SHUN HO HOLDINGS LIMITED

順 豪 控 股 有 限 公 司

(Stock Code: 253)

Interim Report 2020

CORPORATE INFORMATION

Executive Directors

Solicitors

Mr. William CHENG Kai Man (Chairman)

Withers

Mr. Albert HUI Wing Ho

30th Floor

Madam Kimmy LAU Kam May

United Centre

Madam NG Yuet Ying

95 Queensway

(appointed on 25th May, 2020)

Hong Kong

Madam Wendy CHENG Wai Kwan

(appointed on 25th May, 2020)

Principal Bankers

Madam Jennie WONG Kwai Fong

The Hongkong and Shanghai Banking

(retired on 22nd May, 2020)

Corporation Limited

Bank of China (Hong Kong) Limited

Non-Executive Director

Madam Mabel LUI FUNG Mei Yee

Registered Office

3rd Floor, Shun Ho Tower

Independent Non-Executive Directors

24-30 Ice House Street

Mr. Vincent KWOK Chi Sun

Central, Hong Kong

Mr. CHAN Kim Fai

Mr. LAM Kwai Cheung

Share Registrars

Tricor Tengis Limited

Company Secretary

Level 54, Hopewell Centre

Madam KOO Ching Fan

183 Queen's Road East

Hong Kong

Auditor

Tel: 2980 1333

Deloitte Touche Tohmatsu

35th Floor, One Pacific Place

Company's Website

88 Queensway

www.shunho.com.hk

Hong Kong

1

INTERIM RESULTS

The board of directors (the "Board") of Shun Ho Holdings Limited (the "Company") announces that the loss for the period attributable to owners of the Company for the six months ended 30th June, 2020 was HK$77 million (profit for the six months ended 30th June, 2019: HK$46 million), decreased by HK$123 million.

INTERIM DIVIDEND

The Board has resolved not to declare an interim dividend for the six months ended 30th June, 2020 (six months ended 30th June, 2019: Nil).

MANAGEMENT DISCUSSION AND ANALYSIS

During the period under review, the Group continued with the commercial properties investment and leasing, and hotel investments and hotel management.

Loss for the period attributable to owners of the Company for the six months ended 30th June, 2020 was HK$77 million (profit for the six months ended 30th June, 2019: HK$46 million), decreased by HK$123 million. It was mainly due to the hotel operating loss, revaluation loss and depreciation.

PERFORMANCE

1. Hotel Business

  1. The income from hotel operations of the Group amounted to HK$85 million (six months ended 30th June, 2019: HK$289 million), decreased by 71%.

    The Group owns 63.73% of Shun Ho Property Investments Limited ("Shun Ho Property") which holds 71.09% of Magnificent Hotel Investments Limited ("Magnificent Hotel") as its hotel investment subsidiary. The Group and Magnificent Hotel Group presently own nine hotels, including: (1) Ramada Hong Kong Grand View, (2) Ramada Hong Kong Harbour View, (3) Best Western Plus Hotel Kowloon, (4) Best Western Plus Hotel Hong Kong, (5) Best Western Grand Hotel,

  2. Best Western Hotel Causeway Bay, (7) Grand City Hotel, (8) Magnificent International Hotel, Shanghai and (9) Royal Scot Hotel in London. The nine hotels have about 2,821 guest rooms and the Group is one of the largest hotel groups in Hong Kong.

2

Loss for the period attributable to owners of Magnificent Hotel for the six months ended 30th June, 2020 was HK$154 million (profit for the six months ended 30th June, 2019: HK$58 million), decreased by HK$212 million.

Six months ended

30.6.2019

30.6.2020

Change

HK$'000

HK$'000

(unaudited)

(unaudited)

Profit (loss) from operation of hotels

63,261

(49,907)

N/A

- Profit (loss)

101,208

(12,111)

- Depreciation

(37,947)

(37,796)

Profit (loss) from property investment

14,566

(99,247)

N/A

Income from securities investments

3,557

53

-99%

Other income and expenses and

gains and losses

8,804

9,489

+8%

90,188

(139,612)

N/A

Administrative expenses

(18,698)

(19,113)

+2%

Income tax (expense) credit

(13,891)

4,866

N/A

Profit (loss) after taxation

57,599

(153,859)

N/A

The overall loss for the six months ended 30th June, 2020 was mainly due to the hotel operating loss, revaluation loss and depreciation.

3

  • For the six months ended 30th June, 2020, the GROUP'S INCOME of Magnificent Hotel was mostly derived from the aggregate of income from operation of hotels and investment properties rental income, which was analysed as follows:
    Income

Six months ended

30.6.2019

30.6.2020

Change

Reasoning

HK$'000

HK$'000

(unaudited)

(unaudited)

Income from operation

248,370

71,463

-71%

Decrease in

of hotels

room rates and

occupancies

Income from investment

16,739

18,782

+12%

Royal Scot Hotel,

properties

London and

apartment leasing

Dividend income

3,557

53

-99%

Decrease in

dividend received

from stock investment

Other income

8,804

9,489

+8%

Total

277,470

99,787

-64%

The total income for the Magnificent Hotel Group decreased by 64% from HK$277 million to HK$100 million for the same period compared with last year. During the period, the Group's hotel operating expenses were reduced by HK$72 million.

Best Western Grand Hotel will be re-branded to the higher class RAMADA HONG KONG GRAND in August 2020.

As at 30th June, 2020, an independent third party valuation of Royal Scot Hotel, London was GBP88,500,000 (As at 30th June, 2019: GBP95,000,000). The rental income of Royal Scot Hotel, London for the period was GBP1,769,000, equivalent to HK$17,474,000 (six months ended 30th June, 2019: GBP1,564,000, equivalent to HK$15,565,000), increased by 12%.

4

2. Commercial Properties Rental Income

The commercial properties rental income was derived from the hotel property in UK, Royal Scot Hotel in London, office buildings of Shun Ho Tower, 633 King's Road and shops from Best Western Plus Hotel Kowloon, Best Western Plus Hotel Hong Kong and Best Western Grand Hotel amounted to HK$85 million (six months ended 30th June, 2019: HK$81 million).

During the period, the ADMINISTRATIVE EXPENSES excluding depreciation was HK$21.7 million (six months ended 30th June, 2019: HK$20.6 million), representing costs for corporate management office including directors' fees, salaries for executive staff and employees, rental, marketing expenses and office expenses. The increase was due to the professional fee arising from acquisition of Wood Street Hotel in London.

LIQUIDITY

  • As at 30th June, 2020, the OVERALL DEBTS of the Group including Shun Ho Property and Magnificent Hotel and their subsidiaries was HK$1,290 million (31st December, 2019: HK$915 million). The increase in overall debts was due to the increase in bank borrowings during the period to make up appropriate cash reserve in deposits in case of any banking system disorder in Hong Kong because of the unstable social situation. Subsequently, HK$356.2 million bank loan was repaid during July and August 2020. Therefore, the overall debts of the Group would be about HK$934 million. The gearing ratio of the Group in terms of overall debts against funds employed was 16% (31st December, 2019: 11%).
    The Group's bank borrowings carry interest at floating rates and are mainly denominated in Hong Kong dollar and Pound Sterling. Accordingly, the Group exposes to exchange risk and the management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner.
    As at 30th June, 2020, the Group had a total number of 570 employees (31st December, 2019: 698 employees). Remuneration and benefit were set with reference to the market.

5

BUSINESS HIGHLIGHTS

During the period, the tourism market in Hong Kong was most devastated by the local social unrest and the COVID-19. Overseas/PRC visitors have dropped to less than 100 a day and most hotels and retail stores suffer from an over 90% drop in turnover. Our hotel management achieved a reduction of operating costs of HK$72 million (approximately 44%) while maintaining high occupancies above 80%.

During the period, the rental income of Royal Scot Hotel, London increased by 12% compared with the same period last year and other commercial properties remained almost fully letted but retail income properties suffer substantial rental reduction.

The Group acquired Wood Street Police Headquarter building in the centre of City of London for GBP40 million on 29th January, 2020 which has a gross internal area of 117,472 s.f. on a 20,000 s.f. island site for the refurbishment of a deluxe hotel of about 210 guest rooms and restaurants, bar and facilities (subject to approval). The management is proud of having this opportunity to renovate this landmark heritage building in the centre of City of London.

LOOKING AHEAD

The Group has nine income producing hotels, seven in Hong Kong, one in Shanghai, one in London, and the newly acquired Wood Street Hotel refurbishment project in London.

Hong Kong has been suffering from US-Sino trade war, social disorders and coronavirus in the last several months which has stopped international/PRC tourism visiting. Such unforeseeable circumstances have adversely affected the local economy, hospitality, retail and hotel market of Hong Kong with most establishments either closed or operating on low occupancies with significant losses.

It is the management's view that with the remaining months of this financial year due to the continuous COVID-19 effect, unstable US-China relationship, it is quite unlikely overseas/PRC visitors will return to Hong Kong in significant volume. Hotels and retail stores will continue to suffer from low occupancies and high operating costs. The management will continue to try to maintain high hotel occupancies and to control hotel operating costs.

Most of the tenants at the Group's 633 King's Road office building and Shun Ho Tower are multinational trading companies and because of the US/China trade war, retail closures due to the street violence and the nearly collapsed economies, those trading companies tenants are experiencing difficulties. Thus, it is expected the vacancies of the buildings may increase quickly.

In longer term, the continuous adverse US-China relationship will impact on the geopolitics, which will continue to damage any tourism and economy recovering.

6

PUBLIC FLOAT

Based on information that was publicly available to the Company and within the knowledge of the Directors, the Company has maintained the prescribed amount of public float during the period and up to the date of this report as required under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the six months ended 30th June, 2020.

DIRECTORS' INTERESTS IN LISTED SECURITIES

As at 30th June, 2020, the interests or short positions of the directors and chief executive of the Company in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) which were required (a) to be recorded in the register required to be kept by the Company under Section 352 of the SFO; or (b) to be notified to the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code"), were as follows:

The Company

Nature of

Number of Shares/

Approximate %

Name of director

Capacity

interests

underlying Shares held

of shareholding

William Cheng Kai Man

Beneficial owner

Personal and

217,452,825

71.44%

and interest of

corporate

(Note)

controlled corporations

Note:

Trillion Resources Limited ("Trillion Resources") beneficially owned 154,006,125 shares in the Company (the "Shares") (50.60%) and Mercury Fast Limited beneficially owned 62,602,700 Shares (20.57%). Mr. William Cheng Kai Man had controlling interests in the above-mentioned companies. In addition, Mr. William Cheng Kai Man beneficially owned 844,000 Shares (0.27%). All the above interests in the Shares are long position.

7

Associated Corporations

Name of

Nature of

Number of Shares/

Approximate %

Name of director

associated corporation

Capacity

interests

Underlying shares held

of shareholding

William Cheng Kai Man

Shun Ho Property

Beneficial owner

Personal and

369,489,999

63.73%

Investments Limited

and interest of

corporate

("Shun Ho Property")

controlled corporations

(Note 1)

William Cheng Kai Man

Magnificent Hotel

Interest of

Corporate

6,360,585,437

71.09

Investments Limited

controlled corporations

("Magnificent Hotel")

(Note 2)

William Cheng Kai Man

Trillion Resources

Beneficial owner

Personal

2

100

(Note 3)

Notes:

  1. Shun Ho Property, the Company's subsidiary, is a public limited company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange.
  2. Magnificent Hotel, the Company's indirect subsidiary, is a public limited company incorporated in Hong Kong, the shares of which are listed on the Stock Exchange.
  3. Trillion Resources, the Company's ultimate holding company, is a company incorporated in the British Virgin Islands.
  4. All the above interests in the shares of the associated corporations are long position.

An employee share option scheme of Magnificent Hotel, an indirect subsidiary of the Company, was adopted at the extraordinary general meeting held on 14th November, 2013 and was amended at the annual general meeting held on 18th June, 2014 (the "Share Option Scheme"). Since the adoption of the Share Option Scheme and up to the date of this report, no share option has been granted under the Share Option Scheme.

8

Save as disclosed above, as at 30th June, 2020, none of the directors or chief executive of the Company had any interest or short position in the Shares, underlying Shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be recorded in the register required to be kept by the Company under Section 352 of the SFO; or (b) to be notified to the Company and the Stock Exchange pursuant to the Model Code and none of the directors or their associates or their spouse or children under the age of 18, had any right to subscribe for the securities of the Company or associated corporation, or had exercised any such right during the period.

SUBSTANTIAL SHAREHOLDERS

As at 30th June, 2020, the following persons (not being directors or chief executive of the Company) had interests in the Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO:

Number of Shares/

Approximate %

Name of shareholder

Capacity

underlying Share held

of shareholding

Mercury Fast Limited

Beneficial owner

62,602,700

20.60

("Mercury")

Magnificent Hotel

Interest of

62,602,700

20.60

(Note 1)

controlled corporation

Shun Ho Property

Interest of

62,602,700

20.60

(Note 1)

controlled corporation

Trillion Resources

Beneficial owner

216,608,825

71.20

(Note 2)

and interest of

controlled corporation

Liza Lee Pui Ling

Interest of spouse

216,766,825

71.22

(Note 3)

9

Notes:

  1. Magnificent Hotel and Shun Ho Property were taken to be interested in 62,602,700 Shares held by Mercury, a wholly-owned subsidiary of Magnificent Hotel which in turn owned as to 71.09% by Shun Ho Property and its subsidiaries.
  2. Trillion Resources beneficially owned 154,006,125 Shares (50.60%) and was taken to be interested in 62,602,700 Shares (20.60%) held by Mercury which is the Company's indirect subsidiary.
  3. Madam Liza Lee Pui Ling was deemed to be interested in 216,766,825 Shares by virtue of the interest in such Shares of her spouse, Mr. William Cheng Kai Man, a director of the Company.
  4. All the above interests in the Shares are long position.

Save as disclosed above, there was no person, other than a director or chief executive of the Company, who has an interest or short position in the Shares and underlying Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO.

INDEPENDENT REVIEW

The interim results for the six months ended 30th June, 2020 are unaudited, but have been reviewed in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants, by Deloitte Touche Tohmatsu, whose independent review report is included on page 13 of this interim report. The interim results and the interim report 2020 have also been reviewed by the Group's Audit Committee.

10

CORPORATE GOVERNANCE

  1. Compliance with the Corporate Governance Code
    During the six months ended 30th June, 2020, the Company has complied with all the code provisions of the Corporate Governance Code set out in Appendix 14 of the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited with the exception of the following deviations:
    Code Provision A.2.1: chairman and chief executive should not be performed by the same individual
    The Company does not have separate appointments for Chairman and Chief Executive Officer. Mr. William Cheng Kai Man holds both positions. The Board believes that vesting the roles of both Chairman and Chief Executive Officer in the same person enables the Company to have a stable and consistent leadership. It also facilitates the planning and execution of the Company's strategy and is hence, for the interests of the Company and its shareholders.
    Code Provision A.4.1: non-executive directors should be appointed for a specific term
    Except three non-executive directors, all directors of the Company (including executive or non-executive directors) are not appointed for a fixed term. The Articles of Association of the Company stipulate that every director (including executive or non-executive directors) shall retire and be re-elected at least once every three years. Therefore, the Company has adopted adequate measures to ensure the corporate governance of the Company complies with the same level to that required under the Corporate Governance Code.
    Code Provision A.5.2: the nomination committee should perform the duties set out in paragraphs (a) to (d)
    The terms of reference of the nomination committee adopted by the Company are in compliance with Code Provision A.5.2 except that it is not the duty of the nomination committee to select individuals nominated for directorships. The nomination committee comprises a majority of independent non-executive directors who are not involved in the daily operation of the Company and may not have sufficient knowledge of industry practice. Such duty should be performed by the board.

11

Code Provision B.1.2: the remuneration committee's terms of reference should include, as a minimum, paragraphs (a) to (h)

The terms of reference of the remuneration committee adopted by the Company are in compliance with Code Provision B.1.2 except that it is not the duties of the remuneration committee to approve the management's remuneration proposals, compensation payable to executive directors and senior management for any loss or termination of office or appointment and compensation arrangements relating to dismissal or removal of directors for misconduct. The remuneration committee comprises a majority of independent non-executive directors who are not involved in the daily operation of the Company and may not have sufficient knowledge of industry practice. Such duties should be performed by the board.

  1. Compliance with the Model Code
    The Company has adopted the Model Code set out in Appendix 10 of the Listing Rules as the code of conduct regarding securities transactions by the directors. Having made specific enquiry of all directors, the Company confirmed that all directors have complied with the required standard set out in the Model Code during the six months ended 30th June, 2020.

By Order of the Board

William CHENG Kai Man

Chairman

Hong Kong, 19th August, 2020

12

REPORT ON REVIEW OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OF

SHUN HO HOLDINGS LIMITED

順豪控股有限公司

(incorporated in Hong Kong with limited liability)

INTRODUCTION

We have reviewed the condensed consolidated financial statements of Shun Ho Holdings Limited (the "Company") and its subsidiaries set out on pages 14 to 37, which comprise the condensed consolidated statement of financial position as of 30th June, 2020 and the related condensed consolidated statement of profit or loss, consolidated statement of total comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 "Interim Financial Reporting" ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants. The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion 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.

SCOPE OF REVIEW

We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Hong Kong Institute of Certified Public Accountants. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS 34.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

19th August, 2020

13

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

Six months

ended 30th June,

NOTES

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Revenue

3

Contracts with customers

85,355

289,009

Leases

85,269

81,025

Dividend income

53

163

Total revenue

170,677

370,197

Cost of sales

(247)

(2,253)

Other service costs

(95,270)

(167,132)

Depreciation of property,

plant and equipment

(51,022)

(51,062)

Depreciation of right-of-use assets

(391)

(407)

Gross profit

23,747

149,343

(Decrease) increase in fair value

of investment properties

(184,229)

10,000

Other income and expenses and

gains and losses

10,179

8,952

Administrative expenses

(26,022)

(25,047)

- Depreciation

(4,370)

(4,460)

- Others

(21,652)

(20,587)

Finance costs

5

(10,721)

(12,684)

(Loss) profit before taxation

(187,046)

130,564

Income tax expense

6

(3,401)

(24,715)

(Loss) profit for the period

7

(190,447)

105,849

(Loss) profit for the period attributable to:

Owners of the Company

(76,562)

45,545

Non-controlling interests

(113,885)

60,304

(190,447)

105,849

HK cents

HK cents

(Loss) earnings per share

9

Basic

(31.67)

18.84

14

CONDENSED CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

Six months

ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

(Loss) profit for the period

(190,447)

105,849

Other comprehensive (expense) income

Item that will not be reclassified to profit or loss

Fair value (loss) gain on equity instruments at

fair value through other comprehensive income

(1,806)

171

Item that may be reclassified subsequently

to profit or loss

Exchange differences on translation of

foreign operations

(76,024)

(1,413)

Other comprehensive expense for the period

(77,830)

(1,242)

Total comprehensive (expense) income for the period

(268,277)

104,607

Total comprehensive (expense) income attributable to:

Owners of the Company

(105,159)

45,090

Non-controlling interests

(163,118)

59,517

(268,277)

104,607

15

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30TH JUNE, 2020

As at

As at

30th June,

31st December,

NOTES

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

NON-CURRENT ASSETS

Property, plant and equipment

10

3,687,770

3,772,036

Right-of-use assets

25,595

26,481

Investment properties

11

5,154,490

4,937,300

Deposit paid for acquisition of

an investment property

-

429,470

Equity instruments at fair value through

other comprehensive income

1,868

3,674

8,869,723

9,168,961

CURRENT ASSETS

Inventories

1,166

1,352

Trade and other receivables

12

21,488

10,548

Other deposits and prepayments

15,118

12,952

Bank balances and cash

512,663

155,795

550,435

180,647

CURRENT LIABILITIES

Trade and other payables and accruals

13

47,575

51,472

Rental and other deposits received

8,818

10,098

Contract liabilities

3,565

2,066

Amount due to ultimate holding company

16(a)

53,653

13,852

Tax liabilities

15,411

39,940

Bank loans

14

585,950

203,153

714,972

320,581

NET CURRENT LIABILITIES

(164,537)

(139,934)

TOTAL ASSETS LESS CURRENT

LIABILITIES

8,705,186

9,029,027

16

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL

POSITION (Continued)

AT 30TH JUNE, 2020

As at

As at

30th June,

31st December,

NOTES

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

CAPITAL AND RESERVES

Share capital

15

172,252

172,252

Reserves

3,624,870

3,730,029

Equity attributable to owners of the Company

3,797,122

3,902,281

Non-controlling interests

4,064,803

4,227,921

Total equity

7,861,925

8,130,202

NON-CURRENT LIABILITIES

Bank loans

14

650,247

697,682

Rental deposits received

35,698

35,414

Deferred tax liabilities

157,316

165,729

843,261

898,825

8,705,186

9,029,027

17

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

Attributable to owners of the Company

Foreign

Property

Securities

currency

Own shares

Non-

Share

revaluation

revaluation

translation

held by a

Other

Retained

Sub-

controlling

capital

reserve

reserve

reserve

subsidiary

reserve

profits

total

interests

Total

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(Note a)

(Note b)

(Note c)

(note d)

At 1st January, 2019 (audited)

172,252

22,702

(12,669)

(19,193)

(12,834)

820,719

2,913,670

3,884,647

4,245,085

8,129,732

Profit for the period

-

-

-

-

-

-

45,545

45,545

60,304

105,849

Fair value gain on equity instruments

at fair value through other

comprehensive income

-

-

63

-

-

-

-

63

108

171

Exchange differences arising on

translation of foreign operations

-

-

-

(518)

-

-

-

(518)

(895)

(1,413)

Total comprehensive income

(expense) for the period

-

-

63

(518)

-

-

45,545

45,090

59,517

104,607

Acquisition of additional interest

in a subsidiary

-

-

-

-

-

6,964

-

6,964

(9,037)

(2,073)

Dividend paid to non-controlling

interests

-

-

-

-

-

-

-

-

(27,437)

(27,437)

At 30th June, 2019 (unaudited)

172,252

22,702

(12,606)

(19,711)

(12,834)

827,683

2,959,215

3,936,701

4,268,128

8,204,829

At 1st January, 2020 (audited)

172,252

22,702

(12,978)

(12,806)

(12,834)

828,750

2,917,195

3,902,281

4,227,921

8,130,202

Loss for the period

-

-

-

-

-

-

(76,562)

(76,562)

(113,885)

(190,447)

Fair value loss on equity instruments

at fair value through other

-

-

(664)

-

-

-

-

(664)

(1,142)

(1,806)

comprehensive income

Exchange differences arising on

-

-

-

(27,933)

-

-

-

(27,933)

(48,091)

(76,024)

translation of foreign operations

Total comprehensive expense

-

-

(664)

(27,933)

-

-

(76,562)

(105,159)

(163,118)

(268,277)

for the period

At 30th June, 2020 (unaudited)

172,252

22,702

(13,642)

(40,739)

(12,834)

828,750

2,840,633

3,797,122

4,064,803

7,861,925

18

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN

EQUITY (Continued)

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

Notes:

  1. The property revaluation reserve is arisen from the transfer and will be transferred to retained profits when the relevant properties are disposed of.
  2. Included in securities revaluation reserve at 30th June, 2020 consists of (i) the Group's share of a decrease in change in value of securities amounting to HK$12,252,000 for the year ended 31st December, 2001 attributable to the securities held by a former associate, and (ii) the Group's share of the cumulative fair value losses on equity instruments at fair value through other comprehensive income amounting to HK$1,390,000 (30th June, 2019: HK$354,000). The associate has become a subsidiary of the Company since 2001.
  3. The own shares held by a subsidiary represents the carrying amount of shares in the Company held by an entity at the time the entity become a subsidiary of the Company.
  4. The other reserve was resulted from the acquisition of additional interest or disposal of partial interest in subsidiaries without losing control in previous years.

19

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

Six months

ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Net cash from operating activities

10,574

194,379

Net cash (used in) from investing activities

Acquisition of property, plant and equipment

(29,438)

(3,872)

Proceeds from disposal of property,

plant and equipment

132

21,587

Deposit paid for acquisition of property,

plant and equipment

-

(5,800)

Interest received

416

-

(28,890)

11,915

Net cash from (used in) financing activities

Interest paid

(9,909)

(11,171)

Bank loans raised

384,430

-

Repayment of bank loans

(32,105)

(148,355)

Dividends paid to shareholders

(6,203)

(33,656)

Acquisition of additional interest in a subsidiary

-

(2,073)

Advance from ultimate holding company

39,812

27,000

Repayment to ultimate holding company

(11)

(7)

376,014

(168,262)

Net increase in cash and cash equivalents

357,698

38,032

Cash and cash equivalents at the beginning

of the period

155,795

583,248

Effect of foreign exchange rate changes

(830)

(133)

Cash and cash equivalents at the end of the period,

represented by bank balances and cash

512,663

621,147

20

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30TH JUNE, 2020

1. BASIS OF PREPARATION

Shun Ho Holdings Limited (the "Company") is a public limited company incorporated in Hong Kong and its shares are listed on The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange"). The directors of the Company consider the Company's parent company and ultimate holding company to be Trillion Resources Limited, an international business company incorporated in the British Virgin Islands.

The condensed consolidated financial statements are presented in Hong Kong Dollars ("HK$"), which is also the functional currency of the Company.

The principal activities of the Company and its subsidiaries (collectively referred to as the "Group") are the investment and operation of hotels, property investment and securities investment.

The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") as well as the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange.

The financial information relating to the year ended 31st December, 2019 that is included in these condensed consolidated financial statements as comparative information does not constitute the Company's statutory annual consolidated financial statements for that year but is derived from those financial statements. Further information relating to these statutory financial statements is as follows:

The Company has delivered the financial statements for the year ended 31st December, 2019 to the Register of Companies as required by section 662(3) of, and Part 3 of Schedule 6 to, the Hong Kong Companies Ordinance.

The Company's auditor has reported on those financial statements. The auditor's report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance.

In preparing the condensed consolidated financial statements, the directors of the Company have given careful consideration to the future liquidity of the Group in light of the fact that the Group's current liabilities exceeded its current assets by HK$164,537,000 as at 30th June, 2020. In the opinion of the directors of the Company, the Group has a number of sources of finance available to fund its operations, including internal resources and available unutilised banking facilities. The ultimate holding company has also agreed not to demand for repayment until the Group has the financial ability to do so. Accordingly, the condensed consolidated financial statements have been prepared on a going concern basis.

21

1. BASIS OF PREPARATION (Continued)

1A. Significant events in the current interim period

The outbreak of Covid-19 and the subsequent quarantine measures as well as the travel restrictions imposed by many countries have had negative impacts to the global economy, business environment, directly and indirectly affect the operations of the Group. To address negative impact arising from the pandemic, the Government of the Hong Kong Special Administrative Region (the "Government of the HKSAR") has announced some financial measures and supports for corporates. As a result of these factors, the financial positions and performance of the Group were affected in different aspects, including reduction in revenue, change in fair value of investment properties and recognition of government grants in respect of Covid-19-related subsidies.

During the current interim period, the Group recognised government grants of HK$8,597,000 in respect of Covid-19-related subsidies, of which amounted to HK$4,847,000 related to Employment Support Scheme provided by the Government of the HKSAR and set off the relevant salary expenses.

22

2. PRINCIPAL ACCOUNTING POLICIES

The condensed consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values, as appropriate.

Other than changes in accounting policies resulting from application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs"), the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30th June, 2020 are the same as those followed and presented in the preparation of the Group's financial statements for the year ended 31st December, 2019.

Application of amendments to HKFRSs

In the current interim period, the Group has applied the Amendments to References to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA, for the first time, which are mandatory effective for the annual period beginning on or after 1st January, 2020 for the preparation of the Group's condensed consolidated financial statements:

Amendments to HKAS 1

Definition of Material

and HKAS 8

Amendments to HKFRS 3

Definition of a Business

Amendments to HKFRS 9,

Interest Rate Benchmark Reform

HKAS 39 and HKFRS 7

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current period has had no material impact on the Group's financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

2.1 Impacts of application on Amendments to HKAS 1 and HKAS 8 "Definition of Material"

The amendments provide a new definition of material that states "information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity." The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments in the current period had no impact on the condensed consolidated financial statements. Changes in presentation and disclosures on the application of the amendments, if any, will be reflected on the consolidated financial statements for the year ending 31st December, 2020.

23

3. REVENUE

Revenue represents the aggregate of income from operation of hotels, property rental and dividend income, and is analysed as follows:

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Income from operation of hotels

85,355

289,009

Income from property rental

85,269

81,025

Dividend income

53

163

170,677

370,197

Disaggregation of revenue for operation of hotels:

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Types of goods or services (time of revenue recognition):

Room revenue and other ancillary services

(recognised over time)

83,991

278,795

Food and beverage (recognised at a point in time)

1,364

10,214

85,355

289,009

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Geographical markets:

Hong Kong

83,689

280,859

The People's Republic of China (the "PRC")

1,666

8,150

85,355

289,009

24

4. SEGMENT INFORMATION

The Group's operating and reportable segments, based on information reported to the chief operating decision maker ("CODM"), the Chairman of the Company, for the purpose of resources allocation and performance assessment are as follows:

  1. Hospitality services - Best Western Plus Hotel Kowloon
  2. Hospitality services - Best Western Plus Hotel Hong Kong
  3. Hospitality services - Magnificent International Hotel, Shanghai
  4. Hospitality services - Best Western Hotel Causeway Bay
  5. Hospitality services - Ramada Hong Kong Harbour View
  6. Hospitality services - Best Western Grand Hotel
  7. Hospitality services - Grand City Hotel
  8. Hospitality services - Ramada Hong Kong Grand View
  9. Property investment - 633 King's Road
  10. Property investment - Shun Ho Tower
  11. Property investment - Shops, hotel and residential property
  12. Securities investment

Information regarding the above segments is reported below.

25

4. SEGMENT INFORMATION (Continued)

The following is an analysis of the Group's revenue and results by operating and reportable segment for the periods under review:

Segment revenue

Segment (loss) profit

Six months

Six months

ended 30th June,

ended 30th June,

2020

2019

2020

2019

HK$'000

HK$'000

HK$'000

HK$'000

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Hospitality services

85,355

289,009

(60,657)

68,472

- Best Western Plus Hotel Kowloon

9,486

36,326

(12,983)

3,912

- Best Western Plus Hotel Hong Kong

15,582

43,122

(1,881)

16,424

- Magnificent International Hotel,

Shanghai

1,666

8,150

(3,350)

11

- Best Western Hotel Causeway Bay

8,573

31,573

(8,139)

6,562

- Ramada Hong Kong Harbour View

14,387

51,823

(3,610)

18,981

- Best Western Grand Hotel

13,397

52,349

(15,058)

10,528

- Grand City Hotel

8,372

25,027

(4,535)

6,048

- Ramada Hong Kong Grand View

13,892

40,639

(11,101)

6,006

Property investment

85,269

81,025

(99,878)

90,708

- 633 King's Road

56,102

52,183

15,347

61,965

- Shun Ho Tower

10,385

12,103

(17,578)

12,004

- Shops, hotel and residential property

18,782

16,739

(97,647)

16,739

Securities investment

53

163

53

163

170,677

370,197

(160,482)

159,343

Other income and expenses and

gains and losses

10,179

8,952

Administrative expenses

(26,022)

(25,047)

Finance costs

(10,721)

(12,684)

(Loss) profit before taxation

(187,046)

130,564

Segment (loss) profit represents the result of each segment without allocation of administrative expenses, other income and expenses and gains and losses and finance costs. This is the measure reported to the CODM for the purposes of resources allocation and performance assessment.

Revenue reported above represents revenue generated from external customers. There were no inter-segment sales for both periods.

26

4. SEGMENT INFORMATION (Continued)

The following is an analysis of the Group's assets and liabilities by operating and reportable segment:

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Segment assets

Hospitality services

3,558,758

3,607,091

- Best Western Plus Hotel Kowloon

356,729

366,943

- Best Western Plus Hotel Hong Kong

317,221

317,628

- Magnificent International Hotel, Shanghai

64,311

67,053

- Best Western Hotel Causeway Bay

309,817

315,115

- Ramada Hong Kong Harbour View

495,353

497,931

- Best Western Grand Hotel

676,848

690,187

- Grand City Hotel

384,435

387,415

- Ramada Hong Kong Grand View

954,044

964,819

Property investment

5,161,146

5,371,581

- 633 King's Road

2,985,897

3,024,436

- Shun Ho Tower

792,359

819,775

- Shops, hotels and residential property

1,382,890

1,097,900

- Deposit paid for acquisition of

an investment property

-

429,470

Securities investment

1,868

3,674

Total segment assets

8,721,772

8,982,346

Unallocated assets

698,386

367,262

Consolidated assets

9,420,158

9,349,608

27

4.

SEGMENT INFORMATION (Continued)

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Segment liabilities

Hospitality services

34,162

31,063

- Best Western Plus Hotel Kowloon

5,334

5,224

- Best Western Plus Hotel Hong Kong

6,181

4,242

- Magnificent International Hotel, Shanghai

1,854

1,458

- Best Western Hotel Causeway Bay

3,411

3,520

- Ramada Hong Kong Harbour View

4,326

4,467

- Best Western Grand Hotel

5,401

5,854

- Grand City Hotel

3,935

2,513

- Ramada Hong Kong Grand View

3,720

3,785

Property investment

53,920

54,205

- 633 King's Road

34,226

34,463

- Shun Ho Tower

7,808

7,843

- Shops, hotel and residential property

11,886

11,899

Securities investment

1

2

Total segment liabilities

88,083

85,270

Unallocated liabilities

1,470,150

1,134,136

Consolidated liabilities

1,558,233

1,219,406

For the purposes of monitoring segment performances and allocating resources between segments:

  • all assets are allocated to operating and reportable segments other than the Group's head office corporate assets (including certain property, plant and equipment) and bank balances and cash; and
  • all liabilities are allocated to operating and reportable segments other than the Group's head office corporate liabilities, amount due to ultimate holding company, bank loans, tax liabilities and deferred tax liabilities.

28

5.

FINANCE COSTS

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Interests on:

Bank loans

9,909

11,171

Amount due to ultimate holding company (note 16(a))

812

1,513

10,721

12,684

6.

INCOME TAX EXPENSE

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

The taxation expense comprises:

Current tax

Hong Kong

8,953

20,798

The United Kingdom (the "UK")

3,041

2,507

11,994

23,305

(Over) underprovision in prior years

Hong Kong

(311)

-

The UK

131

(102)

11,814

23,203

Deferred tax

(8,413)

1,512

3,401

24,715

29

  1. INCOME TAX EXPENSE (Continued)
    Hong Kong Profits Tax is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The annual tax rate used is 16.5% for the six months ended 30th June, 2020 (six months ended 30th June, 2019: 16.5%).
    Taxation arising in the PRC and the UK are recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year prevailing in the relevant jurisdictions.
    No deferred tax liabilities on the temporary differences attributable to the undistributed retained profits earned by the Group's PRC subsidiary were charged to profit or loss for the six months ended 30th June, 2019 and 2020.
  2. (LOSS) PROFIT FOR THE PERIOD

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

(Loss) profit for the period has been arrived

at after charging (crediting):

Depreciation of right-of-use assets

391

407

Depreciation of property, plant and equipment

55,392

55,522

Interest on bank deposits (Note)

(416)

(5,118)

Loss (gain) on disposal of property,

plant and equipment (Note)

7

(3,318)

Note: The amounts are included in other income and expenses and gains and losses.

  1. DIVIDEND
    No dividend was paid, declared or proposed during the interim period. The directors have resolved not to declare or propose an interim dividend for the six months ended 30th June, 2020 (six months ended 30th June, 2019: nil).
  2. (LOSS) EARNINGS PER SHARE
    The calculation of the basic (loss) earnings per share is based on the loss for the period attributable to owners of the Company of HK$76,562,000 (profit for the six months ended 30th June, 2019: HK$45,545,000) and on 241,766,000 shares (six months ended 30th June, 2019: 241,766,000 shares) in issue during the period. The number of shares adopted in the calculation of the earnings per share has been arrived at after eliminating the shares in the Company held by a subsidiary of the Company.
    Diluted (loss) earnings per share for both periods are not presented as there are no potential ordinary shares outstanding during both periods.

30

  1. PROPERTY, PLANT AND EQUIPMENT
    During the six months ended 30th June, 2020, the Group has acquired property, plant and equipment (8 Park St, James, St. James's Terrace, London to be registered address of Wood Street Hotel Limited in the UK) of HK$29,438,000 (six months ended 30th June, 2019: HK$3,872,000).
    The Group has disposed of property, plant and equipment with carrying amount of HK$139,000 (six months ended 30th June, 2019: HK$18,269,000) during the period.
    During the period, a building with a carrying amount of HK$57,499,000 is transferred from property, plant and equipment to investment properties.
  2. INVESTMENT PROPERTIES
    Investment properties are stated at fair value based on the valuations performed by independent professional valuers which are not connected with the Group and the Directors of the Company. The fair value is derived by using income capitalisation method and by making reference to comparable rental and sales transactions as available in the market which involves certain estimates. During the assessment of the fair values of investment properties, the valuers and the Directors of the Company have exercised their judgement and are satisfied that the method of valuation and the key inputs, including capitalisation rates and market rents, are reflective of the current market conditions. If there are changes in the assumptions used for the valuations, the fair value of the investment properties will change in the future.
    The investment properties of the Group with an aggregate carrying amount of approximately HK$5,154,490,000 (31st December, 2019: HK$4,937,300,000) were rented out under operating leases at the end of the reporting period. Outgoing expense for investment properties that are not generating income during the period are insignificant. The resulting loss on fair value changes of investment properties of HK$184,229,000 has been recognised directly in profit or loss for the six months ended 30th June, 2020 (six months ended 30th June, 2019: gain on fair value changes of investment properties of HK$10,000,000).
    In estimating the fair value of the properties, the highest and best use of the properties is their current use.
    The income capitalisation approach estimates the values of the properties on an open market basis by capitalising rental income on a fully leased basis having regard to the current passing rental income from existing tenancies and potential future reversionary income at the market level. The term value involves the capitalisation of the current passing rental income over the existing lease term. The reversionary value is taken to be current market rental income upon the expiry of the lease and is capitalised on a fully leased basis. In this approach, the valuers have considered the term yield and reversionary yield. The term yield is used for capitalisation of the current passing rental income as at the date of valuation whilst the reversionary yield is used to convert reversionary rental income.
    During the six months ended 30th June, 2020, a deposit paid for acquisition of an investment property (37 Wood Street, London) of HK$429,470,000 was transferred to investment properties upon the completion of the acquisition.

31

12. TRADE AND OTHER RECEIVABLES

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade receivables from contracts with customers

2,584

4,246

Lease receivables

3,214

1,182

Other receivables

15,690

5,120

21,488

10,548

Except for a credit period of 30 to 60 days granted to travel agencies and certain customers of the hotels, the Group does not allow any credit period to customers. The following is an aged analysis of the Group's trade receivables from contracts with customers and lease receivables presented based on the invoice date at the end of the reporting period:

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Not yet due

5,524

5,378

Overdue:

0 - 30 days

52

41

31 - 60 days

108

9

61 - 90 days

114

-

5,798

5,428

32

13. TRADE AND OTHER PAYABLES AND ACCRUALS

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Trade payables

2,066

2,697

Other payables and accruals

45,509

48,775

47,575

51,472

The following is an aged analysis of the Group's trade payables presented based on the invoice date at the end of the reporting period:

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

0 - 30 days

1,889

2,601

31 - 60 days

34

54

61 - 90 days

143

42

2,066

2,697

33

14. BANK LOANS

As at

As at

30th June,

31st December,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Audited)

Secured bank loans

1,236,197

900,835

The carrying amounts of bank loans are repayable

(based on scheduled repayment dates

set out in the loan agreements):

Within one year

59,470

60,847

Within a period of more than one year

but not exceeding two years

278,814

60,847

Within a period of more than two years

but not exceeding five years

371,433

636,835

709,717

758,529

The carrying amounts of bank loans that contain

a repayment on demand clause (shown under

current liabilities) but repayable:

Within one year

457,918

72,836

Within a period of more than one year

but not exceeding two years

66,406

26,274

Within a period of more than two years

but not exceeding five years

2,156

42,806

Within a period of more than five years

-

390

526,480

142,306

1,236,197

900,835

Amounts shown under current liabilities

585,950

203,153

Amounts shown under non-current liabilities

650,247

697,682

1,236,197

900,835

All the Group's bank loans are floating rate borrowings. The bank loans are secured over certain of the Group's assets as disclosed in note 18. Effective interest rate is 1.86% per annum (31st December, 2019: 2.34% per annum).

34

15. SHARE CAPITAL

Number of

shares

Amount

'000

HK$'000

Ordinary shares

Issued and fully paid:

At 1st January, 2019 (audited), 30th June, 2019

(unaudited), 31st December, 2019 (audited)

and 30th June, 2020 (unaudited)

304,369

172,252

At 30th June, 2020, the Company's 62,603,000 (31st December, 2019: 62,603,000) issued shares were held by a subsidiary of the Company. In accordance with the Hong Kong Companies Ordinance, members of the Group who are shareholders of the Company have no right to vote at meetings of the Company.

16. RELATED PARTY TRANSACTIONS

Other than those disclosed in the condensed consolidated financial statements, the Group had the following transactions with related parties during the period:

Six months ended 30th June,

2020

2019

HK$'000

HK$'000

(Unaudited)

(Unaudited)

Trillion Resources Limited (the Company's

ultimate holding company)

Interest expenses (note a)

812

1,513

Compensation of key management personnel (note b)

7,862

8,607

Notes:

  1. The amount due to ultimate holding company is unsecured, carries interest at Hong Kong Interbank Offered Rate ("HIBOR") plus 4% (31st December, 2019: HIBOR plus 4%) per annum and repayable on demand.
  2. The compensation of key management personnel comprised short-term and post employment benefits attributable to such personnel.

17. PROJECT/CAPITAL COMMITMENTS

The Group had outstanding commitments contracted for but not provided in the condensed consolidated financial statements in respect of expenditure on property, plant and equipment amounted to HK$1,363,000 (31st December, 2019: HK$706,000).

35

  1. PLEDGE OF ASSETS/REVENUE
    At the end of the reporting period, the bank loan facilities of the Group were secured by the followings:
    1. investment properties and hotel properties of the Group with carrying amounts as at 30th June, 2020 of approximately HK$3,928 million (31st December, 2019: HK$4,118 million) and HK$3,342 million (31st December, 2019: HK3,385 million), respectively;
    2. pledge of shares in certain subsidiaries with an aggregate net asset value as at 30th June, 2020 of approximately HK$4,377 million (31st December, 2019: HK$4,558 million);
    3. assignment of property rental of certain subsidiaries;
    4. charge over deposits and securities of a subsidiary; and
    5. assignment of insurance on certain of the hotel properties.
  3. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
    Fair value of the Group's financial assets that are measured at fair value on a recurring basis
    Some of the Group's financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used), as well as the level of the fair value hierarchy into which the fair value measurements are categorised (Levels 1 to 3) based on the degree to which the inputs to the fair value measurements is observable.
    • Level 1 fair value measurements are based on quoted prices (unadjusted) in active market for identical assets or liabilities;
    • Level 2 fair value measurements are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
    • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Fair value as at

Valuation

30th June,

31st December,

Fair value

technique(s) and

Financial asset

2020

2019

hierarchy

key input(s)

HK$'000

HK$'000

(Unaudited)

(Audited)

Equity instrument at fair value through

1,868

3,674

Level 1

Quoted bid prices

other comprehensive income

in an active market

The directors of the Company consider that the carrying amounts of the other financial assets and financial liabilities recorded at amortised cost in the condensed consolidated financial statements approximate their fair values.

36

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