NOTES TO THE FINANCIAL STATEMENTS (Expressed in Hong Kong dollars unless otherwise indicated)

Transcription

1 1. General formation Power Assets Holdgs Limited ( the Company ) is a limited company corporated and domiciled. The address of its registered office is Rooms , 19th Floor, Hutchison House, 10 Harcourt Road,. 2. Significant accountg policies (a) Statement of compliance These fancial statements have been prepared accordance with all applicable Fancial Reportg Standards ( HKFRSs ), which collective term cludes all applicable dividual Fancial Reportg Standards, Accountg Standards ( HKASs ) and Interpretations issued by the Institute of Certified Public Accountants ( HKICPA ), accountg prciples generally accepted and the requirements of the Company Ordance. These fancial statements also comply with the applicable disclosure provisions of the Rules Governg the Listg of Securities on The Stock Exchange of Limited. A summary of the significant accountg policies adopted by the Group is set out below. The HKICPA has issued certa new and revised HKFRSs that are first effective or available for early adoption for the current accountg period of the Group. Note 3 provides formation on any changes accountg policies resultg from itial application of these developments to the extent that they are relevant to the Group for the current and prior accountg periods reflected these fancial statements. (b) Basis of preparation of the fancial statements The consolidated fancial statements for the year ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as the Group ) and the Group s terests jot ventures and associates. The measurement basis used the preparation of the fancial statements is the historical cost basis except as explaed the accountg policies set out below. The preparation of fancial statements conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, come and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of makg the judgements about carryg values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlyg assumptions are reviewed on an ongog basis. Revisions to accountg estimates are recognised the period which the estimate is revised if the revision affects only that period, or the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management the application of HKFRSs that have significant effect on the fancial statements and major sources of estimation uncertaty are discussed note 29. (c) Basis of consolidation The consolidated fancial statements corporate the fancial statements of the Company and all its subsidiaries made up to 31 December each year, together with the Group s share of the results for the year and the net assets at the end of the reportg period of its jot ventures and associates. 70 POWER ASSETS HOLDINGS LIMITED

2 (d) Subsidiaries Subsidiaries are entities (cludg structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has the rights to, variable returns from its volvement with the entity and has the ability to affect those returns through its power over the entity. Investments subsidiaries are consolidated to the consolidated fancial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealised profits arisg from tra-group transactions are elimated full preparg the consolidated fancial statements. Unrealised losses resultg from tra-group transactions are elimated the same way as unrealised gas but only to the extent that there is no evidence of impairment. Changes the Group s terests a subsidiary that do not result a loss of control are accounted for as equity transactions, whereby adjustments are made to the amounts of controllg and non-controllg terests with consolidated equity to reflect the change relative terests, but no adjustments are made to goodwill and no ga or loss is recognised. When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire terest that subsidiary, with a resultg ga or loss beg recognised profit or loss. Any terest retaed that former subsidiary at the date when control is lost is recognised at fair value and this amount is regarded as the fair value on itial recognition of a fancial asset (see note 2(g)) or, when appropriate, the cost on itial recognition of an vestment a jot venture or an associate (see note 2(e)). In the Company s statement of fancial position, an vestment a subsidiary is stated at cost less impairment losses (see note 2(l)). (e) Jot ventures and associates A jot venture is an arrangement whereby the Group or the Company and other parties contractually agree to share control of the arrangement and have rights to the net assets of the arrangement. An associate is an entity which the Group or the Company has significant fluence, but not control or jot control, over its management, cludg participation the fancial and operatg policy decisions. An vestment a jot venture or an associate is accounted for the consolidated fancial statements under the equity method, it is classified as held for sale (or cluded a disposal group that is classified as held for sale). Under the equity method, the vestment is itially recorded at cost, adjusted for any excess of the Group s share of the acquisition-date fair values of the vestee s identifiable net assets over the cost of the vestment (if any). Thereafter, the vestment is adjusted for the post acquisition change the Group s share of the vestee s net assets and any impairment loss relatg to the vestment (see notes 2(f) and 2(l)). Any excess of the Group s share of the acquisition-date fair values of the vestee s identifiable net assets over the cost of the vestment, the Group s share of the post-acquisition, posttax results of the vestees and impairment losses for the year, if any, are recognised the consolidated statement of profit or loss, whereas the Group s share of the post-acquisition, post-tax items of the vestees other comprehensive come is recognised the consolidated statement of comprehensive come. When the Group s share of losses exceeds its terest a jot venture or an associate, the Group s terest is reduced to nil and recognition of further losses is discontued except to the extent that the Group has curred legal or constructive obligations or made payments on behalf of the vestee. For this purpose, the Group s terest is the carryg amount of the vestment under the equity method together with the Group s long-term terests that substance form part of the Group s net vestment the jot venture or the associate. ANNUAL REPORT

3 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 2. Significant accountg policies (Contued) (e) Jot ventures and associates (Contued) Unrealised profits and losses resultg from transactions between the Group and its jot ventures and associates are elimated to the extent of the Group s terest the vestee, except where unrealised losses provide evidence of an impairment of the asset transferred, which case they are recognised immediately profit or loss. When the Group ceases to have jot control over a jot venture or significant fluence over an associate, it is accounted for as a disposal of the entire terest that vestee, with a resultg ga or loss beg recognised profit or loss. Any terest retaed a former jot venture at the date when jot control is lost is recognised at fair value and this amount is regarded as the fair value on itial recognition of a fancial asset (see note 2(g)) or, when appropriate, the cost on itial recognition of an vestment an associate. Any terest retaed a former associate at the date when significant fluence is lost is recognised at fair value and this amount is regarded as the fair value on itial recognition of a fancial asset. (f) Goodwill Goodwill represents the excess of the cost of a busess combation or an vestment a jot venture or an associate over the Group s terest the net fair value of the acquiree s identifiable assets, liabilities and contgent liabilities. Any excess of the Group s terest the net fair value of the acquiree s identifiable assets, liabilities and contgent liabilities over the cost of a busess combation or an vestment a jot venture or an associate is recognised immediately profit or loss. Goodwill is stated at cost less accumulated impairment losses. Goodwill arisg on a busess combation is allocated to each cash-generatg unit, or groups of cash-generatg units, that is expected to benefit from the synergies of the combation and is tested annually for impairment (see note 2(l)). In respect of jot ventures or associates, the carryg amount of goodwill is cluded the carryg amount of the terest the jot venture or associate and the vestment as a whole is tested for impairment whenever there is objective evidence of impairment (see note 2(l)). (g) Other vestments equity securities The Group s and the Company s policies for vestments equity securities, other than vestments subsidiaries, jot ventures and associates, are as follows: Investments equity securities are itially stated at fair value, which is their transaction price fair value can be more reliably estimated usg valuation techniques whose variables clude only data from observable markets. Cost cludes attributable transaction costs. Investments equity securities that do not have a quoted market price an active market and whose fair value cannot be reliably measured are subsequently recognised the statement of fancial position at cost less impairment losses (see note 2(l)). Investments are recognised/derecognised on the date the Group commits to purchase/sell the vestments or they expire. 72 POWER ASSETS HOLDINGS LIMITED

4 (h) Derivative fancial struments Derivative fancial struments are recognised itially at fair value. At the end of each reportg period, the fair value is remeasured. The ga or loss on remeasurement to fair value is recognised immediately profit or loss, except where the derivatives qualify for cash flow hedge accountg or hedge the net vestment a foreign operation, which case recognition of any resultant ga or loss depends on the nature of the item beg hedged (see note 2(i)). (i) Hedgg (i) Fair value hedges Changes the fair value of derivatives that are designated and qualify as fair value hedges are recognised profit or loss, along with any changes the fair value of the hedged assets or liabilities that are attributable to the hedged risk. (ii) Cash flow hedges Where a derivative fancial strument is designated as a hedge of the variability cash flows of a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk of a committed future transaction, the effective portion of any ga or loss on remeasurement of the derivative fancial strument to fair value is recognised other comprehensive come and accumulated separately equity the hedgg reserve. The effective portion of any ga or loss is recognised immediately profit or loss. If a hedge of a forecast transaction subsequently results the recognition of a non-fancial asset or non-fancial liability, the associated ga or loss is reclassified from equity and cluded the itial cost or other carryg amount of the non-fancial asset or liability. If a hedge of a forecast transaction subsequently results the recognition of a fancial asset or a fancial liability, the associated ga or loss is reclassified from equity to profit or loss the same period or periods durg which the asset acquired or liability assumed affects profit or loss (such as when terest come or expense is recognised). For cash flow hedges, other than those covered by the precedg two policy statements, the associated ga or loss is reclassified from equity to profit or loss the same period or periods durg which the hedged forecast transaction affects profit or loss. When a hedgg strument expires or is sold, termated or exercised, or the Group revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative ga or loss at that pot remas equity until the transaction occurs and it is recognised accordance with the above policy. If the hedged transaction is no longer expected to take place, the cumulative unrealised ga or loss is reclassified from equity to profit or loss immediately. (iii) Hedge of net vestments foreign operations The portion of the ga or loss on remeasurement to fair value of an strument used to hedge a net vestment a foreign operation that is determed to be an effective hedge is recognised other comprehensive come and accumulated separately equity the exchange reserve until the disposal of the foreign operation, at which time the cumulative ga or loss is reclassified from equity to profit or loss. The effective portion is recognised immediately profit or loss. ANNUAL REPORT

5 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 2. Significant accountg policies (Contued) (j) Property, plant and equipment and leasehold land, depreciation and amortisation (i) Property, plant and equipment are stated the consolidated statement of fancial position at cost less accumulated depreciation (see note 2(j)(vi)), amortisation (see note 2(j)(v)) and impairment losses (see note 2(l)). (ii) (iii) (iv) (v) (vi) Where parts of a property, plant and equipment have different useful lives, the cost of the property, plant and equipment is allocated on a reasonable basis between the parts and each part is depreciated separately. Subsequent expenditure to replace a component of a property, plant and equipment that is accounted for separately, or to improve its operational performance is cluded the asset s carryg amount or recognised as a separate asset as appropriate when it is probable that future economic benefits excess of the origally assessed standard of performance of the existg asset will flow to the Group and the cost of the item can be measured reliably. All other subsequent expenditure is recognised as an expense the period which it is curred. Gas or losses arisg from the retirement or disposal of an item of property, plant and equipment are determed as the difference between the net disposal proceeds and the carryg amount of the item and are recognised profit or loss on the date of retirement or disposal. Leasehold land held for own use under fance leases is stated the consolidated statement of fancial position at cost less accumulated amortisation (see note 2(j)(v)) and impairment losses (see note 2(l)). The cost of acquirg land held under a fance lease is amortised on a straight-le basis over the period of the unexpired lease term. Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual value, if any, usg the straight-le method over their estimated useful lives as follows: Years Buildgs 60 Furniture and fixtures, sundry plant and equipment 10 Computers 5 to 10 Motor vehicles 5 to 6 Workshop tools and office equipment 5 Immovable assets are amortised on a straight-le basis over the unexpired lease terms of the land on which the immovable assets are situated if the unexpired lease terms of the land are shorter than the estimated useful lives of the immovable assets. Both the useful life of an asset and its residual value, if any, are reviewed annually. 74 POWER ASSETS HOLDINGS LIMITED

6 (k) Leased assets and operatg lease charges An arrangement, comprisg a transaction or a series of transactions, is or contas a lease if the Group determes that the arrangement conveys a right to use a specific asset or assets for an agreed period of time return for a payment or a series of payments. Such a determation is made based on an evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease. Where the Group has the use of assets held under operatg leases, payments made under the leases are charged to profit or loss equal stalments over the accountg periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. (l) Impairment of assets (i) Impairment of vestments equity securities and other receivables Investments equity securities and other current and non-current receivables that are stated at cost or amortised cost are reviewed at the end of each reportg period to determe whether there is objective evidence of impairment. Objective evidence of impairment cludes observable data that comes to the attention of the Group about one or more of the followg loss events: significant fancial difficulty of the debtor; a breach of contract, such as a default or delquency terest or prcipal payments; it becomg probable that the debtor will enter bankruptcy or other fancial reorganisation; significant changes the technological, market, economic or legal environment that have an adverse effect on the debtor; and a significant or prolonged decle the fair value of an vestment an equity strument below its cost. If any such evidence exists, any impairment loss is determed and recognised as follows: For vestments subsidiaries recognised at cost and jot ventures and associates recognised usg the equity method (see note 2(e)), the impairment loss is measured by comparg the recoverable amount of the vestment with its carryg amount accordance with note 2(l)(ii). The impairment loss is reversed if there has been a favourable change the estimates used to determe the recoverable amount accordance with note 2(l)(ii). For unquoted equity securities and other fancial assets carried at cost, the impairment loss is measured as the difference between the carryg amount of the fancial asset and the estimated future cash flows, discounted at the current market rate of return for a similar fancial asset where the effect of discountg is material. Impairment losses for equity securities carried at cost are not reversed. For trade and other current receivables and other fancial assets carried at amortised cost, the impairment loss is measured as the difference between the asset s carryg amount and the present value of estimated future cash flows, discounted at the fancial asset s origal effective terest rate (i.e. the effective terest rate computed at itial recognition of these assets), where the effect of discountg is material. This assessment is made collectively where these fancial assets carried at amortised cost share similar risk characteristics, such as similar past due status and have not been dividually assessed as impaired. Future cash flows for fancial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. ANNUAL REPORT

7 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 2. Significant accountg policies (Contued) (l) Impairment of assets (Contued) (i) Impairment of vestments equity securities and other receivables (Contued) Except for equity securities carried at cost, if a subsequent period the amount of an impairment loss decreases and the decrease can be lked objectively to an event occurrg after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result the asset s carryg amount exceedg that which would have been determed had no impairment loss been recognised prior years. Impairment losses are written off agast the correspondg assets directly. (ii) Impairment of other assets Internal and external sources of formation are reviewed at each end of the reportg period to identify dications that the followg assets may be impaired or, except the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased: property, plant and equipment; and goodwill. If any such dication exists, the asset s recoverable amount is estimated. In addition, for goodwill, the recoverable amount is estimated annually whether or not there is any dication of impairment. Calculation of recoverable amount The recoverable amount of an asset is the greater of its fair value less costs of disposal and value use. In assessg value use, the estimated future cash flows are discounted to their present value usg a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash flows largely dependent of those from other assets, the recoverable amount is determed for the smallest group of assets that generates cash flows dependently (i.e. a cash-generatg unit). Recognition of impairment losses An impairment loss is recognised profit or loss if the carryg amount of an asset, or the cash-generatg unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised respect of cash-generatg units are allocated first to reduce the carryg amount of any goodwill allocated to the cash-generatg unit (or group of units) and then, to reduce the carryg amount of the other assets the unit (or group of units) on a pro rata basis, except that the carryg value of an asset will not be reduced below its dividual fair value less costs of disposal (if measurable) or value use (if determable). 76 POWER ASSETS HOLDINGS LIMITED

8 Reversals of impairment losses In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change the estimates used to determe the recoverable amount. An impairment loss respect of goodwill is not reversed. A reversal of an impairment loss is limited to the asset s carryg amount that would have been determed had no impairment loss been recognised prior years. Reversals of impairment losses are credited to profit or loss the year which the reversals are recognised. (iii) Interim fancial reportg and impairment Under the Rules Governg the Listg of Securities on The Stock Exchange of Limited, the Group is required to prepare an terim fancial report compliance with HKAS 34, Interim fancial reportg, respect of the first six months of the fancial year. At the end of the terim period, the Group applies the same impairment testg, recognition and reversal criteria as it would at the end of the fancial year (see notes 2(l)(i) and 2(l)(ii)). Impairment losses recognised an terim period respect of goodwill and available-for-sale equity securities carried at cost are not reversed a subsequent period. This is the case even if no loss, or a smaller loss, would have been recognised had the impairment been assessed only at the end of the fancial year to which the terim period relates. Consequently, if the fair value of an availablefor-sale equity security creases the remader of the annual period, or any other period subsequently, the crease is recognised other comprehensive come and not profit or loss. (m) Trade and other receivables Trade and other receivables are itially recognised at fair value and thereafter stated at amortised cost less allowance for impairment of doubtful debts (see note 2(l)(i)), except where the receivables are terest-free loans made to related parties without any fixed repayment terms or the effect of discountg would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts. (n) Interest-bearg borrowgs Interest-bearg borrowgs are recognised itially at fair value less attributable transaction costs. Subsequent to itial recognition, with the exception of fixed terest borrowgs that are designated as hedged items fair value hedges (see note 2(i)(i)), terest-bearg borrowgs are stated at amortised cost with any difference between the amount itially recognised and redemption value beg recognised profit or loss over the period of the borrowgs, together with any terest and fees payable, usg the effective terest method. For terest-bearg borrowgs that are designated as hedged items fair value hedges, subsequent to itial recognition, the terest-bearg borrowgs are stated at fair value with the fair value changes that are attributable to the hedged risk recognised profit or loss (see note 2(i)(i)). ANNUAL REPORT

9 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 2. Significant accountg policies (Contued) (o) Trade and other payables Trade and other payables are itially recognised at fair value. Except for fancial guarantee liabilities measured accordance with note 2(s)(i), trade and other payables are subsequently stated at amortised cost the effect of discountg would be immaterial, which case they are stated at cost. (p) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other fancial stitutions, and short-term, highly liquid vestments that are readily convertible to known amounts of cash and which are subject to an significant risk of changes value, havg been with three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an tegral part of the Group s cash management are also cluded as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. (q) Employee benefits (i) Short term employee benefits Salaries, annual bonuses, paid annual leave and the cost of non-monetary benefits are accrued the year which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. (ii) Defed benefit retirement scheme obligations The Group s net obligation respect of defed benefit retirement schemes is calculated separately for each scheme by estimatg the amount of future benefit that employees have earned return for their service the current and prior periods; that benefit is discounted to determe the present value and the fair value of any scheme assets is deducted. The discount rate is the yield at the end of the reportg period on Special Admistrative Region Government Exchange Fund Notes that have maturity dates approximatg the terms of the Group s obligations. The calculation is performed by a qualified actuary usg the Projected Unit Credit Method. Where the calculation of the Group s net obligation results a negative amount, the asset recognised is limited to the present value of any future refunds from or reductions future contributions to the defed benefit retirement scheme. Remeasurement, comprisg actuarial gas and losses, the effect of the changes to the asset ceilg (if applicable) and the return on plan assets (excludg terest), is reflected immediately the statement of fancial position with a charge or credit recognised other comprehensive come the period which they occur. Remeasurement recognised other comprehensive come is reflected immediately the revenue reserve and will not be reclassified to profit or loss. The Group determes the net terest expense or come for the period on the net defed benefit liability or asset by applyg the discount rate used to measure the defed benefit obligation at the begng of the annual period to the net defed benefit liability or asset, takg to account any changes the net defed liabilities or assets durg the year as a result of contributions and benefit payments. (iii) Contributions to defed contribution retirement schemes Obligations for contributions to defed contribution retirement schemes, cludg contributions payable under the Mandatory Provident Fund Schemes Ordance, are recognised as an expense profit or loss as curred. 78 POWER ASSETS HOLDINGS LIMITED

10 (r) Income tax Income tax for the year comprises current tax and movements deferred tax assets and liabilities. Current tax and movements deferred tax assets and liabilities are recognised profit or loss except to the extent that they relate to items recognised other comprehensive come, which case the relevant amounts of tax are recognised other comprehensive come. Current tax is the expected tax payable on the taxable come for the year, usg tax rates enacted or substantively enacted at the end of the reportg period, and any adjustment to tax payable respect of previous years. Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, beg the differences between the carryg amounts of assets and liabilities for fancial reportg purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. All deferred tax liabilities and all deferred tax assets, to the extent that it is probable that future taxable profits will be available agast which the asset can be utilised, are recognised. The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the carryg amount of the assets and liabilities, usg tax rates enacted or substantively enacted at the end of the reportg period. Deferred tax assets and liabilities are not discounted. The carryg amount of a deferred tax asset is reviewed at the end of each reportg period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available. Current tax balances and deferred tax balances, and movements there, are presented separately from each other and are not offset. (s) Fancial guarantees issued, provisions and contgent liabilities (i) Fancial guarantees issued Fancial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the holder ) for a loss the holder curs because a specified debtor fails to make payment when due accordance with the terms of a debt strument. When consideration is received or receivable for the issuance of the guarantee, the consideration is recognised profit or loss. (ii) Other provisions and contgent liabilities Provisions are recognised for other liabilities of uncerta timg or amount when the Group or the Company has a legal or constructive obligation arisg as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contgent liability, the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contgent liabilities the probability of outflow of economic benefits is remote. ANNUAL REPORT

11 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 2. Significant accountg policies (Contued) (t) Revenue recognition Dividend come from unlisted vestments is recognised when the shareholders right to receive payment is established. Interest come is recognised on a time apportioned basis usg the effective terest method. (u) Translation of foreign currencies Foreign currency transactions durg the year are translated to at the foreign exchange rates rulg at the transaction dates, or at contract rates if foreign currencies are hedged by forward foreign exchange contracts. Monetary assets and liabilities denomated foreign currencies are translated to at the foreign exchange rates rulg at the end of the reportg period. Exchange gas and losses are recognised profit or loss. Non-monetary assets and liabilities that are measured terms of historical cost a foreign currency are translated usg the foreign exchange rates rulg at the transaction dates. Non-monetary assets and liabilities denomated foreign currencies that are stated at fair value are translated usg the foreign exchange rates rulg at the dates the fair value was determed. The results of operations outside are translated to at the average exchange rates approximatg the foreign exchange rates rulg at the dates of the transactions. Statement of fancial position items are translated to at the closg foreign exchange rates at the end of the reportg period. The resultg exchange differences are recognised other comprehensive come and accumulated separately equity the exchange reserve. On disposal of an operation outside, the cumulative amount of the exchange differences relatg to that operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognised. (v) Borrowg costs Borrowg costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its tended use or sale are capitalised as part of the cost of that asset. Other borrowg costs are expensed the period which they are curred. The capitalisation of borrowg costs as part of the cost of a qualifyg asset commences when expenditure for the asset is beg curred, borrowg costs are beg curred and activities that are necessary to prepare the asset for its tended use or sale are progress. Capitalisation of borrowg costs is suspended or ceases when substantially all the activities necessary to prepare the qualifyg asset for its tended use or sale are terrupted or complete. 80 POWER ASSETS HOLDINGS LIMITED

12 (w) Related parties (i) A person or a close member of that person s family is related to the Group if that person: (a) (b) (c) has control or jot control over the Group; has significant fluence over the Group; or is a member of the key management personnel of the Group. (ii) An entity is related to the Group if any of the followg conditions apply: (a) (b) (c) (d) (e) (f) (g) (h) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is a jot venture or an associate of the other entity (or a jot venture or an associate of a member of a group of which the other entity is a member). Both entities are jot ventures of the same third party. One entity is a jot venture of a third entity and the other entity is an associate of the third entity. The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. The entity is controlled or jotly controlled by a person identified note 2(w)(i). A person identified note 2(w)(i)(a) has significant fluence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). The entity, or any member of a Group of which it is a part, provides key management personnel services to the Group. Close members of the family of a person are those family members who may be expected to fluence, or be fluenced by, that person their dealgs with the entity. (x) Segment reportg Operatg segments are reported a manner consistent with the ternal reportg provided to the chief operatg decision-maker of the Group for the purposes of resource allocation and performance assessment. Accordgly, the Group s aggregated operatg segments are based on their prcipal activities and geographical regions to present the reportable segments. ANNUAL REPORT

13 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 3. Changes accountg policies The HKICPA has issued a few amendments to HKFRSs that are first effective for the current accountg period of the Group. Of these, the followg developments are relevant to the Group s fancial statements: Annual improvements to HKFRSs cycle Amendments to HKFRS 11, Accountg for acquisition of terests jot operations Amendments to HKAS 16 and HKAS 38, Clarification of acceptable methods of depreciation and amortisation Amendments to HKAS 27, Equity method separate fancial statements Amendments to HKFRS 10, HKFRS 12 and HKAS 28, Investments entities: Applyg the consolidation exception Amendments to HKAS 1, Disclosure itiative The adoption of these amendments to HKFRSs has no material impact on the Group s results and fancial position for the current or prior periods. The Group has not applied any new standard or amendment that is not effective for the current accountg period. 4. Revenue The prcipal activity of the Group is vestment power and utility-related busesses. Group revenue represents terest come from loans granted to jot ventures and associates, dividends from other fancial assets and engeerg and consultg services fees. Interest come 1,236 1,239 Dividends Others ,288 1,308 Share of revenue of jot ventures 16,359 17, POWER ASSETS HOLDINGS LIMITED

14 5. Other net loss Interest come from fancial assets not at fair value through profit or loss Loss on partial disposal of an associate (532) Foreign exchange loss on loans and receivables (787) (303) Sundry come Segment formation (221) (207) The Group has aggregated operatg segments with similar characteristics to present the followg reportable segments. Investment HKEI: this segment vests generation and supply of electricity busess. Investments: this segment vests power and utility-related busesses and is segregated further to four reportable segments (United Kgdom, Australia, Maland Cha and Others) on a geographical basis. All other activities: this segment represents other activities carried out by the Group. The basis of accountg for the Group s segment formation is the same as that for the Group s fancial statements. The fancial formation about the Group s segments is set out Appendix 1 on pages 116 to Fance costs Interest on bank loans and other borrowgs ANNUAL REPORT

15 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 8. Profit before taxation Profit before taxation is arrived at after chargg: Amortisation of leasehold land 1 Depreciation 2 Staff costs Property, plant and equipment written off 1 Auditors remuneration audit and audit related work KPMG 3 3 other auditors 1 1 non-audit work KPMG 1 4 other auditors Income tax the consolidated statement of profit or loss (a) Taxation the consolidated statement of profit or loss represents: Current tax operations outside Provision for the year Tax credit for the year (50) (57) 7 (11) Deferred tax (see note 22(b)(i)) Origation and reversal of temporary differences (19) (12) (11) No provision for Profits Tax has been made the fancial statements as the Group did not have any assessable profits durg the current and precedg years. Taxation for operations outside is charged at the appropriate current rates of taxation rulg the relevant countries. 84 POWER ASSETS HOLDINGS LIMITED

16 (b) Reconciliation between tax credit and accountg profit at applicable tax rates: Profit before taxation 6,405 7,721 Less: Share of profits less losses of jot ventures (4,705) (4,958) Share of profits less losses of associates (1,696) (1,789) Notional tax on profit before taxation, calculated at the rates applicable to profits the tax jurisdictions concerned Tax effect of non-deductible expenses Tax effect of non-taxable come (329) (427) Tax effect of temporary difference not recognised (1) (2) Tax effect of unused tax losses not recognised 8 10 Actual tax credit (12) (11) 10. Directors emoluments and senior management remuneration Directors emoluments comprise payments to Directors by the Company and its subsidiaries connection with the management of the affairs of the Company and its subsidiaries. The emoluments of each of the Directors of the Company are as follows: Fees Salaries, allowances and other benefits Retirement scheme contributions Bonuses 2016 Total emoluments 2015 Total emoluments Name of Directors Executive Directors (3) (4) Fok K Ng, Canng Chairman Tsai Chao Chung, Charles (5) Chief Executive Officer Chan Loi Shun (6) (10) Andrew John Hunter Neil Douglas McGee Wan Chi T (7) Non-executive Directors Li Tzar Kuoi, Victor (8) Frank John Sixt (9) Ip Yuk-keung, Albert (1) (2) Ralph Raymond Shea (1) (2) (3) Wong Chung H (1) (2) (3) Wu Tg Yuk, Anthony (1) Total for the year Total for the year ANNUAL REPORT

17 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 10. Directors emoluments and senior management remuneration (Contued) Notes: (1) Independent Non-executive Director (2) Member of the Audit Committee (3) Member of the Remuneration Committee (4) Durg the year, Mr. Fok K Ng, Canng received director s emoluments of $120,000 from HK Electric Investments Limited, which is an associate of the Group. The director s emoluments received were paid back to the Company. (5) Durg the year, Mr. Tsai Chao Chung, Charles received director s emoluments of THB484,500 from Ratchaburi Power Company Limited, which is an associate of the Group. The director s emoluments received were paid back to the Company. (6) Durg the year, Mr. Chan Loi Shun received director s emoluments of THB484,500 from Ratchaburi Power Company Limited and $2,710,000 from HK Electric Investments Limited, which are associates of the Group. The director s emoluments received were paid back to the Company. (7) Durg the year, Mr. Wan Chi T received director s emoluments of $70,000 from HK Electric Investments Limited, which is an associate of the Group. The director s emoluments received were paid back to the Company. (8) Durg the year, Mr. Li Tzar Kuoi, Victor received director s emoluments of $70,000 from HK Electric Investments Limited, which is an associate of the Group. The director s emoluments received were paid back to the Company. (9) Mr. Frank John Sixt resigned as a Non-executive Director of the Company with effect from 1 January (10) Durg the year, Mr. Chan Loi Shun received director s emoluments of $4,630,000 from the Company. The director s emoluments received were paid back to Cheung Infrastructure Holdgs Limited, a substantial shareholder of the Company. The five highest paid dividuals of the Group cluded two directors (2015: two) whose total emoluments are shown above. The remuneration of the other three dividuals (2015: three) who comprises the five highest paid dividuals of the Group is set out below: Salary and other benefits Retirement scheme contributions The total remuneration of senior management, excludg directors, is with the followg bands: Number Number $1,000,001 $1,500, $1,500,001 $2,000, $2,500,001 $3,000, $3,000,001 $3,500, $4,000,001 $4,500,000 1 The remuneration of directors and senior management is as follows: Short-term employee benefits Post-employment benefits At 31 December 2016 and 2015, there was no amount due from directors and senior management. 86 POWER ASSETS HOLDINGS LIMITED

18 11. Earngs per share The calculation of earngs per share is based on the profit attributable to ordary equity shareholders of the Company of $6,417 million (2015: $7,732 million) and 2,134,261,654 ordary shares (2015: 2,134,261,654 ordary shares) issue throughout the year. There were no dilutive potential ordary shares existence durg the years ended 31 December 2016 and Property, plant and equipment and leasehold land $ million Buildgs Plant, machery and equipment Sub-total Interests leasehold land held for own use under fance leases Cost: At 1 January Additions Disposals (2) (2) (2) At 31 December 2015, 1 January 2016 and 31 December Accumulated amortisation and depreciation: At 1 January Written back on disposals (1) (1) (1) Charge for the year At 31 December At 1 January Charge for the year 1 1 At 31 December Net book value: At 31 December At 31 December Total ANNUAL REPORT

19 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 13. Interest jot ventures Share of net assets of unlisted jot ventures 34,532 33,281 Loans to unlisted jot ventures (see note below) 8,084 9,175 Amounts due from unlisted jot ventures (see note below) ,739 42,629 Share of total assets of unlisted jot ventures 101, ,655 The loans to unlisted jot ventures are unsecured, terest bearg at rates rangg from 6.6% per annum to 11.0% per annum (2015: 6.7% per annum to 11.0% per annum) and are not due with one year. Included the loans to unlisted jot ventures are subordated loans totallg $4,390 million (2015: $4,744 million). The rights respect of these loans are subordated to the rights of any other lenders to the jot ventures and they are treated as part of the vestment the jot ventures. The amounts due from unlisted jot ventures are unsecured, terest free and have no fixed repayment terms. They are neither past due nor impaired. All the Group s jot ventures are unlisted corporate entities for which a quoted market price is not available. Details of the Group s material jot ventures at the end of the reportg period are set out Appendix 3 on page 120 to page 121. (a) Summarised fancial formation of material jot ventures Summarised fancial formation respect of the Group s material jot ventures is set out below. The summarised fancial formation below represents amounts shown the jot ventures fancial statements prepared accordance with HKFRSs adjusted by the Group for equity accountg purposes and before adjustments for the Group s effective share. UK Power Networks Northern Gas Networks Wales & West Gas Networks Australian Gas Networks Husky Midstream L.P. Zhuhai Power Current assets 3,150 4,416 3,808 1, , ,873 4,970 Non-current assets 108, ,512 25,926 30,493 34,936 41,054 29,789 28,543 13,912 Current liabilities (7,510) (11,239) (5,117) (3,037) (1,104) (2,276) (701) (966) (252) (1,642) (995) Non-current liabilities (63,837) (70,365) (17,254) (20,459) (30,898) (36,251) (16,069) (14,635) (3,415) 88 POWER ASSETS HOLDINGS LIMITED

20 The above amounts of assets and liabilities clude the followg: UK Power Networks Northern Gas Networks Wales & West Gas Networks Australian Gas Networks Husky Midstream L.P. Zhuhai Power Cash and cash equivalents 776 1, , ,497 4,690 Current fancial liabilities (excludg trade and other payables and provisions) (835) (3,882) (144) (556) (93) (543) Non-current fancial liabilities (excludg trade and other payables and provisions) (50,336) (56,218) (14,193) (16,744) (26,148) (30,151) (15,551) (14,564) (3,353) UK Power Networks Northern Gas Networks Wales & West Gas Networks Australian Gas Networks Husky Midstream L.P. Zhuhai Power Revenue 18,136 20,125 4,443 4,969 4,417 4,880 3,256 3, ,905 4,694 Profit from contug operations 7,321 7,749 1,460 1,675 1,356 1, Other comprehensive come for the year (3,029) 471 (705) 27 (1,832) Total comprehensive come for the year 4,292 8, ,702 (476) 1, Dividends received from the jot ventures durg the year The above profit or loss for the year cludes the followg: UK Power Networks Northern Gas Networks Wales & West Gas Networks Australian Gas Networks Husky Midstream L.P. Zhuhai Power Depreciation and amortisation (2,225) (2,481) (459) (814) (727) (991) (492) (474) (184) (120) (574) Interest come Interest expense (2,649) (2,953) (757) (786) (812) (889) (671) (715) (85) Income tax (expense)/credit (1,205) (773) (245) (440) (497) (1) (402) (71) ANNUAL REPORT

21 NOTES TO TO THE THE FINANCIAL FINANCIAL STATEMENTS STATEMENTS 13. Interest jot ventures (Contued) (a) Summarised fancial formation of material jot ventures (Contued) Reconciliation of the above summarised fancial formation to the carryg amount of the terest the jot ventures recognised the consolidated fancial statements: UK Power Networks Northern Gas Networks Wales & West Gas Networks Australian Gas Networks Husky Midstream L.P. Zhuhai Power Net assets of the jot ventures 39,828 46,324 7,363 8,993 3,630 5,640 13,315 13,292 10,561 4,231 3,975 Group s effective terest 40.0% 40.0% 41.29% 41.29% 30.0% 30.0% 27.51% 27.51% 48.75% 45.0% 45.0% Group s share of net assets of the jot ventures 15,931 18,530 3,040 3,712 1,089 1,692 3,663 3,657 5,148 1,905 1,789 Consolidation adjustments (8) Carryg amount of the Group s terest jot ventures 15,991 18,604 3,040 3,712 1,089 1,692 3,663 3,657 5,140 1,905 1,789 (b) Aggregate formation of jot ventures that are not dividually material Restated The Group s share of net assets 3,704 3,827 The Group s share of profit from contug operations The Group s share of other comprehensive come The Group s share of total comprehensive come Interest associates Share of net assets Listed associate 16,881 16,583 Unlisted associates 3,358 3,395 20,239 19,978 Loans to unlisted associates (see note below) 3,889 3,868 Amounts due from associates (see note below) ,202 23,919 The market value (level 1 fair value measurement (see note 24(f))) of above listed associate, HKEI, at 31 December 2016 is $18,873 million (2015: $19,168 million). All the Group s other associates are unlisted corporate entities for which a quoted market price is not available. The loans to unlisted associates are unsecured, terest bearg at rates rangg from 10.9% per annum to 13.8% per annum (2015: 10.9% per annum to 13.8% per annum) and are not due with one year. 90 POWER ASSETS HOLDINGS LIMITED