PY** CIS* Report of the Directors and Audited Financial Statements THE ACTUARIAL SOCIETY OF HONG KONG. 30 September 2015

Transcription

1 Report of the Directors and Audited Financial Statements THE ACTUARIAL SOCIETY OF HONG KONG PY** CIS* Building a better working world

2 CONTENTS Pages REPORT OF THE DIRECTORS 1-2 INDEPENDENT AUDITORS' REPORT 3-4 AUDITED FINANCIAL STATEMENTS Statement of profit or loss and other comprehensive income 5 Statement of financial position 6 Statement of changes in equity ~? Statement of cash flows 8 Notes to financial statements 9-24

3 REPORT OF THE DIRECTORS The directors present their report and the audited financial statements of The Actuarial Society of Hong Kong (the "Society") for the year ended. Principal activities The principal activities of the Society have not changed during the year and are to represent and further the interests of the actuarial profession, to uphold the standards of professional conduct and to regulate the practice of its members. Results and recommended dividends The Society's surplus for the year ended and its state of affairs at that date are set out in the financial statements on pages 5 to 24. The directors do not recommend the payment of any dividend in respect of the year. Share issued The Society was incorporated under the laws of Hong Kong as a company limited by guarantee and does not have a share capital. The details of the liability of its members are set out in note 1 to the financial statements. Directors The directors of the Society during the year were: Cheng, Kin Shun Tony (resigned on 31 August 2015) Duran, J Peter Foong, Sai Cheong Hui, Kin Ling Queenie Ke, Wing Siu Nigel Lam, Yat Tung Simon Leckie, Stuart Hamilton Lee, Kevin (appointed on 1 January 2015) Mak, Tze Kei Jacky (resigned on 31 December 2014) Ng, Fat Kwong Louis Nossiter, Gaston Phillipe (appointed on 1 September 2015) Porter, Jeremy Robert Walpole, Simon Robert Wong, Yuk Lun Billy Wong, Ka Man (appointed on 1 January 2015) In accordance with the Society's articles of association, all remaining directors continue in office for two years from the first day of the calendar year following the annual general meeting in which they are elected. Directors' interests At no time during the year was the Society a party to any arrangement to enable the Society's directors to acquire benefits by means of the acquisition of debentures of the Society or any other body corporate. Directors' interests in transactions, arrangements or contracts No director had a material interest, either directly or indirectly, in any transaction, arrangement or contract of significance to the business of the Society to which the Society was a party during the year.

4 REPORT OF THE DIRECTORS (continued) Management contracts Pursuant to an agreement dated 21 September 2012 between the Society and its representative Office, Actuaries Office in Hong Kong ("AOHK"), the Society pays a share of the costs for AOHK. The agreement will run year to year, in absence of any prior written notice at any time upon not less than six months. During the year, the Society paid contribution expenses to AOHK of 942,961 (2014: 904,855) under this agreement. Honorary auditors Ernst & Young retire and a resolution for their reappointment as honorary auditors of the Society will be proposed at the forthcoming annual general meeting. ON BEHALF OF THE BOARD Director Hong Kong 9 November 2015

5 Ernst & Young *fttf-gf*ft0r Tel ^IS: /F, CITIC Tower SiS^Is^liitl^ Fax fss: Tim Mei Avenue 3>\m±!S.22i$ ey.com Central, Hong Kong Independent auditors' report To the members of The Actuarial Society of Hong Kong (Incorporated in Hong Kong with liability limited by guarantee) We have audited the financial statements of The Actuarial Society of Hong Kong (the "Society") set out on pages 5 to 24, which comprise the statement of financial position as at, and the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Directors' responsibility for the financial statements The directors of the Society are responsible for the preparation of financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' responsibility Our responsibility is to express an opinion on these financial statements based on our audit Our report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation of 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 financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. A member firm of Ernsl & Young Global Limited

6 EYs Independent auditors' report (continued) To the members of The Actuarial Society of Hong Kong (Incorporated in Hong Kong with liability limited by guarantee) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Society as at, and of its financial performance and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in compliance with the Hong Kong Companies Ordinance. Certified Public Accountants Hong Kong 9 November 2015 A member firm of Ernst & Young Global Limited

7 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Year ended Notes REVENUE Other income Administrative expenses Other operating expenses SURPLUS /(DEFICIT) BEFORE TAX Income tax expense SURPLUS /(DEFICIT) FOR THE YEAR AND TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,221,400 3,625,842 (4,287,761) ( 112,884) 446,597 ( 51,477) 395,120 1,161, ,971 (1,590,060) ( 113,734) ( 64,299) ( 64,299)

8 STATEMENT OF FINANCIAL POSITION NON-CURRENT ASSET Plant and equipment Notes , CURRENT ASSETS Prepayments, deposits and other receivables Amounts due from related entities Cash and cash equivalents Time deposits Total current assets ! 954, ,065 1,569,412 2,626,145 6,084, ,349 1,294, ,781 2,610,908 5,521,898 CURRENT LIABILITIES Amounts due to related entities Other payables and accruals Tax payable Total current liabilities , ,550 49, , , , ,737 NET CURRENT ASSETS 5,246,020 4,861,161 TOTAL ASSETS LESS CURRENT LIABILITIES 5,258,309 4,861,161 NON-CURRENT LIABILITY Deferred tax liability 12 2,028 Net assets 5,256,281 4,861,161 Represented by: GENERAL FUND ACCOUNT 5,256,281 4,861,161 Director D

9 STATEMENT OF CHANGES IN EQUITY Year ended General fund account At 1 October ,925,460 Total comprehensive loss for the year ( 64,299) At 30 September 2014 and 1 October ,861,161 Total comprehensive income for the year 395,120 At 5,256,281

10 STATEMENT OF CASH FLOWS Year ended Notes CASH FLOWS FROM OPERATING ACTIVITIES Surplus/(Deficit) for the year Adjustment for interest income Increase in prepayments and other receivables Increase in other payables and accruals Change in amounts with related entities Net cash flows from/fused in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Increase in a time deposit with original maturity of more than three months when acquired Purchase of items of plant and equipment Net cash flows (used in)/from investing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENTS AT END OF YEAR 446,597 ( 13,407) 433,190 ( 210,321) 386, , ,920 15,237 ( 15,237) ( 12,289) ( 12,289) 699, ,781 1,569,412 ( 64,299) ( 12,781) ( 77,080) ( 504,120) 64,110 ( 307,705) ( 824,795) 12,072 ( 12,071) ( 824,794) 1,694, ,781 ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Bank balance lo,569, ,781 1,569, ,781

11 1. CORPORATE INFORMATION The registered office of the Society is located at Unit 2202, 22/F, Tower Two, Lippo Centre, 89 Queensway, Hong Kong. The principal activities of the Society have not changed during the year and are to represent and further the interests of the actuarial profession, to uphold the standards of professional conduct and to regulate the practice of its members. The Society is a company limited by guarantee. The liability of each member is limited to the extent of an amount not exceeding HKSIOO in the event of the Society being wound up while he/she is a member, or within one year after he/she ceases to be a member. For the year ended 30 September 2015, there are 1,016 members in total in the Society and the total liability of the members is limited to the extent of an amount not exceeding 101,600 in the event of the Society being wound up STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants, accounting principles generally accepted in Hong Kong and Hong Kong Companies Ordinance BASIS OF PREPARATION The Society presents its statement of financial position broadly in order of liquidity, with a distinction based on expectations regarding recovery or settlement within twelve months after the financial reporting date (current) and more than twelve months after the financial reporting date (non-current). These financial statements have been prepared under the historical cost convention. These financial statements are presented in Hong Kong dollars ("") which is also the Society's functional currency CHANGES IN ACCOUNTING POLICY AND DISCLOSURES The Society has adopted the following revised HKFRSs for the first time for the current year's financial statements, which are applicable to the Society. Amendment to HKFRS 13 included in Annual Improvements Cycle HKAS 32 Amendments Short-term Receivables and Payabies Amendments to HKAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities

12 2.3. CHANGES IN ACCOUNTING POLICY AND DISCLOSURES (continued) The HKFRS 13 Amendment clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendment has no impact on the Society. The HKAS 32 Amendments clarify that a right of set-off must not only be legally enforceable in the normal course of business, but must also be enforceable in the event of default and the event of bankruptcy or insolvency of all of the counterparties to the contract, including the reporting entity itself. The amendments also clarify that a right of set-off must not be contingent on a future event. The amendments have had no impact on the Society as the Society does not have any offsetting arrangement ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS The Society has not early applied any of the new and revised HKFRSs that have been issued but are not yet effective for the accounting year ended, in these financial statements. Among the new and revised HKFRSs, the following are expected to be relevant to the Society's financial statements upon becoming effective: HKFRS 9 HKFRS 15 Financial Instruments2 Revenue from Contracts with Customers Effective for annual periods beginning on or after 1 January 2017 Effective for annual periods beginning on or after 1 January 2018 In September 2014, the HKICPA issued the final version of HKFRS 9, which reflects all phases of the financial instruments project and replaces HKAS 39 and all previous versions of HKFRS 9. The standard introduces new requirements for classification and measurement, impairment and hedge accounting. The Society expects that the adoption of HKFRS 9 will have no impact on the classification and measurement of the Society's financial assets and liabilities. HKFRS 15 was issued in July 2014 and shall be applied for a financial period beginning on or after 1 January The new standard establishes a new five-step model that will apply to revenue arising from contracts with customers. Under HKFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in HKFRS 15 provide a more structured approach for measuring and recognising revenue. The standard also introduces extensive qualitative and quantitative disclosure requirements, including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods and key judgements and estimates. The standard will supersede all current revenue recognition requirements under HKFRSs. The Society is currently assessing the impact of HKFRS 15 upon adoption. 10

13 2.5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Related parties A party is considered to be related to the Society if: (a) the party is a person or a close member of that person's family and that person (i) has control or joint control over the Society; (ii) has significant influence over the Society; or (iii) is a member of the key management personnel of the Society or of a parent of the Society; or (b) the party is an entity where any of the following conditions applies: (i) the entity and the Society are members of the same group; (ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity); (iii) the entity and the Society are joint ventures of the same third party; (iv) one entity is ajoint venture of a third entity and the other entity is an associate of the third entity; (v) the entity is a post-employment benefit plan for the benefit of employees of either the Society or an entity related to the Society; (vi) the entity is controlled or jointly controlled by a person identified in (a); and (vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). Plant and equipment and deprcciation Items of plant and equipment are stated at cost or valuation less accumulated depreciation and any impairment losses. The cost of an item of plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of plant and equipment are required to be replaced at intervals, the Society recognises such parts as individual assets with specific useful lives and depreciates them accordingly. II

14 2.5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Plant and equipment and depreciation (continued) Depreciation is calculated on a straight-line basis to write off the cost or valuation of each item of plant and equipment to its residual value over its estimated useful life. The principal annual rate used for this purpose is as follows: Computer and office equipment 33'/3% The gain or loss on disposal of items of plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant asset and is recognised in profit or loss. The assets' residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end. Impairment of non-financial assets The Society assesses at the end of each reporting period whether there is an indication that an asset may be impaired. If such an indication exists, the Society makes an estimate of the asset's recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e., a cash-generating unit). An impairment loss is recognised in profit or loss whenever the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. A reversal of the impairment loss is limited to the asset's carrying amount that would have been determined had no impairment loss been recognised in prior years. The reversal of the impairment loss is credited to profit or loss in the year in which it arises. Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset and whether the arrangement conveys a right to use the asset. Finance leases, which transfer to the Society substantially all the rewards and risks incidental to ownership of a leased item, are capitalised at the inception of the lease at the fair value of the leased item, or if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction in the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are expensed through profit or loss. Capitalised leased assets are depreciated over the shorter of the lease terms and the estimated useful lives of the assets. 12

15 2.5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Lease (continued) Operating lease payments, net of any incentives received from the lessor, are recognised as an expense in profit or loss on a straight-line basis over the lease terms. Where the Society is the lessor, assets leased by the Society under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss on the straight-line basis over the lease terms. Lease payments which cannot be allocated reliably between the land and buildings elements are included in the cost of the land and buildings as a finance lease in plant and equipment. Financial instruments The Society classifies its financial instruments into the following categories at inception, depending on the purpose for which the assets were acquired or the liabilities were incurred. (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are initially recorded at fair value plus any directly attributable transaction costs and are subsequently measured at amortised cost using the effective interest rate method, less impairment allowances. The Society recognises losses for impaired loans promptly where there is objective evidence that impairment of a loan or a portfolio of loans has occurred. Impairment allowances are assessed either individually for individually significant loans or collectively for loan portfolios with similar credit risk characteristics including those individually assessed balances for which no impairment provision is made on an individual basis. If, in a subsequent period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to profit or loss. (b) Other financial liabilities Other financial liabilities include bank and other borrowings, trade payables, accruals and other monetary liabilities. All other financial liabilities are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, they are subsequently measured at amortised cost using the effective interest rate method. The fair value of financial instruments that are traded in active markets is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments where there is no active market, the fair value is determined using appropriate valuation techniques. Such techniques include using recent arm's length market transactions; reference to the current market value of another instrument which is substantially the same; a discounted cash flow analysis. 13

16 2.5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments (continued) Financial assets are derecognised when the rights to receive cash flows from the assets have expired; or where the Society has transferred its contractual rights to receive the cash flows of the financial assets and has transferred substantially all the risks and rewards of ownership; or where control is not retained. Financial liabilities are derecognised when they are extinguished, i.e., when the obligation is discharged or cancelled, or expires. Provisions A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. When the effect of discounting is material, the amount recognised for a provision is the present value at the end of the reporting period of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in profit or loss. Income tax Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates. Deferred tax is provided using the liability method, on temporary differences at the end of the reporting period arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Tax rates enacted or substantively enacted by the end of the reporting period are used to determine the deferred tax. Deferred tax liabilities are provided in full while deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Revenue recognition Revenue is recognised when it is probable that the economic benefits will flow to the Society and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, net of returns and discounts. Revenue of the Society is recognised on the following bases: (a) (b) membership subscription income is recognised in the period for which membership is granted. The underlying nature of membership in the Society is that membership is granted only once the subscription has been received by the Society; luncheon and seminar income, office services recharges and advertising income are recognised when the relevant services has been rendered; 14

17 2.5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition (continued) (c) (d) rental income under operating leases is recognised on the straight-line basis over the terms of the relevant leases; and interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the eliminated future cash receipts over the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with banks, and other short term highly liquid investments with original maturity of three months or less when acquired, less bank overdrafts. Employee benefits Paid leave carried forward The Society provides paid annual leave to its employees under their employment contracts on a calendar year basis. Under certain circumstances, such leave which remains untaken as at the end of the reporting period is permitted to be carried forward and utilised by the respective employees in the following year or will be paid to the employees upon termination of employment. An accrual is made at the end of the reporting period for the expected future cost of such paid leave earned but untaken during the year by the employees and carried forward. Retirement scheme The Society operates a mandatory provident fund scheme (the "MPF Scheme") under the Mandatory Provident Fund Schemes Ordinance, for those employees who are eligible to participate in the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Society in an independently administered fund. Contributions are made based on a percentage of the employees' basic salaries and are charged to profit or loss as and when the contributions fall due.. Foreign currency transactions Transactions in foreign currencies are translated into the functional currency of the Company using the exchange rates prevailing at the dates of the transactions. Exchange differences arising from the settlement of such transactions and from the retranslation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. 3. SIGIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES Judgements In the process of applying the Society's accounting policies, management has made the following judgements apart from those involving estimations which have the most significant effect on the amounts recognised in the financial statements. 15

18 3. SIGIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (continued) Judgements (continued) Income taxes Significant judgements on the future tax treatment of certain transactions are required in determining income tax provisions. The Society carefully evaluates tax implications of transactions and tax provisions are recorded accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislation. Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Impairment of plant and equipment Items of plant and equipment are tested for impairment if there is any indication that the carrying value of these assets may not be recoverable and the assets are subject to an impairment loss. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. The value-in-use calculation requires the Society to estimate the future cash flows expected to arise from the relevant cash-generating unit and a suitable discount rate is used in order to calculate the present value. 4. REVENUE AND OTHER INCOME Revenue and other income represent membership subscriptions, luncheons and seminars, office services recharges, advertising income and interest income earned during the year as follows: Revenue - membership subscription income ,221, ,161,524 Other revenue: Luncheon and seminar income Office services recharges Advertising income Interest income Others 893,075 2,527, ,000 13,407 2, , ,400 12, ,625, ,971 16

19 5. SURPLUS/(DEFICIT) BEFORE TAX The Society's Surplus/(deflcit) before tax is arrived at after charging/(crediting): Auditors' remuneration Staff costs (excluding directors' remuneration (note 6)): Wages and salaries 3,804,758 3,143,401 Retirement scheme contributions 116,366 82,318 3,921,124 3,225,719 Less: recharge to related parties (note 14) (3,592,830) (3,225,719) Contribution to AOHK (note 14) 942, ,855 Luncheon and evening talks 538, ,439 Annual meeting costs 174, ,088 Membership fee to International Actuarial Association 69,698 90,373 Minimum lease payments under operating leases of land and buildings 1,805,400 Other expenses 541, ,038 Total expenses 4,400,645 1,703, DIRECTORS' REMUNERATION No director received any fees or emoluments in respect of his services rendered to the Society during the year (2014: Nil). 7. INCOME TAX Hong Kong profit tax has been provided at the rate of 16.5% on the estimated assessable profits arising in Hong Kong during the year. In 2014, the Society was exempt from Hong Kong profits tax under Section 24(2) of the Inland Revenue Ordinance Provision for the year 49,449 Deferred tax (note 12) 2,028 Tax charge for the year 51,477 17

20 7. INCOME TAX (continued) A reconciliation of the tax expense applicable to surplus before tax at the statutory rate to the tax expense at the effective tax rate is as follows: 2015 Surplus before tax 446,597 Tax at the statutory tax rate of 16.5% Income not subject to tax Special tax reduction Others Tax charged at the effective rate 73,689 ( 4,240) ( 20,000) 2,028 51, (0.9) (4.5) X. PLANT AND EQUIPEMENT All October2014: Cost Accumulated depreciation Computers Net carrying amount At 1 October 2014, net of accumulated depreciation Additions Depreciation provided during the year At, net of accumulated depreciation 12,289 12,289 At : Cost Accumulated depreciation Net carrying amount 12,289 12,289 No plant and equipment was held by the Society in IS

21 9. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES Prepayments 604, ,309 Deposits and other receivables 350,087 11, , ,349 None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default. The carrying amounts of the other receivables approximate to their fair values. 10. CASH AND CASH EQUIVALENTS Cash and bank balance 1,569, ,781 Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Society, and earn interest at the respective short term time deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalents approximate to their fair values. 11. TIME DEPOSITS Non-pledged time deposits with original maturity of more than 3 months when acquired 2,626,145 2,610,908 Time deposits are made for a period of between six months and one year and earn interest at the respective time deposit rates. The time deposits are deposited with creditworthy banks with no recent history of default. [9

22 12. DEFERRED TAX LIABILITY The movements in deferred tax liability during the year are as follows: Depreciation allowance in excess of related depreciation At 1 October 2014 Deferred tax charged to profit or loss during the year 2,028 Gross deferred tax liabilities at 2,028 In 2014, the Society was exempt from Hong Kong profits tax under Section 24(2) of the Inland Revenue Ordinance. 13. OPERATING LEASE ARRANGEMENT The Society leases its office premise under operating lease arrangements. Leases for office premise are negotiated for terms ranging from one to two years. At, the Society had total future minimum lease payments under non-cancellable operating leases falling due as follows: Within one year 1,805,400 In the second to fifth years, inclusive HKS 1,805,400 20

23 14. RELATED PARTY TRANSACTIONS (a) In addition to transactions disclosed elsewhere in these financial statements, the Society had the following transactions with related parties during the year: Notes Contribution expenses to Actuaries Office in Hong Kong ("AOHK") (i) 942, ,855 Management service recharged by the Society to AOHK (i) (1,459,913) (1,412,899) Rental, management fee and other office administrative expenses charged by the Society to AOHK (i) ( 867,000) Rental, management fee and other office administrative expenses charged by the Society to China Region Development Fund("CRDF") (ii) ( 271,200) Management service recharged by the Society tocrdf (ii) ( 663,555) ( 651,901) Management Service recharged by the Society to Institute and Faculty of Actuaries ("IFoA") (iii) (1,003,219) ( 1,006,062) Management service recharged by the Society to Casualty Actuarial Society ("CAS") (iv) ( 466,143) ( 154,857) Rental, management fee and other office administrative expenses charged by the Society to CAS (iv) ( 297,600) Notes: (i) AOHK was established by the Society and five participating organisations under the Memorandum of Understanding for Joint Hong Kong Representative Office (the "Memorandum"). Under the Memorandum, the participating organisations pay a quarterly charge to the AOHK, which is based on a certain percentage of budgeted expenses agreed by the participating organisations. The Society also charged AOHK a proportion of its management service costs, rental and management fee and other office administrative expenses for office services performed on behalf of AOHK. (ii) CRDF was established by the Society of Actuaries ("SOA"), one of the five participating organisations of AOHK. During the year, the Society charged to CRDF a proportion of its management service costs, rental and management fee and other office administrative expenses for office services performed on behalf of CRDF. (iii) IFoA is one of the five participating organisations of AOHK. During the year, the Society charged to IFoA a proportion of its management service cost for office services performed on behalf of IFoA. 21

24 14. RELATED PARTY TRANSACTIONS (continued) (a) In addition to transactions disclosed elsewhere in these financial statements, the Society had the following transactions with related parties during the year: (continued) Notes (continued): (iv) CAS is one of the five participating organisations of AOHK. During the year, the Society charged to CAS a proportion of its management service costs, rental and management fee and other office administrative expenses for office services performed on behalf of CAS. (b) Compensation of key management personnel of the Society: No key management personnel received any compensation in respect of their services rendered to the Society during the year (2014: Nil). 15. BALANCES WITH RELATED ORGANISATIONS Particulars of balances with AOHK, CRDF, IFoA and CAS, disclosed pursuant to Section 78 of Schedule 11 of the Hong Kong Companies Ordinance, are as follows: Name 2015 Maximum amount 2014 Receivable/ outstanding during Receivable/ (payable) the year (payable) HKS ( AOHK 934,065 1,553,496 1,262,530 CRDF ( 63,089) 32,330 32,330 IFoA ( 75,119) 693,071 (304,068) CAS ( 66,235) 737,775 (158,602) The balances are unsecured, interest-free and have no fixed terms of repayment. 22

25 16. FINANCIAL INSTRUMENTS BY CATEGORY The carrying amounts of each of the categories of financial instruments of the Society as at the end of the reporting period are as follows: Financial assets Financial assets included in prepayments and other receivables Amounts due from related entities Cash and cash equivalent Time deposits Loans and receivables HKS 47, ,065 1,569,412 2,626,145 5,177,195 Financial liabilities Amounts due to related entities Other payables and accruals Financial liabilities at amortised cost HKS 204, , , September 2014 Financial assets Financial assets included in prepayments and other receivables Amounts due from related entities Cash and cash equivalent Time deposits Loans and receivables HKS 11,040 1,294, ,781 2,610,908 4,786,589 Financial liabilities Amounts due to related entities Other payables and accruals Financial liabilities at amortised cost HKS 462, , ,737

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