK\$239,229,000) due to the unpredictability of future profit streams. The realisability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future, which is a key source of estimation uncertainty especially in the current year given the significant uncertainty on the potential disruption of Group's hotel operations due to the COVID-19 pandemic. In cases where the actual future taxable profits generated are less or more than expected, or change in facts and circumstances which result in revision of future taxable profits estimation, a material reversal or further recognition of deferred tax assets may arise, which would be recognised in profit or loss for the period in which such a reversal or further recognition takes place.

For the year ended 31 December 2020

4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY — continued

Key sources of estimation uncertainty — continued

Fair value of investment properties

Investment properties with a carrying amount of HK\$7,338,649,000 in aggregate (2019: HK\$7,313,892,000) are stated at fair value based on the valuation performed by independent qualified professional valuers. In determining the fair values, the valuers have used different methods of valuation which involve certain assumptions of market conditions. In relying on the valuation reports, the Directors have exercised their judgment and are satisfied that the methods of valuation are reflective of the current market conditions. Changes in assumption relating to these factors could affect the reported fair values of the investment properties. See note 19 for further disclosures.

Fair value measurement of financial assets at FVTPL

The Group's financial assets at FVTPL as disclosed in note 25 are measured at fair values with fair values being determined based on unobservable inputs using valuation techniques. Judgement and estimation are required in establishing the relevant valuation techniques and the relevant inputs thereof. Changes in assumptions relating to these factors could result in material adjustments to the fair values of these instruments. See note 35(c) for further disclosures.

5. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to the Shareholders through the optimisation of the debt and equity balances. The Group's overall strategy remains unchanged from the prior year.

The capital structure of the Group consists of net debt (see below) and equity attributable to the owners of the Company, comprising issued share capital, retained profits and reserves.

For the year ended 31 December 2020

5. CAPITAL RISK MANAGEMENT — continued

The Directors review the capital structure periodically, monitor the level of bank borrowings and manage the leverage yield of returns while targeted to maintain a low gearing. The Group's percentage of net debt to the carrying value of properties (comprising investment properties, properties included in property, plant and equipment and investment in a joint venture) at the end of the reporting period.

	2020 HK\$'000	2019 HK\$'000
Bank balances and cash Pledged bank deposits Debt instruments at FVTO CI	3,354,456 29,768 3,879,628	5,027,037 499,037 5,600,467
Financial assets at FVTPL Equity instruments at FVTO CI	101,183 431,485	280,325 —
Guaranteed notes Bank borrowings Lease liabilities	(1,158,222) (9,122,974) (203,812)	(2,718,359) (11,059,959) (207,903)
Net debt	(2,688,488)	(2,579,355)
Total carrying value of properties Investment in a joint venture	7,942,055 1,169,992	7,949,029 1,114,627
	9,112,047	9,063,656
Percentage of net debt to carrying value of properties and investment in a joint venture which engaged in property development segment	29.5%	28.5%

6. SEGMENT INFORMATION

Information reported to the Executive Directors, being the chief operating decision makers ("CODM"), for the purposes of resource allocation and assessment of segment performance is mainly focused on property development, property investment, hotel operation and financial investment.

The property investment segment includes a number of various property locations, each location is considered as a separate operating segment by the CODM. For segment reporting, these individual operating segments have been aggregated into a single reportable segment as property investment provide the same nature of income with the same recognition criteria.

The financial investment segment includes interest income from time deposits and investment income from listed and unlisted investments.

It is the Group's strategy to make financial investment, particularly fixed income debt securities, from time to time in order to generate stable financial investment income for the Group.

For the year ended 31 December 2020

6. SEGMENT INFORMATION — continued

Segment revenues and results

The following is an analysis of the Group's revenue and results from operating and reportable segments:

For the year ended 31 December 2020

	Property development HK\$'000	Property investment HK\$'000	Hotel operation HK\$'000	Financial investment HK\$'000	Consolidated HK\$'000
SEGMENT REVENUE External revenue	—	212,934	44,769	345,246	602,949
SEGMENT RESULTS Segment (loss) profit	(2,865)	240,867	(33,650)	320,979	525,331
Unallocated interest income Corporate expenses Share of result of a joint venture Finance costs					226 (75,095) (61) (273,679)
Profit before taxation					176,722

For the year ended 31 December 2019

	Property P development HK\$'000	roperty investment HK\$'000	Hotel operation HK\$'000	Financial investment HK\$'000	Consolidated HK\$'000
SEGMENT REVENUE External revenue	—	200,055	192,318	424,056	816,429
SEGMENT RESULTS Segment (loss) profit	(2,880)	243,119	39,414	441,850	721,503
Unallocated interest income Corporate expenses Share of result of a joint venture Finance costs					335 (104,232) (53) (420,047)
Profit before taxation					197,506

Segment profit of the property investment division for the year ended 31 December 2020 included an increase in fair value of investment properties of HK\$39,067,000 (2019: HK\$50,408,000).

The accounting policies for operating segments are the same as the Group's accounting policies described in note 3.

For the year ended 31 December 2020

6. SEGMENT INFORMATION — continued

Segment revenues and results — continued

The Group does not allocate interest income generated from bank deposits, corporate expenses, share of result of a joint venture and finance costs to individual reportable segment profit or loss for the purposes of resource allocation and performance assessment by the CODM.

The CODM makes decisions according to operating results of each segment. No analysis of segment asset and segment liability is presented as the CODM does not regularly review such information for the purposes of resources allocation and performance assessment. Therefore, only segment revenue and segment results are presented.

Other segment profit or loss information

Amounts included in the measure of segment profit or loss:

For the year ended 31 December 2020

	Property development HK\$'000	Property investment HK\$'000	Hotel operation HK\$'000	Financial investment HK\$'000	HK\$'000	Unallocated Consolidated HK\$'000

Amortisation and depreciation
— Other assets	—	—	—	—	60	60
— Property, plant and equipment	—	—	22,987	—	13,861	36,848
Fair value changes on investment
properties	—	(39,067)	—	—	—	(39,067)
Gain on disposal of property,
plant and equipment	—	—	(10)	—	—	(10)

	Property P development HK\$'000	roperty investment HK\$'000	Hotel operation HK\$'000	Financial investment U HK\$'000	nallocated HK\$'000	Consolidated HK\$'000
Amortisation and depreciation — Other assets — Property, plant and equipment Fair value changes on investment properties	— — —	— — (50,408)	— 25,677 —	— — —	60 13,600 —	60 39,277 (50,408)
(Gain) loss on disposal of property, plant and equipment	—	(20)	40	—	—	20

For the year ended 31 December 2020

6. SEGMENT INFORMATION — continued

Geographical information

The Group's operations are located in Hong Kong (country of domicile), Australia and the UK.

Information about the Group's revenue from external customers by the geographical location of its properties or the principal place of business of the Company is detailed below.

	2020 HK\$'000	2019 HK\$'000
Hong Kong Australia UK	411,057 13,415 178,477	620,367 15,364 180,698
	602,949	816,429

Other than the tenants of 33 Old Broad Street and 20 Moorgate from whom the rental income represents 17% (2019: 13%) and 12% (2019: 9%) of the total revenue of the Group respectively, there is no other single customer who contributes over 10% of the total revenue of the Group.

Information about the Group's non-current assets, excluding financial assets at FVTPL, equity instruments at FVTOCI, debt instruments at FVTOCI, investment in a joint venture and pledged bank deposits, by geographical location is detailed below.

	2020 HK\$'000	2019 HK\$'000
Hong Kong Australia UK	3,093,175 171,031 4,697,218	3,272,302 156,147 4,542,345
	7,961,424	7,970,794

The total assets of the Group by geographical location which is determined by reference to the location of the asset or the principal place of the business of the Company are detailed below.

	2020 HK\$'000	2019 HK\$'000
Hong Kong Australia UK	12,071,954 173,796 4,715,928	15,752,957 162,694 4,622,125
	16,961,678	20,537,776

For the year ended 31 December 2020

7. REVENUE

	2020 HK\$'000	2019 HK\$'000
Renting of investment properties (note i) Hotel operation (note ii) Return from financial investment	212,934 44,769	200,055 192,318
— interest income and others (note iii)	345,246	424,056
	602,949	816,429

Notes:

i. Included in revenue generated from renting of investment properties, HK\$210,366,000 (2019: HK\$199,531,000) is rental income from leasing of investment properties under operating leases in which the lease payments are fixed. No rental income from leasing of investment properties under operating leases in which the lease payments depend on an index or a certain rate is generated for both years.
ii. For the year ended 31 December 2020, revenue from hotel operation, which arose from contracts with customers comprises of (i) hotel room revenue of HK\$28,156,000 (2019: HK\$140,954,000) being recognised over time and based on output method; (ii) food and beverage sales of HK\$6,265,000 (2019: HK\$39,620,000) and ancillary service of HK\$915,000 (2019: HK\$2,089,000) being recognised at point in time. The remaining revenue of HK\$9,433,000 (2019: HK\$9,655,000) is rental income from leasing of hotel's retail portion under operating leases in which the lease payments are fixed.
iii. Interest income and others includes interest income from listed and unlisted debt securities and time deposits of HK\$345,022,000 (2019: HK\$424,056,000) and dividend income from listed equity securities of HK\$224,000 (2019: nil).

8. OTHER INCOME

	2020 HK\$'000	2019 HK\$'000
Interest income from bank deposits Government grants Others	226 7,700 2,541	335 — 6,688
	10,467	7,023

For the year ended 31 December 2020, the Group recognised government grants of HK\$7,700,000 from Places of Public Entertainment Licence Holder Subsidy Scheme, Food Licence Holders Subsidy Scheme and Employment Support Scheme under Anti-Epidemic Fund of the Government of the Hong Kong Special Administrative Region.

For the year ended 31 December 2020

9. PROPERTY AND RELATED COSTS

	2020 HK\$'000	2019 HK\$'000
Selling and marketing expenses Direct operating expenses of investment properties	144 5,083	1,056 2,980
	5,227	4,036

10. OTHER EXPENSES

	2020 HK\$'000	2019 HK\$'000
Included in other expenses are:
Hotel operating expenses Legal and professional fees	15,575 14,446	48,721 21,244

11. OTHER GAINS AND LOSSES

	2020 HK\$'000	2019 HK\$'000
Net exchange losses	(6,911)	(26,396)
Fair value gain on financial assets at FVTPL	1,014	31,334
Gain on disposal of an investment property	—	6,375
Loss on disposal of debt instruments at FVTO CI Loss on early redemption of debt instruments at FVTO CI	(24,000) —	— (2,335)
	(29,897)	8,978

For the year ended 31 December 2020

12. FINANCE COSTS

	2020 HK\$'000	2019 HK\$'000
Bank borrowings:
Interest on bank borrowings	182,438	255,561
A mortisation of bank borrowings front-end fee	13,428	14,608
	195,866	270,169
Guaranteed notes:
Interest on guaranteed notes	60,163	127,786
A mortisation of guaranteed notes issued costs	2,443	6,842
	62,606	134,628
Lease liabilities:
Interest on lease liabilities	8,044	7,966
Other charges	7,163	7,284
	273,679	420,047

13. PROFIT BEFORE TAXATION

	2020 HK\$'000	2019 HK\$'000
Profit before taxation has been arrived at after charging (crediting):
Auditor's remuneration Equity-settled share-based payment expenses	1,834	1,942
— share options	464	565
(Gain) loss on disposal of property, plant and equipment	(10)	20
Gross rental income from investment properties	(210,366)	(199,531)
Less: direct operating expenses	5,083	2,980
Net rental income	(205,283)	(196,551)

For the year ended 31 December 2020

14. INCOME TAX EXPENSE

	2020 HK\$'000	2019 HK\$'000
Current tax:
Hong Kong	5,338	5,742
A ustralia	2,816	3,514
T he United Kingdom	14,203	10,220
	22,357	19,476
Under(over)provision in prior years:
Hong Kong	2,738	1,228
T he United Kingdom	71	(5,414)
	2,809	(4,186)
Deferred tax (note 34):
Current year	588	9,098
	25,754	24,388

On 21 March 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the "Bill") which introduced the two-tiered profits tax rates regime. The Bill was signed into law on 28 March 2018 and was gazetted on the following day. Under the twotiered profits tax rates regime, the first HK\$2 million of profits of the qualifying group entity will be taxed at 8.25%, and profits above HK\$2 million will be taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.

Accordingly, the Hong Kong Profits Tax of the qualifying group entity is calculated at 8.25% on the first HK\$2 million of the estimated assessable profits and at 16.5% on the estimated assessable profits above HK\$2 million for the qualifying group entity.

The United Kingdom Corporate Tax (2019: Income Tax) is calculated at 19% (2019: 20%) of the estimated assessable profit. Effective from 6 April 2019, the Group is subject to the United Kingdom Corporate Tax which is calculated at 19% of the assessable chargeable capital gain on disposals.

Income tax arising in other jurisdiction is calculated at the rate prevailing in the relevant jurisdictions.

Details of deferred taxation are set out in note 34.

For the year ended 31 December 2020

14. INCOME TAX EXPENSE — continued

Income tax expense for the year can be reconciled to profit before taxation per the consolidated statement of profit or loss as follows:

	2020 HK\$'000	2019 HK\$'000
Profit before taxation	176,722	197,506
Tax at the domestic income tax rate of 16.5% Tax effect of expenses not deductible for tax purposes Tax effect of income not taxable for tax purposes Tax effect of tax losses not recognised Utilisation of tax losses previously not recognised Income tax at concessionary rate Effect of different tax rates of subsidiaries operating overseas	29,159 35,271 (64,894) 19,535 (1,097) (165) 3,402	32,588 47,679 (70,220) 15,322 (431) (165) 3,841
Under(over)provision in prior years Others	2,809 1,734	(4,186) (40)
Income tax expense for the year	25,754	24,388

For the year ended 31 December 2020

15. DIRECTORS' AND CHIEF EXECUTIVES EMOLUMENTS

The emoluments paid or payable to each of the Directors for the year are as follows:

	Mr. M	r. M	r. M		r. Mr. Walujo M	r. M	r. M	r.
	Lu Wing L	ambert L	am Sing L	incoln		Santoso, Leung Hok	Chung Pui Chan Kwok
	Chi, Jesse L HK\$'000	u T HK\$'000	ai L HK\$'000	u HK\$'000	Wally L HK\$'000	im L HK\$'000	am HK\$'000	Wai* T HK\$'000	otal HK\$'000

2020
Fees Other emoluments	40	40	40	40	400	500	500	400	1,960
Salaries and other benefits	3,600	6,000	1,200	—	—	—	—	—	10,800
Discretionary and performance-based
bonus (note below)	3,534	3,534	200	—	—	—	—	—	7,268
Retirement benefits scheme
contributions	540	900	180	—	—	—	—	—	1,620

Total emoluments	7,714	10,474	1,620	40	400	500	500	400	21,648
2019
Fees	40	40	40	40	400	500	500	233	1,793
Other emoluments
S alaries and other benefits	4,800	6,000	2,400	—	—	—	—	—	13,200
Discretionary and performance-based
bonus (note below)	3,950	3,950	200	—	—	—	—	—	8,100
R etirement benefits scheme
contributions	720	788	360	—	—	—	—	—	1,868
Total emoluments	9,510	10,778	3,000	40	400	500	500	233	24,961

Note: The Directors' fee shown above were mainly for their services as Directors and its subsidiaries.

The other emoluments shown above were mainly for their services in connection with management of the affairs of the Company and the Group.

The discretionary and performance based bonus to Messrs. Lu Wing Chi, Jesse and Lambert Lu are based on their contribution to the Group and calculated on the basis of profit before taxation attributable to the Shareholders. The discretionary and performance based bonus to Mr. Lam Sing Tai is based on the Group's and his performance.

There was no arrangement under which a Director or the Chief Executive waived or agreed to waive any remuneration during both years.

* Mr. Chan Kwok Wai was appointed on 1 June 2019.

For the year ended 31 December 2020

16. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees of the Group during the year included two Directors (2019: three Directors), details of whose remuneration are set out in note 15 above. Details of the remuneration for the year of the remaining three (2019: two) highest paid employees who are neither a Director nor Chief Executive are as follows:

	2020 HK\$'000	2019 HK\$'000
Salaries and other benefits Retirement benefits scheme contributions Discretionary and performance-based bonus Equity-settled share-based payment	4,198 417 477 251	2,821 246 470 114
	5,343	3,651

The number of the highest paid employees who are not the Directors whose remuneration fell within the following bands is as follows:

	2020 Number of employees	2019 Number of employees
HK\$1,500,001 to HK\$2,000,000	3	2

Details of the share option scheme are set out in note 41 to the Group's consolidated financial statements.

17. DIVIDENDS

	2020 HK\$'000	2019 HK\$'000
Dividends recognised as distributions during the year:
2020 interim dividend — HK2 cents (2019: 2019 interim dividend — HK2 cents) per share 2019 final dividend — HK3 cents	13,203	13,244
(2019: 2018 final dividend — HK3 cents) per share	19,869	19,866
	33,072	33,110
2020 final dividend proposed: HK3 cents (2019: HK3 cents) per share	19,267	19,869

Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31 December 2020 of HK3 cents (2019: HK3 cents) per ordinary share, in an aggregate amount of HK\$19,267,000 (2019: HK\$19,869,000), has been proposed by the Directors and is subject to approval by the Shareholders in the forthcoming annual general meeting.

For the year ended 31 December 2020

18. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the Company's shareholders is based on the following data:

	2020	2019
	HK\$'000	HK\$'000
Earnings for the purpose of basic and diluted earnings per share:
Profit for the year attributable to the Company's shareholders	150,968	173,118
	Number of shares
	2020	2019
Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary share options	657,392,666 —	662,184,370 119,750
Weighted average number of ordinary shares for the purpose of diluted earnings per share	657,392,666	662,304,120

The computation of diluted earnings per share for the year ended 31 December 2020 does not assume the exercise of the Company's share options as set out in note 41 as the exercise price of these options is higher than the average market price for the shares.

For the purpose of assessing the performance of the Group, the Directors are of the view that the profit for the year should be adjusted for the fair value changes on investment properties recognised in profit or loss and the related deferred taxation in arriving at the "adjusted profit attributable to the Company's shareholders". A reconciliation of the adjusted earnings is as follows:

	2020 HK\$'000	2019 HK\$'000
Profit for the year attributable to the Company's shareholders as shown in the consolidated statement of profit or loss Fair value changes on investment properties	150,968 (39,067)	173,118 (50,408)
Deferred tax thereon	1,400	11,921
Adjusted profit attributable to the Company's shareholders	113,301	134,631

For the year ended 31 December 2020

18. EARNINGS PER SHARE — continued

	2020 HK cents	2019 HK cents
Earnings per share excluding fair value changes on investment properties net of deferred tax — Basic	17.2	20.3
— Diluted	17.2	20.3

The denominators used in the calculation of basic and diluted adjusted earnings per share for the years ended 31 December 2020 and 2019 are the same as those detailed in the calculation of basic and dilutive adjusted earnings per share above.

19. INVESTMENT PROPERTIES

The Group leases out various offices, retail stores and resort under operating leases with rentals payable monthly. The leases typically run for an initial period of 1 to 35 years (2019: 1 to 35 years). Some of the lease contracts contain market review clauses. The leases of resort contain minimum annual lease payment that depends on index or at certain rate and variable lease payment that is based on a percentage of sales over minimum annual lease payment.

The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in the respective functional currencies of group entities. The lease contracts do not contain residual value guarantee and/or lessee's option to purchase the property at the end of lease term.

		United
	Hong Kong	Kingdom	Australia T	otal
	HK\$'000	HK\$'000	HK\$'000	HK\$'000

At 1 January 2019	1,635,400	4,422,201	157,738	6,215,339
Additions	979,680	—	—	979,680
Disposal	—	(65,251)	—	(65,251)
Fair value changes	320	50,088	—	50,408
Exchange adjustments	—	135,307	(1,591)	133,716

At 31 December 2019	2,615,400	4,542,345	156,147	7,313,892
Additions	12,433	—	—	12,433
Disposal (note 37)	(196,500)	—	—	(196,500)
Fair value changes	39,067	—	—	39,067
Exchange adjustments	—	154,873	14,884	169,757

At 31 December 2020	2,470,400	4,697,218	171,031	7,338,649

All of the Group's property interests held under operating leases to earn rentals and/or for capital appreciation purposes are measured using the fair value model and are classified and accounted for as investment properties.

For the year ended 31 December 2020

19. INVESTMENT PROPERTIES — continued

Included in the investment properties in the United Kingdom are leasehold land subleased by the Group under operating leases. The related right-of-use assets of HK\$190,858,000 are recognised with related lease liabilities of HK\$188,981,000 as at 31 December 2020 (2019: right-of-use assets of HK\$184,565,000 and related lease liabilities of HK\$182,759,000). The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

For the year ended 31 December 2020, the total cash outflow for leases is HK\$7,541,000 (2019: HK\$9,293,000), paid for leasehold land under sublease.

During the year ended 31 December 2020, the Group, through disposal of a subsidiary, disposed of an investment property in Hong Kong with a carrying amount of HK\$196,500,000 for a cash proceed of HK\$196,500,000. Details are set out in note 37.

During the year ended 31 December 2019, the Group acquired an investment property in Hong Kong at a consideration of HK\$780,000,000. The amount has been settled in full.

During the year ended 31 December 2019, the Group disposed of an investment property in the United Kingdom with a carrying amount of HK\$65,251,000 for a cash proceed of HK\$71,626,000, resulting in a gain of disposal of HK\$6,375,000 recognised in other gains and losses.

The fair value of the Group's investment properties as at 31 December 2020 and 31 December 2019 has been arrived at on the basis of a valuation carried out on the respective dates by the independent qualified professional valuers not connected to the Group as disclosed in below table.

For the year ended 31 December 2020

19. INVESTMENT PROPERTIES — continued

Details of the valuation methodology are as follows:

Valuer	Class of properties	Fair value as at 31 December		Fair value Valuation methodology hierarchy		Unobservable key inputs to the valuation	Sensitivity analysis
		2020 HK\$'000	2019 HK\$'000
Colliers International (Hong Kong) Limited# and CBRE Limited * (2019: Colliers International (Hong	Residential and commercial units in Hong Kong	2,470,400	2,615,400	The valuers have used the direct comparison approach and made reference to comparable sales evidence as available in the market adjusted by location, size, age and maintenance, etc.	Level 3	Hong Kong residential units adjusting factors for nature, location and conditions of the property ranging from 81.4% to 117.2% (2019: 76.1% to 108.4%)	A significant increase in the adjusting factors for location, size, age and maintenance of the property used would result in a significant increase in fair value, and vice versa.
Kong) Limited)						Hong Kong commercial units adjusting factors for nature, location and conditions of the property ranging from 76.3% to 118.9% (2019: 70.9% to 114.3%)
Colliers International Valuation UK LLP@	Office portion in the United Kingdom	4,697,218	4,542,345	The valuer has used the income capitalisation approach in which the valuations have reflected the current lease terms and capitalised the appropriate income stream, having regard to market comparable evidence.	Level 3	UK office capitalisation rates ranging from 3.8% to 4.3% (2019: 3.8% to 4.3%) per annum	A slight increase in the capitalisation rate used would result in a significant decrease in fair value, and vice versa.
CBRE Valuations Pty Limited^	Resort portion in Australia	171,031	156,147	The valuer has used a combination of the income capitalisation approach and discounted cash flow analysis to determine the fair value.	Level 3	Australia resort capitalisation rates of 9.5% (2019: 9.5%) per annum for income capitalisation approach	A slight increase in the capitalisation rate and discounted rate used would result in a significant decrease in fair value, and vice versa.
				Income capitalisation approach reflected the current lease terms and capitalised the appropriate income stream, having regard to market comparable evidence.		The discount rate of 10.8% (2019: 10.5%) for discounted cash flow analysis
				Discounted cash flow analysis was based upon estimation of future trading results which are based on historic trading analysis and future trading expectations having regard to any forecast capital expenditure, supply and demand factors, and estimated changes in economic and local market conditions.

Colliers International (Hong Kong) Limited is an independent professional valuer not connected to the Group and is a firm of registered valuers recognised by The Hong Kong Institute of Surveyors.
* CBRE Limited is an independent professional valuer not connected to the Group and is a firm of registered valuers recognised by The Hong Kong Institute of Surveyors.
@ Colliers International Valuation UK LLP is an independent professional valuer not connected to the Group and is regulated by the Royal Institution of Chartered Surveyors.
^ CBRE Valuations Pty Limited is an independent professional valuer not connected to the Group and is a firm of registered valuers recognised by the Australian Property Institute.

For the year ended 31 December 2020

19. INVESTMENT PROPERTIES — continued

In estimating the fair value of investment properties, the Group uses market-observable data to the extent it is available. In respect of the valuation of investment properties carried out by independent qualified professional valuers at the end of each reporting period, the valuers have appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The management works closely with the independent qualified professional valuers to establish the appropriate valuation techniques and inputs to the model.

There has been no change from the valuation technique used in the prior year. In estimating the fair value of the properties, the highest and best use of the properties is their current use.

There were no transfers into or out of Level 3 for both years.

During the year, the Group leased its investment property to one of the Directors for a term of one year. The rental income recognised during the year amounted to HK\$900,000.

20. IMPAIRMENT ASSESSMENT OF FINANCIAL ASSETS SUBJECT TO EXPECTED CREDIT LOSS MODEL

	2020 HK\$'000	2019 HK\$'000
Impairment loss recognised on a listed debt instrument at FVTO CI	—	10,033

For the year ended 31 December 2019, the Group provided impairment allowance of HK\$10,033,000 for an individual listed debt security due to the deterioration of credit quality of respective security.

For the year ended 31 December 2020

21. PROPERTY, PLANT AND EQUIPMENT

	Hotel O		wned
	property		properties		Furniture,			Crockery,
	in L	eased	in	Plant and	fixtures and M	otor L	easehold	utensils
	Hong Kong	properties	Hong Kong	machinery	equipment		vehicles improvements	and linen	Total
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
COST
At 1 January 2019	789,426	35,243	26,563	37,177	46,596	6,801	71,366	4,852	1,018,024
Additions	—	—	83	—	1,846	—	1,244	—	3,173
Disposals	(9)	—	—	(25)	(809)	—	(697)	(26)	(1,566)
At 31 December 2019	789,417	35,243	26,646	37,152	47,633	6,801	71,913	4,826	1,019,631
Additions	—	—	—	—	2,271	510	—	—	2,781
Disposals	—	—	—	—	(60)	(716)	(19)	—	(795)
At 31 December 2020	789,417	35,243	26,646	37,152	49,844	6,595	71,894	4,826	1,021,617
DEPRE CIATION
At 1 January 2019	183,257	—	1,522	34,081	39,949	2,438	70,630	—	331,877
Provided for the year	19,994	10,066	1,332	3,097	2,874	1,409	505	—	39,277
Eliminated on disposals	(2)	—	—	(26)	(801)	—	(697)	—	(1,526)
At 31 December 2019	203,249	10,066	2,854	37,152	42,022	3,847	70,438	—	369,628
Provided for the year	19,994	10,418	1,319	—	3,155	1,335	627	—	36,848
Eliminated on disposals	—	—	—	—	(60)	(716)	(19)	—	(795)
At 31 December 2020	223,243	20,484	4,173	37,152	45,117	4,466	71,046	—	405,681
CARR YING VALUES
At 31 December 2020	566,174	14,759	22,473	—	4,727	2,129	848	4,826	615,936
At 31 December 2019	586,168	25,177	23,792	—	5,611	2,954	1,475	4,826	650,003

The above items of property, plant and equipment, except for crockery, utensils and linen, are depreciated on a straight-line basis at the following rates per annum:

Hotel property in Hong Kong	40 years
Leased properties	Over the term of the lease
Owned properties in Hong Kong	4%
Plant and machinery	10%
Furniture, fixtures and equipment	25%
Motor vehicles	25%
Leasehold improvements	25%

All properties as at 31 December 2020 and 31 December 2019 were situated in Hong Kong.

For the year ended 31 December 2020

21. PROPERTY, PLANT AND EQUIPMENT — continued

The Group as lessee

Right-of-use assets (included in the property, plant and equipment)

	Leased properties
	2020 HK\$'000	2019 HK\$'000
As at 1 January Carrying amount	25,177	35,243
For the year ended 31 December Depreciation charge	(10,418)	(10,066)
As at 31 December Carrying amount	14,759	25,177

The carrying amount of the leased properties categorised as right-of-use assets are recognised with related lease liabilities of HK\$14,831,000 as at 31 December 2020 (2019: lease liabilities of HK\$25,144,000). The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.

For the year ended 31 December 2020, the total cash outflows for leases is HK\$10,826,000 (2019: HK\$10,537,000).

For both years, the Group leases office premises for its operations. Lease contracts are entered into for fixed term of 3 years with extension options. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and determines the period for which the contract is enforceable.

The Group has extension options for lease of office premises. These are used to maximise operational flexibility in terms of managing the assets used in the Group's operation. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessors.

The Group assesses, at lease commencement date, whether it is reasonably certain to exercise the extension options. The potential exposures to these future undiscounted lease payments for extension options in which the Group is not reasonably certain to exercise of the lease liabilities as at 31 December 2020 are HK\$32,478,000 (2019: HK\$32,478,000) of which such amount has not been recognised in consolidated financial statements.

In addition, the Group assesses whether it is reasonably certain to exercise an extension option upon the occurrence of either a significant event or a significant change in circumstances that is within the control of the lessee. During the year, there is no such triggering event (2019: nil).

For the year ended 31 December 2020

21. PROPERTY, PLANT AND EQUIPMENT — continued

The Group as lessee — continued

Right-of-use assets (included in the property, plant and equipment) — continued

Impairment assessment

The management of the Group concluded there was indication for impairment and conducted impairment assessment on recoverable amounts of certain property, plant and equipment related to hotel operation with carrying amounts of approximately HK\$566,174,000. The management of the Group estimated the recoverable amount of the cash-generating unit ("CGU") to which the assets belong based on fair value less costs of disposal. The relevant properties were measured at fair value based on Level 3 hierarchy using residual approach on a redevelopment basis. In determining the fair value of the relevant properties, the Group engaged an independent qualified professional valuer to perform the valuation. The key unobservable inputs used in valuing the relevant properties included the gross development value on completion status and estimated project redevelopment cost.

Based on the result of the assessment, management of the Group determined that the recoverable amount of the CGU based on the fair value less cost of disposal was higher than its carrying amount. No impairment is recognised during the year ended 31 December 2020.

	2020 HK\$'000	2019 HK\$'000
Investment cost Loan to a joint venture	1 1,170,145	1 1,114,719
Less: share of post-acquisition losses	(154)	(93)
	1,169,992	1,114,627

22. INVESTMENT IN A JOINT VENTURE

The loan to a joint venture is unsecured, interest bearing at floating rate ranging from approximately 0.6% to 2.4% (2019: 1.8% to 2.5%), has no fixed terms of repayment and is not expected to be recovered within one year from the end of the reporting period. In the opinion of the Directors, the loan is considered as part of the Group's net investment in the joint venture.

The Group holds 10% of the ownership interest of Asia Bright Development Limited ("Asia Bright"). However, Asia Bright is accounted for as a joint venture as at 31 December 2020 and 31 December 2019 as major financial and operating decision required the unanimous consent of all joint venture partners in accordance with the Memorandum of Agreement entered into by the Group with other third party investors for establishment of Asia Bright in 2017.

For the year ended 31 December 2020

22. INVESTMENT IN A JOINT VENTURE — continued

Details of the Group's joint venture at the end of the reporting period are as follows:

Name of entity	Country of incorporation	Principal place of business	Proportion of ownership interest held by the Group		Proportion of voting rights held by the Group		Principal activity
			2020	2019	2020	2019
Asia Bright	Hong Kong	Hong Kong	10%	10%	10%	10% P	roperty development

Summarised financial information of the joint venture

Summarised financial information in respect of the Group's joint venture is set out below. The summarised financial information below represents amounts shown in the joint venture's financial statements prepared in accordance with HKFRSs.

The joint venture is accounted for using the equity method in these consolidated financial statements.

	2020 HK\$'000	2019 HK\$'000
Current assets	19,362,600	18,659,174
Current liabilities	(70,491)	(82,893)
Non-current liabilities	(19,293,642)	(18,577,204)
	2020 HK\$'000	2019 HK\$'000
Revenue	—	—
Loss for the year	(610)	(531)

For the year ended 31 December 2020

22. INVESTMENT IN A JOINT VENTURE — continued

Reconciliation of the above summarised financial information to the carrying amount of the interest in the joint venture recognised in the consolidated financial statements:

	2020 HK\$'000	2019 HK\$'000
Net liabilities of Asia Bright Proportion of the Group's ownership interest in Asia Bright	(1,533) 10%	(923) 10%
Capital contribution in form of loan to a joint venture	(153) 1,170,145	(92) 1,114,719
Carrying amount of the Group's investment in Asia Bright	1,169,992	1,114,627

As at 31 December 2020, the Group has executed corporate financial guarantees in proportion of its equity interest in joint venture for the banking facilities granted to the joint venture. The total amount of such facilities attributable to the Group was HK\$1,073,183,000 (2019: HK\$955,000,000), of which HK\$691,620,000 (2019: HK\$691,620,000) was utilised and HK\$381,563,000 (2019: HK\$263,380,000) was unutilised.

At the end of the reporting period, the Group did not recognise any liabilities in respect of such corporate financial guarantees as the Directors consider that the fair values of these financial guarantee contracts at their initial recognition and at the end of the reporting period are insignificant.

23. EQUITY INSTRUMENTS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

	2020 HK\$'000	2019 HK\$'000
Equity securities listed in Hong Kong and United States	431,485	—

The above listed equity investments represent ordinary shares of entities listed in Hong Kong and United States. These investments are not held for trading; instead, they are held for long-term strategic purposes. The Directors have elected to designate these investments in equity instruments at FVTOCI as they believe that recognising short-term fluctuations in these investments' fair value in profit or loss would not be consistent with the Group's strategy of holding these investments for long-term purposes and realising their performance potential in the long run.

Details of the fair value measurement are disclosed in note 35(c).

For the year ended 31 December 2020

24. D E B T INS T R UMENT S AT FAI R VALUE T H R O UG H OT H E R COMPREHENSIVE INCOME

	2020 HK\$'000	2019 HK\$'000
Unlisted investments at fair value: — Debt securities (note i)	—	709,000
Listed investments at fair value: — Debt securities maturing between the period from March 2021 to April 2026 (2019: January 2020 to July 2026) with a fixed interest ranging from 3.1% to 12.0% (2019: from 1.9% to 12.0%) per annum (note ii)	3,879,628	4,891,467
Total	3,879,628	5,600,467
Analysed for reporting purposes as: Current assets N on-current assets	806,575 3,073,053	2,447,346 3,153,121
	3,879,628	5,600,467

Notes:

(i) As at 31 December 2019, the Group held two notes issued by China Strategic Holdings Limited, an independent company listed on the Stock Exchange with principal activities of investment in securities, trading, money lending as well as securities brokerage, at principal amounts of HK\$500,000,000 and HK\$200,000,000 with maturity dates in December 2020 and August 2020 respectively.

As at 31 December 2019, both notes are measured at fair value determined based on the valuation conducted by an independent qualified professional valuer.

During the year ended 31 December 2020, the interest income generated from these unlisted debt securities was HK\$58,573,000 (2019: HK\$68,232,000) and the fair value gain was HK\$2,482,000 (2019: fair value loss of HK\$2,632,000), which were recognised in profit or loss and other comprehensive income respectively.

During the year ended 31 December 2020, both notes were redeemed upon maturity.

For the year ended 31 December 2020

24. D E B T INS T R UMENT S AT FAI R VALUE T H R O UG H OT H E R COMPREHENSIVE INCOME — continued

Notes: — continued

(ii) As at 31 December 2020, the Group's investments in listed debt securities with principal amount ranging from US\$500,000 to US\$66,000,000 (2019: US\$300,000 to US\$66,000,000) will mature between March 2021 to April 2026 with fixed interests ranging from 3.1% to 12.0% per annum (2019: January 2020 to July 2026 with fixed interests ranging from 1.9% to 12.0% per annum), which have been pledged as security for the bank borrowings (2019: pledged).

During the year ended 31 December 2020, interest income generated from the listed debt securities was HK\$246,570,000 (2019: HK\$202,006,000) and fair value loss was HK\$38,083,000 (2019: fair value gain of HK\$46,401,000), which were recognised in profit or loss and other comprehensive income respectively.

As at 31 December 2020, the Group held listed debt securities with an aggregate principal amount of US\$157,000,000 (2019: US\$110,000,000) issued by China Evergrande Group ("China Evergrande"). China Evergrande and its subsidiaries are principally engaged in property development, property investment, property management, new energy vehicle business, hotel operations, finance business, internet business and health industry in the PRC.

During the year ended 31 December 2020, the interest income generated from the listed debt securities issued by China Evergrande was HK\$89,285,000 (2019: HK\$71,179,000) and fair value loss was HK\$5,082,000 (2019: HK\$21,308,000), which were recognised in profit or loss and other comprehensive income respectively.

The Directors consider the prospects of these investments is positive with no significant credit risk.

(iii) Details of impairment assessment and fair value measurement are disclosed at note 35(b) and (c).

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets measured at FVTPL:

	2020 HK\$'000	2019 HK\$'000
Unlisted investments
— Preferred shares (note)	88,062	272,538
— Unit fund	13,121	7,787

	101,183	280,325
Analysed for reporting purposes as:
Current assets	80,309	—
N on-current assets	20,874	280,325

	101,183	280,325

For the year ended 31 December 2020

25. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

— continued

Note: The unlisted investments in preferred shares do not meet the requirement of an equity instruments based on the terms and conditions of the shares. In addition, it does not represent solely payment for principal and interest of the principal amount outstanding, and it is therefore, measured at fair value through profit or loss.

Included in the unlisted investments in preferred shares is the Group's investment in preferred shares issued by an unlisted entity incorporated in the Cayman Islands (the "Preferred Shares") of HK\$80,309,000 (2019: HK\$264,751,000).

As at 31 December 2019, the Group held US\$34,000,000 (approximately HK\$264,751,000) of the Preferred Shares which represented 2.12% of issued shares of the entity (including ordinary shares and preferred shares). The entity is principally engaged in the provision of online credit assessment platform to individuals and institutions through the use of big data. The Group is entitled to receive dividend on the same basis as the ordinary shareholders of the entity. Subject to the consent of more than fifty percent of Preferred Shares holders, the Group is entitled to redeem all or part of the Preferred Shares, at any time after the earlier of 31 December 2020 or occurrence of certain events as set out in the memorandum and articles of association of this entity. In addition, the Group is entitled to receive 107% on the Preferred Shares investment amount upon liquidation of the entity.

During the year ended 31 December 2020, the entity has agreed to redeem the outstanding Preferred Shares from the Group and other Preferred Shares holders, pursuant to the redemption agreement entered between the entity, the Group and other Preferred Shares holders on 21 December 2020 ("Redemption Agreement"). The redemption price payable by the entity under the Redemption Agreement is to be settled in several tranches in form of cash and equity securities of a private entity established in PRC, within one year from the signing of the Redemption Agreement. As at the end of the reporting period, one of the tranches has been settled by cash amounting to US\$15,403,000 (approximately HK\$119,478,000) being received by the Group.

In addition, the entity has advanced loan principals of US\$8,000,000 carrying fixed interest rate of 10% per annum to the Group during the year with an unconditional right allowing the Group to set-off such loan against any obligation due from the entity, including the Preferred Shares. As at 31 December 2020, the Group has exercised the right to set-off the loan principals with related interests amounting to US\$8,367,000 (approximately HK\$64,901,000) against the Preferred Shares, without notice or demand as pursuant to the terms and conditions stipulated in the loan agreements. Based on the opinion from external legal counsel, the Directors considered that the Group's obligation to repay such loan principals and related interest amounting to US\$8,367,000 (approximately HK\$64,901,000) has been fully discharged and the corresponding amount of Preferred Shares has been redeemed, after the exercise of right to set-off.

The fair value of the Preferred Shares as at 31 December 2020 and 31 December 2019 has been arrived at on the basis of a valuation carried out on the respective dates by the Directors with reference to the valuation performed by Jones Lang LaSalle Corporate Appraisal and Advisory Limited, an independent professional valuer not connected to the Group.

Details of fair value measurement are disclosed in note 35(c).

For the year ended 31 December 2020

26. OTHER ASSETS

Other assets represent club memberships with finite useful lives and amortised on a straight-line basis over the membership period of 24 years up to 31 December 2039 as the Directors are of the opinion that the Group will derive benefits from the use of these club memberships over their lives.

Club memberships with indefinite useful lives are stated at cost. All club memberships will be tested for impairment annually or whenever there is an indication of impairment.

During the year ended 31 December 2020, amortisation of HK\$60,000 (2019: HK\$60,000) was recognised in profit or loss.

27. BANK BALANCES AND CASH/PLEDGED BANK DEPOSITS

Bank balances carry interest at market rates which range from 0.1% to 0.7% (2019: 0.1% to 3.7%) per annum. The pledged bank deposits amounting to HK\$29,768,000 (2019: HK\$482,525,000) carry fixed interest rates ranged from 0.2% to 0.5% (2019: ranged from 1.3% to 2.4%) per annum represent deposits pledged to banks to secure bank borrowings due within one year, and therefore they are classified as current assets.

As at 31 December 2019, the pledged bank deposits amounting to HK\$16,512,000 carry fixed interest rates of 2.1% represented deposits pledged to banks to secure bank borrowings due after one year, and therefore they were classified as non-current assets. During the year ended 31 December 2020, such pledged bank deposits were released upon the settlement of relevant bank borrowings.

Details of impairment assessment of pledged bank deposits are set out in note 35(b).

28. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

	2020 HK\$'000	2019 HK\$'000
Trade receivables — Hotel operation (note) Accrued income Deposits, prepayments and other receivables	133 1,066 31,595	1,660 2,086 40,722
	32,794	44,468

Note: Trade receivables from corporate customers and travel agents for the use of hotel facilities.

As at 1 January 2019, trade receivables from contracts with customers amounted to HK\$5,455,000.

For the year ended 31 December 2020

28. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

— continued

The following is an aged analysis of trade receivables presented based on the invoice date.

	2020 HK\$'000	2019 HK\$'000
0 to 30 days 31 to 60 days	131 2	1,654 6
	133	1,660

As at 31 December 2020, included in the Group's trade receivables balance are debtors with aggregate carrying amount of HK\$2,000 (2019: HK\$6,000) which are past due as at the reporting date. The outstanding balances have been subsequently settled. The Group does not hold any collateral over these balances.

Details of impairment assessment of trade and other receivables are set out in note 35(b).

29. PAYABLES, RENTAL DEPOSITS AND ACCRUED CHARGES

The following is an aged analysis of trade payable presented based on the invoice date.

	2020 HK\$'000	2019 HK\$'000
0 to 60 days	593	1,411
Trade payables Rental deposits Rental received in advance Other payables, other deposits and accrued charges Interest payables	593 7,043 45,622 70,718 29,368	1,411 11,053 43,932 103,266 67,318
	153,344	226,980

The average credit period on purchase of goods is 60 days.

Rental deposits to be refunded after twelve months from the end of the reporting period based on the respective lease terms amounted to HK\$4,757,000 (2019: HK\$7,589,000).

For the year ended 31 December 2020

30. BANK BORROWINGS

	2020 HK\$'000	2019 HK\$'000
Secured Unsecured	7,602,286 1,551,500	8,934,857 2,159,000
Less: front-end fee	9,153,786 (30,812)	11,093,857 (33,898)
	9,122,974	11,059,959
Less: amounts due within one year shown under current liabilities	(3,511,586)	(5,765,168)
Amounts shown under non-current liabilities	5,611,388	5,294,791
The carrying amounts of bank borrowings are repayable based on repayment schedule:
Within one year	3,516,308	5,769,990
Within a period of more than one year, but not exceeding two years	1,118,436	1,382,709
Within a period of more than two years, but not exceeding five years	4,519,042	3,941,158
	9,153,786	11,093,857

As at 31 December 2020, bank borrowings of HK\$3,147,672,000 (2019: HK\$5,697,421,000) with repayment on demand clause are shown under current liabilities.

Except for the bank borrowing of HK\$506,508,000 (2019: HK\$3,383,986,000) denominated in HK\$ being the foreign currency of the relevant group entities with functional currency in United States Dollars ("USD"), the remaining bank borrowings are denominated in the functional currencies of the relevant group entities, the principal amount of which are analysed below:

Denominated in	2020 HK\$'000	2019 HK\$'000
Hong Kong dollars Australian dollars Great Britain pounds United States dollars	4,378,100 19,136 2,860,378 1,389,664	4,464,800 24,569 3,220,502 —
	8,647,278	7,709,871

The effective interest rates of these variable rate borrowings range from 0.6% to 2.2% (2019: 1.2% to 5.8%) per annum.

For the year ended 31 December 2020

31. GUARANTEED NOTES

On 19 January 2017, the Group issued US\$200,000,000 (approximately HK\$1,555,480,000) 4.5% guaranteed notes with a maturity of three years due on 19 January 2020 guaranteed by the Company (the "Guaranteed Notes 2017"). During the year, the Guaranteed Notes 2017 were fully paid at their principal amount upon maturity.

The Guaranteed Notes 2017 bear interest at 4.50% per annum, payable semi-annually in arrears on 19 January and 19 July in each year.

On 19 January 2018, the Group further issued US\$150,000,000 (approximately HK\$1,172,940,000) 4.875% guaranteed notes with a maturity of five years due on 19 January 2023 guaranteed by the Company (the "Guaranteed Notes 2018"). The Guaranteed Notes 2018 are payable at their principal amount upon maturity.

The Guaranteed Notes 2018 bear interest at 4.875% per annum, payable semi-annually in arrears on 19 January and 19 July in each year.

32. LEASE LIABILITIES

	2020 HK\$'000	2019 HK\$'000
Lease liabilities payable:
Within one year	12,901	10,323
Within a period of more than one year
but not more than two years	6,650	10,608
Within a period of more than two years but not more than five years	7,649	4,356
Within a period of more than five years	176,612	182,616

	203,812	207,903
Less: amount due for settlement within 12 months shown under current liabilities	(12,901)	(10,323)

Amount due for settlement after 12 months shown under non-current liabilities	190,911	197,580

Lease obligations are denominated in currencies of the functional currencies of the relevant group entities.

For the year ended 31 December 2020

33. SHARE CAPITAL

	Number of ordinary shares of HK\$0.1 each			Nominal value
	2020 2019		2020 HK\$'000	2019 HK\$'000
Authorised	1,000,000,000	1,000,000,000	100,000	100,000
Issued and fully paid: A t beginning of year S hares issued upon exercise of share options S hares repurchased and cancelled	662,288,726 — (20,050,000)	662,058,726 230,000 —	66,229 — (2,005)	66,206 23 —
At end of year	642,238,726	662,288,726	64,224	66,229

During the year ended 31 December 2019, 230,000 ordinary shares of HK\$0.1 each in the Company were issued at the subscription price of HK\$6.302 per share, upon exercise of the share options.

During the year ended 31 December 2020, the Company repurchased its own ordinary shares through The Stock Exchange of Hong Kong Limited as follows:

Month of	No. of ordinary	Price		Aggregate
repurchase	shares of HK\$0.1 each	per share		consideration
		Highest L HK\$	owest HK\$	paid HK\$'000
September	10,446,000	10.00	9.00	101,713
October	9,604,000	9.90	7.28	92,459

The above ordinary shares were cancelled upon repurchase.

None of the Company's subsidiaries purchased or sold any of the Company's shares during both years.

For the year ended 31 December 2020

34. DEFERRED TAXATION

The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior year:

	tax	Accelerated Fair value of investment T	ax L	ease
	depreciation	properties	losses	liabilities O	thers T	otal
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
At 1 January 2019	25,524	32,625	(17,078)	—	41	41,112
Charge (credit) to profit or loss	1,938	11,921	(4,367)	(353)	(41)	9,098
Exchange adjustments	156	(48)	18	(8)	—	118

At 31 December 2019	27,618	44,498	(21,427)	(361)	—	50,328
Charge (credit) to profit or loss	3,842	1,400	(4,670)	16	—	588
Exchange adjustments	295	3,584	(179)	(18)	—	3,682

At 31 December 2020	31,755	49,482	(26,276)	(363)	—	54,598

At the end of the reporting period, the Group has unused tax losses of HK\$506,410,000 (2019: HK\$363,966,000) available for offset against future profits. A deferred tax asset has been recognised in respect of HK\$153,634,000 (2019: HK\$124,737,000) of such losses. No deferred tax asset has been recognised in respect of the remaining HK\$352,776,000 (2019: HK\$239,229,000) due to unpredictability of future profit streams. All tax losses may be carried forward indefinitely.

35. FINANCIAL INSTRUMENTS

(a) Categories of financial instruments

	2020 HK\$'000	2019 HK\$'000
Financial assets
Financial assets at FVTPL	101,183	280,325
Debt instruments at FVTO CI	3,879,628	5,600,467
Equity instruments at FVTO CI	431,485	—
Financial assets at amortised cost	4,564,489	6,681,746
Financial liabilities
Financial liabilities at amortised cost	10,372,581	13,925,225

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies

The Directors have overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls to monitor risks and adherence to market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a constructive control environment in which all employees understand their roles and obligations. The Directors monitor and manage the financial risks relating to the operations of the Group to ensure appropriate measures are implemented on a timely and effective manner. These risks include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk.

Market risk

(i) Currency risk

Certain subsidiaries of the Company have foreign currency denominated monetary assets/(liabilities) which expose the Group to foreign currency risk. The Group currently does not have a foreign currency hedging policy. However, the management monitors the foreign currency exposure and will consider hedging significant foreign exchange exposure should the need arises.

The carrying amounts of the Group's foreign currency, except US\$, denominated net monetary assets (liabilities) at the end of the reporting period in the respective group entities are as follows:

	2020 HK\$'000	2019 HK\$'000
Renminbi	1,195	1,236
Australian dollars	9,736	949
Great Britain pounds	794	2,879

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Market risk — continued

(i) Currency risk — continued

Sensitivity analysis

The following table details the Group's sensitivity to a 5% (2019: 5%) increase and decrease in the functional currencies of the relevant subsidiaries (i.e. Renminbi, Australian dollars and Great Britain pounds) against the relevant foreign currencies of the relevant subsidiaries (i.e. Renminbi, Australian dollars and Great Britain pounds). 5% (2019: 5%) is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. A positive number below indicates an increase in profit for the year where the relevant functional currencies of the subsidiaries strengthen 5% (2019: 5%) against relevant foreign currencies. There would be an equal and opposite impact where functional currencies of the relevant subsidiaries weaken by 5% (2019: 5%) against the relevant foreign currencies.

	(Increase) decrease in profit for the year
	2020 2019 HK\$'000 HK\$'000
Renminbi Australian dollars Great Britain pounds	60 487 40	62 47 144

In management's opinion, the sensitivity analysis is unrepresentative of the inherent foreign currency risk as the year end exposure does not reflect the exposure during the relevant years.

Since the HK\$ is pegged to the US\$ under the Linked Exchange Rate System, the management does not expect any significant foreign currency exposure in relation to the exchange rate fluctuations between the Hong Kong dollar and the United States dollar.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued

Market risk — continued

(ii) Interest rate risk

The Group is exposed to fair value interest rate risk in relation to guaranteed notes, listed and unlisted debt securities, and pledged bank deposits. The Group is also exposed to cash flow interest rate risk in relation to variable-rate borrowings and bank balances. The Directors consider that the interest rate risk on bank balances are insignificant as they are subject to minimal interest rate fluctuation, accordingly, no sensitivity analysis is presented. The Group's cash flow interest rate risk is mainly concentrated on the fluctuation of the Hong Kong Interbank Offered Rate ("HIBOR"), the British Pound Sterling London Interbank Offered Rate and Australian Bank Bill Swap Bid Rate on the bank borrowings. The Group aims at keeping borrowings at variable rates. The Group manages its interest rate exposures by assessing the potential impact arising from any interest rate movements based on interest rate level and outlook. The management will review the proportion of borrowings in fixed and floating rates and ensure they are within reasonable range.

Total interest income in revenue and other income from financial assets that are measured at amortised cost or at FVTOCI is as follows:

	2020 HK\$'000	2019 HK\$'000
Revenue
Financial assets
— at amortised cost	39,879	150,824
— at FVTO CI	305,143	270,238

	345,022	421,062
Other income Financial assets
— at amortised cost	226	335
Total interest income	345,248	421,397

Interest expense on financial liabilities not measured at FVTPL:

	2020 HK\$'000	2019 HK\$'000
Financial liabilities at amortised cost	258,472	404,797

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Market risk — continued

(ii) Interest rate risk — continued

Sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. The analysis is prepared assuming the financial instruments outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis points (2019: 50 basis points) increase or decrease in variable-rate bank borrowings and are used when reporting interest rate risk internally to key management personnel and represents the management's assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points (2019: 50 basis points) higher/lower and all other variables were held constant, the Group's:

• profit for the year ended 31 December 2020 would decrease/increase by HK\$45,769,000 (2019: HK\$55,469,000) in respect to its variable-rate bank borrowings; and
• investment revaluation reserve would decrease/increase by HK\$19,398,000 (2019: HK\$28,002,000) in respect to the changes in the fair value of fixed rate instruments classified as debt instruments at FVTOCI.

(iii) Price risk

The Group is exposed to equity price risk through its investments in equity securities measured at FVTOCI. For listed equity securities measured at FVTOCI, the management of the Group manages this exposure by maintaining a portfolio of investments with different risks.

Sensitivity analysis

The sensitivity analyses have been determined based on the exposure to equity price risk at the reporting date.

If the prices of the respective equity instruments had been 5% higher/lower, the Group's investment revaluation reserve for the year ended 31 December 2020 would increase/decrease by HK\$21,574,000 as a result of changes in fair value of listed equity securities measured at FVTOCI.

No prior year sensitivity analysis is presented as the Group had no equity instruments at FVTOCI at 31 December 2019.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Credit risk and impairment assessment

Credit risk refers to the risk that the Group's counterparties default on their contractual obligations resulting in financial losses to the Group. The Group's credit risk exposures are primarily attributable to trade receivables, other receivables, pledged bank deposits, bank balances, debt instruments at FVTOCI, loan to a joint venture and contingent liability in relation to the financial guarantee contract to its joint venture (see note 22). The Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets and financial guarantee contracts.

Trade receivables arising from contracts with customers

In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits and credit approvals. Before granting credit to any corporate customers and travel agents, the Group uses an internal credit assessment policy to assess the potential customer's credit quality and defines credit limit by corporate customer and travel agents. Limits attributed to customers are reviewed regularly. Other monitoring procedures are in place to ensure that follow-up action is taken to recover overdue debts. In this regard, the Directors consider that the Group's credit risk is mitigated. In addition, the Group performs impairment assessment under ECL model on trade balances individually. For the years ended 31 December 2020 and 2019, the Group assessed the ECL for trade receivables were insignificant and thus no loss allowance was recognised.

Other receivables and deposits

For other receivables and deposits, the Directors make periodic individual assessment on the recoverability of other receivables and deposits based on historical settlement records, past experience, and also quantitative and qualitative information that is reasonable and supportive forward-looking information. The Directors believe that there are no significant increase in credit risk of these amounts since initial recognition and the Group provided impairment based on 12m ECL. For the years ended 31 December 2020 and 2019, the Group assessed the ECL for other receivables and deposits were insignificant and thus no loss allowance was recognised.

Pledged bank deposits and bank balances

Credit risk on pledged bank deposits and bank balances is limited because the counterparties are reputable banks with high credit ratings assigned by international credit agencies. The Group assessed 12m ECL for pledged bank deposits and bank balances by reference to information relating to probability of default and loss given default of the respective credit rating grades published by external credit rating agencies. For the years ended 31 December 2020 and 2019, the Group assessed the ECL for pledged bank deposits and bank balances were insignificant and thus no loss allowance was recognised.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Credit risk and impairment assessment — continued

Debt instruments at FVTOCI

The Group only invests in debt securities with low credit risk. The Group's debt instruments at FVTOCI comprise listed and unlisted securities that are either (i) in investment grades or (ii) issued by large PRC state-owned institutions or (iii) issued by large listed companies with secured financial capability and where no default occurred in the past years and therefore are considered to be low credit risk investments.

The Group has established an expected credit losses calculation methodology that is based on the probability of default assigned to each issuer according to their external credit ratings, financial performance and financial positions and the related historical credit losses experience, adjusted for forward-looking information, including the economic development that the issuers are operated in, such as forecast property market development, forecast changes in default rate of the respective credit rating published by the external credit rating agencies, etc.

As mentioned in note 20, there was an indication that there was significant increase in credit risk of one of the debt instruments at FVTOCI, and therefore, lifetime ECL has been adopted for assessing the impairment loss on that debt security and the Group provided impairment loss allowance of HK\$10,033,000 for the year ended 31 December 2019. Other than that, the Directors believe that there are no significant increase in credit risk since initial recognition and the Group provided impairment based on 12m ECL.

Loan to a joint venture

The Group's exposure to credit risk arising from default of the counterparty is limited as the counterparty engages in property development in Hong Kong and the underlying properties under development are of high quality. For the years ended 31 December 2020 and 2019, the Group assessed the ECL for loan to a joint venture was insignificant and thus no loss allowance was recognised.

Financial guarantee contract

For financial guarantee contracts provided to the banking facilities granted to a joint venture, the maximum amount that the Group has guaranteed under the respective contracts was HK\$691,620,000 as at 31 December 2020 (2019: HK\$691,620,000). At the end of the reporting period, the Directors have performed impairment assessment, and concluded that there has been no significant increase in credit risk since initial recognition of the financial guarantee contracts as the guarantee is secured by the properties of the joint venture for both years. In addition, the Directors make periodic assessment on the ECL based on financial position and financial performance of the joint venture, and also quantitative and qualitative information that is reasonable and supportive forward-looking information, including the macroeconomic conditions that the counterparties operated in, such as forecast unemployment rate and property market development, etc. Accordingly, the loss allowance for financial guarantee contracts issued by the Group is measured at an amount equal to 12m ECL. For the years ended 31 December 2020 and 2019, the Group assessed the ECL for financial guarantee contracts were insignificant and thus no loss allowance was recognised.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Credit risk and impairment assessment — continued

Financial guarantee contract — continued

Other than concentration of credit risk on liquid funds which are deposited with several banks with high credit ratings, the Group does not have any other significant concentration of credit risk. Trade receivables consist of a large number of customers.

The Group's internal credit risk grading assessment comprises the following categories:

Internal credit rating D	escription	Trade receivables	Other financial assets
Low risk	The counterparty has a low risk of default and does not have any past-due amounts	Lifetime ECL — not credit-impaired	12m ECL
Watch list	Debtor frequently repays after due dates but usually settles in full	Lifetime ECL — not credit-impaired	12m ECL
Doubtful	There have been significant L increases in credit risk since initial recognition through information developed internally or external resources	ifetime ECL — not credit-impaired	Lifetime ECL — not credit-impaired
Loss	There is evidence indicating L the asset is credit-impaired	ifetime ECL — credit-impaired	Lifetime ECL — credit-impaired
Write-off	There is evidence indicating A that the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery	mount is written off A	mount is written off

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Credit risk and impairment assessment — continued

The table below details the credit risk exposures of the Group's financial assets and financial guarantee contract which are subject to ECL assessment:

	External Internal credit credit		12m ECL or G	ross carrying amount
	rating	rating	lifetime ECL	2020 HK\$'000	2019 HK\$'000
Debt instruments at FVTOCI
Investments in listed securities	A to B N	/A	12m ECL	3,879,628	4,891,467
Investments in unlisted securities	N/A L	ow risk (note i)	12m ECL	—	709,000
Financial assets at amortised costs
Pledged bank deposits	AA N	/A	12m ECL	29,768	499,037
Bank balances	AA N	/A	12m ECL	3,354,301	5,026,792
Loan to a joint venture	N/A L	ow risk (note i)	12m ECL	1,170,145	1,114,719
Other receivables	N/A L	ow risk (note i)	12m ECL	9,987	39,293
Trade receivables — hotel operation	N/A L	ow risk L (note ii)	ifetime ECL (not credit- impaired)	133	1,660
Other item
Financial guarantee contract	N/A	(note iii)	12m ECL	691,620	691,620

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Credit risk and impairment assessment — continued

Notes:

i. For the purposes of internal credit risk management, the Group uses past due information to assess whether credit risk has increased significant since initial recognition.

For investment in unlisted securities, the issuer has either investment grades or issued by a large institution, therefore, no significant increase in credit risk is noted.

The loan to a joint venture has no fixed terms of repayment and has not past due. Thus, no significant increase in credit risk is noted for the year ended 31 December 2020.

All other receivables are repayable on demand with no fixed term of repayment. The balance are settled within 30 days after debit notes issued, thus, no significant increase in credit risk is noted for the year ended 31 December 2020.

ii. For trade receivables, the Group has applied the simplified approach in HKFRS 9 to measure the loss allowance at lifetime ECL. The Group determine the expected credit losses on these items individually. The balances are settled within 30 days after the credit period granted, thus, no significant increase in credit risk noted for the year ended 31 December 2020.
iii. For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group has guaranteed under the respective contracts.

Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Directors, who have built an appropriate liquidity risk management framework for the management of the Group's short, medium and long-term funding and liquidity requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities, and by continuously monitoring forecast and actual cash flows. As at 31 December 2020, the Group has bank balances and cash of HK\$3,354,456,000 (2019: HK\$5,027,037,000) and available unutilised bank borrowings facilities of approximately HK\$3,332,105,000 (2019: HK\$2,412,407,000).

The following table details the Group's remaining contractual maturity for its financial liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Specially, bank borrowings with a repayment on demand clause are included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity for other financial liabilities are based on the agreed repayment dates.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued Liquidity risk — continued

The table includes both interest and principal cash flows, estimated based on interest rate at the end of the reporting period.

	Weighted average effective interest rate %	Repayable on demand or within 3 months HK\$'000	3 months to 6 months HK\$'000	6 months to 9 months HK\$'000	9 months to O 12 months HK\$'000	ver 1 year HK\$'000	Total undiscounted cash flows HK\$'000	Carrying amount HK\$'000

At 31 December 2020
Payables and deposits received Bank borrowings (note i)	— 1.39	84,861 3,203,302	219 36,310	453 36,255	1,626 1,401,940	4,226 4,661,587	91,385 9,339,394	91,385 9,122,974
Guaranteed notes	4.88	28,343	—	28,343	—	1,247,798	1,304,484	1,158,222
Lease liabilities	4.08	4,705	4,705	4,705	4,705	712,238	731,058	203,812
		3,321,211	41,234	69,756	1,408,271	6,625,849	11,466,321	10,576,393
Financial guarantee (note ii)		691,620	—	—	—	—	691,620	—

	Weighted R average	epayable on demand	3 months	6 months	9 months		Total
	effective	or within	to	to	to O	ver	undiscounted	Carrying
	interest rate	3 months	6 months	9 months	12 months	1 year	cash flows	amount
	%	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000

At 31 December 2019 Payables and deposits received	—	136,431	853	534	1,500	7,589	146,907	146,907
Bank borrowings (note i)	4.00	5,787,758	59,836	59,668	59,500	5,741,958	11,708,720	11,059,959
Guaranteed notes	4.66	1,620,871	—	28,470	—	1,310,372	2,959,713	2,718,359
Lease liabilities	3.99	4,639	4,639	4,639	4,639	696,625	715,181	207,903
		7,549,699	65,328	93,311	65,639	7,756,544	15,530,521	14,133,128
Financial guarantee (note ii)		691,620	—	—	—	—	691,620	—

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(b) Financial risk management objectives and policies — continued

Liquidity risk — continued

Notes:

i. The amounts included above for variable rate bank borrowings are subject to change if changes in variable interest rates differ to those estimates of interest rates determined at the end of the reporting period.

Bank borrowings with a repayment on demand clause are included in the "within 3 months" time band in the above maturity analysis. As at 31 December 2020, the aggregate carrying amounts of these bank borrowings amounted to HK\$3,147,672,000 (2019: HK\$5,697,421,000). Those bank borrowings are revolving loan in nature, and with repayment period of less than three months. Taking into account the Group's financial position, the Directors do not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment.

ii. The amounts included above for financial guarantee contracts are the maximum amounts the Group could be required to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty to the guarantee. Based on expectations at the end of the reporting period, the Group considers that it is more likely than not that no amount will be payable under the arrangement. However, this estimate is subject to change depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood that the financial receivables held by the counterparty which are guaranteed suffer credit losses.

(c) Fair value measurement of financial instruments

Certain of the Group's financial instruments are measured at fair value for financial reporting purposes. The management determines the appropriate valuation techniques and inputs for fair value measurements.

In estimating the fair value, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages independent qualified professional valuers to perform the valuation if the investment is material. The management works closely with the independent qualified professional valuers to establish the appropriate valuation techniques and inputs to the model. The management reports the findings to the Directors regularly to explain the cause of fluctuations in the fair value.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(c) Fair value measurement of financial instruments — continued

(i) Fair value of the Group's financial assets that are measured at fair values on a recurring basis

Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

	Fair value as at
Financial assets	31 December 2020 HK\$'000	31 December 2019 HK\$'000	Fair value hierarchy	Valuation technique(s) and key input(s)
Listed equity securities classified as equity instruments at FVTOCI (note 23)	431,485	—	Level 1	The fair value is quoted price in an active market.
Listed debt securities classified as debt instruments at FVTOCI (note 24)	3,879,628	4,891,467	Level 1	The fair value is quoted price in an active market.
Unlisted debt securities classified as debt instruments at FVTOCI (note 24)	—	709,000	Level 2	The fair value of the note is determined by the discounted cash flow model. It is estimated by computing the sum of the present values of all expected future cash flows for an appropriate period, each discounted by their prevailing market rates of interest for a similar instrument with a similar credit rating. This discount rate should consider the time value of money, inflation and the risk inherent in ownership
				of the asset or security interest being valued. The discount rate is determined with reference to a credit spread derived from comparable bonds with similar credit rating and maturity.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(c) Fair value measurement of financial instruments continued
(i) Fair value of the Group's financial assets that are measured at fair values on a recurring basis — continued

	Fair value as at
Financial assets	31 December 2020 HK\$'000	31 December 2019 HK\$'000	Fair value hierarchy	Valuation technique(s) and key input(s)
Unlisted investment classified as financial assets at FVTPL — preferred shares (note 25)	88,062	272,538	Level 3	2020 The fair value of the preferred shares is determined with reference to the adjusted net assets value approach and income approach.
				Adjusted net assets value approach determines the fair value with reference to the net assets value of the subject assets adjusted by revaluation of certain underlying assets, discount for lack of marketability and discount for lack of control.
				Income approach determines the fair value with reference to the future cash flows of the subject assets adjusted by default rate and recovery rate.
				The significant unobservable inputs are the discount for lack of marketability of 16% and the discount for lack of control of 32%. An increase in discount for lack of marketability or the discount for lack of control could result in decrease in fair value of the preferred shares.
				2019 The fair value of the preferred shares is determined by use of the combination of market approach and Black-Scholes option pricing model.
				Market approach determines the value of the subject asset with reference to price to earnings ratio of similar assets in listed market and adjusted by the discount for lack of marketability.
				The Black-Scholes option pricing model determines the value of option based on such parameters as risk-free rate, prevailing price of the underlying stock, exercise price, expected volatility of the underlying share prices, and term to maturity.
				The significant unobservable inputs are the discount for lack of marketability of 30% and expected volatility of the underlying share prices of 70%. Changing these unobservable inputs based on reasonable alternative assumptions would not significant change the valuations of the preferred shares.

For the year ended 31 December 2020

35. FINANCIAL INSTRUMENTS — continued

(c) Fair value measurement of financial instruments — continued

(i) Fair value of the Group's financial assets that are measured at fair values on a recurring basis — continued

Reconciliation of Level 3 fair value measurements

	Financial assets
	at FVTPL HK\$'000

At 1 January 2019	324,490
Redemption	(84,775)
Interest income	2,994
Exchange adjustments	(1,505)
Fair value gain	31,334
At 31 December 2019	272,538
Redemption	(184,379)
Exchange adjustments	(1,111)
Fair value gain	1,014
At 31 December 2020	88,062

Fair value gain on financial assets at FVTPL are included in 'other gains and losses'.

There were no transfer in or out of level 1, 2 and 3 during the year.

(ii) Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair value disclosures are required)

The fair value of financial assets and financial liabilities carried at amortised cost, are determined in accordance with generally accepted pricing models which is based on discounted cash flows analysis using the relevant prevailing market rates as input.

The Directors consider that the carrying amounts of financial assets and financial liabilities recognised at amortised cost in the consolidated financial statements approximate their fair values.

For the year ended 31 December 2020

36. OPERATING LEASE ARRANGEMENTS

The Group as lessor

The lease terms of the remaining leased properties range from 1 to 19 years (2019: 1 to 20 years).

The majority of the Group's investment properties were leased out under operating leases.

Minimum lease payments receivable on leases are as follows:

	2020 HK\$'000	2019 HK\$'000

Within one year	226,624	224,549
In the second year In the third year	220,368 209,029	219,547 212,646
In the fourth year	206,790	199,832
In the fifth year	221,529	210,003
After five years	2,162,243	2,297,001

	3,246,583	3,363,578

37. DISPOSAL OF A SUBSIDIARY

During the year, the Group entered into a sale agreement to dispose of its 100% equity interest in Treasure Base Global Limited and its subsidiary (collectively named as "Treasure Base Group") that held an investment property in Hong Kong to an independent third party at a consideration of HK\$196,565,000. The disposal was completed on 26 June 2020, on which the Group lost control of Treasure Base Group.

The net assets of Treasure Base Group at the date of disposal were as follows:

	HK\$'000
Net assets disposed of	196,565

Total consideration
Satisfied by: Cash	196,565

Disposal-related costs amounting to HK\$5,738,000 have been recognised as an expense for the year within the "other expenses" line item in the consolidated statement of profit or loss and other comprehensive income.

For the year ended 31 December 2020

37. DISPOSAL OF A SUBSIDIARY — continued

Assets derecognised at the date of disposal
	HK\$'000
Investment property (note 19) Rental deposits	196,500 65
	196,565
Net cash inflows arising on disposal of Treasure Base Group

	HK\$'000
Consideration received	196,565

38. CAPITAL COMMITMENTS

	2020 HK\$'000	2019 HK\$'000
Capital expenditure in respect of the acquisition of investment properties contracted for but not provided in the consolidated financial statements	13,824	55,612

For the year ended 31 December 2020

39. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated statement of cash flows as cash flows from financing activities.

	I Lease	Bank G	uaranteed	nterest payable (included in other	Dividends payable (included in other
	liabilities	borrowings	notes	payables)	payables) T	otal
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
	(note 32)	(note 30)	(note 31)	(note 29)
At 1 January 2020	207,903	11,059,959	2,718,359	67,318	2,803	14,056,342
Financing cash flows	(18,367)	(2,009,623)	(1,554,060)	(288,525)	(33,057)	(3,903,632)
Foreign exchange translation	6,232	59,210	(8,520)	811	—	57,733
Amortisation of bank borrowings
front-end fee	—	13,428	—	—	—	13,428
Amortisation of guaranteed notes
issued costs	—	—	2,443	—	—	2,443
Interest expense	8,044	—	—	249,764	—	257,808
Dividends declared	—	—	—	—	33,072	33,072
At 31 December 2020	203,812	9,122,974	1,158,222	29,368	2,818	10,517,194
				Interest payable (included	Dividends payable (included
	Lease	Bank	Guaranteed	in other	in other
	liabilities	borrowings	notes	payables)	payables) T	otal
	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000	HK\$'000
	(note 32)	(note 30)	(note 31)	(note 29)
At 1 January 2019	—	10,979,410	2,726,740	67,865	2,795	13,776,810
Adjustment for initial recognition	214,352	—	—	—	—	214,352
Financing cash flows	(19,830)	(21,453)	—	(390,938)	(33,102)	(465,323)
Foreign exchange translation	5,415	87,394	(15,223)	(240)	—	77,346
Amortisation of bank borrowings
front-end fee	—	14,608	—	—	—	14,608

Amortisation of guaranteed notes
issued costs	—	—	6,842	—	—	6,842
Interest expense	7,966	—	—	390,631	—	398,597
Dividends declared	—	—	—	—	33,110	33,110

At 31 December 2019	207,903	11,059,959	2,718,359	67,318	2,803	14,056,342

For the year ended 31 December 2020

40. PLEDGE OF ASSETS

At the end of the reporting period, the Group had pledged the following assets to secure banking facilities granted to the Group:

(a) Fixed charges on investment properties with an aggregate carrying value of HK\$7,322,248,000 (2019: HK\$6,442,492,000) together with a floating charge over all the assets of the properties owning subsidiaries and benefits accrued to the relevant properties.
(b) Fixed charges on hotel properties with aggregate carrying values of HK\$566,174,000 (2019: HK\$586,168,000) together with a floating charge over all the assets of the properties owning subsidiaries and benefits accrued to the hotel properties.
(c) Pledged bank deposits of HK\$29,768,000 (2019: HK\$499,037,000).
(d) Debt instruments at FVTOCI of HK\$3,879,628,000 (2019: HK\$4,891,467,000).

41. SHARE-BASED PAYMENTS TRANSACTIONS

Share Option Scheme of the Company

The Company adopted a share option scheme on 29 May 2015 (the "2015 Share Option Scheme"). Unless terminated earlier by the Board, the 2015 Share Option Scheme shall be valid and effective for a term of 10 years until 28 May 2025. Under the 2015 Share Option Scheme, the Board may offer to eligible participants options to subscribe for shares of the Company at a price at least the highest of (i) the nominal value of the share of the Company; (ii) the average of the closing price of the share of the Company on the Stock Exchange for the five business days immediately preceding the date of grant of the option; and (iii) the closing price of the share of the Company on the Stock Exchange on the date of grant of the option.

For the year ended 31 December 2020

41. SHARE-BASED PAYMENTS TRANSACTIONS — continued

Share Option Scheme of the Company — continued

Details of the share options granted under the 2015 Share Option Scheme during the years ended 31 December 2020 and 2019 are as follows:

			Number of share options
Date of grant	Exercisable period upon vesting	Exercise price per share HK\$	At 1 January 2019	Exercised L	apsed	At 31 December 2019 L	apsed	At 31 December 2020
Granted to the employees
02.07.2015 22.01.2018 22.01.2018 22.01.2018 22.01.2018 22.01.2018 22.01.2018	01.07.2018 to 30.06.2020 01.01.2019 to 31.12.2020 01.07.2019 to 30.06.2021 01.01.2020 to 31.12.2021 01.07.2020 to 30.06.2022 01.01.2021 to 31.12.2022 01.07.2021 to 30.06.2023	6.302 12.800 12.800 12.800 12.800 12.800 12.800	500,000 325,000 400,000 500,000 225,000 1,600,000 1,550,000 5,100,000	(230,000) — — — — — — (230,000)	— (50,000) (125,000) — — (300,000) (325,000) (800,000)	270,000 275,000 275,000 500,000 225,000 1,300,000 1,225,000 4,070,000	(270,000) (100,000) (75,000) — — (325,000) (200,000) (970,000)	— 175,000 200,000 500,000 225,000 975,000 1,025,000 3,100,000
Weighted average exercise price (HK\$)			12.163	6.302	12.800	12.369	10,991	12.800
Exercisable at year end			500,000			820,000		1,100,000
Weighted average exercise price of options exercisable at year end (HK\$)			6.302			10.660		12.800

Under the 2015 Share Option Scheme, no share options had been granted and cancelled during the years ended 31 December 2019 and 2020, and no share options had been exercised for the year ended 31 December 2020. The vesting period of the share options is from the date of grant until the commencement of the exercisable period.

For the year ended 31 December 2019, total consideration received by the Group for exercising the share options amounted to HK\$1,449,000 and the weighted average share price at the dates of exercise was HK\$9.65. There is no share options exercised during the year ended 31 December 2020.

On 2 July 2015, 21,650,000 share options under the 2015 Option Scheme were granted to the employees of the Company and the closing price of the Company's shares immediately preceding the date of grant was HK\$6.23. The estimated fair value of the share options granted to employees of the Company on that date was HK\$21,499,000. The Directors determined the fair values of share options with reference to the calculation of the fair value of the share options granted made by an independent professional valuer.

For the year ended 31 December 2020

41. SHARE-BASED PAYMENTS TRANSACTIONS — continued

Share Option Scheme of the Company — continued

On 22 January 2018, 5,775,000 share options under the 2015 Option Scheme were granted to the employees of the Company and the closing price of the Company's shares immediately preceding the date of grant was HK\$12.64. The estimated fair value of the share options granted to employees of the Company on that date was HK\$4,339,000. The Directors determined the fair values of share options with reference to the calculation of the fair value of the share options granted made by an independent professional valuer.

The fair values were calculated using The Binominal Option Pricing model. The inputs into the model were as follows:

	Share Option Granted on
	2 July 2015	22 January 2018

Share price as at grant date:	HK\$6.200	HK\$12.80
Exercise price:	HK\$6.302	HK\$12.80
Expected volatility:	21.58% – 24.24%	25.31% – 34.27%
Expected dividend yield:	1.75%	0.62%
Risk-free rate:	0.385% – 1.188%	1.53% – 1.82%

Expected volatility was determined by using the historical volatility of the Company's share price over the previous five years. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The variables and assumptions used in computing the fair value of the share options were based on the Director's best estimate. The value of an option varied with different variables of certain subjective assumptions.

The Group recognised the total expense of HK\$464,000 for the year ended 31 December 2020 (2019: HK\$565,000) in relation to share options granted by the Company.

Share Award Scheme of the Company

The Share Award Scheme was approved by the Shareholders on 27 May 2010 and came into effect on 15 June 2010. Unless terminated earlier by the Board, the Share Award Scheme shall be valid and effective for a term of 15 years until 14 June 2025.

For the year ended 31 December 2020

41. SHARE-BASED PAYMENTS TRANSACTIONS — continued

Share Award Scheme of the Company — continued

The purpose of the Share Award Scheme is to provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants (as defined in the Share Award Scheme). Under the Share Award Scheme, the Board (or any committee delegated by the Board) may at its absolute discretion grant awards, which may comprise (a) new shares of the Company; (b) existing shares of the Company in issue and is listed on the Stock Exchange from time to time; (c) cash in lieu of the shares of the Company; or (d) a combination of (a), (b) and (c), to any eligible participants as it thinks fit and appropriate and subject to the terms and conditions of the Share Award Scheme. No award may be granted under the Share Award Scheme if the aggregate number of shares which may be issued and/or transferred upon vesting of all outstanding awards granted under the Share Award Scheme and any other share award scheme of the Company and which may be issued upon exercise of all outstanding options granted and yet to be exercised under any share option scheme of the Company exceed 30% of the shares of the Company in issue from time to time.

The Company has appointed trustee to acquire the Company's shares from the open market with funds provided by the Company and to hold the shares before they are vested and transferred to the selected participants.

No ordinary shares of the Company were awarded for both years ended 31 December 2019 and 2020.

42. RETIREMENT BENEFIT PLANS

The Group participates in a Mandatory Provident Fund Scheme (the "MPF Scheme") established under the Mandatory Provident Fund Schemes Ordinance in December 2000 and also participated in a defined contribution scheme which is registered under the Occupational Retirement Schemes Ordinance (the "ORSO Scheme"). The assets of the schemes are/were held separately from those of the Group, in funds under the control of trustees. Employees who were members of the ORSO Scheme prior to the establishment of the MPF Scheme were offered a choice of staying within the ORSO Scheme or switching to the MPF Scheme, whereas all new employees joining the Group on or after 1 December 2000 are required to join the MPF Scheme.

For members of the MPF Scheme, the Group contributes 5% to 15% of relevant payroll costs to the scheme for members of the MPF Scheme, depending on the grading and the length of service with the Group.

The ORSO Scheme is funded by monthly contributions from both employees and the Group at rates ranging from 5% to 15% of the employee's basic salary, depending on the length of service with the Group.

The Group terminated the ORSO Scheme in February 2019 and all members of the ORSO Scheme transferred their accrued benefits and contributions under the ORSO Scheme to the MPF Scheme.

The total expense recognised in profit or loss of HK\$3,901,000 (2019: HK\$5,983,000) represents contributions payable to these plans by the Group at rates specified in the rules of the plans. No forfeited contributions have been used to reduce the level of contributions in either year.

For the year ended 31 December 2020

43. RELATED PARTY TRANSACTIONS

Other than as disclosed in note 19 and elsewhere in these consolidated financial statements, the Group has no other transactions and balances with related parties.

The remuneration of the Directors who are the Group's key management personnel is set out in note 15.

The remuneration of the Directors and key executives of the Company is determined/ recommended to the Board for approval by the remuneration committee of the Company having regard to the performance of individuals and market trends.

44. STATEMENT OF FINANCIAL POSITION AND RESERVES OF THE COMPANY

	2020 HK\$'000	2019 HK\$'000
Non-current assets Interests in subsidiaries Pledged bank deposits	5,357,226 —	6,275,287 16,512
	5,357,226	6,291,799
Current assets Receivables and deposits Pledged bank deposits Bank balances	114 12,000 1,136,367	800 16,512 1,075,105
	1,148,481	1,092,417
Current liabilities Payables and accrued charges Bank borrowings — due within one year	3,034 1,550,400	5,122 1,857,800
Net current liabilities	1,553,434 (404,953)	1,862,922 (770,505)
Net assets	4,952,273	5,521,294
Capital and reserves Share capital Reserves	64,224 4,888,049	66,229 5,156,165
Total equity	4,952,273	5,222,394
Non-current liability Bank borrowings — due after one year	—	298,900
Total equity and non-current liability	4,952,273	5,521,294

For the year ended 31 December 2020

44. STATEMENT OF FINANCIAL POSITION AND RESERVES OF THE COMPANY — continued

Movement in the Company's capital and reserves

	Attributable to the Shareholders
	Share capital HK\$'000	Share premium HK\$'000	Contributed surplus HK\$'000	Capital redemption reserve HK\$'000	Share option reserve HK\$'000	Retained profits T HK\$'000	otal HK\$'000
At 1 January 2019	66,206	19,068	190,081	4,451	2,390	4,961,577	5,243,773
Profit and total comprehensive income for the year Recognition of equity-settled	—	—	—	—	—	9,717	9,717
share-based payments — share options	—	—	—	—	565	—	565
Shares issued upon exercise of
share options	23	1,677	—	—	(251)	—	1,449
Dividends paid	—	—	—	—	—	(33,110)	(33,110)
At 31 December 2019	66,229	20,745	190,081	4,451	2,704	4,938,184	5,222,394
Loss and total comprehensive expense for the year Recognition of equity-settled	—	—	—	—	—	(43,341)	(43,341)
share-based payments
— share options	—	—	—	—	464	—	464
Lapse of vested share options	—	—	—	—	(831)	831	—
Shares repurchased and cancelled	(2,005)	(192,167)	—	—	—	—	(194,172)
Dividends paid	—	—	—	—	—	(33,072)	(33,072)
Transfer of excess share premium
to retained profits	—	171,422	—	—	—	(171,422)	—
At 31 December 2020	64,224	—	190,081	4,451	2,337	4,691,180	4,952,273

For the year ended 31 December 2020

45. PRINCIPAL SUBSIDIARIES

(a) General information of subsidiaries

Name of subsidiary	Place/country of incorporation/ operation	Issued and paid up share capital/ registered capital		Effective % of issued share capital/ registered capital held by the Company	Principal activities
			2020	2019
Direct subsidiaries
New Rose Investments Limited	British Virgin Islands ("B.V.I.")/ Hong Kong	US\$1	— (Note i)	100	Bond issuance
Rosy Delta Investments Limited	B.V.I./ Hong Kong	US\$1	100	100	Bond issuance
South-East Asia Investment And A gency Company, Limited	Hong Kong	HK\$10,000,000	100	100 P	rovision of corporate and property management services
Indirect subsidiaries
Concord Way Limited	Hong Kong	HK\$100	100	100	Hotel operation
Easy Mega Investment Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Giant Well Enterprises Limited	B.V.I./ Hong Kong	US\$1	100	100	Investment holding
Grace Art Development Limited	Hong Kong	HK\$1	100	100 T	reasury services
Harbour Blossom Limited	B.V.I./ Hong Kong	US\$1	— (Note i)	100	Financial investment
High Team International Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Honest Smart Properties Limited	Hong Kong	HK\$1	100	100 P	roperty investment
King Victory Global Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
Leighton Road Hotel Management S ervices Limited	Hong Kong	HK\$1	100	100	Hotel operation
Luck Marker Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment

For the year ended 31 December 2020

45. PRINCIPAL SUBSIDIARIES — continued

(a) General information of subsidiaries — continued

Name of subsidiary	Place/country of incorporation/ operation	Issued and paid up share capital/ registered capital		Effective % of issued share capital/ registered capital held by the Company	Principal activities
			2020	2019
Indirect subsidiaries — continued
Maple Sky Ventures Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
Max Grand Properties Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Nice Source Investment Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Oceanic Hero Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
One Valley View Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Pearl Hope Limited	B.V.I.	US\$1	100	100	Financial investment
Rainbow Mark Investments Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
SEA Island Holdings Pty. Limited A	ustralia	A\$320,000 paid up share capital	100	100 P	roperty investment
SEA Profit Holdings Limited	B.V.I./ Hong Kong	US\$1	100	100 P	roperty investment
SEA Vanguard Holdings Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
Seven Valley View Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Sound Grace Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Sunni City Limited	Hong Kong	HK\$2	— (Note i)	100 P	roperty investment
Ten Valley View Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Treasure Indicator Limited	B.V.I./ Hong Kong	US\$1	100	100	Financial investment
Twenty Valley View Limited	Hong Kong	HK\$1	100	100 P	roperty investment
Two Valley View Limited	Hong Kong	HK\$1	100	100 P	roperty investment

For the year ended 31 December 2020

45. PRINCIPAL SUBSIDIARIES — continued

(a) General information of subsidiaries — continued

Name of subsidiary	Place/country of incorporation/ operation	Issued and paid up share capital/ registered capital	Effective % of issued share capital/ registered capital held by the Company		Principal activities
			2020	2019
Indirect subsidiaries — continued
Tycoon Honour Limited	B.V.I./ Hong Kong	US\$1	100	100 T T	Investment holding of he Moorgate Unit rust Units
Worthy Merit Limited	B.V.I./ Hong Kong	US\$1	100	100 T T	Investment holding of he Moorgate Unit rust Units

Note:

(i) The equity interests of these subsidiaries were disposed or liquidated during the year ended 31 December 2020.

The Directors are of the opinion that a complete list of the particulars of all subsidiaries of the Company will be of excessive length and therefore the above list contains only the particulars of subsidiaries which principally affect the results or assets of the Group.

None of the subsidiaries has issued any debt securities except for Rosy Delta Investments Limited (2019: Rosy Delta Investments Limited and New Rose Investments Limited) which has issued guaranteed notes as set out in note 31 at the end of both years.

GLOSSARY

In this annual report, unless the context otherwise requires, the following expression shall have the following meanings:

"AGM(s)"	the annual general meeting(s) of the Company;
"Ambleside Glory"	Ambleside Glory Limited, a company incorporated in the British Virgin Islands with limited liability;
"Audit Committee"	the audit committee of the Company;
"Board"	the board of Directors;
"CG Code"	the Corporate Governance Code;
"Chairman"	the chairman of the Board;
"Chief Executive"	the chief executive of the Company;
"Chief Financial Officer"	the chief financial officer of the Company;
"Company" or "SEA "	S E A Holdings Limited is an exempted company incorporated in Bermuda with limited liability, the shares of which are listed and traded on the Main Board of the Stock Exchange (Stock code: 251);
"Deloitte"	Deloitte Touche Tohmatus, Certified Public Accountants;
"Director(s)"	the director(s) of the Company;
"ESG"	environmental, social and governance;
"Executive Committee"	the executive committee of the Company;
"Executive Director(s)"	the executive Director(s);
"Group or SEA Group"	the Company and its subsidiaries;
"Government"	the government of Hong Kong;
"HK\$"	the lawful currency of Hong Kong for the time being;
"HKAS"	Hong Kong Accounting Standards;
"HKEX"	Hong Kong Exchanges and Clearing Limited;
"HKFRS"	Hong Kong Financial Reporting Standards;
"Hong Kong/HKSAR "	the Hong Kong Special Administrative Region of the PRC;

GLOSSARY

"Independent Non-executive Director(s)" or "INED"	the independent non-executive Director(s);
"Listing Rules"	the Rules Governing the Listing of Securities on the Stock Exchange;
"Model Code"	the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules;
"NLI"	Nan Luen International Limited, an exempted company incorporated in Bermuda with limited liability;
"Nomination Committee"	the nomination committee of the Company;
"Non-executive Director(s)"	the non-executive Director(s);
"NYH"	NYH Limited, an exempted company incorporated in Bermuda with limited liability;
"Port Lucky"	Port Lucky Limited, a company incorporated in the British Virgin Islands with limited liability;
"PRC" or "Mainland" or "Mainland China"	The People's Republic of China;
"Remuneration Committee"	the remuneration committee of the Company;
"SEA Fortune"	SEA Fortune Ventures Limited, a company incorporated in the British Virgin Islands with limited liability;
"SFO"	the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);
"SGM(s)"	the special general meeting(s) of the Company;
"Shareholders"	the shareholders of the Company;
"Share Award Scheme"	the share award scheme of the Company;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"US\$"	United States dollars, the lawful currency of the United States of America;
"%"	per cent; and
"2015 Share Option Scheme"	the share option scheme adopted by the Company on 29 May 2015.

AI assistant

S E A Holdings Limited — Annual Report 2020

49068_rns_2021-04-26_869f993a-bec9-4ca6-a120-6ffee4c39aed.pdf

Contents

DIRECTORY

DIRECTORS

Executive Directors

Non-executive Directors

Independent Non-executive Directors

AUDIT COMMITTEE

NOMINATION COMMITTEE

REMUNERATION COMMITTEE

AUTHORISED REPRESENTATIVES

COMPANY SECRETARY

LEGAL ADVISERS

INDEPENDENT AUDITOR

PRINCIPAL BANKERS

REGISTERED OFFICE

PRINCIPAL PLACE OF BUSINESS

BRANCH REGISTRAR IN HONG KONG

LISTING

STOCK CODE AND BOARD LOT

WEBSITE

Location of the Group's Properties/PROJECTS

UNITED KINGDOM

London

CHINA Hong Kong

AUSTRALIA Queensland

Property Portfolio List of All Properties

Particulars of Development Properties / Properties under Development

Particulars of Investment Properties

Particulars of Hotel Building

Hong Kong, China

Project name: grand Victoria

development Address:

geographical Environment:

Planning and design:

Project Highlight:

Hong Kong, China

development Address:

ownership Status:

geographical Environment:

Planning and design:

Project Highlight:

London, the United Kingdom

Project name: 33 old Broad Street

development Address:

geographical Environment:

Project Highlight:

London, the United Kingdom

development Address:

Project Highlight:

Chairman's Statement

Chairman's Statement

Balance Sheet and Management

FY2020 HIGHLIGHTS

Property Development

Hotel Operations and Management

RESULTS HIGHLIGHTS

STRENGTHENING OUR BUSINESS RESILIENCE

CAPITAL STRUCTURE AND LIQUIDITY

C O R P O R A T E GO VER N A N CE A ND C O R P O R A T E S O C I A L RESPONSIBILITY

OUTLOOK

Directors' Biographical Information

MR. LU WING CHI, JESSE

MR. LAMBERT LU

Mr. Yap Shee Liam

Directors' Biographical Information

Mr. Lam Sing Tai

Mr. Lincoln Lu

Non-executive Director

Mr. Walujo Santoso, Wally

Directors' Biographical Information

Mr. Leung Hok Lim

Mr. Chung Pui Lam

Mr. Chan Kwok Wai

Financial Highlights Statement of Profit or Loss Highlights

HK\$ million, unless otherwise stated

Financial Highlights Statement of Financial Position Highlights

HK\$ million, unless otherwise stated

S E A Holdings Limited Annual Report 2020