Asian Growth Properties Limited (Incorporated in the British Virgin Islands with limited liability)

Transcription

1 Asian Growth Properties Limited (Incorporated in the British Virgin Islands with limited liability) Annual Report 2014

2 Directory Registered Office Website Portcullis TrustNet Chambers P.O. Box 3444 Road Town, Tortola British Virgin Islands Principal Place of Business 25/F., Dah Sing Financial Centre 108 Gloucester Road Wanchai, Hong Kong Telephone: Facsimile: Directors Richard Öther Prickett * + Lu Wing Chi # Lambert Lu # David Andrew Runciman # Lincoln Lu # Lam Sing Tai Δ John David Orchard Fulton + * Non-executive Chairman # Executive Director Δ Non-executive Director + Independent Non-executive Director Company Secretary SHL Services Limited 18/F., United Centre 95 Queensway Hong Kong Principal Bankers The Hongkong and Shanghai Banking Corporation Limited Bank of China (Hong Kong) Limited Standard Chartered Bank (Hong Kong) Limited Hang Seng Bank Limited Nominated Advisor and Broker Panmure Gordon (UK) Limited One New Change London EC4M 9AF United Kingdom Legal Advisor Stephenson Harwood LLP 1 Finsbury Circus London EC2M 7SH United Kingdom Independent Auditor Deloitte Touche Tohmatsu 35/F., One Pacific Place 88 Queensway Hong Kong Share Registrar Computershare Investor Services (Jersey) Limited Queensway House Hilgrove Street, St. Helier Jersey JE1 1ES Channel Islands Telephone: Facsimile: Depositary Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZY United Kingdom Telephone: Facsimile: Listing The shares of the Company are admitted for trading on the AIM Market of London Stock Exchange plc (Stock Code: AGP) The Company is a subsidiary of S E A Holdings Limited whose shares are listed and traded on The Stock Exchange of Hong Kong Limited (Stock Code: 251) Asian Growth Properties Limited Annual Report 2014

3 Contents Financial Highlights Property Portfolio Location of the Group s Properties/Projects Chairman s Review Executive Directors Review Board of Directors Corporate Governance Report Directors Report Independent Auditor s Report Consolidated Statement of Profit or Loss Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Glossary Asian Growth Properties Limited Annual Report 2014

4 Financial Highlights Results For the year ended 31 December HK$ m HK$ m HK$ m HK$ m HK$ m (restated) Revenue Profit for the year before non-controlling interests , , Non-controlling interests 0.8 (0.7) Profit for the year attributable to the Company s shareholders , , Assets And Liabilities As at 31 December HK$ m HK$ m HK$ m HK$ m HK$ m (restated) Total assets 18, , , , ,002.6 Total liabilities (4,906.6) (3,858.8) (3,511.7) (4,064.4) (3,682.4) Non-controlling interests (55.5) (57.7) (58.0) (89.1) (94.7) Equity attributable to the Company s shareholders 13, , , , ,225.5 Net asset value per share attributable to the Company s shareholders (in HK$) Performance Data HK$ HK$ HK$ HK$ HK$ (restated) Earnings per share for profit attributable to the Company s shareholders Earnings per share excluding fair value changes on properties net of deferred tax Net cash (used in)/from operating activities (in HK$ m) (127.1) Asian Growth Properties Limited Annual Report 2014

5 Financial Highlights Segment Revenue for External Sales 40.6% 29.3% % 59.3% 0.1% 26.8% Property Investment Property Development Hotel Operation Revenue from External Customers by Geographical Location of Properties 21.8% 16.0% % % Hong Kong Mainland China Property Assets by Geographical Segment 31.3% 31.1% % % Hong Kong Mainland China 3 Asian Growth Properties Limited Annual Report 2014

6 Property Portfolio At 31 December 2014 Particulars of Investment Properties Name Location Lease Expiry Usage Approximate Group s Gross Floor Area Interest (square metres) (%) HONG KONG Dah Sing Financial 108 Gloucester Road, 30 June 2047 Commercial/ 37,214 and Centre Wanchai Office car parking spaces MAINLAND CHINA Plaza Central 8 Shunchengda Street, 6 October 2063 Commercial/ 91,455 (including 100 Yanshikou, Chengdu, Office car parking floors) Sichuan Province Commercial podium No. 6 Xi Yu Long Street, 18 May 2063 Commercial 19,261 (including 100 in Zone B and Qingyang District, car parking spaces) car parking spaces Chengdu, on Basements 2 and 3, Sichuan Province New Century Plaza Office Tower, Westmin Plaza Phase II 50 Zhong Shan 7th Road, Li Wan District, Guangzhou, Guangdong Province 23 May 2050 Office 16, Particulars of Hotel Building Name Location Lease Expiry Usage Approximate Group s Gross Floor Area Interest (square metres) (%) HONG KONG Crowne Plaza Hong Kong Causeway Bay 8 Leighton Road, Causeway Bay 6 November 2049 Hotel 14, Asian Growth Properties Limited Annual Report 2014

7 Property Portfolio At 31 December 2014 Particulars of Properties Held for Sale Stage of Approximate Group s Name Location Completion Usage Gross Floor Area Interest (square metres) (%) MAINLAND CHINA Commercial podium, Zhong Shan Completed Commercial 45,984 (including 100 Westmin Plaza 7th Road, car parking floors) Phase II Li Wan District, Guangzhou, Guangdong Province Particulars of Development Properties/Properties under Development Stage of Estimated Approximate Group s Name of Project Location Completion Completion Date Usage Site Area Interest (square metres) (%) HONG KONG Fo Tan Project, 1-11 Au Pui Wan Street, Foundation Beyond 2018 Residential/ 20, Shatin Fo Tan, Sha Tin, construction Commercial New Territories completed and superstructure design in progress MAINLAND CHINA Chengdu Nova Longquanyi District, Phase I site Phase I 2017 Residential/ 506, City Chengdu, formation and Commercial Sichuan Province piling works completed and superstructure is being planned to commence Kaifeng Nova South lateral of Phase IA Phase IA 2015 Residential/ 735, City Zheng Kai Da Road, superstructure Phase IB 2016 Commercial Kaifeng, works in progress Henan Province Phase IB superstructure is being planned to commence Huangshan Qiankou Town, Phase I site Phase I Tourist leisure 337, Project Huizhou District, formation works Beyond 2015 facilities Huangshan City, in progress Anhui Province 5 Asian Growth Properties Limited Annual Report 2014

8 Location of the Group s Properties/Projects MAINLAND CHINA IN MAINLAND CHINA 1 Plaza Central, Sichuan Province 2 New Century Plaza, Sichuan Province 3 Chengdu Nova City, Sichuan Province 4 Kaifeng Nova City, Henan Province 5 Huangshan Project, Anhui Province 6 Nanjing Project, Jiangsu Province 7 Westmin Plaza Phase II, Guangdong Province 7 Hong Kong C A B IN HONG KONG A Dah Sing Financial Centre B Crowne Plaza Hong Kong Causeway Bay C Fo Tan Project 6 Asian Growth Properties Limited Annual Report 2014

9 Chairman s Review I am pleased to present the audited consolidated financial results of the Group for the year 2014 to the shareholders of the Company. Results AGP reported a profit attributable to the Company s shareholders of HK$703.1 million ( 58.3 million) for the year ended 31 December 2014 (2013: HK$474.5 million ( 37.0 million)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$600.3 million ( 49.8 million) (2013: HK$269.5 million ( 21.0 million)). By excluding the net effect of such surplus, the Group s net profit attributable to the Company s shareholders was HK$102.8 million ( 8.5 million) (2013: HK$205.0 million ( 16.0 million)). As at 31 December 2014, the Group s equity attributable to the Company s shareholders amounted to HK$13,148.1 million ( 1,090.0 million) (31 December 2013: HK$12,458.7 million ( million)). The net asset value per share as at 31 December 2014 was HK$14.8 (122.7 pence) as compared with HK$14.1 (110.0 pence) as at 31 December Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting years. Operations During the year ended 31 December 2014, the Group has continued the development of various property projects in Hong Kong and Mainland China. The rental income from investment properties situated in both Hong Kong and Mainland China continue to provide stable returns to the Group. Crowne Plaza Hong Kong Causeway Bay has also performed satisfactorily with improvements in room rate as compared to last year. For details of the Group s operations, please refer to the Executive Directors Review. Outlook In the U.S., job growth appears to be improving with interest rates forecast to rise this year. Commodity prices have dropped like a stone, the European markets are in trouble with an uncertain time in respect of the Greek economy and the ever present threat of war in various parts of the world remains omnipresent with events in the Ukraine, The Middle East and the South China Sea causing cause for concern. At no time in the past few years has the Group had to face the challenges it currently faces in terms of geopolitical risk globally. China is experiencing a dramatic slowdown in both export and import growth with the People s Bank of China reducing capital adequacy ratios in an attempt to encourage growth. Amidst this atmosphere, the Group has made steady progress. How many of these geopolitical risks play out in 2015 remains the subject of conjecture. However, the Group will continue to remain flexible and opportunistic in its approach to its assets and continue to hold large amount of cash in its balance sheet to weather the current prevailing conditions in global markets. Dah Sing Financial Centre, Hong Kong 7 Asian Growth Properties Limited Annual Report 2014

10 Chairman s Review On 28 May 2014, Mr. Donald Ian Fletcher resigned as a Non-executive Director of the Company. The Board would like to express its gratitude for his valuable contribution to the Company during his tenure of service. Acknowledgement The Board would like to take this opportunity to thank the executive and management team for the execution of the Board s strategy and their ongoing support. Richard Prickett Non-executive Chairman Hong Kong, 20 March 2015 Plaza Central, Chengdu Final Dividend The Board does not propose the payment of a final dividend for the year ended 31 December 2014 (2013: Nil). Change of Directors On 19 March 2014, Messrs. Lincoln Lu and Lam Sing Tai were appointed as an Executive Director and a Non-executive Director of the Company respectively and on 30 July 2014, Mr. John David Orchard Fulton was appointed as an Independent Non-executive Director of the Company. The Board would like to extend its warmest welcome to them to join the Board. 8 Asian Growth Properties Limited Annual Report 2014

11 Executive Directors Review FINANCIAL SUMMARY Turnover for the year ended 31 December 2014 amounted to HK$648.7 million ( 53.8 million) (2013: HK$878.6 million ( 68.5 million)). The turnover was principally attributable to the recognition of rental income from investment properties and revenue from hotel operation. Profit attributable to the Company s shareholders for the year amounted to HK$703.1 million ( 58.3 million) (2013: HK$474.5 million ( 37.0 million)), equivalent to a basic earnings per share of HK79.3 cents (6.6 pence) (2013: HK53.5 cents (4.2 pence)). The reported profit included a revaluation surplus on investment properties net of deferred taxation of HK$600.3 million ( 49.8 million) (2013: HK$269.5 million ( 21.0 million)). By excluding the effect of such surplus, the Group s net profit attributable to the Company s shareholders was HK$102.8 million ( 8.5 million) (2013: HK$205.0 million ( 16.0 million)), equivalent to HK11.6 cents (1.0 pence) (2013: HK23.1 cents (1.8 pence)) per share. BUSINESS REVIEW Property Investment and Development The Group continues to focus on its development and investment projects in Hong Kong and Mainland China. It is the Group s approach to review and optimise the project portfolios from time to time. The Group s core projects located in Hong Kong and Mainland China are listed below. Hong Kong The office leasing market was stable during the year. With several tenancies of Dah Sing Financial Centre, a 39-storey commercial building, being renewed at market rates, rental income received during the year increased. The occupancy rate of Dah Sing Financial Centre remains at a high level of approximately 94% as at 31 December As at 31 December 2014, the Group s equity attributable to the Company s shareholders amounted to HK$13,148.1 million ( 1,090.0 million) (31 December 2013: HK$12,458.7 million ( million)). The net asset value per share attributable to the Company s shareholders as at 31 December 2014 was HK$14.8 (122.7 pence) as compared with HK$14.1 (110.0 pence) as at 31 December For shareholders information, figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting years and the relevant exchange rates adopted are stated as follows: For 31 December 2014: 1 = HK$ ; and For 31 December 2013: 1 = HK$ Dah Sing Financial Centre, Hong Kong 9 Asian Growth Properties Limited Annual Report 2014

12 Executive Directors Review The negotiation of the land premium with the Government for the development project at Fo Tan remains in progress. This development project has a site area of approximately 20,000 square metres and envisages, among other facilities, residential units, car parks, educational facilities and a bus terminus. The foundation work of the project has been completed and advanced pile cap is in progress. Mainland China Chengdu, Sichuan Province Chengdu Nova City, Chengdu (prospective view) During the year under review, the occupancy rate for the two 30-storey office towers of Plaza Central remained at a high level and its retail podium with a gross floor area of about 29,000 square metres is fully let principally to Chengdu New World Department Store on a long-term lease. As at 31 December 2014, the aggregate occupancy rate for the two office towers and the retail podium was approximately 89%. Leasing activities for the remaining areas of Plaza Central continue. The master layout plan of the Longquan project (known as Chengdu Nova City ), which has a site area of 506,000 square metres, was approved by the local government in January Preliminary site works and site formation works for Phase I of the project have been completed. Superstructure works for Phase I are now scheduled to commence in the second quarter of Kaifeng, Henan Province The Kaifeng project, known as Kaifeng Nova City, is situated in Zheng-Kai District, a new town in Kaifeng and envisages a shopping mall, premium offices, exhibition hall, hotel, serviced apartments and residential towers. This project has a site area of 735,000 square metres and for providing a better living environment, the gross floor area of the development will vary from 2,000,000 to 2,500,000 square metres only. The master layout plan has been approved by the local government and foundation work for Phase I of the residential has been completed. The superstructure works for Phase IA of the residential are in progress. Pre-sale consent for Phase IA was issued and 50% of the residential units were launched into the market. The superstructure works for Phase IB of the residential units are scheduled to commence by the end of the first quarter of The shopping arcade of New Century Plaza with a gross floor area of about 16,300 square metres is fully let to a hotel on a long-term lease. The previous lease to a furniture retailer expired in late 2014, and a new lease to a hotel operator was entered into in late Kaifeng Nova City, Kaifeng 10 Asian Growth Properties Limited Annual Report 2014

13 Executive Directors Review Huangshan, Anhui Province The project in Huangshan has a site area of about 337,000 square metres comprising of development land of about 117,000 square metres and landscape land of 220,000 square metres. The master layout plan for the development of the project comprising a hotel, serviced apartments and resort villas in the integrated resort site has been approved by the local government and site formation work for phase I of the project has been completed. Phase I foundation works for hotel are now scheduled to commence in the first quarter of Chi Shan, Nanjing, Jiangsu Province The Group has established two 51%-owned joint venture companies to participate in the tenant relocation arrangements and excavation and infrastructure works on certain pieces of land in Chi Shan. The Group intends to acquire such lands through land auctions by different stages. Hotel Operation Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star hotel comprising 263 guest rooms with ancillary facilities and is managed by the InterContinental Hotels Group. It has achieved satisfactory occupancy and room rates for the year under review. Westmin Plaza, Guangzhou Guangzhou, Guangdong Province As at 31 December 2014, the occupancy rate of the 14-storey office tower of Westmin Plaza Phase II of about 16,100 square metres was 100% with more than one-third of the total office space being leased to AIA. Leasing activities for the 3-storey shopping arcade of Westmin Plaza Phase II with a total gross floor area of about 26,400 square metres are in progress. Crowne Plaza Hong Kong Causeway Bay, Hong Kong 11 Asian Growth Properties Limited Annual Report 2014

14 Executive Directors Review AGREEMENT FOR COST-SHARING ARRANGEMENT WITH RELATED PARTY The Company and SEAI, a wholly-owned subsidiary of SEA (the holding company of the Company), entered into the Management Agreement) for the appointment of SEAI as manager for the provision of corporate, project and property management services to the Group. The Management Agreement was terminated with effect from 1 January Subsequent to the termination of the Management Agreement and the consideration of alternative structures to provide the necessary resources to the Group, the AGP Service Recipients entered into an agreement with SEAI on 29 July 2014 whereby in consideration of SEAI making available its personnel and facilities to the Group, the AGP Service Recipients agreed to pay their proportionate share of the Net Costs for the use of SEAI s personnel and facilities from 1 January The Net Costs is the proportion of staff costs and indirect costs to be borne by the AGP Service Recipients and will be calculated by reference to the time spent by SEAI s personnel on the services to each of the AGP Service Recipients (with a mark-up of 5%), plus the reimbursable costs incurred by SEAI on behalf of the AGP Service Recipients (on a dollar-for-dollar basis). Each of the AGP Service Recipients should bear and pay its proportion of the Net Costs. WORKING CAPITAL AND LOAN FACILITIES As at 31 December 2014, the Group s total cash balance was HK$2,646.8 million ( million) (31 December 2013: HK$1,766.4 million ( million)) and unutilised facilities were HK$845.0 million ( 70.1 million) (31 December 2013: HK$855.0 million ( 66.7 million)). The gearing ratio as at 31 December 2014, calculated on the basis of net interest bearing debts minus cash and restricted and pledged deposits as a percentage of total property assets, was 9.3% (31 December 2013: 8.9%). As at 31 December 2014, the maturity of the Group s outstanding borrowings was as follows: 31 December December 2013 HK$ million HK$ million Due Within 1 year , years 1, years 1, ,082.9 Over 5 years 1, , ,026.5 Less: Front-end fee (22.4) (13.7) 4, ,012.8 Pledge of Assets For the Company s subsidiaries operating in Hong Kong and Mainland China, the total bank loans drawn as at 31 December 2014 amounted to HK$4,019.7 million (31 December 2013: HK$3,012.8 million) which comprise secured bank loans of HK$3,919.7 million (31 December 2013: HK$2,894.8 million) and unsecured bank loans of HK$100.0 million (31 December 2013: HK$118.0 million). The secured bank loans were secured by properties valued at HK$12,086.4 million (31 December 2013: HK$11,343.7 million) and note receivables of HK$54.3 million (31 December 2013: HK$54.3 million). 12 Asian Growth Properties Limited Annual Report 2014

15 Executive Directors Review Treasury Policies The Group adheres to prudent treasury policies. As at 31 December 2014, all of the Group s borrowings were raised through its wholly-owned or substantially controlled subsidiaries on a nonrecourse basis. International Financial Reporting Standards The Group has adopted IFRS and the audited consolidated financial statements accompanying this Review have been prepared in accordance with IFRS. OUTLOOK Mainland China s economy reported slowing growth in 2014, as 2014 GDP growth was 7.4%, which was slightly below the government s target of 7.5%, marking the weakest expansion in the past 24 years. GDP growth for 2015 has been lowered and is now targeted at around 7%. Property prices have softened over the past nine months and whilst this is difficult to predict we expect this trend to continue without new policy initiatives. Hong Kong s economy remained relatively stable with solid demand for residential real estate continuing. The popularity of small flat sales was an emerging trend. The continuing low interest rate environment together with affordability should help maintain the property market at healthy levels of turnover despite the government imposing substantive increases in stamp duty during The Group s investment properties remain substantially let at good rents and the hotel property in Hong Kong continues to perform in line with expectations although affected somewhat by the Occupy Central movement. Year to date occupancy rates are encouraging. In Hong Kong, the premium on our Fo Tan development site has yet to be finally agreed with the government although we are hopeful that an acceptable figure will be agreed shortly which will enable us to move forward with the development of this asset. Our development portfolio in Mainland China is likely to benefit from infrastructure works. In particular in Kaifeng, the light rail system between Zhengzhou and Kaifeng is completed which will enhance accessibility to our development site and already is increasing patronage. Phase IA, comprising 444 residential units, is under construction with 50% of these units launched for pre-sale. Due to the existing poor market sentiment, sales are slower than originally anticipated. Sales are recognizable upon obtaining an occupation permit which is expected for the end of this year. In Chengdu, our master layout plan has been approved and the site will benefit from new road connections to the area with two new major roads enhancing access. On behalf of the Executive Directors Fo Tan Project, Hong Kong Lu Wing Chi Executive Director Hong Kong, 20 March Asian Growth Properties Limited Annual Report 2014

16 Board of Directors RICHARD ÖTHER PRICKETT Non-executive Chairman and Independent Non-executive Director Mr. Prickett, aged 63, joined the Board in January 2006 and became the Non-executive Chairman of the Company in March Mr. Prickett is also the chairman of the Audit, Nomination and Remuneration Committees of the Company. He is a Chartered Accountant in England and Wales and has many years experience in corporate finance. LU WING CHI Executive Director Mr. Lu, aged 68, joined the Board in March He is the chairman and managing director of SEA and a director of various members of the Group. Mr. Lu has over 45 years experience in property investment and development in Hong Kong and throughout the Asia-Pacific region. He is responsible for investment strategies and development direction within the Group. Mr. Prickett was the chairman of Brancote Holdings Plc from 1995 until its merger with Meridian Gold Inc. in July He is a chief executive officer and finance director of Landore Resources Limited (a company listed on the AIM Market) and an independent non-executive director of City Natural Resources High Yield Trust Plc (a listed investment trust). 14 Asian Growth Properties Limited Annual Report 2014

17 Board of Directors LAMBERT LU Executive Director DAVID ANDREW RUNCIMAN Executive Director Mr. Lu, aged 38, joined the Board in September He is an executive director of SEA and a director of various members of the Group. He is also a member of the Henan Committee of Chinese People s Political Consultative Conference and a vice chairman of The Chamber of Hong Kong Listed Companies. Mr. Lu holds a Bachelor s degree in Statistics and Economics from the University of British Columbia in Canada. He furthered his postgraduate business studies at the Tsinghua School of Economics and Management, Tsinghua University in the PRC. Mr. Runciman, aged 64, joined the Board in January He is a Fellow of the Royal Institution of Chartered Surveyors of the United Kingdom and has spent much of his working career in Asia dealing with all aspects of residential and commercial real estate markets. Mr. Runciman formerly served as the chairman for Asia Pacific for CBRE, the world s largest property services company. He had worked with Richard Ellis (subsequently CBRE) for 30 years and was instrumental in growing the business from a company comprising just four professionals in 1977 to that with over 2,000 staff operating in 54 offices throughout Asia in In addition, Mr. Runciman is the chief executive officer of Scottish and Oriental Estates which is his own investment company and has been a Hong Kong resident since Asian Growth Properties Limited Annual Report 2014

18 Board of Directors LINCOLN LU Executive Director LAM SING TAI Non-executive Director Mr. Lu, aged 40, joined the Board in March He is an executive director of SEA and a director of various members of the Group. He is also a member of the Sichuan Committee of Chinese People s Political Consultative Conference and an executive member of All-China Federation of Industry and Commerce. Mr. Lu holds a Bachelor of Arts degree from the University of British Columbia in Canada. He is primarily responsible for the Group s hotel and project management operations. Mr. Lam, aged 68, joined the Board in March 2014 and is a member of the Audit and Remuneration Committees of the Company. He is a non-executive director of SEA and a director of various members of the Group. Mr. Lam is primarily responsible for the sales and marketing matters of the Group s properties in Hong Kong and Mainland China and has over 40 years of solid experience in property development and investment. 16 Asian Growth Properties Limited Annual Report 2014

19 Board of Directors JOHN DAVID ORCHARD FULTON Independent Non-executive Director Mr. Fulton, aged 61, joined the Board in July 2014 and is a member of the Audit and Remuneration Committees of the Company. He is a senior partner of law firm Anderson Strathern LLP and has been doing business in the Far East since He has over 25 years experience in property work and as an adviser to major landowners and also as a secretary or trustee of registered charities. Mr. Fulton, a Notary Public and an accredited mediator, is a trustee of the WS Dependants Annuity Fund, a trustee of the Asia Scotland Institute, a founding trustee of the Clark Foundation for Legal Education, and served as treasurer of the Society of Writers to Her Majesty s Signet. He holds a LL.B. degree from the University of Edinburgh in the United Kingdom. 17 Asian Growth Properties Limited Annual Report 2014

20 Corporate Governance Report The Company observes the Corporate Governance Guidelines for AIM Companies published by the Quoted Companies Alliance in the United Kingdom so far as it is reasonably practicable having regard to its size and business nature. The Board The Board currently comprises the following members: Mr. Richard Öther Prickett Mr. Lu Wing Chi Mr. Lambert Lu Mr. David Andrew Runciman Mr. Lincoln Lu Mr. Lam Sing Tai Mr. John David Orchard Fulton (Non-executive Chairman and Independent Non-executive Director) (Executive Director) (Executive Director) (Executive Director) (Executive Director) (Non-executive Director) (Independent Non-executive Director) The Board meets regularly throughout the year. To enable the Board to perform its duties, each Director has full access to all relevant information and the services of the Company Secretary or its delegates. If necessary, the Non-executive Directors may take independent professional advice at the Company s expense. The Board has delegated specific responsibilities to the committees described below. Board Audit Committee Remuneration Committee Nomination Committee (Role undertaken by the Board) The Audit Committee The Audit Committee, which comprises Messrs. Prickett, Lam and Fulton and is presently chaired by Mr. Prickett, meets at least twice each year. The committee monitors, in discussion with the external independent auditor, the integrity of the financial statements of the Company and any formal announcements relating to the Company s financial performance. It also reviews regular reports from management and the external independent auditor on accounting and internal control matters. Where appropriate, the committee monitors the progress of action taken in relation to such matters. The Audit Committee also reviews and approves the remuneration and terms of engagement of the external independent auditor, and makes recommendation to the Board in respect of the appointment or re-appointment of them. 18 Asian Growth Properties Limited Annual Report 2014

21 Corporate Governance Report The Remuneration Committee The Remuneration Committee, which comprises Messrs. Prickett, Lam and Fulton and is presently chaired by Mr. Prickett, meets at least once each year. The committee is responsible for determining with the Board the framework or broad policy for the remuneration of members of executive management and reviewing the performance of the Executive Directors and recommending the level and structure of their remuneration. The Nomination Committee The role of the Nomination Committee is undertaken by the whole Board and is presently chaired by Mr. Prickett. The committee considers the selection and re-appointment of Directors. It identifies and nominates candidates to fill the Board s vacancies and reviews regularly the structure, size and composition of the Board (including the skills, knowledge and experience of its members) and makes recommendations to the Board with regard to any changes. Share Dealing Code The Company has adopted the Code for the Directors and applicable employees, which is appropriate for a company whose shares are admitted for trading on the AIM Market operated by London Stock Exchange plc. The Company is also subject to certain legislation of England prohibiting market abuse and insider dealing, on which guidance notes are set out in the Code. The Company takes all reasonable steps to ensure compliance with the Code by its Directors and any relevant employees. 19 Asian Growth Properties Limited Annual Report 2014

22 Directors Report The Directors present their report together with the audited consolidated financial statements for the year ended 31 December Principal Activities The Group currently carries on the business of property development and investment in Hong Kong and Mainland China as well as hotel operation in Hong Kong. During the year, the Company acted as an investment holding company and the activities of its principal subsidiaries are set out in note 40 to the consolidated financial statements. Business Review and Outlook Details of the Group s business development during the year and future outlook are included in the Chairman s Review and the Executive Directors Review on pages 7 to 8 and 9 to 13 of this 2014 annual report respectively. Results The Group recorded a profit before tax of HK$746.3 million (2013: HK$556.6 million) and a profit after tax of HK$702.3 million for the year ended 31 December 2014 (2013: HK$475.2 million). Profit attributable to the Company s shareholders for the year was HK$703.1 million (2013: HK$474.5 million), equivalent to basic earnings per share of HK79.3 cents (2013: HK53.5 cents). By excluding the effect of a revaluation surplus on investment properties net of deferred tax, the Group would report a net profit attributable to the Company s shareholders of HK$102.8 million (2013: HK$205.0 million), equivalent to basic earnings per share of HK11.6 cents (2013: HK23.1 cents). Net asset value per share attributable to the Company s shareholders as at 31 December 2014 was HK$14.8 (2013: HK$14.1). Dividend The Board does not propose the payment of a final dividend for the year ended 31 December 2014 (2013: Nil) and has not paid or declared any dividend for the year (2013: Nil). Directors The Directors who have served the Company during the year and up to the date of this report are named as follows: Mr. Richard Öther Prickett Mr. Lu Wing Chi Mr. Lambert Lu Mr. David Andrew Runciman Mr. Lincoln Lu (appointed on 19 March 2014) Mr. Lam Sing Tai (appointed on 19 March 2014) Mr. John David Orchard Fulton (appointed on 30 July 2014) Mr. Donald Ian Fletcher (resigned on 28 May 2014) 20 Asian Growth Properties Limited Annual Report 2014

23 Directors Report In accordance with Articles 24.1 and 24.2 of the Company s Articles of Association, one-third of the existing Directors (or, if the number is not a multiple of three, the number nearest to but not greater than one-third) will retire at every AGM. As Messrs. Richard Öther Prickett and Lu Wing Chi have been the longest in office as Directors since their last re-election in 2010 and 2012 respectively, they will retire by rotation and, being eligible, have offered themselves for re-election at the forthcoming AGM. Mr. Prickett has served the Company as Independent Non-executive Director for more than 9 years. The Company has received an annual confirmation from him on satisfying all the criteria for independence, except that he has served the Company for more than 9 years, as set out in the Corporate Governance Guidelines for AIM Companies published by the Quoted Companies Alliance in the United Kingdom. Thus, the Board is satisfied that, notwithstanding his length of service with the Company, it is not aware of any relationships or circumstances which are likely to interfere with the exercise of the independent judgement of Mr. Prickett nor any evidence that his service tenure has any impact on his independence. In accordance with Article 23.2 of the Company s Articles of Association, Mr. John David Orchard Fulton who was appointed by the Board last year will retire and, being eligible, has offered himself for re-election at the forthcoming AGM. Share Option Scheme and the Share Award Scheme The Company has adopted a share option scheme and a share award scheme in The two schemes were approved by the shareholders of SEA (the holding company of the Company) at a special general meeting held on 27 May 2010 and by the Board on 28 May 2010 but came into effect on 16 August 2010 upon fulfillment of the conditions contained therein. The two schemes provide a flexible means to recognise and acknowledge the performance and/or contribution of the eligible participants (as defined under the schemes). No option/award had been granted since the commencement of the schemes and up to the year ended 31 December Asian Growth Properties Limited Annual Report 2014

24 Directors Report Directors Shareholdings As at 20 March 2015, the interests of the Directors and persons connected with them in the issued ordinary share capital of the Company are as follows: Name of Directors Notes Personal interests (held as beneficial owner) Number of ordinary shares Corporate interests (held through corporation) Total interests Approximate % of interest in the issued share capital Richard Öther Prickett Lu Wing Chi 1, 2 & 3 364,397, ,397, Lambert Lu 1, 2 & 4 125,813, ,813, David Andrew Runciman 1 & 5 520, , , Lincoln Lu 1, 2 & 6 123,659, ,659, Lam Sing Tai 1 & 7 2,653,030 2,653, John David Orchard Fulton Notes: 1. As at 20 March 2015, SEA was interested in 97.17% of the issued shares of the Company. 2. As at 20 March 2015: (a) (b) JCS has a direct interest of 63.58% in the issued share capital of NLI. NLI has a direct shareholding interest of 59.83% of the issued share capital of SEA and is interested in 100% of the issued share capital in two companies which in turn are interested in a total of 5.13% of the issued share capital of SEA. Thus, NLI is deemed to have a total shareholding interest of 64.96% in the issued share capital of SEA. (c) NYH is interested in 25% of the issued shares in each of two companies which in turn are interested in a total of 3.28% of the issued shares capital of SEA. 3. Mr. Lu Wing Chi has indirect deemed interest in 364,397,610 ordinary shares of the Company by virtue of his shareholding interest in SEA through the following: (a) (b) (c) (d) 1.76% direct shareholding interest in SEA; 30% direct shareholding interest in NLI; 49% direct shareholding interest in JCS; and 100% direct shareholding interest in NYH. 4. Mr. Lambert Lu has indirect deemed interest in 125,813,031 ordinary shares of the Company by virtue of his shareholding interest in SEA through the following: (a) (b) (c) 1.99% direct shareholding interest in SEA; 3.21% direct shareholding interest in NLI; and 25.50% direct shareholding interest in JCS. 22 Asian Growth Properties Limited Annual Report 2014

25 Directors Report 5. Mr. David Runciman has indirect deemed interest in 186,856 ordinary shares of the Company through his 0.02% direct interest in SEA. 6. Mr. Lincoln Lu has indirect deemed interest in 123,659,834 ordinary shares of the Company by virtue of his shareholding interest in SEA through the following: (a) (b) (c) 1.74% direct shareholding interest in SEA; 3.21% direct shareholding interest in NLI; and 25.50% direct shareholding interest in JCS. 7. Mr. Lam Sing Tai has indirect deemed interest in 2,653,030 ordinary shares of the Company through his 0.31% direct shareholding interest in SEA. Save as disclosed above, none of the Directors or any of their respective immediate family members nor any person connected with the Directors had any interest, whether beneficial or non-beneficial, in any share capital of the Company. Directors Service Arrangements The Company has service arrangements with the following Directors, significant particulars of which are set out below: Annual Name Title Salary Directors Fees Richard Öther Prickett Non-executive Chairman and Independent Non-executive Director 40,000 (1) Lu Wing Chi Executive Director 20,000 Lambert Lu Executive Director 20,000 David Andrew Runciman Executive Director HK$1,440,000 Lincoln Lu Executive Director 20,000 Lam Sing Tai Non-executive Director 20,000 John David Orchard Fulton (2) Independent Non-executive Director 20,000 (1) Mr. Prickett was entitled to a Director s fee of 40,000 per annum for assuming the role of the Non-executive Chairman and chairman of the Audit, Remuneration and Nomination Committees. (2) Appointed as Director on 30 July Save as disclosed above, there are no existing or proposed service arrangements between any of the Directors and the Company or any member of the Group and there are no existing or proposed service arrangements between any of the Directors and the Company or any member of the Group which provide for benefits upon termination of employment. 23 Asian Growth Properties Limited Annual Report 2014

26 Directors Report Significant Shareholdings As at 20 March 2015, the Company has been notified by the shareholders named below of having 3% or more shareholding interests in the Company: Name Number of ordinary shares Percentage of shareholding (%) SEA 861,278,857* Charm Action 668,653, SEA (AGP) 175,094, * Of these shares of the Company, (i) 668,653,817 shares were held by Charm Action, a direct wholly-owned subsidiary of SEA; (ii) 175,094,641 shares were held by SEA AGP, a direct wholly-owned subsidiary of SEA; and (iii) 17,530,399 shares were held by another two direct wholly-owned subsidiaries of SEA. Dealing in the Company s Shares During the year ended 31 December 2014, the Company did not redeem any of its listed shares nor did the Company and its subsidiaries purchase or sell any of the Company s listed shares. Related Party Transactions During the year under review, the Company has continued the following related party transaction: Cost-Sharing Agreement The Company and SEAI entered into the Management Agreement on 18 September 2006 for the appointment of SEAI as manager for the provision of corporate, project and property management services to the Group. The Management Agreement was terminated with effect from 1 January Subsequent to the termination of the Management Agreement and the consideration of alternative structures to provide the necessary resources to the Group, the AGP Service Recipients entered into an agreement with SEAI on 29 July 2014 whereby in consideration of SEAI making available its personnel and facilities to the Group, the AGP Service Recipients agreed to pay their proportionate share of the Net Costs for the use of SEAI s personnel and facilities from 1 January The Net Costs is the proportion of staff costs and indirect costs to be borne by the AGP Service Recipients and will be calculated by reference to the time spent by SEAI s personnel on the services to each of the AGP Service Recipients (with a mark-up of 5%), plus the reimbursable costs incurred by SEAI on behalf of the AGP Service Recipients (on a dollar-for-dollar basis). Each of the AGP Service Recipients should bear and pay its proportion of the Net Costs., Messrs. Lu Wing Chi, Lincoln Lu and Lambert Lu, Executive Directors of the Company, have indirect deemed interests in the Company and SEAI by virtue of their shareholding interests in SEA. They are also directors of SEA and SEAI. 24 Asian Growth Properties Limited Annual Report 2014

27 Directors Report Independent Auditor Approved by the Board upon the Audit Committee s recommendation, a resolution will be submitted to the forthcoming 2015 AGM to re-appoint Deloitte Touche Tohmatsu as independent auditor of the Company for the ensuing year. On behalf of the Board Richard Prickett Non-executive Chairman and Independent Non-executive Director England, 20 March Asian Growth Properties Limited Annual Report 2014

28 Independent Auditor s Report TO THE MEMBERS OF ASIAN GROWTH PROPERTIES LIMITED (incorporated in the British Virgin Islands with limited liability) We have audited the consolidated financial statements of the Group set out on pages 28 to 83, which comprise the consolidated statement of financial position as at 31 December 2014, 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 a summary of significant accounting policies and other explanatory information. Directors Responsibility for the Consolidated Financial Statements The Directors are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation of consolidated financial statements that give a true and fair view 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 entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 26 Asian Growth Properties Limited Annual Report 2014

29 Independent Auditor s Report Opinion In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2014 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 20 March Asian Growth Properties Limited Annual Report 2014

30 Consolidated Statement of Profit or Loss NOTES Revenue 7 648, ,597 Interest income 24,292 24,874 Other income 8 21,474 24,166 Costs: Property and related costs 9 (73,416) (160,091) Staff costs (89,742) (82,291) Depreciation and amortisation (73,369) (80,159) Other expenses 10 (230,857) (278,509) (467,384) (601,050) Profit from operations before fair value changes on investment properties 227, ,587 Fair value changes on investment properties 617, ,340 Profit from operations after fair value changes on investment properties 844, ,927 Gain on disposal of assets classified as held for sale 21,640 Finance costs 11 (98,522) (80,994) Profit before taxation , ,573 Income tax expense 14 (44,000) (81,313) Profit for the year 702, ,260 Attributable to: Company s shareholders 703, ,543 Non-controlling interests (773) , ,260 HK cents HK cents Earnings per share for profit attributable to the Company s shareholders Basic Earnings per share excluding fair value changes on investment properties net of deferred tax Basic Asian Growth Properties Limited Annual Report 2014

31 Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit for the year 702, ,260 Other comprehensive (expense) income: Items that may be subsequently reclassified to profit or loss: Exchange differences arising on translation of foreign operations (13,836) 126,825 Release of translation reserve upon disposal of assets classified as held for sale (2,480) (13,836) 124,345 Total comprehensive income for the year 688, ,605 Total comprehensive income attributable to: Company s shareholders 689, ,328 Non-controlling interests (951) 2, , , Asian Growth Properties Limited Annual Report 2014

32 Consolidated Statement of Financial Position As at 31 December NOTES Non-current assets Investment properties 17 10,358,285 10,216,706 Property, plant and equipment 18 1,437,456 1,016,607 Properties for development 19 1,248,432 1,350,813 Loan receivables 20 4,118 7,072 Note receivables 21 54,289 54,279 Other receivables , ,794 Other financial assets 23 7,764 Restricted bank deposits 24 6,338 6,360 13,507,855 13,036,631 Current assets Properties held for sale Completed properties 482, ,531 Properties under development 25 1,322, ,684 Other inventories 1,333 1,119 Loan receivables Trade receivables, deposits and prepayments , ,536 Tax recoverable 4, Amounts due from non-controlling interests Bank balances and cash 28 2,640,466 1,760,007 4,602,383 3,338,545 Current liabilities Payables, rental deposits and accrued charges , ,079 Sales deposits 64,389 Tax liabilities 101, ,024 Amounts due to non-controlling interests 27 99,505 96,985 Bank borrowings due within one year ,569 1,290,658 1,003,902 1,810,746 Net current assets 3,598,481 1,527,799 Total assets less current liabilities 17,106,336 14,564,430 Capital and reserves Share capital , ,204 Reserves 12,802,924 12,113,481 Equity attributable to the Company s shareholders 13,148,128 12,458,685 Non-controlling interests 55,540 57,706 Total equity 13,203,668 12,516,391 Non-current liabilities Bank borrowings due after one year 30 3,583,165 1,722,108 Deferred taxation , ,931 3,902,668 2,048,039 Total equity and non-current liabilities 17,106,336 14,564,430 The consolidated financial statements on pages 28 to 83 were approved and authorised for issued by the Board on 20 March 2015 and are signed on its behalf by: Lu Wing Chi Executive Director Lambert Lu Executive Director 30 Asian Growth Properties Limited Annual Report 2014