Scout Association of Hong Kong. 31 March 2018

Transcription

1 31 March 2018

2 kpmg Independent auditor s report to the Council of Scout Association of Hong Kong (Incorporated under the Scout Association of Hong Kong Ordinance) Opinion We have audited the financial statements of Scout Association of Hong Kong ( the Association ) set out on pages 4 to 49, which comprise the statement of financial position as at 31 March 2018, the statement of income and expenditure, the statement of comprehensive income, the statement of changes in funds and reserves and the cash flow statement for the year then ended and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the financial statements give a true and fair view of the financial position of the Association as at 31 March 2018 and of its financial performance and its cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ). Basis for opinion We conducted our audit in accordance with Hong Kong Standards on Auditing ( HKSAs ) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report. We are independent of the Association in accordance with the HKICPA s Code of Ethics for Professional Accountants ( the Code ) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Information other than the financial statements and auditor s report thereon The Executive Committee members are responsible for the other information. The other information comprises all the information included in the annual report, other than the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 1

3 kpmg Independent auditor s report to the Council of Scout Association of Hong Kong (continued) (Incorporated under the Scout Association of Hong Kong Ordinance) Responsibilities of the Executive Committee members for the financial statements The Executive Committee members are responsible for the preparation of the financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and for such internal control as the Executive Committee members determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Executive Committee members are responsible for assessing the Association s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Executive Committee members either intend to liquidate the Association or to cease operations, or have no realistic alternative but to do so. Auditor s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. This report is made 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. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control. 2

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5 Statement of income and expenditure for the year ended 31 March 2018 (Expressed in Hong Kong dollars) Note $ 000 $ 000 Revenue 4 335, ,302 Cost of sales (107,760) (123,290) 227, ,012 Other revenue and net income 5 30,449 27,893 Departmental and programme expenses (14,975) (18,433) General and administrative expenses (155,293) (153,182) Surplus for the year (before movements in designated funds) 6 87,489 58,290 The notes on pages 11 to 49 form part of these financial statements. 4

6 Statement of comprehensive income for the year ended 31 March 2018 (Expressed in Hong Kong dollars) Note $ 000 $ 000 Surplus for the year (before movements in designated funds) 87, , Other comprehensive income for the year Items that will be reclassified subsequently to surplus for the year (before movement in designated funds): Available-for-sale securities: Changes in fair value recognised during the year 35,948 29,770 Reclassification adjustments for amounts transferred to the statement of income and expenditure: realisation on disposal (1,674) (311) Items that will not be reclassified to surplus for the year (before movement in designated funds): 14(a) 34,274 29, Movements in designated funds: Additions and receipts for the year 14(b) 1 1 Interest and dividend income from investments and fixed deposits 14(b) 1,338 1,255 Loss on disposal of investment financial assets 14(b) (106) - Utilisation 14(b) (927) (773) Total comprehensive income for the year 122,069 88,232 The notes on pages 11 to 49 form part of these financial statements. 5

7 Statement of financial position at 31 March 2018 (Expressed in Hong Kong dollars) Non-current assets Note $ 000 $ 000 Property, plant and equipment 8 401, ,756 Available-for-sale financial assets 9 221, ,391 Held-to-maturity financial assets 9 46,934 62,958 Current assets 669, , Inventories 10 5,998 5,347 Receivables, deposits and prepayments 11 27,486 18,341 Amounts due from related parties 17 2, Cash and bank deposits , ,923 Current liabilities 847, , Trade and other payables ,523 81,973 Amounts due to related parties 17 17,461 15, ,984 97, Net current assets 727, , NET ASSETS 1,397,095 1,275,026 6

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9 Statement of changes in funds and reserves for the year ended 31 March 2018 (Expressed in Hong Kong dollars) Note Accumulated fund Internal designated funds Investment revaluation reserve Replacement reserve Replacement amortisation reserve Sinking fund Designated funds Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 April , ,459 80,973 95,129 59, ,552 20,276 1,186,794 Changes in funds and reserves for the year: Surplus for the year (before movements in designated funds) 58, ,290 Other comprehensive income , ,942 Total comprehensive income 58,290-29, , Allocation of surplus for the year 14(a) (47,109) 10,198-28,637 (17,436) 25, Transfer between funds 14(a) (197) (7,442) 7, Balance at 31 March , , , ,324 49, ,262 20,759 1,275,

10 Statement of changes in funds and reserves for the year ended 31 March 2018 (continued) (Expressed in Hong Kong dollars) Note Accumulated fund Internal designated funds Investment revaluation reserve Replacement reserve Replacement amortisation reserve Sinking fund Designated funds Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 April , , , ,324 49, ,262 20,759 1,275,026 Changes in funds and reserves for the year: Surplus for the year (before movements in designated funds) 87, ,489 Other comprehensive income , ,580 Total comprehensive income 87,489-34, , Allocation of surplus for the year 14(a) (49,683) 11,712-29,769 (18,440) 26, Transfer between funds 14(a) (275) (9,867) 9, Balance at 31 March , , , ,226 40, ,904 21,065 1,397,095 The notes on pages 11 to 49 form part of these financial statements. 9

11 Cash flow statement for the year ended 31 March 2018 (Expressed in Hong Kong dollars) Operating activities Note $ 000 $ 000 Cash generated from operations 12(b) 74,105 91,712 Net payments in designated funds (926) (772) Cash generated from operating activities 73,179 90, Investing activities Interest and dividend income from investments and fixed deposits 19,007 17,425 Interest received Decrease/(increase) in bank deposits with maturity greater than three months at acquisition 151,147 (43,009) Payment for the purchase of investment financial assets (12,224) (33,627) Payment for the purchase of property, plant and equipment (192,053) (55,803) Proceeds from the disposal of investment financial assets 34,257 31,162 Net cash generated from/(used in) investing activities (83,618) Net increase in cash and cash equivalents 73,528 7,322 Cash and cash equivalents at the beginning of the year 86,411 79,089 Cash and cash equivalents at the end of the year 12(a) 159,939 86,411 The notes on pages 11 to 49 form part of these financial statements. 10

12 Notes to the financial statements (Expressed in Hong Kong dollars) 1 General information (a) Organisation and activities Scout Association of Hong Kong (the Association ) is a body corporate with perpetual succession established under the Scout Association of Hong Kong Ordinance (Chapter 1005 of the Laws of Hong Kong) for the purpose of furthering and promoting the Scout Movement in the Hong Kong Special Administrative Region ( HKSAR ). The Association established The Hong Kong Scout Foundation in accordance with the Scout Association of Hong Kong Ordinance. On cessation or dissolution of the Foundation Management Committee, the Association would be the legal owner of all funds and assets under the name of the Foundation. (b) Operations included in the financial statements The financial statements include the operations of the following: (i) (ii) (iii) (iv) (v) (vi) Headquarters of Scout Association of Hong Kong ( Scout Headquarters ); The Hong Kong Scout Foundation ( the Foundation ); The Scout Shop of Hong Kong ( Scout Shop ); B P International House ( Hostel ); Hong Kong Island Region, Kowloon Region, East Kowloon Region, New Territories Region and New Territories East Region, including New Territories Region Development Fund Commission and New Territories Campsites & Sea Activities Centre Development Fund (collectively known as the Regions ); and Gilwell Campsite, Pak Sha Wan Tam Wah Ching Sea Activity Centre, Tai Tam Scout Centre, Tung Tsz Scout Centre, Shatin Scout Centre, Tai Mei Tuk Sea Activity Centre and Choi Chee Ming Luen Kwong Scout Centre (collectively known as the Campsites ). 11

13 1 General information (continued) Their principal activities are as follows: Scout Headquarters, the Regions and the Campsites: furthering and promoting the Scout Movement in the HKSAR. Hong Kong Scout Foundation: managing any funds assigned by the Executive Committee of Scout Association of Hong Kong; receiving any donations for the Foundation; and managing the surplus generated from the investment of the funds. Scout Shop of Hong Kong: selling of Scout uniforms and other accessories. B P International House: operating a hostel. 2 Significant accounting policies (a) Statement of compliance These financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ( HKFRSs ), which collective term includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ( HKASs ) and Interpretations issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ) and accounting principles generally accepted in Hong Kong. Significant accounting policies adopted by the Association are disclosed below. The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Association. Note 2(c) provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Association for the current and prior accounting periods reflected in these financial statements. 12

14 2 Significant accounting policies (continued) (b) Basis of preparation of the financial statements The measurement basis used in the preparation of the financial statements is the historical cost basis except for financial instruments classified as available-for-sale securities (see note 2(d)) which are stated at fair value. The preparation of financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income 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 making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of HKFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in note 3. (c) Changes in accounting policies The HKICPA has issued a number of amendments to HKFRSs that are first effective for the current accounting period of the Association. None of these developments have had a material effect on how the Association s results and financial position for the current or prior periods have been prepared or presented. The Association has not applied any new standard or interpretation that is not yet effective for the current accounting period. (d) Investments in debt and equity securities Investments in debt and equity securities are initially stated at fair value, which is their transaction price unless it is determined that the fair value at initial recognition differs from the transaction price and that fair value is evidenced by a quoted price in an active market for an identical asset or liability or based on a valuation technique that uses only data from observable markets. Cost includes attributable transaction costs. These investments are subsequently accounted for as follows, depending on their classification: 13

15 2 Significant accounting policies (continued) (i) Held-to-maturity debt securities Dated debt securities that the Association has the positive ability and intention to hold to maturity are classified as held-to-maturity securities. Held-to-maturity securities are stated at amortised cost less impairment losses. Impairment losses for held-to-maturity securities are recognised when there is objective evidence of impairment and are measured as the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the asset s original effective interest rate (i.e. the effective interest rate originally computed at initial recognition of the asset). Objective evidence of impairment includes observable data that comes to the attention of the Association about events that have an impact on the asset s estimated future cash flows. If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the statement of income and expenditure. A reversal of an impairment loss shall not result in the asset s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years. (ii) Available-for-sale securities Other investments in securities, being those held for non-trading purposes, are classified as available-for-sale securities. At the end of each reporting period the fair value is remeasured, with any resultant gain or loss being recognised in other comprehensive income and accumulated separately in the investment revaluation reserve, except foreign exchange gains and losses resulting from changes in the amortised cost of monetary items such as debt securities which are recognised directly in the statement of income and expenditure. Dividend income from these investments is recognised in accordance with the policy set out in note 2(n)(v) and, where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the statement of income and expenditure in accordance with the policy set out in note 2(n)(iii). When these investments are derecognised, the cumulative gain or loss is reclassified from the investment revaluation reserve to the statement of income and expenditure. When there is objective evidence that available-for-sale securities are impaired, the cumulative loss that has been recognised in the investment revaluation reserve is reclassified to the statement of income and expenditure. The amount of the cumulative loss that is recognised in the statement of income and expenditure is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that asset previously recognised in the statement of income and expenditure. Objective evidence of impairment includes observable data that comes to the attention of the Association concerning the underlying financial stability of the investee as well as a significant or prolonged decline in the fair value of an investment below its cost. 14

16 2 Significant accounting policies (continued) Impairment losses recognised in the statement of income and expenditure in respect of available-for-sale equity securities are not reversed through the statement of income and expenditure. Any subsequent increase in the fair value of such assets is recognised directly in other comprehensive income. Impairment losses in respect of available-for-sale debt securities are reversed if the subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of impairment losses in such circumstances are recognised in the statement of income and expenditure. When the investments are derecognised, the cumulative gain or loss recognised in investment revaluation reserve is reclassified to the statement of income and expenditure. (e) Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Construction in progress represents building and leasehold improvements on which construction work has not been completed and furniture and equipment pending installation. It is carried at cost which includes construction expenditures and other direct costs less any impairment losses. On completion, construction in progress is transferred to the appropriate categories of property, plant and equipment at cost less accumulated impairment losses. No depreciation is provided for construction in progress until they are completed and available for use. Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight line method over their estimated useful lives as follows: Leasehold land Over the unexpired term of lease Buildings 50 years Leasehold improvements Over the shorter of the unexpired term of lease and 8 years Machinery, motor vehicles, furniture, fixtures and computer equipment 3-15 years Programme and training equipment 4 years Both the useful life of an asset and its residual value, if any, are reviewed annually. 15

17 2 Significant accounting policies (continued) The carrying amounts of property, plant and equipment are reviewed for indications of impairment at the end of each reporting period. An impairment loss is recognised in the statement of income and expenditure if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. The recoverable amount of an asset, or of the cash-generating unit to which it belongs, is the greater of its fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the assets. An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognised in the statement of income and expenditure on the date of retirement or disposal. (f) Leased assets An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Association determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination 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. (i) Classification of assets leased to the Association Assets that are held by the Association under leases which transfer to the Association substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Association are classified as operating leases. (ii) Operating lease charges Where the Association has the use of assets held under operating leases, payments made under the leases are charged to the statement of income and expenditure in equal instalments over the accounting 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. Lease incentives received are recognised in the statement of income and expenditure as an integral part of the aggregate net lease payments made. 16

18 2 Significant accounting policies (continued) (g) Inventories Inventories are carried at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out method and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. (h) Receivables Receivables are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less allowance for impairment of doubtful debts, except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts. Impairment losses for bad and doubtful debts are recognised when there is objective evidence of impairment and are measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the asset s original effective interest rate where the effect of discounting is material. Objective evidence of impairment includes observable data that comes to the attention of the Association about events that have an impact on the asset s estimated future cash flows such as significant financial difficulty of the debtor. Impairment losses for receivables whose recovery is considered doubtful but not remote are recorded using an allowance account. When the Association is satisfied that recovery is remote, the amount considered irrecoverable is written off against receivables directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognised in the statement of income and expenditure. 17

19 2 Significant accounting policies (continued) (i) Trade and other payables Trade and other payables are initially recognised at fair value and subsequently stated at amortised cost unless the effect of discounting would be immaterial, in which case they are stated at cost. (j) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Association s cash management are also included as a component of cash and cash equivalents for the purpose of the cash flow statement. (k) Employee benefits Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in 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. (l) Income tax The Association is exempted from Hong Kong Profits Tax by virtue of Section 88 of the Inland Revenue Ordinance. (m) Provisions and contingent liabilities Provisions are recognised for liabilities of uncertain timing or amount when the Association has a legal or constructive obligation arising 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 contingent liability, unless 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 contingent liabilities unless the probability of outflow of economic benefits is remote. 18

20 2 Significant accounting policies (continued) (n) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Association and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in the statement of income and expenditure as follows: (i) Sale of merchandise, food and beverage Revenue is recognised when merchandise, food and beverage are sold and the related risks and rewards of ownership have been transferred to the customers. Revenue is stated after deduction of any trade discounts. (ii) Hostel room and hall revenue Hostel room and hall revenue from rooms and other ancillary services is recognised when the services are rendered. (iii) Interest income Interest income is recognised as it accrues using the effective interest method. (iv) Donations Donations not designated for any specific purposes are utilised at the discretion of the Executive Committee and are recognised as revenue upon receipt of cash. Designated donations are recognised in the statement of income and expenditure on a systematic basis in the same periods in which the expenses are incurred. (v) Dividends Dividend income from listed investments is recognised when the share price of the investment goes ex-dividend. (vi) Government grants Government grants are recognised when there is reasonable assurance that they will be received and that the Association will comply with the conditions attaching to them. (o) Translation of foreign currencies Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the end of the reporting period. Exchange gains and losses are recognised in the statement of income and expenditure. 19

21 2 Significant accounting policies (continued) (p) Related parties (a) A person, or a close member of that person s family, is related to the Association if that person: (i) (ii) (iii) has control or joint control over the Association; has significant influence over the Association; or is a member of the key management personnel of the Association. (b) An entity is related to the Association if any of the following conditions applies: (i) (ii) (iii) (iv) (v) (vi) The entity and the Association are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). Both entities are joint ventures of the same third party. One entity is a joint 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 Association or an entity related to the Association. The entity is controlled or jointly controlled by a person identified in (a). (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). (viii) The entity, or any member of a group of which it is a part, provides key management personnel services to the Association. Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. 20

22 2 Significant accounting policies (continued) (q) Designated funds Designated funds are funds established from specific donations which are earmarked for specific purposes at the request of the donors. (i) Air Activities Development Fund The Air Activities Development Fund is represented by funds available for purchasing facilities related to the development of air activities. (ii) Air Activities Development Fund Amortisation The Air Activities Development Fund Amortisation is represented by the net book value of property, plant and equipment funded by the Air Activities Development Fund. Transfers from the fund represent additions during the year. Transfers to the statement of income and expenditure represent the corresponding depreciation charged for the year. (iii) Foundation Fund for The Aged The Foundation Fund for The Aged is represented by funds available for functions organised for the aged. (iv) Karson Choi Scout Foundation The Karson Choi Scout Foundation is represented by funds available for the thematic events and community services in the New Territories Region. (v) Lee Kui Nang Foundation The Lee Kui Nang Foundation is represented by funds available for Scout development and camping activities. (vi) New Territories East Regional Headquarters Fund The New Territories East Regional Headquarters Fund is represented by funds available for repair, maintenance and other operating expenses of the New Territories East Regional headquarters. (vii) Ng Tor Tai Scout Fund The Ng Tor Tai Scout Fund is represented by funds available for provision of financial assistance for activities with the aim of developing the Scout Movement of the East Kowloon Region. 21

23 2 Significant accounting policies (continued) (viii) Patrick Chung s Scholarship Fund The Patrick Chung s Scholarship Fund is represented by funds available for personal development of Scouts. (ix) Promoting and Developing Scout Fund The Promoting and Developing Scout Fund is represented by funds available for assisting the Association to promote and develop scouting. (x) Promoting and Developing Scout Fund Amortisation The Promoting and Developing Scout Fund Amortisation is represented by the net book value of property, plant and equipment funded by the Promoting and Developing Scout Fund. Transfers from the Fund represent additions during the year. Transfers to the statement of income and expenditure represent the corresponding depreciation charged for the year. (xi) Scout Performing Arts Foundation The Scout Performing Arts Foundation is represented by funds available for assisting the Association for performing arts development of Scouts. (xii) Samson Sun Scout Fund The Samson Sun Scout Fund is represented by funds available for provision of subsidies for the procurement of uniforms for under-privileged youth members of the Association. (xiii) Sichuan Relief Fund The Sichuan Relief Fund is represented by funds available for donation to support the rehabilitation work and related service plans for earthquake victims in Sichuan. (xiv) SAHK Leadership Training Institute Foundation The SAHK Leadership Training Institute Foundation is represented by funds available for supporting leaders training and continuing education. 22

24 2 Significant accounting policies (continued) (r) Internal designated funds Internal designated funds are funds established by the Association and are earmarked for special purposes. (i) Amortisation Reserves The Amortisation Reserves are represented by the net book value of property, plant and equipment funded by various internal designated funds. Transfers from the internal designated funds represent additions during the year. Transfers to the statement of income and expenditure represent the corresponding depreciation charged for the year. (ii) Baden-Powell Scout Fund The Baden-Powell Scout Fund is represented by funds available for provision of grants, loans or revolving funds for major units of the Scout Movement in the HKSAR. (iii) Building Fund The Building Fund is represented by funds available for future renovation, decoration and repair of the Scout Headquarters. (iv) Campsite Development Fund The Campsite Development Fund is represented by funds available for the major development and improvement projects of campsites and activity centres. (v) Chau Cham Son World Jamboree Fund The Chau Cham Son World Jamboree Fund is represented by funds available for subsidising Scout members to participate in the World Jamboree. (vi) Development Fund The Development Fund is represented by funds available for provision of funds and assistance for the development of the Scout Movement in the HKSAR. (vii) District Fund The District Fund is represented by funds available for subsidising District activities in the Kowloon Region. (viii) General Project Fund The General Project Fund is represented by funds available for provision of grants, loans or revolving funds for the Scout Movement in the Kowloon Region. 23

25 2 Significant accounting policies (continued) (ix) International Brotherhood Fund The International Brotherhood Fund is represented by funds available for the development of the Scout Movement in other countries, especially in developing countries. (x) New Territories East Region Eddie Kwan Scout Fund The New Territories East Region Eddie Kwan Scout Fund is represented by funds available for the operations of the New Territories East Region. (xi) New Territories East Region Training Team Development Fund The New Territories East Region Training Team Development Fund is represented by funds available for provision of funds and assistance for the development of the training team of the New Territories East Region. (xii) Regional Scout Fund The Regional Scout Fund is represented by funds available for the development and operations of the East Kowloon Region, the New Territories Region and the New Territories East Region. (xiii) Programme and Training Project Fund The Programme and Training Project Fund is available for provision of funds for supporting programmes and training of the Scout Movement of the Kowloon and East Kowloon Regions. (xiv) Subsidy Scheme for Needy Youth Members Training The Subsidy Scheme for Needy Youth Members Training is represented by funds available for Scout members who have financial difficulties to participate in training courses or activities organised by the Association. (xv) Regional Headquarters Maintenance Fund The Regional Headquarters Maintenance Fund is represented by funds available for operations of the Regional Headquarters and the Pak Sha Wan Tam Wah Ching Sea Activity Centre. (xvi) Scout Development Fund The Scout Development Fund is represented by funds available for financing scouting activities for the purpose of retaining and/or expanding membership in the District and Scout Groups. 24

26 2 Significant accounting policies (continued) (xvii) Staff Welfare Fund The Staff Welfare Fund is represented by funds available for staff welfare and recreation. (xviii) Redevelopment Fund The Redevelopment Fund is represented by funds available for future redevelopment of the Tai Tam Scout Centre and the Hong Kong Island Regional Headquarters. (xix) Tai Tam Scout Centre Development Fund The Tai Tam Scout Centre Development Fund is represented by funds available for development of the Tai Tam Scout Centre. (xx) Wong Fuk Hong Memorial Fund The Wong Fuk Hong Memorial Fund is represented by funds available for the development of the Scout Movement in the HKSAR. (xxi) New Territories East Region Scout Band Fund New Territories East Region Scout Band Fund is represented by funds available for subsidising the New Territories East Region Scout Band activities. (s) Replacement reserve The Replacement reserve is to provide for future capital expenditure relating to B P International House. The provision for the current year is $25,000,000 (2017: $25,000,000) which has been approved by the Board of Management of B P International House. If capital expenditure from this reserve is capitalised as property, plant and equipment, an equal amount will be transferred out of this reserve into the Replacement amortisation reserve. (t) Replacement amortisation reserve The Replacement amortisation reserve is represented by the net book value of property, plant and equipment funded by the Replacement reserve. Transfers from the Replacement reserve represent additions of $9,867,000 (2017: $7,442,000) during the year. Transfers to the Accumulated fund represent the corresponding depreciation charged for the year. The gains or losses arising from the disposal of property, plant and equipment are credited/(charged) to the statement of income and expenditure. The net book value of the disposed assets is transferred from the Accumulated fund to the Replacement amortisation reserve. 25

27 2 Significant accounting policies (continued) (u) Sinking fund The Sinking fund is represented by funds provided for future redevelopment of the Hong Kong Scout Centre building of the Association. The provision for the current year is $19,000,000 (2017: $19,000,000). 3 Accounting judgements and estimates In the process of applying the Association s accounting policies, management has made the following accounting judgements: Held-to-maturity financial assets The Association follows the guidance of HKAS 39, Financial instruments: Recognition and measurement on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classification requires significant judgement. In making this judgement, the Association evaluates its intention and ability to hold such investments to maturity. If the Association fails to keep these investments to maturity other than for specific circumstances explained in HKAS 39, it will be required to reclassify the whole class as available-for-sale. The investments would then be measured at fair value instead of at amortised cost. 4 Revenue $ 000 $ 000 Accommodation and equipment fee 3,682 4,255 Air-conditioning, management fee and utilities recovered from related parties Camp fee 4,044 3,843 Course fee 6,484 6,371 Donations 3,317 2,362 Hostel room and hall revenue 219, ,661 Licence fee and vehicle park 41,168 37,977 Raffle income (note 4(a)) Sale of merchandise, food and beverage 29,317 41,436 Subvention and other government grants (note 4(b)) 26,100 29, , ,302 26

28 4 Revenue (continued) (a) Raffle income $ 000 $ 000 Raffle sales and donations 6,739 6,626 Less: Expenditure for the year (531) (497) Transfer to funds and projects (810) (815) 5,398 5,314 Less: Allocation to Districts and Scout groups (4,456) (4,408) (b) Subvention and other government grants $ 000 $ 000 Subvention from the Government of the HKSAR for Uniformed units (note (i)) 21,257 23,440 Campsites and activity centre (note (ii)) 4,590 4,466 The Friends of Scouting (note (iii)) 36,917 36,008 62,764 63,914 Less: Transfer to the Friends of Scouting (note (iii)) (36,917) (36,008) 25,847 27,906 Other government grants 253 1,595 26,100 29,501 Notes: (i) (ii) (iii) This subvention was received in respect of Scout Headquarters and the Regions. This subvention was received in respect of two campsites and one sea activity centre. The Friends of Scouting is a separate body of the Association which supplements the Association s services to the community by conducting training, developmental activities and other programmes with an emphasis on young people who are not uniformed members of the Association. Subvention funds from the Government of the HKSAR are received initially by Scout Headquarters and then transferred to the Friends of Scouting. 27

29 5 Other revenue and net income $ 000 $ 000 Bank interest income Interest and dividend income from investments and fixed deposits 17,669 16,170 Donations and other income of internal designated funds and reserves 5,972 5,905 Reclassification from investment revaluation reserve on disposal of available-for-sale financial assets 209 (25) Net foreign exchange gain Net gain on disposal of investment financial assets 2,851 1,916 Other income 3,433 3,693 30,449 27,893 6 Surplus for the year (before movements in designated funds) Surplus for the year (before movements in designated funds) is arrived at after charging: $ 000 $ 000 Amortisation of premium on acquisition of held-to-maturity financial assets Auditor s remuneration Cost of sales - Hostel 101, ,961 Cost of sales - Scout Shop 6,004 6,329 Depreciation 24,497 24,508 Electricity, water, fuel and gas 7,965 8,202 Government rent, rates and permit fee 8,267 8,367 Hostel management fee 7,217 6,605 Operating lease charges 1,285 1,280 Other expenses 30,197 34,626 Net foreign exchange loss Property, plant and equipment written-off Repairs and maintenance 7,415 5,772 Staff costs Salaries 71,355 70,463 Contributions to ORSO and MPF schemes 5,630 5,664 Other staff benefits 5,234 4,762 Total expenditure 278, ,905 28

30 6 Surplus for the year (before movements in designated funds) (continued) To provide additional information, the Executive Committee presents the major operations results of the Association as follows: For the year ended 31 March 2018 Others including Regions, Hostel Vehicle Park Scout Shop Scout Headquarters Offices Campsites and the Foundation Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue, other income and net income 250,502 29,920 10,439 5,526 69, ,517 Cost of sales, departmental and programme expenses and general and administrative expenses (167,952) (4,297) (9,269) (61,469) (35,041) (278,028) Surplus/(deficit) for the year (before movements in designated funds) 82,550 25,623 1,170 (55,943) 34,089 87,489 For the year ended 31 March 2017 Others including Regions, Hostel Vehicle Park Scout Shop Scout Headquarters Offices Campsites and the Foundation Total $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Revenue, other income and net income 240,410 27,219 10,716 7,676 67, ,195 Cost of sales, departmental and programme expenses and general and administrative expenses (180,949) (4,049) (9,762) (75,507) (24,638) (294,905) Surplus/(deficit) for the year (before movements in designated funds) 59,461 23, (67,831) 42,536 58,290 7 Remuneration of Executive Committee members None of the Executive Committee members received or will receive any fees or other remuneration in respect of their services rendered to the Association during the year (2017: Nil). 29

31 8 Property, plant and equipment Cost: Machinery, motor vehicles, furniture, fixtures and computer equipment Programme and training Construction in equipment progress Leasehold land Buildings Leasehold improvements Total (note 8(b)) $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 At 1 April , , , , , ,835 Additions - - 5,627 6, , ,715 Written-off and disposals (1,626) - - (1,626) At 31 March , , , , , , Accumulated depreciation: At 1 April 2017 (14,312) (44,343) (257,698) (123,531) (195) - (440,079) Charge for the year (525) (2,005) (17,841) (4,087) (39) - (24,497) Written-off and disposals , ,378 At 31 March 2018 (14,837) (46,348) (275,539) (126,240) (234) - (463,198) Net book value: At 31 March ,363 53,918 31,824 9, , ,726 Cost: At 1 April , , , , , ,241 Additions - - 7,355 4, ,163 55,803 Written-off and disposals (1,209) - - (1,209) At 31 March , , , , , , Accumulated depreciation: At 1 April 2016 (13,787) (42,338) (239,476) (120,995) (153) - (416,749) Charge for the year (525) (2,005) (18,222) (3,714) (42) - (24,508) Written-off and disposals , ,178 At 31 March 2017 (14,312) (44,343) (257,698) (123,531) (195) - (440,079) Net book value: At 31 March ,888 55,923 44,038 6, , ,756 30

32 8 Property, plant and equipment (continued) (a) The analysis of the net book value of properties is as follows: $ 000 $ 000 In Hong Kong under medium-term leases 69,281 71,811 Representing: Buildings carried at cost less accumulated depreciation 53,918 55,923 Leasehold land held for own use 15,363 15,888 69,281 71,811 (b) Leasehold land Leasehold land includes a piece of land owned by the Association which was bequeathed by the late Mr Wong Fuk Hong and is held under a medium-term lease and situated at Lot 3934 RP, 3936, 4679 and 4680 RP in Demarcation District No. 51 in Fanling, the New Territories. It is stated at a nominal value of $4 in the financial statements. The land is held under a medium-term lease. Leasehold land also includes the following parcels of land which were donated to the Association in previous years for no consideration. They are stated at a nominal value of $1 in the financial statements. Location of leasehold land Lease period Inland Lot No. 8961, North Point, Hong Kong Up to December 2018 Lot No. 131 in DD 60, Au Tau, Yuen Long, New Territories Up to year