REPORT OF THE EXECUTIVE COMMITTEE The members of the executive committee have pleasure in submitting their report together with the audited financial statements for the year ended 31st December, 2014. PRINCIPAL ACTIVITY The principal activity of the company is to promote, support and encourage education in recreation management. FINANCIAL STATEMENTS The results of the company for the year are set out in the income statement on page 5. The members of the executive committee do not recommend the payment of a dividend. EXECUTIVE COMMITTEE CHAN Joyce CHEUNG Kwok Kee, Paul HUANG Ling To, Lester KWONG Man Lung LAM Huen Sum, Michael LAU Wing Chung, Patrick LEUNG King Fat LI Sai Sum, Sam WONG Ka Yee, Allison WONG Tat Ming, Richard WOO Wai Man, Johnny YEUNG Sheh Kwong, Donny In accordance with Article 38 of the company's Articles of Association, all retiring members of the executive committee shall be eligible for re-election. INTEREST IN CONTRACTS No contracts of significance to which the company was a party and in which a member of the executive committee had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. 1
REPORT OF THE EXECUTIVE COMMITTEE MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the activities of the company were entered into or existed during the year. ARRANGEMENTS TO PURCHASE SHARES OR DEBENTURES At no time during the year was the company a party to any arrangements to enable the members of the executive committee to acquire benefits by means of the acquisition of shares in, or debentures of, the company or any other body corporate. AUDITOR The financial statements have been audited by Lau & Au Yeung C.P.A. Limited who retire and, being eligible, offer themselves for reappointment. On behalf of the Board Chairman HONG KONG, 2
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HONG KONG RECREATION MANAGEMENT ASSOCIATION LIMITED (incorporated in Hong Kong and limited by guarantee) We have audited the financial statements of Hong Kong Recreation Management Association Limited set out on pages 5 to 14, which comprise the balance sheet as at 31st December, 2014, and the income statement, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Executive committee's responsibility for the financial statements The members of the executive committee are directors of the company and are responsible for the preparation of financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standard ("HKFRS") for Private Entities issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") and the Hong Kong Companies Ordinance, and for such internal control as the members of the executive committee determine is necessary to enable the preparation of 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 financial statements based on our audit. This report is made solely to you, as a body, in accordance with section 80 of Schedule 11 to the Hong Kong Companies Ordinance (Cap. 622), 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 HKICPA. 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 auditor's 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 auditor considers internal control relevant to the entity's preparation of the 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 members of the executive committee, as well as evaluating the overall presentation of the financial statements. 3
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HONG KONG RECREATION MANAGEMENT ASSOCIATION LIMITED (incorporated in Hong Kong and limited by guarantee) Auditor's responsibility (cont'd) We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the state of of the company's affairs as at 31st December, 2014 and of its surplus and cash flows for the year then ended in accordance with HKFRS for Private Entities and have been properly prepared in accordance with the Hong Kong Companies Ordinance. LAU & AU YEUNG C.P.A. LIMITED Certified Public Accountants HONG KONG, Chan Lok Sang, Director Practising Certificate Number : P01993 4
INCOME STATEMENT Note RECEIPTS 3 400,275 381,915 ADMINISTRATIVE EXPENSES (GENERAL FUND) 4 (177,212) (193,224) EVENTS' EXPENDITURE 6 (201,115) (239,121) SURPLUS/(DEFICIT) FOR THE YEAR 21,948 (50,430) ===== ===== The notes on pages 9 to 14 are an integral part of these financial statements. 5
BALANCE SHEET AS AT 31ST DECEMBER, 2014 Note CURRENT ASSETS Accounts and other receivables 5,900 38,250 Deposit and prepayment 3,721 990 Cash and bank balances 8 457,615 441,748 467,236 480,988 ----------- ----------- LESS : CURRENT LIABILITIES Accounts payable 10,075 10,075 Receipts in advance 1,500 37,200 11,575 47,275 ---------- ---------- NET CURRENT ASSETS 455,661 433,713 EQUITY General fund 5 455,661 433,713 Chairman Treasurer The notes on pages 9 to 14 are an integral part of these financial statements. 6
STATEMENT OF CHANGES IN EQUITY Balance as at 1st January 433,713 484,143 Surplus/(deficit) for the year 21,948 (50,430) Balance as at 31st December 455,661 433,713 The notes on pages 9 to 14 are an integral part of these financial statements. 7
STATEMENT OF CASH FLOWS CASH FLOWS FROM OPERATING ACTIVITIES Surplus/(deficit) for the year 21,948 (50,430) Interest received (25) (25) Surplus/(deficit) before working capital changes 21,923 (50,455) Decrease/(increase) in accounts and other receivables 32,350 (33,250) (Increase)/decrease in deposit and prepayment (2,731) 24,028 Decrease in accounts payable - (1,640) (Decrease)/increase in receipts in advance (35,700) 1,050 Net cash generated from/(used in) operating activities 15,842 (60,267) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 25 25 INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 15,867 (60,242) CASH AND CASH EQUIVALENTS AT 1ST JANUARY 441,748 501,990 CASH AND CASH EQUIVALENTS AT 31ST DECEMBER 457,615 441,748 ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and bank balances 457,615 441,748 The notes on pages 9 to 14 are an integral part of these financial statements. 8
ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The company was incorporated in Hong Kong on 10th January, 1991 under the Hong Kong Companies Ordinance as a company limited by guarantee and not having a share capital. The address of its registered office is 21st Floor, Tai Yau Building, 181 Johnston Road, Wanchai, Hong Kong. The principal activity of the company is to promote, support and encourage education in recreation management. Under the provisions of the company's Articles of Association, every member shall, in the event of the company being wound up, contribute to the assets of the company to the extent of HK$10. At 31st December, 2014, the company had 493 members. These financial statements are presented in Hong Kong dollars. 2. PRINCIPAL ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. (a) Basis of preparation The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standard for Private Entities ("HKFRS for Private Entities") issued by the Hong Kong Institute of Certified Public Accountants and the requirement of Hong Kong Companies Ordinance. The financial statements have been prepared under the historical cost convention. (b) Revenue recognition Provided that it is probable that the economic benefits associated with the revenue transaction will flow to the company and the revenue and costs, if applicable, can be measured reliably, as follows: (i) Entrance and subscription fees Entrance and subscription income is recognised when the right to receive payment is established. (ii) Advertising income Advertisement income is recognised when the relevant services are provided. 9
ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 2. PRINCIPAL ACCOUNTING POLICIES (CONT'D) (b) Revenue recognition (cont'd) (iii) Receipt from events and sponsorships Receipt from events and sponsorships is recognised when the right to receive such revenue has been established. (iv) Interest income Interest income is recognized on a time-proportion basis using the effective interest method. (c) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts, if any. (d) Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The company s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases using in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that is probable that taxable profit will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. (e) Employee benefits obligatiolns 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. 10
ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 2. PRINCIPAL ACCOUNTING POLICIES (CONT'D) (f) Trade and other receivables Trade and other receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables. (g) Trade and other payables Trade payables are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method. 3. REVENUE An analysis of the company's revenue is as follows: RECEIPTS - GENERAL FUND Advertisements 89,000 100,000 Entrance fees 3,700 1,900 Interest 25 25 Subscriptions 18,950 11,400 Sponsorships 130,000 130,000 Sundries - 1,800 241,675 245,125 ----------- ----------- - EVENTS' RECEIPTS Seminar fees 5,200 4,000 Annual general meeting dinner 120,400 96,790 Residential Clubhouse Management Award receipts 33,000 36,000 158,600 136,790 ----------- ----------- Total revenue 400,275 381,915 11
ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 4. ADMINISTRATIVE EXPENSES - GENERAL FUND Awards - 10,000 Bad debts - 4,000 Bank charges 1,468 1,005 Business registration fee 250 450 Conference expenses 18,092 24,018 MPF contributions 900 900 Printing, stationery and postage 106,700 106,923 Secretarial fee 12,105 12,105 Salary 16,800 17,100 Storages 12,679 11,797 Subscriptions 2,623 2,363 Sundry expenses 1,200 800 Telephone 1,323 1,763 Webpage expenses 3,072-177,212 193,224 5. GENERAL FUND Balance brought forward 433,713 484,143 ------------ ------------ Advertisements 89,000 100,000 Entrance fees 3,700 1,900 Interest 25 25 Subscriptions 18,950 11,400 Sponsorships 130,000 130,000 Sundries - 1,800 General receipts 241,675 245,125 Events receipts (Note 6) 158,600 136,790 Total receipts for the year 400,275 381,915 Less : Administrative expenditure (Note 4) 177,212 193,224 Events expenditure (Note 6) 201,115 239,121 Surplus/(deficit) for the year 21,948 (50,430) ------------ ------------ Balance carried forward 455,661 433,713 12
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ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 6. DEFICIT FROM EVENTS RECEIPTS Seminar fees 5,200 4,000 Annual general meeting dinner 120,400 96,790 Residential Clubhouse Management Award receipts 33,000 36,000 158,600 136,790 ----------- ----------- EXPENDITURE Seminar expenses 5,314 6,160 Annual general meeting dinner 162,991 155,917 Residential Clubhouse Management Award expenses 32,810 77,044 201,115 239,121 ----------- ----------- DEFICIT FROM EVENTS (42,515) (102,331) 7. INCOME TAX EXPENSE No Hong Kong profits tax has been provided as, in the opinion of the committee members, there is no estimated assessable profit arising in Hong Kong during the year (2013: Nil). The tax on the company's surplus before income tax differs from the theoretical amount that would arise using the Hong Kong profits tax rate as follows :- Surplus/(deficit) before income tax 21,948 (50,430) ===== ===== Calculated at a taxation rate of 16.5% (2013: 16.5%) 3,621 (8,321) Income not subject to taxation (66,045) (63,016) Expenses not deductible for taxation purpose 62,424 71,337 Income tax - - ===== ===== 14
ACCOUNTING POLICIES AND EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 8. CASH AND BANK BALANCES Cash at bank earns interest at floating rates based on daily bank deposit rates. The carrying amount of the cash at bank approximates to its fair value. 9. EMPLOYEE BENEFIT EXPENSES Salaries and bonus 16,800 17,100 Pension costs - defined contribution plans 900 900 17,700 18,000 ===== ===== 10. EXECUTIVE COMMITTEE'S REMUNERATION None of the members of the executive committee received or will receive any fees or emoluments in respect of their services to the company during the year (2013: Nil). 11. DEFERRED INCOME TAX No deferred tax assets or liabilities have been recognised as the company has neither unused tax losses available to offset against future profit nor deductible temporary difference (2013: Nil). 12. APPROVAL OF FINANCIAL STATEMENTS The financial statements set out on pages 5 to 14 were approved by the members of the executive committee on 15