Hon Kwok Land Investment : Annual Report 2019/20

July 27, 2020 at 04:35 am EDT

Hon Kwok Land Investment Company, Limited

Stock Code: 160

Annual Report 2019/20

CONTENTS

	Page(s)
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 2
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 3
Location of Property Projects in Mainland China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 4
Chairman's Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 5
Biographical Details of Directors and Senior Management. . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 14
Corporate Governance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 19
Report of the Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 29
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 45
Consolidated Statement of Profit or Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 51
Consolidated Statement of Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 52
Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 53
Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 55
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 56
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 58
Five Year Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 154
Particulars of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 155
Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 160

Cover Photo:

newly completed Data Centre - Kin Chuen Street, Kwai Chung

封面圖片：

新近落成之數據中心－葵涌健全街

	HON KWOK LAND Annual Report 2019/20	1

CORPORATE INFORMATION

DIRECTORS

James Sai-Wing Wong (Chairman)

James Sing-Wai Wong

Xiao-Ping Li

Philip Bing-Lun Lam

Zuo Xiang*

Janie Fong*

David Tak-Wai Ma*

* Independent non-executive directors

AUDIT COMMITTEE

Zuo Xiang (Chairman)

Janie Fong

David Tak-Wai Ma

REMUNERATION COMMITTEE

David Tak-Wai Ma (Chairman)

Philip Bing-Lun Lam

Janie Fong

COMPANY SECRETARY

Ka-Yee Wan

PRINCIPAL BANKERS

The Bank of East Asia, Limited

Chong Hing Bank Limited

Hang Seng Bank Limited

The Hongkong and Shanghai Banking

Corporation Limited

Industrial and Commercial Bank of

China Limited

Industrial and Commercial Bank of

China (Asia) Limited

Shanghai Commercial Bank Limited

AUDITOR

Ernst & Young

REGISTRAR

Tricor Tengis Limited

Level 54

Hopewell Centre

183 Queen's Road East Hong Kong

REGISTERED OFFICE

23rd Floor

Wing On Centre

111 Connaught Road Central

Hong Kong

Tel	:	(852) 2523 7177
Fax	:	(852) 2845 1629
E-mail	:	general@chinneyhonkwok.com

STOCK CODE

SEHK 160

WEBSITE

http://www.honkwok.com.hk

2 HON KWOK LAND Annual Report 2019/20

Revenue/

Net Profit/(Loss)

HK$ Million

		2,980
		1,781
1,570	1,574		1,478

			1,159
	585			638

460
				(36)
2016	2017	2018	2019	2020
Revenue

Net profit/(loss) attributable to shareholders

FINANCIAL HIGHLIGHTS

Shareholders' Funds/Net Assets per Share

HK$ Million / HK$

			11,874
		11,372		11,311
7,813	7,837
			$16.48
		$15.79		$15.70
	$10.88
$10.84
2016	2017	2018	2019	2020

Shareholders' funds

Net assets per share (HK$)

Earnings/(Loss)/
Dividend per Share	Gearing/Equity Funding

HK cents

		414
					47%	46%	58%	62%	58%


					49%
						38%
									32%
			161					25%
	81						16%
64

12.5	12.5	17.5	12.5	(5) 12.5

2016	2017	2018	2019	2020	2016	2017	2018	2019	2020

	Earnings/(loss) per share		Gearing ratio (*)

	Dividend per share		% of total assets financed by equity

Representing ratio of "bank borrowings + lease liabilities - bank balances" to "shareholders' funds + non-controlling interests".

	HON KWOK LAND Annual Report 2019/20	3

LOCATION OF PROPERTY PROJECTS IN MAINLAND CHINA

Airport	Expressway

Guangzhou	Metro

Bai Yun Shan

Scenic Area

GUANGZHOU

				n
			he g
		n	C
	a
H	u

Long Yan Dong

Forest Park

							y
							a
					d		w
					a		s
				o		Huo Lu Shan
			nR			s
		ua				e
	Y			South China
n					r	Forest Park
ia							p
T				Botanical Garden x
							E
6						n
					a
							N
							a
						H	u

			y
			a
		w
	s
es
Expr

TIAN HE DISTRICT

Nanhai
To	hour)
1
(about

					Guangshen	Railway	Guangzhou Railway
						East Station
	Provincial Government			Tian He
			Sport Centre
							o
							Metr
						Guangzhou
Road	2	Road	YUE XIU DISTRICT
1
Nan
		Beijing
7
Fang
	14 Tian Zi Pier
Jie
					Pearl	River

Guangshen

CHONGQINGRailway

Yuan Yang

BEI BU XIN QU

Interchange

Jin

Road

Kai

Jin

Jin Shan International

Business Centre

Administrative Committee of

Chongqing New Northern Zone

)

min)

Jinyu Motorway

(about

Interchange

centre

city

irp

Qiao

Xiang

Road

Shenzhen OCT

Golf Club

		West	Street
	Shan
Xiang

NANSHAN

DISTRICT

Enterprise
Square		Road
	Fa
Qiao

Tian

District

Wisdom Plaza

FU TIAN DISTRICT	SHENZHEN

	Park	Hua Qiang Bei
4	Central	Commercial Zone


To Nanshan	The Shanghai
Hotel
	District		Shen Nan Zhong Road
(about 20 min)
	Shenzhen	10	Shenzhen Metro

	FuRoadMing

Guangshen Railway

LUO HU DISTRICT

Jia Bin Road

The Mixc

13 12

	Projects under Development		Hotel/Serviced Apartments
1	Adjacent site to No. 5 Residence 北京路5號公館	12	City Suites 寶軒公寓, held as investment property
2	Second adjacent site to No. 5 Residence 北京路5號公館	13	The Bauhinia Hotel (Shenzhen) 寶軒酒店（深圳）,
3	Metropolitan Oasis 雅瑤綠洲, Nanhai (not shown above)		held as investment property

	Completed Projects	Acquired Property
4	Millennium Oasis 城市綠洲花園 Phase I [2001], Phases II & III [2002]	14 Ganghui Dasha 港滙大廈, held as investment property
5	City Square 城市天地廣場 [2005]
6	Chongqing Hon Kwok Centre 重慶漢國中心 [2009],
	held as investment property
7	No. 5 Residence 北京路5號公館 [2009]
8	Chongqing Jinshan Shangye Zhongxin 重慶金山商業中心 [2016],
	held as investment property
9	Botanica 寶翠園 [2016]
10	Hon Kwok City Commercial Centre 漢國城市商業中心 [2018],
	held as investment property
11	Enterprise Square 僑城坊 [2018]

4 HON KWOK LAND Annual Report 2019/20

CHAIRMAN'S STATEMENT

FINANCIAL RESULTS

For the year ended 31 March 2020, the Group's consolidated revenue was HK$638 million (2019: HK$1,478 million) with a net loss attributable to shareholders of HK$36 million (2019: net profit attributable to shareholders of HK$1,159 million). Excluding the fair value losses of investment properties (net of deferred taxation) of HK$105 million (2019: fair value gains of investment properties (net of deferred taxation) of HK$707 million), underlying net profit attributable to shareholders would be HK$69 million (2019: HK$452 million). The drop in underlying profit was attributable to the decrease in profit contributions generated from the Group's property sales during the year.

The decline in revenue was in part due to the cyclical drop in property sales from the Group's development projects. For example, last year's major project, Botanica in Guangzhou was completed with most of the revenue already recognised in prior years. On top of which, the turning of net profit into net loss was due to reappraisals resulting in fair value losses in investment properties at year end. Basic loss per share was HK$0.05 (2019: earnings per share of HK$1.61).

As at 31 March 2020, shareholders' equity amounted to HK$11,311 million (as at 31 March 2019: HK$11,874 million) and net assets per share attributable to shareholders stood at HK$15.70 (as at 31 March 2019: HK$16.48). The decrease in shareholder's equity at year end was mainly due to the net loss attributable to shareholders, together with the translation difference caused by the depreciation of Renminbi against Hong Kong Dollars during the year.

Impact of COVID-19

Since early 2020, the outbreak of coronavirus (COVID-19) has caused disruptions to cross-border traffic and business activities, resulting in a negative impact on the Group's property related businesses and hotel operation. To support our tenants, rent-free periods were granted to individual tenants according to their circumstances. Despite the large scale emergency measures implemented by the Chinese and local governments to mitigate the adverse effect on the economy, we foresee that the business environment will remain subdued for the near future. Nonetheless, the overall financial and business positions of the Group remain strong and healthy. The Group will keep abreast of the market situation and adjust its market strategy accordingly.

	HON KWOK LAND Annual Report 2019/20	5

CHAIRMAN'S STATEMENT (Continued)

DIVIDEND

The Directors recommend the payment of a final dividend of 12.5 Hong Kong cents per ordinary share for the year ended 31 March 2020 (2019: final dividend of 12.5 Hong Kong cents) to shareholders whose names appear on the Company's register of members on 4 September 2020. Subject to the approval by the shareholders at the forthcoming annual general meeting, the dividend cheques are expected to be despatched to shareholders on or before 22 September 2020.

CLOSURE OF REGISTER OF MEMBERS FOR ANNUAL GENERAL MEETING

The annual general meeting of the Company is scheduled to be held on 27 August 2020. For determining the entitlement to attend and vote at the annual general meeting, the register of members of the Company will be closed from 24 August 2020 to 27 August 2020 (both days inclusive), during which period no share transfers will be registered. In order to be eligible to attend and vote at the annual general meeting, all transfer forms accompanied by relevant share certificates must be lodged with Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on 21 August 2020.

CLOSURE OF REGISTER OF MEMBERS FOR DIVIDEND

The proposed final dividend for the year ended 31 March 2020 is subject to the approval by the shareholders at the annual general meeting. For determining the entitlement to the proposed final dividend, the register of members of the Company will be closed from 3 September 2020 to 4 September 2020, during which period no share transfers will be registered. The last day for dealing in the Company's shares cum entitlements to the proposed final dividend will be 31 August 2020. In order to qualify for the proposed final dividend, all transfer forms accompanied by relevant share certificates must be lodged with Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not later than 4:30 p.m. on 2 September 2020.

6 HON KWOK LAND Annual Report 2019/20

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW

Property Development and Investment - Mainland China

Guangzhou, PRC

The Botanica 寶翠園, situated in the greenery zone of Tian He District near the Botanical Garden, comprises 39 blocks of high-rise residential buildings. This development project, with a total gross floor area of approximately 229,000 sq.m., was completed in 2016 with nearly all residential units sold out and recognised as revenue in prior years. For the year ended 31 March 2020, the Group recognised revenue of HK$132 million (2019: HK$1,035 million) from the delivery of the remaining units of the final phase to customers.

Ganghui Dasha 港滙大廈, a 20-storey commercial/office building, is situated at the junction of Beijing Road, Nanti Er Road and Baqi Er Road, Yue Xiu District. The average occupancy rate of the building was about 85%.

45-107Beijing Nan Road is a development site adjacent to the Group's former projects, No. 5 Residence, and Ganghui Dasha. The site is close to the Beijing Road Pedestrian Street, a famous shopping district in Guangzhou, and includes a 30-storey commercial/ residential building and a 32-storey commercial/office building. The residential units of the project are planned for pre-sale in the financial year 2021/2022 whereas the office portion will be held for recurring rental income. Foundation works are now in progress. After completion, together with previous development projects, there will have four blocks of buildings forming a property complex with office, commercial and residential components along Beijing Road, representing a significant development footprint of the Group in Guangzhou.

Beijing Nan Road project - architect perspective

	HON KWOK LAND Annual Report 2019/20	7

Metropolitan Oasis 雅瑤綠洲, situated in Da Li District, Nanhai with a total gross floor area of approximately 273,000 sq.m., was developed in phases. For the year ended 31 March 2020, the Group recorded revenue of HK$193 million (2019: HK$189 million) from the units of phase 1 and phase 2 delivered during the year. Phase 3 of the project, comprising 19 blocks of high rise apartments of approximately 550 units, is scheduled for completion in 2020. Some units of phase 3 have been launched to the market for pre-sale.As at 31 March 2020, the contracted property sales but not yet booked amounted to RMB884 million.

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW (Continued)

Property Development and Investment - Mainland China (Continued)

Nanhai, Foshan, PRC

Metropolitan Oasis project - full view

Metropolitan Oasis project - inner garden view

Shenzhen, PRC
Hon Kwok City Commercial Centre
漢國城市商業中心, the Group's
investment property, with a total gross
floor area of approximately 128,000
sq.m., is situated at the junction of
Shen Nan Zhong Road and Fu Ming
Road, in the core area of Futian
District of Shenzhen. This signature
75-storey high commercial/office tower
above ground with 5-level basement,
offers high-quality Grade A office and
retail space. The building development
was completed in 2018 and delivered
for leasing/occupation in the second	Hon Kwok City Commercial Centre	Hon Kwok City Commercial Centre

half of 2019. As at 31 March 2020,	- day view	- night view

the occupancy rate of the retail portion

was 64%, while the offices were 24% leased. Overall occupancy rate grew steadily and reached around 30%.

8 HON KWOK LAND Annual Report 2019/20

Enterprise Square

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW (Continued)

Property Development and Investment - Mainland China (Continued)

Shenzhen, PRC (Continued)

City Square 城市天地廣場, situated at Jia Bin Road, Luo Hu District, is a 5-storey commercial podium. The leasing of the retail shops at ground level and the entire first floor of the podium are satisfactory. With the outbreak of COVID-19, the rental performance of hotel industry was directly hit during the first quarter of 2020, The Bauhinia Hotel (Shenzhen) 寶軒酒店（深圳）, a 162-room hotel at upper three floors of the above podium, experienced a drastic drop in occupancy and room rates, whilst, the average occupancy rate of City Suites 寶軒公寓, a 64-unit serviced apartment on top of the podium was stable and remained over 90%.

Enterprise Square 僑城坊, in which the Group owns a 20% interest, is situated at Qiaoxiang Road North, Nanshan District, covering a site area of approximately

49,000 sq.m. and a total gross floor area of approximately 224,500 sq.m. It was developed into a commercial complex comprised of office towers, a residential apartment tower and a commercial mall offering dining and entertainment facilities to the tenants. Development for the entire project was completed in 2018. Part of office towers and the residential apartment tower have been launched to the market for sale. For the year ended 31 March 2020, property sales realised revenue of

RMB1,497 milion (2019: RMB1,884 million) from the units delivered during the year. As at 31 March 2020, the property sales contracted but revenue not yet booked amounted to RMB147 million. Net profit attributable to the Group in respect of Enterprise Square, including a decrease in fair value of the commercial mall and an office tower which are classified as investment properties, amounted to HK$110 million (2019: HK$317 million) for the year ended 31 March 2020.

	HON KWOK LAND Annual Report 2019/20	9

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW (Continued)

Property Development and Investment - Mainland China (Continued)

Chongqing, PRC

Chongqing Hon Kwok Centre 重慶

漢國中心, situated at Bei Bu Xin Qu, is a 21-storeytwin-tower office building atop of a 4-storey retail/commercial podium achieved average occupancy rate of 94%.

Chongqing Jinshan Shangye Zhongxin

重慶金山商業中心, a twin-tower project, is also situated at Bei Bu Xin Qu and adjacent to the above Chongqing Hon Kwok Centre 重慶漢國中心. It comprises

41-storeyoffice tower and a 42-storey hotel and office composite tower each with its respective 4-storey retail/commercial podium. The occupancy rate of the office tower increased steadily up to 82% as at 31 March 2020, while the occupancy rate of the hotel/office tower went up to 62%.

Left: Chongqing Hon Kwok Centre

Right: Chongqing Jinshan Shangye Zhongxin

Hotel-guest room

10 HON KWOK LAND Annual Report 2019/20

Data Centre on Kin Chuen Street, Kwai Chung

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW (Continued)

Property Investment - Hong Kong

The Group's newly completed data centre, with a total gross floor area of approximately 228,000 sq.ft., is situated at Kin Chuen Street, Kwai Chung, New Territories. This building, which is 14-storey high above ground with a

2-level basement, was developed into a data centre. Construction works had been completed in mid 2020. The move is a milestone for the Group, expanding its capability to develop special-purpose properties with highly building requirements for enterprise customers. Following the issue of the occupation permit in the coming month, the entire

building is being leased out to a leading global data centre operator at satisfactory rental rates under a long term lease. It will generate a steady stream of recurrent income starting from financial year 2020/2021 onwards.

The average occupancy rate of The Bauhinia Hotel (Central) 寶軒酒店（中環）, a 42-room boutique hotel situated at four podium floors of the hotel/apartment building at Connaught Road Central and Des Voeux Road Central was about 85% whilst that of The Bauhinia 寶軒, a 171-room serviced apartment atop of the above hotel, was about 83%. The retail shops at street level of the aforesaid building are fully let.

The average occupancy rate of The Bauhinia Hotel (TST) 寶軒酒店（尖沙咀）, a 98-room boutique hotel occupying a total of 20 floors of a 23-storey commercial/office building at Observatory Court, Tsim Sha Tsui, was about 62%. The remaining floors of the above building are for leasing as restaurant/ commercial use.

The impact of local social unrest and the COVID-19 pandemic weighed heavily on the hotel industry in Hong Kong. The occupancy and room rates dropped drastically in early 2020. To cope with the difficulties, our Group's hotel business imposed cost control and offered attractive packages to customers, occupancy rates of our hotels remained at 40% as at 31 March 2020, slightly better than the market average.

The average occupancy rate of Hon Kwok Jordan Centre 漢國佐敦中心, a 23-storey commercial/office building situated at Hillwood Road, Tsim Sha Tsui was about 88%, delivering a stable rental income.

	HON KWOK LAND Annual Report 2019/20	11

CHAIRMAN'S STATEMENT (Continued)

BUSINESS REVIEW (Continued)

Property and carpark management

For the year ended 31 March 2020, the property and carpark management division reported revenue of HK$31.9 million compared with HK$32.4 million in 2019. Under the adverse impact from the local social unrest in 2019, coupled with the outbreak of COVID-19 pandemic in early 2020, operating profit dropped significantly. The local government, in support of car park operators, provided 50% rental concessions for six months to tenants operating the fee-paying public car parks. This helped to reduce our operating costs. As at 31 March 2020, the Group managed 11 car parks (31 March 2019: 11 car parks) with 2,100 parking spaces (31 March 2019: 2,000 parking spaces).

12 HON KWOK LAND Annual Report 2019/20

CHAIRMAN'S STATEMENT (Continued)

OUTLOOK

The outbreak of the COVID-19 pandemic in early 2020 posed extreme uncertainties and challenges on the entire world. Containment measures adopted to slow the spreading of virus had caused disruptions of supply chains and normal business operations, leading to a sharp decline in the global economy. Governments of impacted countries have implemented accommodative measures to soften the economic fallout. For example, the US Federal cut interest rates abruptly to boost the household and business sentiment and to forestall further deepening of economic downturn. Nevertheless, the adverse effect of COVID-19 is likely to persist in the years ahead.

In 2019, the Mainland real estate market grew moderately amid the on-goingUS-China trade disputes and geopolitical tensions. Under the government's city-specific housing policies and tight control over financing activities, housing prices stabilized. While the signing of the Phase-One trade agreement with the US in January 2020 has slightly lifted market sentiment, the outbreak of COVID-19 pandemic inflicted a sudden turnaround in the reviving economy, resulting in a severe contraction in the first quarter of 2020. In light of the solid demand in Mainland property market, together with the belief that the Chinese government will endeavour to implement policy measures to develop a stable and healthy real estate market, we still see positive growth in the long term.

In Hong Kong, the coronavirus outbreak, impact from the social unrest, and external economic volatility weighed heavily on the economy, affecting all business sectors, resulting in a deep downturn in economic activity through the first quarter of 2020. In particular, the retailing, catering and hotel operations were most affected sectors due to the decline in inbound tourism. Our Group's hotel occupancy rates are historically low. To alleviate the negative impact of the pandemic and forestall further deterioration in the labour market, the local government introduced relief measures by means of an Anti-epidemic Fund to support business sectors. Looking forward, as the consequential impact of pandemic has yet to be fully reflected, Hong Kong's economy is likely to encounter more challenges in the foreseeable future.

Finally, I would like to thank my fellow directors for their support and valuable advice and all staff members for their efforts during the year under review.

James Sai-Wing Wong

Chairman

Hong Kong, 26 June 2020

	HON KWOK LAND Annual Report 2019/20	13

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT

DIRECTORS

James Sai-Wing Wong

Aged 82, was appointed as the Managing Director of the Company in 1985 and became the Chairman in 1990. James Sai-Wing Wong ("Dr. Wong") is the Chairman of Chinney Investments, Limited ("Chinney Investments") (Stock Code: 216), a director of Chinney Holdings Limited ("Chinney Holdings") and Lucky Year Finance Limited ("Lucky Year"), all being substantial shareholders of the Company, and a director of Chinney Capital Limited ("Chinney Capital") which is a shareholder of the Company. He is also the Chairman of Chinney Alliance Group Limited ("Chinney Alliance") (Stock Code: 385). Both Chinney Investments and Chinney Alliance are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). He is also a director of certain subsidiaries of the Company. He was appointed a Justice of the Peace for Hong Kong in 1987.

James Sing-Wai Wong

Aged 56, was appointed as a non-executive director of the Company in August 2017 and subsequently re-designated as an executive director of the Company in July 2018. He graduated from the University of Washington with a Bachelor's degree with honors in Economics. He also holds a Juris Doctor degree from the University of California Hastings College of Law, and a Master's degree in Systems Engineering and Information Systems from the Florida Institute of Technology. He is licensed to practice law in the United States of America ("United States" or "USA" or "U.S.") and the State of California, where he also holds a Real Estate Broker's License. He has accumulated over 30 years of experience in economics, law, management, and information systems in Hong Kong, United States, Canada, the United Kingdom, and the Mainland China.

Mr. Wong is a director of Chinney Holdings and Lucky Year, both of which are substantial shareholders of the Company, and a director of Chinney Capital which is a shareholder of the Company. Mr. Wong was a non-executive director of Chinney Investments during the period from June 2013 to August 2017 and subsequently appointed as an executive director of Chinney Investments in August 2018. He is also an executive director of Chinney Alliance and Chinney Kin Wing Holdings Limited ("Chinney Kin Wing") (Stock Code: 1556). Chinney Investments, Chinney Alliance and Chinney Kin Wing are all listed on the Main Board of the Stock Exchange. He is also a director of certain subsidiaries of the Company. He is the son of Dr. Wong, the Chairman and a substantial shareholder of the Company.

Xiao-Ping Li

Aged 68, joined the Group in 1999 and was appointed as an executive director of the Company in 2009. He is also a director of certain subsidiaries of the Company. He has over 39 years of experience in economics and management in the People's Republic of China (the "PRC"). He has obtained a senior economist qualification certificate of PRC. He is a member of the Plant Maintenance Association of Chinese Mechanical Engineering Society.

14 HON KWOK LAND Annual Report 2019/20

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT (Continued)

DIRECTORS (Continued)

Philip Bing-Lun Lam

Aged 77, was appointed as an executive director of the Company in April 2019. Mr. Lam began his career in 1963 with Hang Seng Bank Limited for eleven years, and then joined the University of Hong Kong ("HKU") in 1975 as an Assistant Finance Director. He then worked as the Chief Accountant and Comptroller in Overseas Bank (Canada) in Vancouver for three years from 1982 to 1985. In December 1985, Mr. Lam re-joined HKU and had served as the Director of Finance from 1990 until his retirement on 30 June 2012. He was then asked by the Vice-Chancellor of HKU to be his Senior Advisor for financial, investment and fund-raising matters until June 2014, and had been the Honorary Advisor to the Chairman of The University of Hong Kong Foundation for Educational Development and Research until end of 2019. Mr. Lam obtained a diploma in management studies from the Hong Kong Polytechnic (now known as the Hong Kong Polytechnic University) in 1974. He is a fellow of The Chartered Institute of Management Accountants (UK), the Hong Kong Institute of Certified Public Accountants and an associate of The Certified Management Accountants (Canada), The Institute of Chartered Secretaries and Administrators (UK) and The Chartered Institute of Bankers (UK).

Mr. Lam is active in community affairs and had served as a member on the Board of Review (Inland Revenue Ordinance) Hong Kong for three years from 1995 to 1998. He had been a member of the Establishment and Finance Committee of the Prince Philip Dental Hospital from early 1990s until his retirement in June 2012. Currently he is a member of the Board of Governors of the Canadian International School of Hong Kong, and a member of the Board of Governors of the Centennial College, a subsidiary of HKU. Mr. Lam is an executive director of Chinney Alliance and Chinney Kin Wing, both companies are listed on the Main Board of the Stock Exchange. He is also a director of certain subsidiaries of the Company. He is also an independent non-executive director of Oriental University City Holdings (H.K.) Limited (stock code: 8067) which is listed on the GEM of the Stock Exchange.

	HON KWOK LAND Annual Report 2019/20	15

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT (Continued)

INDEPENDENT NON-EXECUTIVE DIRECTORS

Zuo Xiang

Aged 56, was appointed as an independent non-executive director of the Company in 2015. He is also the chairman of the audit committee of the Company. He has about 30 years of experience in principal investment, structured finance, opportunistic investment, real estate finance and investment banking in the PRC and Asia Pacific. He previously served a key position in JPMorgan Global Special Opportunities Group and a senior role in The Royal Bank of Scotland and GE Capital Group. Mr. Xiang holds a Bachelor's degree in Philosophy from Sichuan University, Chengdu, PRC, a Master's degree in Sociology from Morehead State University, Kentucky, USA and also a Master of Business Administration Degree in Corporate Finance from Fairleigh Dickinson University, New Jersey, USA.

Janie Fong

Aged 53, was appointed as an independent non-executive director of the Company in May 2019. Ms. Fong is the Managing Director of East West Bank, a post she has held since 2007. California- based East West Bank is a wholly-owned subsidiary of East West Bancorp, Inc., a publicly owned company in the U.S.. From 2000 to 2004, Ms. Fong was appointed by the California Governor to represent the State of California in Hong Kong and the PRC. Through her former post as California's Chief Representative, Ms. Fong was responsible for creating new economic, trade, and diplomatic ties between the PRC and the U.S.. Ms. Fong practiced law as a licensed California attorney up until 2000 and worked as an executive of Silicon Valley start-up companies from 1998 to 2000. Ms. Fong served on the Commission on Strategic Development of Hong Kong from 2005 to 2007. Ms. Fong was an independent non-executive director and a member of audit committee of the board of directors of AID Life Science Holdings Limited (a company listed on the GEM of the Stock Exchange with stock code: 8088) until she resigned in April 2019. Ms. Fong is a member of the Harvard Kennedy School of Government's Women's Leadership Board and currently serves as: an Advisor to ChinaSF, the China Office of the City and County of San Francisco; a member of The Hong Kong Chi Tung Association Limited; a member of the Board of Governors of the Hong Kong-America Center, an executive committee member of Hong Kong Tianjin Business and Professional Women Association, a member of The Hong Kong Federation of Women Lawyers Limited; and a member of the Asia Advisory Council of the University of California, Los Angeles (UCLA).

16 HON KWOK LAND Annual Report 2019/20

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT (Continued)

INDEPENDENT NON-EXECUTIVE DIRECTORS (Continued)

David Tak-Wai Ma

Aged 62, was appointed as an independent non-executive director of the Company in August 2019. He is also the chairman of the remuneration committee of the Company. He is in real estate and capital market advisory business in Hong Kong, the greater China and Japan since 2016. Previously in 2000, Mr. Ma joined the Group and its affiliated company and then he acted as the deputy general manager of Hon Kwok Land Investment (China) Limited and director and general manager of Hon Kwok Project Management Limited until 2015, both companies are wholly owned subsidiaries of the Company. During Mr. Ma's tenure with the Group, he was actively involved in a joint-venture project with investment banks and investment funds in the Group's residential development project in Guangzhou. He was also instrumental to lead the Company's affiliated company to co-invest as limited partner in an investment project of LaSalle Investment Management Limited in Hangzhou. In addition, Mr. Ma successfully advised Grosvenor Asia Pacific in closing a luxury residential project (Chateau Pinnacle) in Shanghai for over RMB2 billion in 2009. Prior to joining the Group and its affiliated company, Mr. Ma has diverse business experiences in the regions of the Pacific Basin and the United States and has been intimately involved in hotel, food and beverage, shipping and real estate sectors from early 1980s. Mr. Ma held various senior positions in sizeable enterprises namely Miramar Hotel Group and Island Navigation Inc. (C.Y. Tung Group) in the 1980s' and was a director of investment at Associated Investment Ltd., the real estate arm of Taiwan Chinese Maritime Transport founded by the late C.Y. Tung, in which Mr. Ma was responsible for new investments in Greater China, Asia Pacific and the United States in the 1990s'.

Mr. Ma is a permanent honorary Premier of Hong Kong South China Athletic Association (SCAA). He was also a member of Hong Kong Rotary Club Admiralty Chapter.

He was raised in both Hong Kong and the United States and obtained his Bachelor of Business Administration's degree from university in the United States.

SENIOR MANAGEMENT

Kai-Nor Siu

Aged 54, was appointed as the Director of Finance of the Company in May 2018. She is also the Financial Controller of Chinney Investments and the director of certain subsidiaries of the Company. She has over 30 years of experience in the accounting field. She holds a Bachelor's degree in Accountancy from The City University of Hong Kong and is a fellow member of the Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants.

	HON KWOK LAND Annual Report 2019/20	17

BIOGRAPHICAL DETAILS OF DIRECTORS AND SENIOR MANAGEMENT (Continued)

SENIOR MANAGEMENT (Continued)

Ka-Yee Wan

Aged 46, was appointed as the Company Secretary of the Company in May 2018. She is also the Company Secretary of Chinney Investments. She has over 20 years of experience in company secretarial and corporate governance practices. Ms. Wan has obtained a Bachelor of Arts degree from The Chinese University of Hong Kong and a postgraduate diploma in corporate administration from The City University of Hong Kong. She is an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators.

Calvin Ming-Yui Ng

Aged 48, joined the Company in 2009 and is currently the Director - Corporate Finance & Business Development of the Company and of Chinney Investments. He has 25 years of experience in investment banking and accounting sectors. He graduated from HKU with a Bachelor of Business Administration degree and obtained a Master of Science (Financial Management) degree from the University of London. He is a member of The Hong Kong Institute of Certified Public Accountants.

Chi-Cheung Chan

Aged 60, joined the Company in May 2019 and is the General Manager - Operations of the Company. He has over 40 years of experience in banking and international business operations. Prior to joining the Company, he has worked as the Director and General Manager - Operations of Jacobson van den Berg (Hong Kong) Limited which is a major subsidiary of Chinney Alliance for over 30 years. He has obtained a Bachelor's degree of Business Administration from Thames Valley University (now known as University of West London), United Kingdom, a Master's degree of Business Administration, and a Master's degree of Professional Accounting from The Open University of Hong Kong. He is a Certified Documentary Credit Specialist endorsed by the International Chamber of Commerce and a member of the Hong Kong Logistic Association.

Stephen Chun-Piu Lee

Aged 53, joined the Company in 1990 and is the Senior Property Manager of the Company in charge of investment properties in Hong Kong. He is also a director of certain subsidiaries of the Company. He has 30 years of experience in property investment and development.

Chi-Kin Lam

Aged 65, joined the Company in 2003 and is the Assistant General Manager - Asset Management of the Company. He is also a director of certain subsidiaries of the Company. He has 35 years of experience in large scale parking facilities and property services management. He is a chartered member of the Chartered Institute of Logistics and Transport.

18 HON KWOK LAND Annual Report 2019/20

CORPORATE GOVERNANCE REPORT

The board of directors of the Company (the "Board") is committed to maintain and ensure high standards of corporate governance and is continuously reviewing and improving the corporate governance practices and standards of the Group to ensure that business activities and decision making processes are regulated in a proper manner.

In the opinion of the Board, the Company has applied applicable principles and complied with the applicable code provisions of the Corporate Governance Code (the "CG Code") as set out in Appendix 14 to the Rules Governing the Listing of Securities on the Stock Exchange (the "Listing Rules") for the year under review, except for the deviations as disclosed in this report.

DIRECTORS' SECURITIES TRANSACTIONS

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own code of conduct for directors' securities transactions. Having made specific enquiry, all the directors have confirmed that they have complied with the required standard as set out in the Model Code throughout the year.

BOARD OF DIRECTORS

The directors of the Company during the year and up to the date of this report were:

Executive Directors
Dr. Wong (Chairman)
James Sing-Wai Wong
Xiao-Ping Li
Philip Bing-Lun Lam	(appointed on 29	April 2019)
Peter Chi-Chung Luk	(resigned on 29 April 2019)
Independent Non-Executive Directors
Zuo Xiang
Janie Fong	(appointed on 27	May 2019)
David Tak-Wai Ma	(appointed on 29	August 2019)
Daniel Chi-Wai Tse	(retired on 29 August 2019)

Details of background and qualifications of each director are set out in the section headed "Biographical Details of Directors and Senior Management" on pages 14 to 18 of this annual report.

	HON KWOK LAND Annual Report 2019/20	19

CORPORATE GOVERNANCE REPORT (Continued)

BOARD OF DIRECTORS (Continued)

The Board is responsible for the overall strategic development of the Group. It also monitors the financial performance and the internal controls of the Group's business operations. Executive directors are responsible for running the Group and executing the strategies adopted by the Board. The day-to-day operation of the Group is delegated to the management with department heads responsible for different aspects of the business and functions.

Non-executive directors (including the independent non-executive directors) serve the relevant function of bringing independent judgement on the development, performance and risk management of the Group through their contributions in board meetings.

The Board considers that each independent non-executive director of the Company is independent in character and judgement. The Company has received from each independent non-executive director a written confirmation of his independence pursuant to Rule 3.13 of the Listing Rules.

The Board meets at least twice each year at approximately half a year interval to discuss the Group's business development, operation and financial performance. Notice of at least 14 days is given to all directors for all regular board meetings. All regular board meetings adhere to a formal agenda in which a schedule of matters is addressed to the Board. All directors have access to board papers and related materials, and are provided with adequate information which enable the Board to make an informed decision on the matters to be discussed and considered at the board meetings. Minutes of board meetings are kept by the Company Secretary and are open for inspection by any director at any reasonable time.

To the best knowledge of the directors, there is no financial, business and family relationships among the members of the Board except that James Sing-Wai Wong is the son of Dr. Wong.

CG Code provision A.1.1 stipulates that the board of directors should meet regularly and board meetings should be held at least four times a year at approximately quarterly intervals. During the year, two full board meetings were held. As business operations were under the management and supervision of the executive directors of the Company, who from time to time held management/executive meetings to resolve all material business or management issues, thus only two full board meetings were held for the year ended 31 March 2020.

20 HON KWOK LAND Annual Report 2019/20

CORPORATE GOVERNANCE REPORT (Continued)

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

The roles of the chairman and chief executive officer were not performed by separate individuals as stipulated in CG Code provision A.2.1. Dr. Wong, Chairman of the Company, assumes the role of the Chairman and also the chief executive officer who is responsible for overseeing the function of the Board and formulating overall strategies of and organising the implementation structure for the Company as well as managing the Group's overall business operations. Given the nature of the Group's businesses which require considerable market expertise, the Board believes that the vesting of the two roles for the time being provides the Group with stable and consistent leadership and allows for more effective planning and implementation of long term business strategies. The Board will continuously review the effectiveness of the structure to balance the power and authority of the Board and the management.

NON-EXECUTIVE DIRECTORS

CG Code provision A.4.1 stipulates that non-executive directors should be appointed for a specific term, subject to re-election and CG Code provision A.4.2 stipulates that all directors appointed to fill a casual vacancy should be subject to election by shareholders at the first general meeting after their appointment and every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.

The non-executive directors of the Company are not appointed for a specific term as stipulated in CG Code provision A.4.1, but are subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with the articles of association of the Company (the "Articles of Association"). The Articles of Association do not require the directors to retire by rotation at least once every three years. However, in accordance with article 104 of the Articles of Association, at each annual general meeting of the Company, one-third of the directors for the time being (or, if their number is not three or a multiple of three, then the number nearest one-third), other than the one who holds the office as executive chairman or managing director, shall retire from office by rotation. The Board will ensure the retirement of each director, other than the one who holds the office as executive chairman or managing director, by rotation at least once every three years in order to comply with the CG Code provisions.

The Chairman will not be subject to retirement by rotation; which deviates from CG Code provision A.4.2 as the Board considers that the continuity of office of the Chairman provides the Group with a strong and consistent leadership and is of great importance to the smooth operations of the Group.

All directors appointed to fill a casual vacancy is subject to re-election by shareholders at the next following annual general meeting of the Company instead of at the first general meeting after their appointment as stipulated in CG Code provision A.4.2.

In accordance with article 95 of the Articles of Association, David Tak-Wai Ma who was appointed by the Board as an independent non-executive director effective 29 August 2019 will hold office until the forthcoming annual general meeting and, being eligible, offer himself for re-election. In accordance with article 104 of the Articles of Association, James Sing-Wai Wong and Xiao-Ping Li shall retire by rotation at the forthcoming annual general meeting. James Sing-Wai Wong and Xiao-Ping Li, being eligible, will offer themselves for re-election.

	HON KWOK LAND Annual Report 2019/20	21

CORPORATE GOVERNANCE REPORT (Continued)

INDUCTION AND CONTINUOUS PROFESSIONAL DEVELOPMENT

The Company Secretary updates directors on the latest developments and changes to the Listing Rules and the applicable legal and regulatory requirements as well as the business environment regarding subjects necessary in the discharge of their duties. All directors are encouraged to participate in continuous professional development to develop and refresh their knowledge and skills.

Directors are required to submit to the Company annually details of training sessions undertaken by them in each financial year for the Company to maintain a training record for its directors. According to the training records maintained by the Company, the training received by each of the existing directors during the year ended 31 March 2020 is summarised as follows:

Name of director	Type of training
Executive Directors
Dr. Wong	A, B
James Sing-Wai Wong	A, B
Xiao-Ping Li	A, B
Philip Bing-Lun Lam	A, B
Independent Non-Executive Directors
Zuo Xiang	A, B
Janie Fong	A, B
David Tak-Wai Ma	A, B

attending seminars/conferences/forums
reading newspapers, journals and updates relating to the economy, general business, real estate, corporate governance and director's duties and responsibilities

CORPORATE GOVERNANCE FUNCTION

The Board is collectively responsible for performing the corporate governance duties including:

to develop, review and update the Company's policy and practices on corporate governance;
to review and monitor the training and continuous professional development of directors and senior management;
to review and monitor the Company's policies and practices in compliance with legal and regulatory requirements;
to review the Company's compliance with the CG Code and disclosure in the "Corporate Governance Report"; and
to perform such other corporate governance duties and functions set out in the CG Code (as amended from time to time) for which the Board is responsible.

22 HON KWOK LAND Annual Report 2019/20

CORPORATE GOVERNANCE REPORT (Continued)

REMUNERATION OF DIRECTORS

The Remuneration Committee was established in 2005. The Remuneration Committee currently comprises two independent non-executive directors, namely David Tak-Wai Ma and Janie Fong, and one executive director, namely Philip Bing-Lun Lam. The Chairman of the Remuneration Committee is David Tak-Wai Ma.

CG Code provision B.1.2 stipulates that the terms of reference of the remuneration committee should include, as a minimum, those specific duties as set out in the CG Code provisions. The Company has adopted the revised terms of reference of the Remuneration Committee on 30 March 2012 with certain deviations from the CG Code provisions. Pursuant to the revised terms of reference, the Remuneration Committee reviews and makes recommendations to the Board on the remuneration packages of directors (as opposed to directors and senior management).

During the year under review, the Remuneration Committee held one meeting, during which the existing remuneration of all directors have been reviewed individually.

Draft minutes of the Remuneration Committee meeting are circulated to members of Remuneration Committee for comments and the signed minutes are kept by the Company Secretary.

AUDIT COMMITTEE

The Audit Committee was established in 2001. The Audit Committee currently comprises three members, namely Zuo Xiang, Janie Fong and David Tak-Wai Ma and they are all independent non- executive directors of the Company. The Chairman of the Audit Committee is Zuo Xiang. The Board considers that each Audit Committee member has broad commercial experience and there is a suitable mix of expertise in banking, business, accounting and financial management in the Audit Committee.

The Audit Committee's functions include:

to review and monitor financial reporting and the reporting judgement contained in them; and
to review financial and internal controls, accounting policies and practices with management and external auditor.

	HON KWOK LAND Annual Report 2019/20	23

CORPORATE GOVERNANCE REPORT (Continued)

AUDIT COMMITTEE (Continued)

The Audit Committee held two meetings during the year under review, which were attended by the external auditor, Ernst & Young and the work performed by the Audit Committee included the review of the following:

the half-yearly and annual results and the related financial reporting matters;
the financial and accounting policies and practices of the Group;
the relationships with external auditor, including remuneration, independence, objectivity and effectiveness of the audit process; and
the effectiveness of the Group's financial and internal controls and risk management system.

Draft minutes of the Audit Committee meetings are circulated to members of Audit Committee for comments and the signed minutes are kept by the Company Secretary.

ATTENDANCE AT MEETINGS OF THE BOARD, REMUNERATION AND AUDIT COMMITTEES AND GENERAL MEETING

		Number of meetings attended
	during the year ended 31 March 2020
				Annual
				General
				Meeting
		Remuneration	Audit	held on
	Board	Committee	Committee	29 August
	Meetings	Meeting	Meetings	2019
Number of meetings held during the year ended
31 March 2020	2	1	2	1
Dr. Wong	2	N/A	N/A	1
James Sing-Wai Wong	2	N/A	N/A	1
Xiao-Ping Li	1	N/A	N/A	0
Philip Bing-LunLam (appointed on 29 April 2019)	2	1	2	1
Zuo Xiang	2	N/A	2	1
Janie Fong (appointed on 27 May 2019)	2	1	2	0
David Tak-WaiMa (appointed on 29 August 2019)	1	N/A	1	N/A
Daniel Chi-WaiTse (retired on 29 August 2019)	1	1	1	0

24 HON KWOK LAND Annual Report 2019/20

CORPORATE GOVERNANCE REPORT (Continued)

NOMINATION OF DIRECTORS AND DIVERSITY OF THE BOARD

CG Code provision A.5.1 stipulates that, amongst others, issuers should establish a nomination committee which is chaired by the chairman of the board or an independent non-executive director.

The Company has not established a nomination committee. The Board is responsible for considering the suitability of a candidate to act as a director, and collectively approving and terminating the appointment of a director as this allows a more informed and balanced decision to be made. The Chairman, with his expertise in property industry, is mainly responsible for identifying suitable candidates for members of the Board when there is a vacancy or an additional director is considered necessary. The Chairman will propose the appointment of such candidates to the Board for consideration and the Board will determine the suitability of the relevant candidates having due regard to the Nomination Policy and the Board Diversity Policy adopted by the Company and assess the independence of the proposed independent non-executive director(s) as appropriate.

In summary, the selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of service. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board. These measurable objectives have been set to ensure that the Board has a balance of skills, experience and diversity of perspectives appropriate to the Company and will be reviewed by the Board annually to ensure the continued effectiveness of the Board.

AUDITOR'S REMUNERATION

During the year, the Group had engaged its external auditor, Ernst & Young, to provide the following services and their respective fees charged are set out as below.

	Fees paid/payable
	HK$'000
Types of services
Audit services	2,700
Non-audit services (tax compliance services and other services)	35
	2,735

	HON KWOK LAND Annual Report 2019/20	25

CORPORATE GOVERNANCE REPORT (Continued)

REMUNERATION OF SENIOR MANAGEMENT

The remuneration of the members of the senior management (excluding directors) by band for the year ended 31 March 2020 is set out below:

Remuneration band (HK$)	Number of persons
Below $2,000,000	3
$2,000,000 to $2,500,000	1
$2,500,001 to $3,000,000	1
	5

DIRECTORS' AND AUDITOR'S RESPONSIBILITIES FOR THE ACCOUNTS

The Directors acknowledge their responsibilities for the accounts and they are not aware of any material uncertainties relating to events or conditions that may cast significant doubt upon the Company's ability to continue as a going concern. The directors' responsibilities for the accounts and the responsibilities of the external auditor to the shareholders are set out in the Independent Auditor's Report on pages 45 to 50 of this annual report.

INTERNAL CONTROL AND RISK MANAGEMENT

The Board has overall responsibilities for maintaining the Group's systems of internal control and reviewing their effectiveness. The internal control systems of the Group are designed to provide reasonable assurance to minimize risk of failure in operational systems, and to assist in the achievement of the Group's goals. The systems are also structured to safeguard the Group's assets, to ensure the maintenance of proper accounting records and compliance with applicable laws, rules and regulations. The systems are designed to provide reasonable, but not absolute, assurance against material misstatement or loss, and to manage rather than eliminate risks of failure in the Group's operational systems and in the achievement of the Group's business objectives. The Group has dedicated internal audit function which reviews the effectiveness of the risk management and internal control systems from time to time in order to ensure that they meet with the dynamic and ever changing business environment.

During the year, the Audit Committee has reviewed the Group's internal control system and considered the internal audit report with the Group's executive directors and finance executive. The review covers all material controls, including financial, operational and compliance controls and risk management of the Group and such systems have been considered reasonably effective and adequate.

The Group regularly reminds the directors and relevant employees for the compliance of policies regarding the inside information, and provide them with updates on the appropriate guidelines or policies to ensure the compliance with regulatory requirements.

26 HON KWOK LAND Annual Report 2019/20

CORPORATE GOVERNANCE REPORT (Continued)

COMPANY SECRETARY

The Company Secretary is responsible for advising the Board on corporate governance and other related matters as well as ensuring good information flow within the Board.

During the year, the Company Secretary undertook no less than 15 hours of relevant professional training.

CONSTITUTIONAL DOCUMENTS

During the year, there is no change in the Company's constitutional documents.

DIVIDEND POLICY

The Company has adopted a dividend policy (the "Dividend Policy"). Pursuant to which, in considering the declaration and payment of dividends, the Board shall maintain adequate cash reserves for meeting its working capital requirements and future business growth and take into account the following factors of the Group:

financial results;
cash flow situation;
business conditions and strategies;
future operations and earnings;
capital requirements and expenditure plans;
interests of shareholders;
any restrictions on payment of dividends; and
any other factors that the Board may consider relevant.

The Board has discretion to declare and distribute dividends to the shareholders of the Company, subject to the Articles of Association and all applicable laws and regulations. The Board will review the Dividend Policy from time to time and may exercise its sole and absolute discretion to update, amend and/or modify the Dividend Policy at any time as it deems fit and necessary. There is no assurance that dividends will be paid in any particular amount for any given period.

	HON KWOK LAND Annual Report 2019/20	27

CORPORATE GOVERNANCE REPORT (Continued)

SHAREHOLDERS' RIGHTS

Convening of extraordinary general meeting on requisition by shareholders
Pursuant to Section 566 of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong) (the "CO"), shareholders representing at least 5% of the total voting rights of all the shareholders are entitled to send a request to the Company to convene an extraordinary general meeting. Such request must state the general nature of the business to be dealt with at the meeting and may include the text of a resolution that may properly be moved and is intended to be moved at the meeting. A request may be sent to the Company in hard copy form or in electronic form and must also be authenticated by the person or persons making it.
Procedures for sending enquiries to the Board
Shareholders may send their enquiries and concerns in writing to the Board by addressing them to the Company Secretary at the registered office of the Company and the Company Secretary shall then forward the same to the appropriate executives of the Company or members of the Board for further handling.
Procedures for putting forward proposals at an annual general meeting by shareholders
Pursuant to Section 615 of the CO, shareholders representing at least 2.5% of the total voting rights of all the shareholders or at least 50 shareholders can request the Company to give notice of a resolution that may properly be moved and is intended to be moved at an annual general meeting. A request may be sent to the Company in hard copy form or in electronic form and must identify the resolution of which notice is to be given. It must be authenticated by the person or persons making it and be received by the Company not later than 6 weeks before the annual general meeting to which the requests relate; or if later, the time at which notice is given of that meeting.

COMMUNICATIONS WITH SHAREHOLDERS

The Board recognises the importance of good communications with all shareholders and is committed to maintaining a policy of open and timely disclosure of relevant information on its attributes to shareholders and other stakeholders through the publication of interim and annual reports, public announcements and other public circulars, all of which are available on the Company's website.

The annual general meeting provides a useful forum for shareholders to exchange views with the Board. Shareholders are encouraged to attend the annual general meeting for which at least 20 clear business days' prior notice is given. The Chairman of the Board as well as the chairman of the board committees (or in their absence, other members of the committees) together with the external auditor are available to answer shareholders' questions at the meeting. At the general meeting, each substantially separate issue will be considered by a separate resolution, including the election of individual director, and the poll procedures will be clearly explained.

28 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS

The directors herein present their report and the audited financial statements for the year ended 31 March 2020.

PRINCIPAL ACTIVITIES

The Company acts as an investment holding company and provides management services to its subsidiaries. Its subsidiaries are mainly engaged in property development, property investment and property related activities. There have been no changes in the nature of the Group's principal activities during the year. Further details of the Company's principal subsidiaries are set out in note 1 to the financial statements.

FINANCIAL RESULTS

The Group's loss for the year ended 31 March 2020 and the Group's financial position at that date are set out in the financial statements on pages 51 to 153.

BUSINESS REVIEW

The Group is principally engaged in the businesses of (i) property development, (ii) property investment and (iii) property and carpark management, and mainly focused on three major cities in Mainland China, namely Shenzhen, Guangzhou and Chongqing as well as in Hong Kong. The long term strategy of the Group aims to generate recurring rental income sufficient to cover its operating overheads including administration expenses, finance costs plus dividends with project sales supplement the Group's additional cash inflows.

A business review of the Group for the year ended 31 March 2020 and outlook are set out in the "Chairman's Statement" on pages 5 to 13 and an analysis using financial key performance indicators are set out in "Financial Highlights" on page 3 of this annual report. The Group's financial risk management objectives and policies are set out in note 36 to the financial statements of this annual report.

The Group is committed to build an environmental-friendly corporation with the aim to conserve natural resources. The Group has taken initiatives to reduce energy consumption and encourage recycle of office supplies and other materials. The Group will continue to review and promote its environmental policies.

During the year ended 31 March 2020, there were no material breach of or non-compliance with applicable laws and regulations by the Group that have significant impact on the business and operations of the Group.

	HON KWOK LAND Annual Report 2019/20	29

REPORT OF THE DIRECTORS (Continued)

RELATIONSHIP WITH EMPLOYEES, CUSTOMERS AND SUPPLIERS

The Group's relationship with its employees is set out in the "Employees and remuneration policies" below.

The Group recognises the importance of maintaining a good relationship with business partners, customers, suppliers and contractors to achieve its long-term business growth and development. Accordingly, the Group has kept good communication and shared business updates with them as and when appropriate.

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue

The Group's revenue was primarily derived from the business segments: (i) property development,

property investment, and (iii) property and carpark management. Revenue decreased by 56.8% to HK$638 million in the year under review from HK$1,478 million in last year. 51.0% of the Group's revenue was generated from the sales of properties (2019: 82.8%), 44.1% from property rental (2019: 15.1%) and 4.9% from property and carpark management and other segments (2019: 2.1%). Property development business recorded a drop as a result of decreased property contracted sales whereas the property investment business recorded a slight increase in revenue.

Liquidity and financial resources

The total interest-bearing debts of the Group amounted to approximately HK$5,880 million as at 31 March 2020 (2019: HK$5,028 million), of which approximately 32% (2019: 22%) of the debts were classified as current liabilities. Included therein were debts of HK$80 million related to bank loans with repayable on demand clause and HK$1,494 million related to project or term loans which will be refinanced during the forthcoming financial year. Based on the repayment schedules pursuant to the related loan agreements and assuming that the aforesaid refinancing will be completed on schedule, the current portion of the total interest-bearing debts was approximately 5%. The increase in total debts was mainly due to the drawdown of bank loans for construction of development projects in the PRC and Hong Kong.

Total cash and bank balances including time deposits were approximately HK$2,168 million as at 31 March 2020 (2019: HK$1,963 million). Included in cash and bank balances are restricted bank deposits of HK$62 million (2019: HK$77 million) which can only be applied in the designated property development projects prior to their completion of construction. The Group had committed but undrawn banking facilities of a total of approximately HK$1,412 million at year end available for its working capital purpose.

Total shareholders' funds as at 31 March 2020 were approximately HK$11,311 million (2019: HK$11,874 million). The decrease was mainly due to current year's loss attributable to shareholders and the depreciation in value of assets less liabilities denominated in Renminbi.

30 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

MANAGEMENT DISCUSSION AND ANALYSIS (Continued)

Liquidity and financial resources (Continued)

The gearing ratio of the Group, as measured by the net interest-bearing debts of approximately HK$3,712 million (2019: HK$3,065 million) over the shareholders' funds plus non-controlling interests totalling of approximately HK$11,503 million (2019: HK$12,069 million), was 32% as at 31 March 2020 (2019: 25%).

Funding and treasury policies

The Group adopts prudent funding and treasury policies. Surplus funds are primarily maintained in the form of cash deposits with leading banks.

Acquisition and development of properties are financed partly by internal resources and partly by bank loans. Repayments of bank loans are scheduled to match asset lives and project completion dates. Bank loans are mainly denominated in Hong Kong dollars and Renminbi and bear interest at floating rates.

Foreign currency exposure is closely monitored by management and hedged to the extent desirable. As at 31 March 2020, the Group had no material exposure under foreign exchange contracts or any other hedging instruments.

Pledge of assets

Properties with an aggregate carrying value of approximately HK$14,854 million as at 31 March 2020 were pledged to secure certain banking facilities of the Group.

Contingent liabilities

Particulars of the contingent liabilities of the Group are set out in note 30 to the financial statements.

Employees and remuneration policies

The Group, not including its joint venture and associate, employed approximately 330 employees as at 31 March 2020. Remuneration is determined by reference to market terms and the qualifications and experience of the staff concerned. Salaries are reviewed annually with discretionary bonuses being paid depending on individual performance. The Group also provides other benefits including medical cover, provident fund, personal accident insurance and educational subsidies to all eligible staff.

	HON KWOK LAND Annual Report 2019/20	31

REPORT OF THE DIRECTORS (Continued)

KEY RISK FACTORS

The following content lists out the key risks and uncertainties facing the Group. It is a non-exhaustive list and there may be other risks and uncertainties which are not identified for the time being or turn out to be material in future.

Risks Pertaining to the Property Market in Mainland China

A substantial part of the Group's property portfolio is located in Mainland China, and a major part of the Group's revenue is derived in Mainland China. Therefore, the Group is exposed to the risks associated with China's property market including risks of policy changes, currency fluctuation and interest rate changes. The Group continues to implement strategies and strengthen its financial position to withstand any adverse impact when the business environment deteriorates.

Risks Pertaining to the Property Market in Hong Kong

A portion of the Group's investment property portfolio is located in Hong Kong, earning rental and management income. Therefore, the Group is susceptible to changes in economic conditions, consumer consumption and the tourist market in Hong Kong. Besides, the local government may introduce further regulatory measures on the property market, thus adversely affecting the local business environment.

Interest Rate Risks

The Group's bank borrowings mainly bear floating rates. The Group's finance and treasury operation is affected by the change in interest rates and market condition. To reduce our exposure due to volatility in interest rates, the Group has closely monitored the interest rate movements and refinanced existing banking facilities when favourable pricing opportunities arise.

Counterparty Risks

The Group relies on contractors in carrying out its property developing activities. While the Group has been careful in selecting its contractors, there can be no assurance that the contractors will perform satisfactorily. Any unsatisfactory performance of the contractors may potentially lead to construction cost overrun, project delay and contract disputes, which can adversely affect the return of the project. The Group has procedures in place in selecting and managing the performance of the contractors to reduce the negative impact that may arise.

32 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

DIVIDEND

CLOSURE OF REGISTER OF MEMBERS FOR ANNUAL GENERAL MEETING

CLOSURE OF REGISTER OF MEMBERS FOR DIVIDEND

	HON KWOK LAND Annual Report 2019/20	33

REPORT OF THE DIRECTORS (Continued)

SUMMARY FINANCIAL INFORMATION

A summary of the published results and assets, liabilities and non-controlling interests of the Group for the last five financial years, as extracted from the published audited financial statements, is set out on page 154. This summary does not form part of the audited financial statements.

SHARE CAPITAL

There were no movements in the share capital of the Company during the year.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

There were no purchases, sales or redemptions of the Company's listed securities by the Company or any of its subsidiaries during the year ended 31 March 2020.

DISTRIBUTABLE RESERVES

At 31 March 2020, the Company's reserves available for distribution, calculated in accordance with the provisions of Sections 291, 297 and 299 of the CO, amounted to HK$188,021,000, of which HK$90,054,000 has been proposed as a final dividend for the year.

MAJOR CUSTOMERS AND SUPPLIERS

During the year, purchases from the Group's five largest suppliers accounted for 86% of the total purchases for the year. Purchases from the Group's largest supplier included therein totalled 59%. Sales to the Group's five largest customers accounted for less than 30% of the total sales for the year.

None of the directors of the Company or their close associates or any shareholders (which, to the best knowledge of the directors, own more than 5% of the number of issued shares of the Company) had any beneficial interest in the Group's five largest customers and suppliers.

34 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

DIRECTORS

The directors of the Company during the year and up to the date of this report were:

Dr. Wong
James Sing-Wai Wong
Xiao-Ping Li
Philip Bing-Lun Lam	(appointed on 29	April 2019)
Zuo Xiang*
Janie Fong*	(appointed on 27	May 2019)
David Tak-Wai Ma*	(appointed on 29	August 2019)
Peter Chi-Chung Luk	(resigned on 29 April 2019)
Daniel Chi-Wai Tse*	(retired on 29 August 2019)

Independent non-executive directors

The Company has received from each of its independent non-executive directors an annual confirmation of independence pursuant to Rule 3.13 of the Listing Rules and still considers them to be independent.

The persons who were directors of the subsidiaries of the Company during the year and up to the date of this report (not including those directors listed above) were Qiao Chen, Hai-Ou Gao, Ying-Hua Guo, Li He**, Xiao-Wen Hong, Yiu Hong, Chi-Kin Lam, Stephen Chun-Piu Lee, Kai-Nor Siu, Qiang Zhang, Tim Bermingham and Julie Di Lorenzo.

no longer the director(s) of the subsidiary(ies) of the Company as at the date of this report

RE-ELECTION OF RETIRING DIRECTORS

In accordance with article 95 of the Articles of Association, David Tak-Wai Ma will hold office until the forthcoming annual general meeting and, being eligible, will offer himself for re-election.

In accordance with article 104 of the Articles of Association, James Sing-Wai Wong and Xiao-Ping Li will retire by rotation at the forthcoming annual general meeting. James Sing-Wai Wong and Xiao-Ping Li, being eligible, will offer themselves for re-election at the forthcoming annual general meeting.

The proposed re-election of David Tak-Wai Ma as independent non-executive director was made in accordance with the Nomination Policy of the Company and took into account a wide range of diversity perspectives, including but not limited to gender, age, cultural and educational background, ethnicity, professional experience, skills, knowledge and length of services, with due regard of the benefits of diversity as set out under the Board Diversity Policy of the Company.

The Board had also assessed and reviewed the written confirmation of independence of David Tak-Wai Ma based on the independence criteria as set out in Rule 3.13 of the Listing Rules and is satisfied that as at the date of this report, David Tak-Wai Ma remained independent in accordance with Rule 3.13 of the Listing Rules.

	HON KWOK LAND Annual Report 2019/20	35

REPORT OF THE DIRECTORS (Continued)

RE-ELECTION OF RETIRING DIRECTORS (Continued)

In addition, the Board had evaluated the performance of David Tak-Wai Ma and is of the view that David Tak-Wai Ma has provided valuable contributions to the Company and has demonstrated his ability to provide independent, balanced and objective view to the Company's affairs. The Board is also of the view that David Tak-Wai Ma would bring to the Board his own perspective, skills and experience, as further described in his biography as set out on page 17 of this annual report, and can contribute to the diversity of the Board taking into account his diversified educational background and professional experience. The Board believes that his re-election as the independent non-executive director of the Company would be in the best interests of the Company and its shareholders as a whole.

DIRECTORS' AND SENIOR MANAGEMENT'S BIOGRAPHIES

Biographical details of the directors of the Company and the senior management of the Group are set out on pages 14 to 18 of this annual report.

DIRECTORS' SERVICE CONTRACTS

No director proposed for re-election at the forthcoming annual general meeting has a service contract with the Company which is not determinable by the Company within one year without payment of compensation, other than statutory compensation.

DIRECTORS' REMUNERATION

The directors' fees are subject to shareholders' approval at general meetings. Other emoluments are determined by the Board with reference to directors' duties, responsibilities and performance and the results of the Group.

The remuneration of the directors of the Company is reviewed by the Remuneration Committee having regard to the Company's operating results, individual performance of the directors and comparable market statistics.

DIRECTORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS

Except as disclosed in note 33 to the financial statements, no director nor a connected entity of a director had a material interest, either directly or indirectly, in any transactions, arrangements or contracts of significance to the business of the Group to which the Company or any of the Company's holding companies, subsidiaries or fellow subsidiaries was a party during the year.

36 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

DIRECTORS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 31 March 2020, the interests and short positions of the directors of the Company in 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 (Chapter 571 of Laws of Hong Kong) (the "SFO")) as recorded in the register required to be kept under Section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:

Directors' interests in the ordinary shares of the Company

			Number of	Percentage of
		Capacity and	ordinary	the Company's
Name of director	Notes	nature of interest	shares held	issued shares
Dr. Wong	1 & 2	Through controlled	502,262,139	69.72
		corporations

Directors' interests in the ordinary shares of associated corporations

					Percentage of
				Number of	the associated
				ordinary shares/	corporation's
		Name of		amount of	issued shares/
		associated	Capacity and	paid-up registered	paid-up
Name of director	Notes	corporation	nature of interest	capital held	registered capital
Dr. Wong	1 & 3	Chinney Investments	Through controlled	341,439,324	61.93
			corporations
	1	Chinney Investments	Beneficially owned	480,000	0.09
	1 & 4	Chinney Holdings	Through controlled	9,900,000	99.00
			corporation
	1	Chinney Holdings	Beneficially owned	100,000	1.00
	1	Lucky Year	Beneficially owned	20,000	100.00
	1 & 5	Guangzhou Honkwok	Through controlled	RMB185,000,000	100.00
		Fuqiang Land	corporations
		Development Ltd.
	1 & 6	Chinney Trading	Through controlled	7,150	55.00
		Company Limited	corporations
		("Chinney Trading")

	HON KWOK LAND Annual Report 2019/20	37

REPORT OF THE DIRECTORS (Continued)

DIRECTORS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

(Continued)

Notes:

All the interests stated above represent long positions.
Out of the 502,262,139 shares, 490,506,139 shares are beneficially held by Chinney Investments, which is a subsidiary of Chinney Holdings. More than one-third of the equity capital of Chinney Holdings is owned by Lucky Year of which Dr. Wong is a director and has beneficial interests therein. The remaining 11,756,000 shares are held by Chinney Capital of which Dr. Wong is a director and has beneficial interests therein.
These shares are beneficially held by Chinney Holdings. By virtue of note 2, Dr. Wong is deemed to be interested in these shares.
These shares are beneficially held by Lucky Year. By virtue of note 2, Dr. Wong is deemed to be interested in these shares.
Out of the RMB185,000,000 paid-up registered capital, RMB111,000,000 is paid up by a wholly-owned subsidiary of the Company and RMB74,000,000 is paid up by a company controlled by Dr. Wong. By virtue of note 2, Dr. Wong is deemed to be interested in this company.
Out of the 13,000 issued shares of Chinney Trading, 2,600 shares are held by a wholly-owned subsidiary of the Company and 4,550 shares are held by a company controlled by Dr. Wong. By virtue of note 2, Dr. Wong is deemed to be interested in this company.

Save as disclosed herein, as at 31 March 2020, none of the directors of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which are required to be recorded in the register kept by the Company under Section 352 of the SFO, or which are required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the year were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director or their respective spouses or minor children, or were any such rights exercised by them; or was the Company, or any of its holding companies, subsidiaries or fellow subsidiaries a party to any arrangement to enable the directors to acquire such rights in any other body corporate.

MANAGEMENT CONTRACTS

The Company has entered into a management contract with Chinney Investments for the provision of general corporate management services. The contract is for an unspecified duration and may be terminated by either party by giving the other party two-month written notice.

During the year, the Company paid a management fee of HK$13,140,000 to Chinney Investments (2019: HK$12,327,000). Dr. Wong and James Sing-Wai Wong, directors of the Company, are also directors of Chinney Investments.

38 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 31 March 2020, so far as is known to the directors of the Company, the following substantial shareholders and other persons had interests or short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO:

			Number of	Percentage of
		Capacity and	ordinary	the Company's
Name	Notes	nature of interest	shares held	issued shares
Dr. Wong	1, 2, 3	Through controlled	502,262,139	69.72
		corporations
Lucky Year	1 & 2	Through controlled	490,506,139	68.09
		corporations
Chinney Holdings	1 & 2	Through controlled	490,506,139	68.09
		corporation
Chinney Investments	1 & 2	Directly beneficially	490,506,139	68.09
		owned

Notes:

All the interests stated above represent long positions.
Dr. Wong, Lucky Year, Chinney Holdings and Chinney Investments are deemed to be interested in the same parcel of 490,506,139 shares by virtue of Section 316 of the SFO.
11,756,000 shares are held by Chinney Capital of which Dr. Wong is a director and has beneficial interests therein.

Save as disclosed herein, as at 31 March 2020, none of the substantial shareholders or other persons had any interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.

	HON KWOK LAND Annual Report 2019/20	39

REPORT OF THE DIRECTORS (Continued)

CONNECTED TRANSACTIONS

On 20 September 2016, Gold Famous Development Limited ("Gold Famous"), an indirect wholly-owned subsidiary of the Company, entered into a framework agreement with Kin Wing Foundations Limited ("Kin Wing Foundations"), an indirect wholly-owned subsidiary of Chinney Kin Wing and an indirect non wholly-owned subsidiary of Chinney Alliance, pursuant to which, Kin Wing Foundations was appointed by Gold Famous as a contractor for the foundation construction works at K.C.T.L. 495, Kin Chuen Street, Kwai Chung, New Territories, Hong Kong for a contract sum of HK$210,000,000. As Dr. Wong is the controlling shareholder of each of Chinney Investments, the Company, Chinney Alliance and Chinney Kin Wing, the transaction constituted a connected transaction under the Listing Rules. The transaction was approved by the independent shareholders of Chinney Investments, the Company, Chinney Alliance and Chinney Kin Wing at the respective general meetings held by each of the companies on 7 November 2016.
During the year ended 31 March 2020, total development cost paid to Kin Wing Foundations amounted to HK$10,500,000.
On 12 June 2018, Gold Famous entered into a consultancy agreement with Shun Cheong Data Centre Solutions Company Limited ("Shun Cheong Data Centre Solutions"), an indirect wholly-owned subsidiary of Chinney Alliance, pursuant to which Shun Cheong Data Centre Solutions was appointed by Gold Famous as a consultant to provide consultancy services in respect of the construction and development of a data centre on a parcel of land owned by Gold Famous in Kwai Chung, Hong Kong (the "Data Centre Project") at a fixed fee of HK$16,200,000 (the "Consultancy Agreement"). As Chinney Investments is interested in approximately 68.09% of the issued shares of the Company and approximately 29.10% of the issued shares of Chinney Alliance and Dr. Wong is the chairman, executive director and a controlling shareholder of each of Chinney Investments, the Company and Chinney Alliance, the transaction constituted a connected transaction for each of Chinney Investments, the Company and Chinney Alliance under the Listing Rules and is subject to the reporting and announcement requirements.
During the year ended 31 March 2020, the consultancy fee paid to Shun Cheong Data Centre Solutions amounted to HK$6,480,000 in respect of the transaction.

40 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

CONNECTED TRANSACTIONS (Continued)

3. On 12 July 2018, Gold Famous entered into a framework agreement with Chinney Construction Company, Limited ("Chinney Construction"), an indirect wholly-owned subsidiary of Chinney Alliance, pursuant to which Gold Famous engaged Chinney Construction to act as the main contractor to carry out construction works for the Data Centre Project at a total contract sum not exceeding HK$757,800,000 (the "Framework Agreement"). As Chinney Investments is interested in approximately 68.09% of the issued shares of the Company and approximately 29.10% of the issued shares of Chinney Alliance and Dr. Wong is the chairman, executive director and a controlling shareholder of each of Chinney Investments, the Company and Chinney Alliance, the related transaction constituted a connected transaction for each of Chinney Investments, the Company and Chinney Alliance under the Listing Rules. Since the entering into of the Consultancy Agreement dated 12 June 2018 also constituted a connected transaction and pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, the Consultancy Agreement and the Framework Agreement should be aggregated as a series of transactions as they were entered into within a 12-month period and involved parties which are connected with one another. The applicable percentage ratios of the Framework Agreement on both stand-alone and the basis when aggregated with the Consultancy Agreement, are more than 5% and contract sum was more than HK$10 million, the transaction is subject to the reporting, announcement and independent shareholders' approval requirements. The transaction was approved by the independent shareholders of Chinney Investments, the Company and Chinney Alliance at the respective general meetings held by each of the companies on 24 August 2018.

During the year ended 31 March 2020, total development cost paid to Chinney Construction amounted to HK$578,413,000 in respect of the transaction.

	HON KWOK LAND Annual Report 2019/20	41

REPORT OF THE DIRECTORS (Continued)

DISCLOSURE PURSUANT TO RULE 13.18 OF THE LISTING RULES

In February 2019, Hon Kwok Treasury Limited, a wholly-owned subsidiary of the Company, as borrower, entered into a facility agreement (the "Facility Agreement") relating to HK$1,500 million transferable term and revolving loan facilities (the "Loan Facilities") with a syndicate of financial institutions (the "Lenders"). The Loan Facilities have a term of 48 months commencing from the date of the Facility Agreement and to be used for refinancing the existing syndicated loan with an outstanding balance of HK$440 million and financing the general corporate funding requirements of the Group.
Pursuant to the Facility Agreement, it shall be an event of default if (i) Chinney Investments ceases to be the major beneficial shareholder of the Company as a result of Chinney Investments ceasing to hold no less than 30% effective shareholding of the Company or does not or ceases to maintain management control of the Company; or (ii) Dr. Wong, the Chairman of both the Company and Chinney Investments, or his family members collectively, do not or cease to hold the major beneficial ultimate shareholding interest in Chinney Investments.
If an event of default under the Facility Agreement occurs, the agent acting for the Lenders may, and shall if so requested by a majority of the Lenders, terminate the Loan Facilities and/ or declare all outstanding amounts together with all interest accrued under the Loan Facilities to be immediately due and payable.
In March 2020, Vast Champ Investment (Chongqing) Co., Ltd. (the "Onshore Borrower"), being a direct wholly-owned subsidiary of the Offshore Borrower (as defined below) and an indirect wholly-owned subsidiary of the Company, as borrower, entered into a loan agreement (固定資產貸款借款合同) (the "Onshore Loan Agreement") relating to a term loan facility in the principal amount up to RMB450 million (the "Onshore Loan Facility") with a PRC branch of a bank in Hong Kong (the "Onshore Lender"). The Onshore Loan Facility will be mainly used for refinancing the existing banking facility of the Onshore Borrower and repayment of inter-company loans, and also as general working capital for the daily operation of the Onshore Borrower. The tenor of the Onshore Loan Facility shall be 5 years commencing from the first drawdown date of the Onshore Loan Facility, or up to the maturity date of the Offshore Loan Facility (as defined below), whichever is later.

42 HON KWOK LAND Annual Report 2019/20

REPORT OF THE DIRECTORS (Continued)

DISCLOSURE PURSUANT TO RULE 13.18 OF THE LISTING RULES (Continued)

Pursuant to the Onshore Loan Agreement, the Onshore Borrower undertakes with the Onshore Lender, inter alia, that (1) it will procure Chinney Investments to continue to (i) be the major beneficial ultimate shareholder of the Company; (ii) hold not less than 30% effective shareholding of the Company; and (iii) maintain management control of the Company; and (2) Dr. Wong, the Chairman of both Chinney Investments and the Company, or his family members or his designated trust beneficiary shall continue to collectively remain as the major beneficial ultimate shareholder of Chinney Investments.

If any of the undertakings as stipulated in the Onshore Loan Agreement are not performed by the Onshore Borrower, it will constitute an event of default and the occurrence of which, if not being remedied by the Onshore Borrower within the period as allowed by the Onshore Lender, would render the Onshore Lender having the right to declare the Onshore Loan Facility to be immediately due and payable.

In March 2020, Vast Champ Investment Limited (the "Offshore Borrower"), an indirect wholly- owned subsidiary of the Company, as borrower, entered into a loan agreement (the "Offshore Loan Agreement") relating to a term loan facility in the principal amount up to HK$100 million (the "Offshore Loan Facility") with a bank in Hong Kong (the "Offshore Lender"). The Offshore Loan Facility will be used for repayment of inter-company loans raised for the purpose of refinancing an existing banking facility of the Offshore Borrower. The tenor of the Offshore Loan Facility shall be 5 years from the drawdown date of the Offshore Loan Facility or up to the maturity date of the Onshore Loan Facility, whichever is earlier.
Pursuant to the Offshore Loan Agreement, it shall be an event of default if (1) Chinney Investments ceases to (i) be the major beneficial ultimate shareholder of the Company; or (ii) hold not less than 30% effective shareholding of the Company, or (iii) maintain management control of the Company; or (2) Dr. Wong, the Chairman of both Chinney Investments and the Company, or his family members or his designated trust beneficiary ceases to collectively remain the major beneficial ultimate shareholder of Chinney Investments.
If an event of default under the Offshore Loan Agreement occurs, the Offshore Lender may declare all outstanding amounts together with all interest accrued under the Offshore Loan Facility to be immediately due and payable.

	HON KWOK LAND Annual Report 2019/20	43

REPORT OF THE DIRECTORS (Continued)

SUFFICIENCY OF PUBLIC FLOAT

Based on the information that is publicly available to the Company and within the knowledge of the directors, at least 25% of the Company's total number of issued shares were held by the public as at the latest practicable date prior to the issue of this annual report.

DIRECTORS' INTERESTS IN COMPETING BUSINESS

During the year, Dr. Wong, the Chairman of the Company, has deemed interests and holds directorships in companies engaged in the businesses of property investment. In this respect, Dr. Wong is regarded as being interested in businesses which might compete with the Group.

As the Board is independent from the board of those entities and maintains a sufficient number of independent non-executive directors, the Group is therefore capable of carrying on its businesses independently of, and at arm's length with, the business of those entities.

PERMITTED INDEMNITY PROVISION

Subject to the applicable laws, every director of the Company shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities which he/she may sustain or incur in or about the execution of the duties of his/her office or otherwise in relation thereto. The Company has arranged appropriate directors' and officers' liability insurance coverage for the directors and officers of the Group throughout the year.

CHARITABLE DONATIONS

Charitable donations made by the Group during the year amounted to HK$56,000.

AUDITOR

Ernst & Young retire and a resolution for their re-appointment as auditor of the Company will be proposed at the forthcoming annual general meeting.

On behalf of the Board

Philip Bing-Lun Lam

Director

Hong Kong, 26 June 2020

44 HON KWOK LAND Annual Report 2019/20

INDEPENDENT AUDITOR'S REPORT

To the members of Hon Kwok Land Investment Company, Limited

(Incorporated in Hong Kong with limited liability)

OPINION

We have audited the consolidated financial statements of Hon Kwok Land Investment Company, Limited (the "Company") and its subsidiaries (the "Group") set out on pages 51 to 153, which comprise the consolidated statement of financial position as at 31 March 2020, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 March 2020, and of its consolidated financial performance and its consolidated 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") and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

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 consolidated financial statements section of our report. We are independent of the Group 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.

	HON KWOK LAND Annual Report 2019/20	45

INDEPENDENT AUDITOR'S REPORT (Continued)

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

Key audit matter	How our audit addressed the key audit matter

Estimation of fair value of investment properties

As at 31 March 2020, the Group's investment	Among our audit procedures, we evaluated the
properties measured at fair value amounted	objectivity, independence and competence of
to approximately HK$14,328 million, with	the valuer by examining the valuer's qualification
net losses arising from fair value change	and assessed the valuation methodologies and
recognised in the statement of profit or	assumptions adopted by the valuer with assistance
loss of approximately HK$217 million from	from our internal valuation expert.
completed investment properties and an
investment property under construction. The	For completed investment properties, we evaluated
valuation process is inherently subjective, and	the data used as inputs for the valuation, which
dependent on a number of estimates such as	included reference to the market unit selling price of
market rent, market yield, market price per	comparable properties nearby and the rental value of
unit, stabilised growth rate, estimated cost to	existing tenancies, by benchmarking against market
completion, etc. To support management's	values of comparable properties and checking the
determination of the fair value, the Group	relevant tenancy agreements.
has engaged an independent professionally
qualified valuer to perform the valuation of	For the investment property under construction, we
investment properties.	also evaluated the cost to completion by checking
	management's budget and contracts entered into
The significant accounting judgements and	with contractors.
estimates and disclosures about the fair value
measurement of investment properties are
included in notes 3 and 14 to the financial
statements.

46 HON KWOK LAND Annual Report 2019/20

INDEPENDENT AUDITOR'S REPORT (Continued)

KEY AUDIT MATTERS (Continued)

Key audit matter

How our audit addressed the key audit matter

Impairment assessment for properties held for sale under development and completed properties held for sale

As at 31 March 2020, the Group has recorded properties held for sale under development and completed properties held for sale of approximately HK$2,061 million in aggregate. Properties held for sale under development and completed properties held for sale are stated at the lower of cost and net realisable value. Management's impairment assessment is significant to our audit, considering the degree of judgement involved in estimating the sales proceeds and selling expenses, and the level of complexity involved in making those assumptions in estimation.

The significant accounting judgements and estimates and disclosures about the balances of properties held for sale under development and completed properties held for sale are included in notes 3 and 18 to the financial statements.

Our audit procedures included the understanding and review of management's impairment assessment process and assumptions adopted with reference to externally available industry and market data and actual sales transactions of properties during the year and subsequent to the end of the reporting period. For properties held for sales under development, we also reviewed the costs incurred to date and future costs to completion against the latest project development cost budgets prepared by management to assess the total costs of properties for impairment assessment purpose. We tested the basis of preparing those budgets taking into account the accuracy of previous budgets of similar projects and the construction quotations, agreements or invoices and historical data supporting the underlying assumptions.

	HON KWOK LAND Annual Report 2019/20	47

INDEPENDENT AUDITOR'S REPORT (Continued)

OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

The directors of the Company are responsible for the other information. The other information comprises the information included in the Annual Report, other than the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated 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 consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated 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.

RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the Company are responsible for assessing the Group'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 directors of the Company either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.

The directors of the Company are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group's financial reporting process.

48 HON KWOK LAND Annual Report 2019/20

INDEPENDENT AUDITOR'S REPORT (Continued)

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the consolidated 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. Our report is made solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

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 consolidated 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 consolidated 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.
Obtain an understanding of internal control relevant to the audit 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 Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.

	HON KWOK LAND Annual Report 2019/20	49

INDEPENDENT AUDITOR'S REPORT (Continued)

AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL

STATEMENTS (Continued)

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor's report is Ki Wing Yee, Winnie.

Ernst & Young

Certified Public Accountants

Hong Kong

26 June 2020

50 HON KWOK LAND Annual Report 2019/20

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Year ended 31 March 2020

		2020		2019
	Notes	HK$'000	HK$'000
REVENUE	5	638,477		1,478,353
Cost of sales		(263,294)	(744,358)

Gross profit		375,183		733,995
Other income	5	30,542		17,924
Fair value gains/(losses) on investment properties, net		(217,302)	929,811
Loss on disposal of investment properties		-	(804)
Administrative expenses		(103,561)	(92,868)
Other operating expenses, net		(28,734)	(25,539)
Finance costs	6	(189,479)	(118,480)
Share of profit of an associate		109,766		317,087

PROFIT/(LOSS) BEFORE TAX	7	(23,585)	1,761,126
Income tax credit/(expense)	10	10,323		(460,564)

PROFIT/(LOSS) FOR THE YEAR		(13,262)	1,300,562
Attributable to:


Owners of the Company		(35,946)	1,158,507
Non-controlling interests		22,684		142,055

		(13,262)	1,300,562
EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO


ORDINARY EQUITY HOLDERS OF THE COMPANY	12
Basic and diluted		HK$(0.05)	HK$1.61

	HON KWOK LAND Annual Report 2019/20	51

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 March 2020

	2020	2019
	HK$'000	HK$'000
PROFIT/(LOSS) FOR THE YEAR	(13,262)	1,300,562
OTHER COMPREHENSIVE LOSS
Other comprehensive loss that may be reclassified to
profit or loss in subsequent periods:
Share of other comprehensive loss of an associate	(22,673)	(14,527)
Exchange differences on translation of foreign operations	(439,207)	(541,825)
OTHER COMPREHENSIVE LOSS
FOR THE YEAR, NET OF TAX	(461,880)	(556,352)

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR	(475,142)	744,210
Attributable to:


Owners of the Company	(472,771)	628,184
Non-controlling interests	(2,371)	116,026

	(475,142)	744,210

52 HON KWOK LAND Annual Report 2019/20

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 March 2020

		2020	2019
	Notes	HK$'000			HK$'000
NON-CURRENT ASSETS
Property, plant and equipment	13	275,961	266,766
Investment properties	14	14,327,900	14,296,837
Investment in a joint venture	16	199	199
Investment in an associate	17	775,363		789,271
Total non-current assets		15,379,423	15,353,073
CURRENT ASSETS
Tax recoverable		278	5,895
Properties held for sale under development
and completed properties held for sale	18	2,061,479	2,051,599
Trade receivables	19	20,777	21,561
Contract costs		30,789	5,547
Prepayments, deposits and other receivables	20	200,118	136,159
Cash and bank balances	21	2,168,054		1,963,000
Total current assets		4,481,495	4,183,761
CURRENT LIABILITIES
Trade payables, other payables and accrued liabilities	22	236,119	415,741
Due to an associate	17	-	15,950
Interest-bearing bank borrowings	24	1,854,126	1,107,931
Lease liabilities	15	17,024			-
Contract liabilities	23	652,885	286,193
Customer deposits		53,423	47,582
Tax payable		163,221		122,549
Total current liabilities		2,976,798		1,995,946
NET CURRENT ASSETS		1,504,697		2,187,815
TOTAL ASSETS LESS CURRENT LIABILITIES		16,884,120		17,540,888

	HON KWOK LAND Annual Report 2019/20	53

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

31 March 2020

		2020	2019
	Notes	HK$'000			HK$'000
NON-CURRENT LIABILITIES
Interest-bearing bank borrowings	24	4,001,060	3,920,286
Lease liabilities	15	8,052			-
Deferred tax liabilities	25	1,371,647		1,552,045
Total non-current liabilities		5,380,759		5,472,331
Net assets		11,503,361	12,068,557
EQUITY


Equity attributable to owners of the Company
Share capital	26	1,519,301	1,519,301
Reserves	27	9,792,078		10,354,903
		11,311,379	11,874,204
Non-controlling interests		191,982		194,353
Total equity		11,503,361	12,068,557

James Sai-Wing Wong	Philip Bing-Lun Lam
Director	Director

54 HON KWOK LAND Annual Report 2019/20

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 March 2020

		Attributable to owners of the Company
				Exchange								Non-
		Share	fluctuation	Retained					controlling	Total
		capital	reserve	profits	Total		interests	equity
		HK$'000	HK$'000	HK$'000	HK$'000		HK$'000	HK$'000
At 1 April 2018	1,519,301		537,408	9,315,386		11,372,095	91,035	11,463,130
Profit for the year		-	-	1,158,507		1,158,507	142,055	1,300,562
Other comprehensive loss for the year:
Exchange differences on translation of foreign operations		-		(530,323)		-			(530,323)			(26,029)	(556,352)
Total comprehensive income/(loss) for the year		-		(530,323)		1,158,507			628,184			116,026	744,210
Dividend paid to non-controlling interests		-	-	-	-	(12,708)	(12,708)
Final and special 2018 dividend declared		-		-		(126,075)		(126,075)		-	(126,075)

At 31 March 2019 and 1 April 2019		1,519,301		7,085*		10,347,818*			11,874,204			194,353	12,068,557
Profit/(loss) for the year		-	-	(35,946)		(35,946)	22,684	(13,262)
Other comprehensive loss for the year:
Exchange differences on translation of foreign operations		-		(436,825)	-	(436,825)	(25,055)	(461,880)

Total comprehensive loss for the year		-		(436,825)	(35,946)		(472,771)	(2,371)	(475,142)
Final 2019 dividend declared		-		-		(90,054)		(90,054)		-	(90,054)

At 31 March 2020		1,519,301		(429,740)*	10,221,818*		11,311,379	191,982	11,503,361

These reserve accounts comprise the consolidated reserves of HK$9,792,078,000 (2019: HK$10,354,903,000) in the consolidated statement of financial position.

	HON KWOK LAND Annual Report 2019/20	55

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 March 2020

		2020		2019
	Notes	HK$'000	HK$'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) before tax		(23,585)	1,761,126
Adjustments for:
Finance costs	6	189,479		118,480
Share of profit of an associate		(109,766)	(317,087)
Bank Interest income	5	(22,193)	(13,852)
Depreciation	7	35,342		5,314
Loss on disposal of investment properties	7	-	804
Loss/(gain) on disposal of items of property,
plant and equipment, net	7	(401)	6
Fair value losses/(gains) on investment properties, net	7	217,302		(929,811)

		286,178		624,980
Decrease/(increase) in properties held for sale under
development and completed properties held for sale		(95,180)	651,281
Decrease/(increase) in trade receivables		784		(1,415)
Decrease/(increase) in prepayments, deposits and
other receivables		(77,790)	13,735
Increase in contract costs		(25,529)	(5,547)
Decrease in trade payables, other payables
and accrued liabilities		(133,253)	(467,682)
Decrease in an amount due to an associate		(15,950)	(10,052)
Increase in contract liabilities		396,320		286,193
Increase/(decrease) in customer deposits		7,069		(1,105,656)

Cash generated from/(used in) operations		342,649		(14,163)
Interest paid		(2,565)	-
Hong Kong profits tax paid		(137)	-
Overseas taxes paid		(53,263)	(516,257)

Net cash flows from/(used in) operating activities		286,684		(530,420)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received		22,193		13,852
Purchases of items of property, plant and equipment	13	(7,400)	(1,158)
Dividend received from an associate		101,001		-
Proceeds from disposal of items of property,
plant and equipment		527		46
Proceeds from disposal of investment properties		-	1,396
Additions to investment properties		(679,582)	(408,314)
Increase in non-pledged time deposits
with original maturity of more than three months
when acquired		(59)	(43)

Net cash flows used in investing activities		(563,320)	(394,221)

56 HON KWOK LAND Annual Report 2019/20

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

Year ended 31 March 2020

		2020		2019
	Notes	HK$'000	HK$'000
CASH FLOWS FROM FINANCING ACTIVITIES
Interest paid		(228,200)	(187,706)
New bank loans		1,218,347		1,006,830
Repayment of bank loans		(330,081)	(426,333)
Principal portion of lease payments	29(b)	(23,976)	-
Dividend paid		(90,054)	(126,075)
Dividend paid to non-controlling interests		-		(12,708)

Net cash flows from financing activities		546,036		254,008
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS		269,400		(670,633)
Cash and cash equivalents at beginning of year		1,960,383		2,675,728
Effect of foreign exchange rates changes, net		(64,303)	(44,712)

CASH AND CASH EQUIVALENTS AT END OF YEAR		2,165,480		1,960,383
ANALYSIS OF BALANCES OF CASH


AND CASH EQUIVALENTS
Cash and bank balances	21	1,441,871		1,504,579
Non-pledged time deposits	21	726,183		458,421
Cash and bank balances as stated in the consolidated
statement of financial position		2,168,054		1,963,000
Non-pledged time deposits with original maturity
of more than three months when acquired		(2,574)	(2,617)
Cash and cash equivalents as stated
in the statement of cash flows		2,165,480		1,960,383

	HON KWOK LAND Annual Report 2019/20	57

NOTES TO THE FINANCIAL STATEMENTS

31 March 2020

1. CORPORATE AND GROUP INFORMATION

Hon Kwok Land Investment Company, Limited is a limited liability company incorporated in Hong Kong. The registered office of the Company is located at 23rd Floor, Wing On Centre, 111 Connaught Road Central, Hong Kong.

During the year, the Group was involved mainly in property development, property investment and property related activities.

The immediate holding company of the Group is Chinney Investments, Limited ("Chinney Investments"), a company incorporated and listed in Hong Kong.

In the opinion of the directors, the ultimate holding company of the Company is Lucky Year Finance Limited ("Lucky Year"), a company incorporated in the British Virgin Islands (the "BVI").

Information about subsidiaries

Particulars of the Company's principal subsidiaries are as follows:

	Place of		Percentage of
	incorporation/		equity attributable
	registration	Issued ordinary/	to the Company
Name	and business	registered share capital	Direct	Indirect	Principal activities
Champion Fine International Investments Inc.*	Canada	Canadian dollar ("CAD") 1	-	100	Investment holding
Chinney Property Management Limited	Hong Kong	Hong Kong dollar	-	100	Property management
		("HK$") 100
CP Parking Limited	Hong Kong	HK$2,740,000	-	100	Carpark management
Crown Honour Developments Limited	Hong Kong	HK$2	100	-	Nominee services
Foshan Nanhai XinDa Land
Development Ltd.*#	PRC/Mainland China	HK$300,000,000	-	100	Property development
Gold Famous Development Limited
("Gold Famous")	Hong Kong	HK$1	-	100	Property development
Guangzhou Honkwok Fuqiang Land	PRC/Mainland China	Renminbi ("RMB")	-	60	Property development
Development Ltd.*#		185,000,000
Guangzhou Hua Yin Land
Development Co., Ltd.*#	PRC/Mainland China	RMB80,000,000	-	100	Property development

58 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

1. CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued)

	Place of		Percentage of
	incorporation/		equity attributable
	registration	Issued ordinary/	to the Company
Name	and business	registered share capital	Direct	Indirect	Principal activities
Guangzhou Sheng Jin Real Estate Co., Ltd.*#	PRC/Mainland China	RMB52,114,000	-	100	Property development
Guangzhou Tungfu Property	PRC/Mainland China	RMB44,400,000	-	100	Property holding
Management Co., Ltd.*#					and letting
Hon Kwok Land Investment (China) Limited	Hong Kong	HK$2	100	-	Investment holding
Hon Kwok Land Investment	PRC/Mainland China	HK$30,000,000	-	100	Property development
(Shenzhen) Co., Ltd.*#
Hon Kwok Project Management Limited	Hong Kong	HK$2	-	100	Project management
Hon Kwok Treasury Limited	Hong Kong	HK$2	-	100	Financing
Honour Well Development Limited	Hong Kong	HK$2	-	100	Property holding
					and letting
Hotwin Investment (Chongqing) Co., Ltd.*#	PRC/Mainland China	US$14,300,000	-	100	Property holding
					and letting
King Capital Development Limited	Hong Kong	HK$2	-	100	Property holding
					and letting
King Champion Limited	Hong Kong	HK$2	-	100	Property holding
					and letting
Shenzhen Guanghai Investment Co., Ltd.*#	PRC/Mainland China	RMB880,000,000	-	100	Property holding
					and letting
Shenzhen Honkwok Huaye Development Co., Ltd.*#	PRC/Mainland China	RMB50,000,000	-	100	Property holding
					and letting

	HON KWOK LAND Annual Report 2019/20	59

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

1. CORPORATE AND GROUP INFORMATION (Continued) Information about subsidiaries (Continued)

	Place of		Percentage of
	incorporation/		equity attributable
	registration	Issued ordinary/	to the Company
Name	and business	registered share capital	Direct	Indirect	Principal activities
The Bauhinia Hotel Management Limited	Hong Kong	HK$2	-	100	Property letting
The Bauhinia Hotel (TST) Management Limited	Hong Kong	HK$2	-	100	Property letting
Vast Champ Investment (Chongqing) Co., Ltd.*#	PRC/Mainland China	US$30,000,000	-	100	Property holding
					and letting
Wide Fame Investment Limited	Hong Kong	HK$2	-	100	Financing
Wise Pacific Investment Limited	Hong Kong	HK$10,000	-	100	Money lending

Not audited by Ernst & Young, Hong Kong or another member firm of the Ernst & Young global network.

These subsidiaries are registered in the PRC as foreign-owned enterprises with business duration of 25 to 50 years.

The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the year or formed a substantial portion of the net assets of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.

60 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ("HKASs") and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"), accounting principles generally accepted in Hong Kong and the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for investment properties which have been measured at fair value as further explained in note 2.4. These financial statements are presented in Hong Kong dollars and all values are rounded to the nearest thousand except when otherwise indicated.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 31 March 2020. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

When the Company has, directly or indirectly, less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

the contractual arrangement with the other vote holders of the investee;
rights arising from other contractual arrangements; and
the Group's voting rights and potential voting rights.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Profit or loss and each component of other comprehensive income are attributed to the owners of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

	HON KWOK LAND Annual Report 2019/20	61

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

BASIS OF PREPARATION (Continued) Basis of consolidation (Continued)
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognises (i) the assets (including goodwill) and liabilities of the subsidiary, (ii) the carrying amount of any non-controlling interest and (iii) the cumulative translation differences recorded in equity; and recognises (i) the fair value of the consideration received, (ii) the fair value of any investment retained and (iii) any resulting surplus or deficit in profit or loss. The Group's share of components previously recognised in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the same basis as would be required if the Group had directly disposed of the related assets or liabilities.
CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The Group has adopted the following new and revised HKFRSs for the first time for the current year's financial statements.

Amendments to HKFRS 9 HKFRS 16 Amendments to HKAS 19 Amendments to HKAS 28 HK(IFRIC)-Int 23 Annual Improvements to

HKFRSs 2015-2017 Cycle

Prepayment Features with Negative Compensation Leases

Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Uncertainty over Income Tax Treatments Amendments to HKFRS 3, HKFRS 11, HKAS 12 and

HKAS 23

62 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

Except for the amendments to HKFRS 9 and HKAS 19, and Annual Improvements to HKFRSs 2015-2017Cycle, which are not relevant to the preparation of the Group's financial statements, the nature and the impact of the new and revised HKFRSs are described below:

HKFRS 16 replaces HKAS 17 Leases, HK(IFRIC)-Int 4 Determining whether an Arrangement contains a Lease, HK(SIC)-Int 15 Operating Leases - Incentives and HK(SIC)-Int 27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model to recognise and measure right-of-use assets and lease liabilities, except for certain recognition exemptions. Lessor accounting under HKFRS 16 is substantially unchanged from HKAS 17. Lessors continue to classify leases as either operating or finance leases using similar principles as in HKAS 17.
The Group has adopted HKFRS 16 using the modified retrospective method of adoption with the date of initial application of 1 April 2019. Under this method, the standard has been applied retrospectively with the cumulative effect of initial adoption recognised as an adjustment to the opening balance of retained profits at 1 April 2019, and the comparative information for 2019 was not restated and continued to be reported under HKAS 17 and related interpretations.
New definition of a lease
Under HKFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. Control is conveyed where the customer has both the right to obtain substantially all of the economic benefits from use of the identified asset and the right to direct the use of the identified asset. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 at the date of initial application. Contracts that were not identified as leases under HKAS 17 and HK(IFRIC)-Int 4 were not reassessed. Therefore, the definition of a lease under HKFRS 16 has been applied only to contracts entered into or changed on or after 1 April 2019.

	HON KWOK LAND Annual Report 2019/20	63

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

(Continued)

As a lessee - Leases previously classified as operating leases

Nature of the effect of adoption of HKFRS 16

The Group has lease contracts for various properties. As a lessee, the Group previously classified leases as either finance leases or operating leases based on the assessment of whether the lease transferred substantially all the rewards and risks of ownership of assets to the Group. Under HKFRS 16, the Group applies a single approach to recognise and measure right-of-use assets and lease liabilities for all leases, except for elective exemptions for leases with a lease of 12 months or less ("short-term lease) (elected by class of underlying asset). Instead of recognising rental expenses under operating leases on a straight-line basis over the lease term commencing from 1 April 2019, the Group recognises depreciation of the right-of-use assets and interest accrued on the outstanding lease liabilities (as finance costs).

Impacts on transition

Lease liabilities at 1 April 2019 were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at 1 April 2019.

The right-of-use assets for most leases were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the lease recognised in the consolidated statement of financial position immediately before 1 April 2019. All these assets were assessed for any impairment based on HKAS 36 on that date.

For the leasehold land and buildings (that were held to earn rental income and/or for capital appreciation) previously included in investment properties and measured at fair value, the Group has continued to include them as investment properties at 1 April 2019. They continue to be measured at fair value applying HKAS 40.

The Group has used the following elective practical expedients when applying HKFRS 16 at 1 April 2019:

Applying the short-term lease exemptions to leases with a lease term that ends within 12 months from the date of initial application
Using hindsight in determining the lease term where the contract contains options to extend/terminate the lease

64 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

(Continued)

As a lessee - Leases previously classified as operating leases (Continued)

Impacts on transition (Continued)

The impacts arising from the adoption of HKFRS 16 as at 1 April 2019 are as follows:

	Increase/
	(decrease)
	HK$'000
Assets
Increase in right-of-use assets	255,025
Decrease in property, plant and equipment	(199,196)
Increase total assets	55,829
Liabilities


Increase in lease liabilities and total liabilities	55,829

The lease liabilities as at 1 April 2019 reconciled to the operating lease commitments as at 31 March 2019 is as follows:

	HK$'000
Operating lease commitments as at 31 March 2019	61,258
Less: Commitments relating to short-term leases and those
leases with a remaining lease term ending on
or before 31 March 2020	(288)
	60,970
Weighted average incremental borrowing rate as at 1 April 2019	5%
Lease liabilities as at 1 April 2019	55,829

	HON KWOK LAND Annual Report 2019/20	65

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES (Continued)

Amendments to HKAS 28 clarify that the scope exclusion of HKFRS 9 only includes interests in an associate or joint venture to which the equity method is applied and does not include long-term interests that in substance form part of the net investment in the associate or joint venture, to which the equity method has not been applied. Therefore, an entity applies HKFRS 9, rather than HKAS 28, including the impairment requirements under HKFRS 9, in accounting for such long-term interests. HKAS 28 is then applied to the net investment, which includes the long-term interests, only in the context of recognising losses of an associate or joint venture and impairment of the net investment in the associate or joint venture. The Group assessed its business model for its long-term interests in associate and joint venture upon adoption of the amendments on 1 April 2019 and concluded that the long-term interests in associate and joint venture continued to be measured at amortised cost in accordance with HKFRS 9. Accordingly, the amendments did not have any impact on the financial position or performance of the Group.
HK(IFRIC)-Int23 addresses the accounting for income taxes (current and deferred) when tax treatments involve uncertainty that affects the application of HKAS 12 (often referred to as "uncertain tax positions"). The interpretation does not apply to taxes or levies outside the scope of HKAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses
(i) whether an entity considers uncertain tax treatments separately; (ii) the assumptions an entity makes about the examination of tax treatments by taxation authorities; (iii) how an entity determines taxable profits or tax losses, tax bases, unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers changes in facts and circumstances. Upon adoption of the interpretation, the Group considered whether it has any uncertain tax positions arising from the transfer pricing on its intergroup sales. Based on the Group's tax compliance and transfer pricing study, the Group determined that it is probable that its transfer pricing policy will be accepted by the tax authorities. Accordingly, the interpretation did not have any impact on the financial position or performance of the Group.

66 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

Amendments to HKFRS 3	Definition of a Business1
Amendments to HKFRS 9,	Interest Rate Benchmark Reform1
HKAS 39 and HKFRS 7
Amendments to HKFRS 10 and	Sale or Contribution of Assets between an Investor
HKAS 28 (2011)	and its Associate or Joint Venture4
Amendments to HKFRS 16	Covid-19-Related Rent Concessions2
HKFRS 17	Insurance Contracts3
Amendments to HKAS 1 and HKAS 8	Definition of Material1

Effective for annual periods beginning on or after 1 January 2020 Effective for annual periods beginning on or after 1 June 2020 Effective for annual periods beginning on or after 1 January 2021 No mandatory effective date yet determined but available for adoption

Further information about those HKFRSs that are expected to be applicable to the Group is described below.

Amendments to HKFRS 3 clarify and provide additional guidance on the definition of a business. The amendments clarify that for an integrated set of activities and assets to be considered a business, it must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. A business can exist without including all of the inputs and processes needed to create outputs. The amendments remove the assessment of whether market participants are capable of acquiring the business and continue to produce outputs. Instead, the focus is on whether acquired inputs and acquired substantive processes together significantly contribute to the ability to create outputs. The amendments have also narrowed the definition of outputs to focus on goods or services provided to customers, investment income or other income from ordinary activities. Furthermore, the amendments provide guidance to assess whether an acquired process is substantive and introduce an optional fair value concentration test to permit a simplified assessment of whether an acquired set of activities and assets is not a business. The Group expects to adopt the amendments prospectively from 1 April 2020. Since the amendments apply prospectively to transactions or other events that occur on or after the date of first application, the Group will not be affected by these amendments on the date of transition.

	HON KWOK LAND Annual Report 2019/20	67

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.3 ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

(Continued)

Amendments to HKFRS 9, HKAS 39 and HKFRS 7 address the effects of interbank offered rate reform on financial reporting. The amendments provide temporary reliefs which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark. In addition, the amendments require companies to provide additional information to investors about their hedging relationships which are directly affected by these uncertainties. The amendments are effective for annual periods beginning on or after 1 January 2020. Early application is permitted. The amendments are not expected to have any significant impact on the Group's financial statements.

Amendments to HKFRS 10 and HKAS 28 (2011) address an inconsistency between the requirements in HKFRS 10 and in HKAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The amendments require a full recognition of a gain or loss when the sale or contribution of assets between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business, a gain or loss resulting from the transaction is recognised in the investor's profit or loss only to the extent of the unrelated investor's interest in that associate or joint venture. The amendments are to be applied prospectively. The previous mandatory effective date of amendments to HKFRS 10 and HKAS 28 (2011) was removed by the HKICPA in January 2016 and a new mandatory effective date will be determined after the completion of a broader review of accounting for associates and joint ventures. However, the amendments are available for adoption now.

Amendments to HKAS 1 and HKAS 8 provide a new definition of material. The new definition states that 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. The amendments clarify that materiality will depend on the nature or magnitude of information. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users. The Group expects to adopt the amendments prospectively from 1 April 2020. The amendments are not expected to have any significant impact on the Group's financial statements.

68 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Investments in an associate and a joint venture

An associate is an entity in which the Group has a long-term interest of generally not less than 20% of the equity voting rights and over which it is in a position to exercise significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group's investments in an associate and a joint venture are stated in the consolidated statement of financial position at the Group's share of net assets under the equity method of accounting, less any impairment losses.

Adjustments are made to bring into line any dissimilar accounting policies that may exist. The Group's share of the post-acquisition results and other comprehensive income of the associate and joint venture is included in the consolidated statement of profit or loss and consolidated other comprehensive income, respectively. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the consolidated statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and its associate or joint venture are eliminated to the extent of the Group's investments in an associate or a joint venture, except where unrealised losses provide evidence of an impairment of the assets transferred. Goodwill arising from the acquisition of an associate or a joint venture is included as part of the Group's investments in an associate or a joint venture.

If an investment in an associate becomes an investment in a joint venture or vice versa, the retained interest is not remeasured. Instead, the investment continues to be accounted for under the equity method. In all other cases, upon loss of significant influence over the associate or joint control over the joint venture, the Group measures and recognises any retained investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence or joint control and the fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

	HON KWOK LAND Annual Report 2019/20	69

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Business combinations and goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred is measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of net assets in the event of liquidation at fair value or at the proportionate share of the acquiree's identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-related costs are expensed as incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the acquiree.

If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value recognised in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent settlement is accounted for within equity.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount recognised for non-controlling interests and any fair value of the Group's previously held equity interests in the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognised in profit or loss as a gain on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 March. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

70 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business combinations and goodwill (Continued)

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed of and the portion of the cash-generating unit retained.

Fair value measurement

The Group measures certain of its investment properties at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1	- based on quoted prices (unadjusted) in active markets for identical assets or
	liabilities
Level 2	- based on valuation techniques for which the lowest level input that is significant to
	the fair value measurement is observable, either directly or indirectly
Level 3	- based on valuation techniques for which the lowest level input that is significant to
	the fair value measurement is unobservable

	HON KWOK LAND Annual Report 2019/20	71

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair value measurement (Continued)

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Impairment of non-financial assets

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than financial assets, investment properties, investment property under construction, properties held for sale under development and completed properties held for sale), the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable amount is determined for the cash-generating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with the function of the impaired asset.

An assessment is made at the end of each reporting period as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation) had no impairment loss been recognised for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss in the period in which it arises.

72 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Related parties

A party is considered to be related to the Group if:

the party is a person or a close member of that person's family and that person
1. has control or joint control over the Group;
2. has significant influence over the Group; or
3. is a member of the key management personnel of the Group or of a parent of the Group;

the party is an entity where any of the following conditions applies:
1. the entity and the Group are members of the same group;
2. one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the other entity);
3. the entity and the Group are joint ventures of the same third party;
4. one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
5. the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group;
6. the entity is controlled or jointly controlled by a person identified in (a);
7. 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); and
8. the entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the parent of the Group.

	HON KWOK LAND Annual Report 2019/20	73

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. When an item of property, plant and equipment is classified as held for sale or when it is part of a disposal group classified as held for sale, it is not depreciated and is accounted for in accordance with HKFRS 5. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Buildings	5% or over the unexpired terms of the leases
Leasehold improvements	20%
Furniture and equipment	20%
Motor vehicles	20%

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

An item of property, plant and equipment including any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in profit or loss in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

74 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investment properties

Investment properties are interests in land and buildings held to earn rental income and/or for capital appreciation, rather than for use in the production or supply of goods or services or for administrative purposes; or for sale in the ordinary course of business. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the end of the reporting period.

Properties under construction or development for future use as investment properties are classified as investment properties under construction. If the fair value cannot be reliably determined, the investment properties under construction will be measured at cost until such time as fair value can be determined or construction is completed. As at 31 March 2019, the Group concluded that the fair value of the investment property under construction could not be measured reliably at the end of the reporting period, therefore, the Group's investment property under construction was measured at cost.

Gains or losses arising from changes in the fair values of investment properties are included in the statement of profit or loss in the year in which they arise.

Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of the retirement or disposal.

For a transfer from investment properties to owner-occupied properties, the deemed cost of a property for subsequent accounting is its fair value at the date of change in use.

Properties held for sale under development and completed properties held for sale Completed properties held for sale

Completed properties held for sale are stated at the lower of cost and net realisable value. Cost is determined by an apportionment of the total land and buildings costs attributable to unsold properties. Net realisable value is estimated by the directors based on the prevailing market prices, on an individual property basis.

Properties held for sale under development

Properties held for sale under development are intended to be held for sale after completion. Properties held for sale under development are stated at the lower of cost and net realisable value and comprise land costs, construction costs, borrowing costs, professional fees and other costs directly attributable to such properties incurred during the development period.

On completion of construction, the properties are transferred to completed properties held for sale. Properties held for sale under development are classified as current assets.

	HON KWOK LAND Annual Report 2019/20	75

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leases (applicable from 1 April 2019)

The Group assesses at contract inception whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right-of-useassets
Right-of-use assets are recognised at the commencement date of the lease (that is the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:

Leasehold land and buildings

over the lease term

When the right-of-use assets relate to interests in leasehold land held as properties held for sale, they are subsequently measured at the lower of cost and net realisable value in accordance with the Group's policies for "properties held for sale under development and completed properties held for sale".

Lease liabilities
Lease liabilities are recognised at the commencement date of the lease at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying asset.

76 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases (applicable from 1 April 2019) (Continued)

Group as a lessee (Continued)

Lease liabilities (continued)
The Group's lease liabilities are separately presented in the consolidated statement of financial position.
Short-termleases
The Group applies the short-term lease recognition exemption to its short-term leases of properties (that is those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).
Lease payments on short-term leases are recognised as an expense on a straight-line basis over the lease term.

Group as a lessor

When the Group acts as a lessor, it classifies at lease inception (or when there is a lease modification) each of its leases as either an operating lease or a finance lease.

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. When a contract contains lease and non-lease components, the Group allocates the consideration in the contract to each component on a relative stand-alone selling price basis. Rental income is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

When the Group is an intermediate lessor, a sublease is classified as a finance lease or operating lease with reference to the right-of-use asset arising from the head lease. If the head lease is

short-termlease to which the Group applies the on-balance sheet recognition exemption, the Group classifies the sublease as an operating lease.

	HON KWOK LAND Annual Report 2019/20	77

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leases (applicable before 1 April 2019)

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under operating leases are included in non-current assets, and rentals receivable under the operating leases are credited to profit or loss on the straight-line basis over the lease terms. Where the Group is the lessee, rentals payable under operating leases net of any incentives received from the lessor are charged to profit or loss on the straight-line basis over the lease terms.

Prepaid land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms. When the lease payments cannot be allocated reliably between the land and buildings elements, the entire lease payments are included in the cost of the land and buildings as a finance lease in property, plant and equipment.

Investments and other financial assets Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income, and fair value through profit or loss.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient of not adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under HKFRS 15 in accordance with the policies set out for "Revenue recognition" below.

In order for a financial asset to be classified and measured at amortised cost or fair value through other comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest ("SPPI") on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured at fair value through profit or loss, irrespective of the business model.

78 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments and other financial assets (Continued)

Initial recognition and measurement (Continued)

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Financial assets classified and measured at amortised cost are held within a business model with the objective to hold financial assets in order to collect contractual cash flows, while financial assets classified and measured at fair value through other comprehensive income are held within a business model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not held within the aforementioned business models are classified and measured at fair value through profit or loss.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as follows: Financial assets at amortised cost (debt instruments)

Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the statement of profit or loss when the asset is derecognised, modified or impaired.

	HON KWOK LAND Annual Report 2019/20	79

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:

the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a "pass-through" arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Group's continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

80 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of financial assets

The Group recognises an allowance for expected credit losses ("ECLs") for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

General approach

ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

At each reporting date, the Group assesses whether the credit risk on a financial instrument has increased significantly since initial recognition. When making the assessment, the Group compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of initial recognition and considers reasonable and supportable information that is available without undue cost or effort, including historical and forward-looking information.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

	HON KWOK LAND Annual Report 2019/20	81

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Impairment of financial assets (Continued)

General approach (Continued)

Financial assets at amortised cost are subject to impairment under the general approach and they are classified within the following stages for measurement of ECLs except for trade receivables which apply the simplified approach as detailed below.

Stage 1 - Financial instruments for which credit risk has not increased significantly since initial recognition and for which the loss allowance is measured at an amount equal to 12-month ECLs

Stage 2 - Financial instruments for which credit risk has increased significantly since initial recognition but that are not credit-impaired financial assets and for which the loss allowance is measured at an amount equal to lifetime ECLs

Stage 3 - Financial assets that are credit-impaired at the reporting date (but that are not purchased or originated credit-impaired) and for which the loss allowance is measured at an amount equal to lifetime ECLs

Simplified approach

For trade receivables that do not contain a significant financing component or when the Group applies the practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group's financial liabilities include trade and other payables, financial liabilities included in customer deposits, an amount due to an associate, lease liabilities and interest-bearing bank borrowings.

82 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial liabilities (Continued)

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification as follows: Financial liabilities at amortised cost (loans and borrowings)

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance costs in profit or loss.

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. A financial guarantee contract is recognised initially as a liability at its fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequent to initial recognition, the Group measures the financial guarantee contracts at the higher of: (i) the ECL allowance determined in accordance with the policy as set out in "Impairment of financial assets"; and (ii) the amount initially recognised less, when appropriate, the cumulative amount of income recognised.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in profit or loss.

	HON KWOK LAND Annual Report 2019/20	83

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Cash and cash equivalents

For the purpose of the consolidated statement of cash flows, cash and bank balances comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group's cash management.

For the purpose of the consolidated statement of financial position, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash which are not restricted as to use.

Income tax

Income tax comprises current and deferred tax. Income tax relating to items recognised outside profit or loss is recognised outside profit or loss, either in other comprehensive income or directly in equity.

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

84 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income tax (Continued)

Deferred tax liabilities are recognised for all taxable temporary differences, except:

when the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated with investments in subsidiaries, a joint venture and an associate, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, and the carryforward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

when the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
in respect of deductible temporary differences associated with investments in subsidiaries, a joint venture and an associate, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

	HON KWOK LAND Annual Report 2019/20	85

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income tax (Continued)

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Revenue recognition

Revenue from contracts with customers

Revenue from contracts with customers is recognised when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

86 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition (Continued)

Revenue from contracts with customers (Continued)

When the contract contains a financing component which provides the customer with a significant benefit of financing the transfer of goods or services to the customer for more than one year, revenue is measured at the present value of the amount receivable, discounted using the discount rate that would be reflected in a separate financing transaction between the Group and the customer at contract inception. When the contract contains a financing component which provides the Group a significant financial benefit for more than one year, revenue recognised under the contract includes the interest expense accreted on the contract liability under the effective interest method. For a contract where the period between the payment by the customer and the transfer of the promised goods or services is one year or less, the transaction price is not adjusted for the effects of a significant financing component, using the practical expedient in HKFRS 15.

Revenue is recognised when or as the control of the asset is transferred to the customer. Depending on the terms of the contract and the laws that apply to the contract, control of the asset may be transferred over time or at a point in time. Control of the asset is transferred over time if the Group's performance:

provides all of the benefits received and consumed simultaneously by the customer;
creates and enhances an asset that the customer controls as the Group performs; or
does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

If control of the asset transfers over time, revenue is recognised over the period of the contract by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is recognised at a point in time when the customer obtains control of the asset.

The progress towards complete satisfaction of the performance obligation is measured based on the Group's efforts or inputs to the satisfaction of the performance obligation, by reference to the contract costs incurred up to the end of the reporting period as a percentage of total estimated costs for each contract.

	HON KWOK LAND Annual Report 2019/20	87

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue recognition (Continued)

Revenue from contracts with customers (Continued)

Sales of properties
Revenue from the sale of properties is recognised at the point in time when the purchasers obtained the physical possession of the completed property and the Group has the present right to payment and the collection of the consideration is probable.
Property management fee income, entrusted management fee income and utility income are recognised when the services are rendered.

Revenue from other sources

rental income is recognised on a time proportion basis over the lease terms.
interest income is recognised on an accrual basis using the effective interest method by applying the rate that exactly discounts the estimated future cash receipts over the expected life of the financial instruments or a shorter period, when appropriate, to the net carrying amount of the financial assets.

88 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Contract liabilities

A contract liability is recognised when a payment is received or a payment is due (whichever is earlier) from customer before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e., transfer control of the related goods or services to the customer).

Contract costs

Other than the costs which are capitalised as investment properties, property, plant and equipment, and properties held for sale under development and completed properties held for sale, costs incurred to fulfil a contract with a customer are capitalised as an asset if all of the following criteria are met:

The costs relate directly to a contract or to an anticipated contract that the entity can specifically identify.
The costs generate or enhance resources of the entity that will be used in satisfying (or in continuing to satisfy) performance obligations in the future.
The costs are expected to be recovered.

The capitalised contract costs are amortised and charged to the profit or loss on a systematic basis that is consistent with the pattern of the revenue to which the asset related is recognised. Other contract costs are expensed as incurred.

Employee benefits

Paid leave carried forward

The Group provides paid annual leave to its employees under their employment contracts on a calendar year basis. Under certain circumstances, such leave which remains untaken as at the end of the reporting period is permitted to be carried forward and utilised by the respective employees in the following year. An accrual is made at the end of the reporting period for the expected future cost of such paid leave earned during the year by the employees and carried forward.

	HON KWOK LAND Annual Report 2019/20	89

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Employee benefits (Continued)

Pension schemes

The Group operates a defined contribution Mandatory Provident Fund retirement benefit scheme (the "MPF Scheme") under the Mandatory Provident Fund Schemes Ordinance for those employees who are eligible to participate in the MPF Scheme. Contributions are made based on a percentage of the employees' basic salaries and are charged to profit or loss as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in independently administered funds. The Group's employer contributions vest fully with the employees when contributed into the MPF Scheme, except for the Group's employer voluntary contributions, which are refunded to the Group when the employee leaves employment prior to the contributions vesting fully, in accordance with the rules of the MPF Scheme.

The employees of the Group's subsidiaries which operate in Mainland China are required to participate in a central pension scheme operated by the local municipal government. These subsidiaries are required to contribute a certain percentage of their payroll costs to the central pension scheme. The contributions are charged to profit or loss as they become payable in accordance with the rules of the central pension scheme.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs capitalised. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Dividends

Final dividends are recognised as a liability when they are approved by the shareholders in a general meeting. Proposed final dividends are disclosed in the notes to the financial statements.

Interim dividends are simultaneously proposed and declared, because the Company's memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

90 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company's functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of exchange ruling at the end of the reporting period. Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Differences arising on settlement or translation of monetary items are recognised in the statement of profit or loss with the exception of monetary items that are designated as part of the hedge of the Group's net investment of a foreign operation. These are recognised in other comprehensive income until the net investment is disposed of, at which time the cumulative amount is reclassified to the statement of profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).

In determining the exchange rate on initial recognition of the related asset, expense or income on the derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of initial transaction is the date on which the Group initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of the advance consideration.

The functional currencies of certain overseas subsidiaries, a joint venture and an associate are currencies other than the Hong Kong dollar. As at the end of the reporting period, the assets and liabilities of these entities are translated into Hong Kong dollars at the exchange rates prevailing at the end of the reporting period and their statements of profit or loss are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are recognised in other comprehensive income and accumulated in the exchange fluctuation reserve. On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in profit or loss.

	HON KWOK LAND Annual Report 2019/20	91

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Foreign currencies (Continued)

For the purpose of the consolidated statement of cash flows, the cash flows of overseas subsidiaries are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Group's financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Judgements

In the process of applying the Group's accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:

Property lease classification - Group as lessor

The Group has entered into commercial property leases on its investment property portfolio. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economy life of the commercial property and the present value of the minimum lease payments not amounting to substantially all the fair value of the commercial property, that it retains substantially all the significant risks and rewards incidental to ownership of these properties which are leased out and accounts for the contracts as operating leases.

Significant judgement in determining the lease term of contracts with renewal options

The Group has several lease contracts that include extension and termination options. The Group applies judgement in evaluating whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).

92 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

Judgements (Continued)

Determining the timing of satisfaction of contracts related to the sale of properties

The Group determined that the sales contract with customers requires the Group to complete the development of property before transferring the legal title of the relevant property to customers. The Group also determined that the Group does not have an enforceable right to payment from customers for performance completed to date before the transfer of legal title of the relevant property to customers. Consequently, the Group concluded that the timing of transfer of properties is at the point in time when the purchasers obtained the physical possession or the legal title of the completed property.

Classification between investment properties and properties held for sale

The Group determines whether a property qualifies as an investment property or a property held for sale, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both.

Properties held for sale are properties held by the Group with intention for sale in the Group's ordinary course of business.

Judgement is made on an individual property basis to determine whether leased out properties are classified as properties held for sale or investment properties.

Classification between investment properties and owner-occupied properties

The Group determines whether a property qualifies as an investment property, and has developed criteria in making that judgement. Investment property is a property held to earn rentals or for capital appreciation or both. Therefore, the Group considers whether a property generates cash flows largely independently of the other assets held by the Group.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately or leased out separately under a finance lease, the Group accounts for the portions separately. If the portions could not be sold separately, the property is an investment property only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as an investment property.

	HON KWOK LAND Annual Report 2019/20	93

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

Judgements (Continued)

Investment property under construction

Properties under construction or development for future use as investment properties are classified as investment properties under construction. If the fair value cannot be reliably determined, the investment property under construction will be measured at cost until such time as fair value can be determined or construction is completed. During the year, the Group's investment property under construction which was stated at cost as at 31 March 2019 was revalued on an open market, existing use basis, by independent professionally qualified valuers as its fair value can be determined reliably, upon the conclusion of most of the construction contracts and the entering of lease agreements for considerable amount of rentable area.

As at 31 March 2019, based on the construction progress, the directors concluded that the fair value of investment property under construction could not be measured reliably and, therefore, the investment property under construction was measured at cost until construction is substantially completed or the remaining construction cost can be accurately estimated.

Deferred taxation on investment properties

For the purposes of measuring deferred tax arising from investment properties that are measured using the fair value model, the directors of the Company have reviewed the Group's investment property portfolio and concluded that the Group's investment properties located in Hong Kong were held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties through sale. Therefore, in measuring the Group's deferred taxation on investment properties located in Hong Kong, the directors of the Company have determined that the presumption that the carrying values of investment properties measured using the fair value model are recovered entirely through sale is not rebutted.

For the Group's investment properties located in the PRC, the directors of the Company concluded that the Group's investment properties located in the PRC were held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, in measuring the Group's deferred taxation on investment properties located in the PRC, the directors of the Company have determined that the presumption that the carrying values of investment properties measured using the fair value model are recovered entirely through sale is rebutted.

94 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued)

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.

Estimation of net realisable values of properties held for sale under development and completed properties held for sale

The Group considers information from a variety of sources, including recent prices of similar properties in the same location and condition, with adjustments to reflect any changes in economic conditions since the dates of transactions that occurred at those prices. Particulars of the properties held for sale under development and completed properties held for sale of the Group are set out in note 18 to the financial statements.

Estimation of total budgeted costs and costs to completion for properties held for sale under development

Total budgeted costs for properties held for sale under development comprise (i) prepaid land lease payments; (ii) building costs; and (iii) any other direct costs attributable to the development of the properties. In estimating the total budgeted costs for properties held for sale under development, management makes reference to information such as (i) current offers from contractors and suppliers; (ii) recent offers agreed with contractors and suppliers; and (iii) professional estimation on construction and material costs.

Estimation of fair value of investment properties

In the absence of current prices in an active market for similar properties, the Group considers information from a variety of sources, including:

current prices in an active market for properties of a different nature, condition or location (or subject to different leases or other contracts), adjusted to reflect those differences;
recent prices of similar properties on less active markets, with adjustments to reflect any changes in economic conditions since the dates of the transactions that occurred at those prices;
discounted cash flow projections based on reliable estimates of future cash flows, supported by the terms of any existing lease and other contracts and (when possible) by external evidence such as current market rents for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows; and

	HON KWOK LAND Annual Report 2019/20	95

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued)

Estimation of fair value of investment properties (Continued)

estimated cost to completion for investment property under construction, supported by contracts with contractors.

Further details, including the key assumptions used for fair value measurement, are given in note 14 to the financial statements.

Current income taxes and deferred income taxes

The Group is subject to income taxes in a number of jurisdictions. Significant judgement is required in determining the amount of the provision for tax and the timing of payment of the related taxes. There are transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact on the income tax and deferred tax provisions in the periods in which such determination is made.

Deferred tax assets

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are contained in note 25 to the financial statements.

Land appreciation tax

Under the Provisional Regulations on land appreciation tax ("LAT") implemented upon the issuance of the Provisional Regulations of the PRC on 27 January 1995, all gains arising from the transfer of real estate properties in Mainland China with effect from 1 January 1994 are subject to LAT at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from sales of properties less deductible expenditures including amortisation of land use rights, borrowing costs and all property development expenditures.

96 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (Continued) Estimation uncertainty (Continued)
Land appreciation tax (Continued)
The subsidiaries of the Group engaging in the property development business in Mainland China are subject to LAT, which has been included in income tax. However, the implementation of Provisional Regulations on LAT varies amongst various Mainland China cities and the Group has not finalised certain of its LAT returns with various tax authorities. Accordingly, significant judgement is required in determining the amount of land appreciation and its related taxes. The ultimate tax determination is uncertain during the ordinary course of business. The Group recognises these liabilities based on management's best estimates. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact on the income tax and provisions for LAT in the period in which such determination is made. Further details are contained in note 10 to the financial statements.
OPERATING SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and services and has three reportable operating segments as follows:
1. the property development segment develops properties for sale;
2. the property investment segment holds investment properties for development and the generation of rental income; and
3. the property, carpark management and others segment comprises, principally, the sub-leasing of carparking business and the property management service business which provides management services to residential and commercial properties.

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax. The adjusted profit/loss before tax is measured consistently with the Group's profit/ loss before tax except that interest income, non-lease-related finance costs, share of profit of an associate as well as head office and corporate expenses are excluded from such measurement.

Segment assets exclude investment in a joint venture, investment in an associate, other unallocated head office and corporate assets, including tax recoverable and cash and bank balances, as these assets are managed on a group basis.

Segment liabilities exclude other unallocated head office and corporate liabilities, including interest-bearing bank borrowings, tax payable and deferred tax liabilities, as these liabilities are managed on a group basis.

During the current and prior years, there were no intersegment transactions.

	HON KWOK LAND Annual Report 2019/20	97

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

4. OPERATING SEGMENT INFORMATION (Continued)

					Property, carpark
	Property development	Property investment	management and others	Total
	2020	2019	2020	2019	2020	2019	2020	2019
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Segment revenue (note 5):
Sales to external customers	325,561	1,224,190	281,060	221,755	31,856	32,408	638,477		1,478,353


Segment results	186,739	559,498	(81,491)	1,051,642	819	2,498	106,067		1,613,638
Reconciliation:
Interest income							22,193		13,852
Unallocated expenses							(74,697)	(64,971)
Finance costs (other than interest on
lease liabilities)							(186,914)	(118,480)
Share of profit of an associate							109,766		317,087

Profit/(loss) before tax							(23,585)	1,761,126


Segment assets	2,263,238	2,241,050	14,856,370	14,639,264	2,152,116	2,070,899	19,271,724		18,951,213
Reconciliation:
Elimination of intersegment receivables							(2,354,700)	(2,172,744)
Investment in a joint venture							199		199
Investment in an associate							775,363	789,271
Corporate and other unallocated assets							2,168,332	1,968,895

Total assets							19,860,918		19,536,834


Segment liabilities	1,672,145	1,481,445	1,043,643	1,009,820	606,415	446,945	3,322,203		2,938,210
Reconciliation:
Elimination of intersegment payables							(2,354,700)	(2,172,744)
Corporate and other unallocated liabilities							7,390,054		6,702,811

Total liabilities							8,357,557		7,468,277

98 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

4. OPERATING SEGMENT INFORMATION (Continued)

										Property, carpark
	Property development	Property investment	management and others	Total
	2020		2019	2020	2019	2020	2019	2020		2019
	HK$'000	HK$'000	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
Other segment information:
Fair value losses/(gains) on investment
properties, net	-	-	217,302	(929,811)		-	-	217,302		(929,811)
Loss/(gain) on disposal of items of
property, plant and equipment	(111)	-	-	10	(290)	(4)	(401)		6
Loss on disposal of investment properties	-	-	-	804		-	-	-	804
Depreciation	2,408		985	6,625	1,736	26,309	2,593	35,342		5,314
Capital expenditure*	527		429	710,238	470,725	6,121	475	716,886		471,629

Capital expenditure represents additions to property, plant and equipment and investment properties.

Geographical information
(a) Revenue
		2020	2019
		HK$'000		HK$'000
	Hong Kong	102,261	111,689
	Mainland China	536,216		1,366,664
		638,477	1,478,353

The revenue information above is based on the locations of the operations.

Non-currentassets

	2020	2019
	HK$'000		HK$'000
Hong Kong	4,829,345	3,923,186
Mainland China	9,774,516		10,640,417
	14,603,861	14,563,603

The non-current asset information above is based on the locations of the assets and excludes investments in a joint venture and an associate.

	HON KWOK LAND Annual Report 2019/20	99

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

5. REVENUE AND OTHER INCOME

Revenue represents income from the sale of properties, gross rental income and property management income during the year.

An analysis of revenue is as follows:

	2020		2019
	HK$'000	HK$'000
Revenue from contracts with customers
Sale of properties	325,561		1,224,190
Property management income	31,217		30,832
Revenue from other sources
Gross rental income	281,699		223,331
	638,477		1,478,353

100 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

5. REVENUE AND OTHER INCOME (Continued)

Revenue from contracts with customers

Disaggregated revenue information
For the year ended 31 March 2020 Segments

						Property,
						carpark
		Property	Property	management
	development	investment	and others	Total
		HK$'000	HK$'000	HK$'000	HK$'000
Types of goods or services
Sales of properties	325,561		-	-	325,561
Property management income		-	29,611	1,606	31,217
Total revenue from contracts with
customers	325,561		29,611	1,606	356,778
Geographical markets


Hong Kong		-	-	1,606	1,606
Mainland China	325,561	29,611	-	355,172
Total revenue from contracts with
customers	325,561		29,611	1,606	356,778
Timing of revenue recognition


Goods transferred at a point in time	325,561		-	-	325,561
Services transferred over time		-	29,611	1,606	31,217
Total revenue from contracts with
customers	325,561		29,611	1,606	356,778

	HON KWOK LAND Annual Report 2019/20	101

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

5. REVENUE AND OTHER INCOME (Continued) Revenue from contracts with customers (Continued)

Disaggregated revenue information (Continued)
For the year ended 31 March 2019 Segments

					Property,
					carpark
	Property	Property	management
	development	investment	and others	Total
	HK$'000	HK$'000	HK$'000	HK$'000
Types of goods or services
Sales of properties	1,224,190		-	-	1,224,190
Property management income	-	29,257	1,575	30,832
Total revenue from contracts with
customers	1,224,190		29,257	1,575	1,255,022
Geographical markets


Hong Kong	-	-	1,575	1,575
Mainland China	1,224,190	29,257	-	1,253,447
Total revenue from contracts with
customers	1,224,190		29,257	1,575	1,255,022
Timing of revenue recognition


Goods transferred at a point in time	1,224,190		-	-	1,224,190
Services transferred over time	-	29,257	1,575	30,832
Total revenue from contracts with
customers	1,224,190		29,257	1,575	1,255,022

The following table shows the amounts of revenue recognised in the current reporting period that were included in the contract liabilities at the beginning of the reporting period and recognised from performance obligations satisfied:

	2020	2019
	HK$'000		HK$'000
Revenue recognised that was included in contract
liabilities at the beginning of the reporting period:
- Sales of properties	120,248	1,107,885

102 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

5. REVENUE AND OTHER INCOME (Continued) Revenue from contracts with customers (Continued)

Performance obligations
Information about the Group's performance obligations is summarised below: Sales of properties
The performance obligation is satisfied upon the physical possession of the completed property being obtained by the purchasers.
Property management income
The performance obligation is satisfied over time as services are rendered and short-term advances are normally required before rendering the services. Management service contracts are for periods of one year or less, and are billed based on the time incurred.

			2020		2019
			HK$'000	HK$'000

	Other income
	Bank interest income	22,193		13,852
	Others	8,349		4,072
			30,542		17,924
6.		FINANCE COSTS


	An analysis of finance costs is as follows:
			2020		2019
			HK$'000	HK$'000
	Interest on bank loans	228,200		187,706
	Interest on lease liabilities	2,565		-
	Less: Interest capitalised under properties under
		development/construction	(41,286)	(69,226)

			189,479		118,480

	HON KWOK LAND Annual Report 2019/20	103

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

7. PROFIT/(LOSS) BEFORE TAX

The Group's profit/(loss) before tax is arrived at after charging/(crediting):

		2020		2019
	Notes	HK$'000	HK$'000
Cost of properties sold		108,650		628,919
Depreciation#	13	35,342		5,314
Minimum lease payments under operating leases#		-	21,658
Lease payments not included in the
measurement of lease liabilities	15(c)	3,327		-
Auditor's remuneration		2,700	2,540
Employee benefit expense
(including directors' remuneration (note 8)):
Wages, salaries, allowances and benefits in kind		60,837		58,254
Pension scheme contributions		1,869		1,955

		62,706		60,209
Less: Amounts capitalised under properties
under development/construction		(20,870)	(20,080)

		41,836		40,129

Gross rental income		(311,310)	(252,588)
Less: Outgoing expenses#*		154,644		115,439

		(156,666)	(137,149)
Direct operating expenses (including repairs and
maintenance) arising from rental-earning
investment properties		125,476		85,198
Foreign exchange differences, net		(1)	(2)
Fair value losses/(gains) on investment properties, net	14	217,302	(929,811)
Loss on disposal of investment properties		-	804
Interest income		(22,193)	(13,852)
Loss/(gain) on disposal of items of property,
plant and equipment		(401)	6

At 31 March 2020 and 2019, the amount of forfeited pension scheme contributions available to the Group for future utilisation was not significant.

Included in the amounts are depreciation of leased carparks of HK$18,456,000 (2019: rental expenses for carpark operations of HK$21,658,000) which are included in "Cost of sales" in the consolidated statement of profit or loss.

The outgoing expenses for the year are included in "Cost of sales" in the consolidated statement of profit or loss.

104 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

8. DIRECTORS' REMUNERATION

Directors' remuneration for the year, disclosed pursuant to the Listing Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

	2020		2019
	HK$'000	HK$'000
Fees	658		400
Other emoluments:
Salaries, allowances and benefits in kind	10,309		11,424
Discretionary performance-related bonuses*	2,000		4,800
Pension scheme contributions	20		234
	12,329		16,458
	12,987		16,858

Certain executive directors of the Company are entitled to bonus payments which are determined based on the individual performance of these directors during the year.

Independent non-executive directors
The fees paid to independent non-executive directors during the year are as follows:

	2020	2019
	HK$'000		HK$'000
Zuo Xiang	175	100
Janie Fong (appointed on 27 May 2019)	125		-
David Tak-Wai Ma (appointed on 29 August 2019)	75		-
William Kwan-Lim Chu (resigned on 1 January 2019)	-	100
Daniel Chi-Wai Tse (retired on 29 August 2019)	108		100
	483	300

There were no other emoluments payable to the independent non-executive directors during the year (2019: Nil).

	HON KWOK LAND Annual Report 2019/20	105

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

8. DIRECTORS' REMUNERATION (Continued)

Executive directors and non-executive directors

			Salaries,	Discretionary
			allowances	performance-	Pension
			and benefits	related	scheme	Total
	Fees	in kind	bonuses	contributions	remuneration
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
2020
Executive directors:
James Sai-Wing Wong	-	-	-	-	-
James Sing-Wai Wong	175		-	-	-	175
Xiao-Ping Li	-	6,760		2,000		-	8,760
Philip Bing-Lun Lam
(appointed on 29 April 2019)	-	1,504		-	-	1,504
Peter Chi-Chung Luk
(resigned on 29 April 2019)	-		2,045		-		20		2,065
	175		10,309	2,000	20	12,504
2019


Executive directors:
James Sai-Wing Wong	-	-	-	-	-
James Sing-Wai Wong
(appointed on 13 July 2018)	-	-	-	-	-
Xiao-Ping Li	-	6,268		2,000		-	8,268
Yuen-Keung Chan
(resigned on 13 July 2018)	-	1,882		2,500		6		4,388
Peter Chi-Chung Luk
(resigned on 29 April 2019)	-		3,274		300		228		3,802
	-	11,424	4,800	234	16,458
Non-executive directors:
Herman Man-Hei Fung
(retired on 1 April 2018)	-	-	-	-	-
James Sing-Wai Wong
(re-designated as executive
director on 13 July 2018)	100		-		-		-		100
	100		11,424	4,800	234	16,558

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

106 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

9. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included one (2019: three) director, details of whose remuneration are set out in note 8 above. Details of the remuneration of the remaining four (2019: two) non-director highest paid employees are as follows:

	2020	2019
	HK$'000		HK$'000
Salaries, allowances and benefits in kind	11,726	6,935
Pension scheme contributions	669		226
	12,395	7,161

The number of non-director highest paid employees whose remuneration fell within the following bands is as follows:

	Number of employees
	2020	2019
HK$2,500,001 to HK$3,000,000	3		-
HK$3,500,001 to HK$4,000,000	1		2
	4		2

	HON KWOK LAND Annual Report 2019/20	107

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

10. INCOME TAX

No provision for Hong Kong profits tax has been made for the year as the Group has available tax losses brought forward from prior years to offset the assessable profits generated during the year (2019: Nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.

LAT has been calculated in conformity with the prevailing rules and practices on the Group's completed projects in Mainland China at progressive rates ranging from 30% to 60% on the appreciation of land value, being the proceeds from the sale of properties less deductible expenditures including amortisation of land use rights, borrowing costs and all property development expenditures.

	2020	2019
	HK$'000	HK$'000
Current - Hong Kong
Underprovision in prior years	137	-
Current - Elsewhere	52,256	138,298
LAT in Mainland China	49,717	99,059
Deferred (note 25)	(112,433)	223,207

Total tax charge/(credit) for the year	(10,323)	460,564

108 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

10. INCOME TAX (Continued)

A reconciliation of the tax expense/(credit) applicable to profit/(loss) before tax at the statutory rates for the jurisdictions in which the Company and the majority of its subsidiaries are domiciled to the tax expense/(credit) at the effective tax rate is as follows:

	2020	2019
	HK$'000	HK$'000
Profit/(loss) before tax	(23,585)	1,761,126


Tax at the statutory tax rates	(16,079)	447,368
Income not subject to tax	(47,593)	(13,694)
Expenses not deductible for tax	13,449	14,027
Tax losses utilised from previous periods	(102)	(612)
Tax losses not recognised	26,917		17,539
Profit attributable to an associate	(27,442)	(79,272)
LAT	49,717		99,059
Others	(9,190)	(23,851)
Tax charge/(credit) at the Group's effective
rate of (43.8)% (2019: 26.2%)	(10,323)	460,564

The share of tax attributable to an associate amounting to HK$87,943,000 (2019: HK$122,876,000) is included in "share of profit of an associate" in the consolidated statement of profit or loss.

There was no share of tax attributable to a joint venture during the year ended 31 March 2020 (2019: Nil).

	HON KWOK LAND Annual Report 2019/20	109

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

11. DIVIDEND
		2020	2019
		HK$'000		HK$'000
Proposed final - 12.5 HK cents (2019: 12.5 HK cents)
	per ordinary share	90,054	90,054

The proposed final dividend for the year is subject to the approval of the Company's shareholders at the forthcoming annual general meeting.

12. EARNINGS/(LOSS) PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of the basic loss (2019: earnings) per share amount is based on the loss for

the year attributable to ordinary equity holders of the Company of HK$35,946,000 (2019: profit of HK$1,158,507,000) and the weighted average number of ordinary shares in issue during the year of 720,429,301 (2019: 720,429,301).

No adjustment has been made to the basic loss (2019: earnings) per share amounts presented for the years ended 31 March 2020 and 2019 in respect of a dilution as the Group had no potential dilutive ordinary shares in issue during the years ended 31 March 2020 and 2019.

110 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

13. PROPERTY, PLANT AND EQUIPMENT

	Right-of-use assets								Owned assets
														Furniture
	Leasehold									Leasehold		and	Motor
	land	Buildings	Total	Buildings	improvements		equipment	vehicles	Total	Total
	HK$'000	HK$'000	HK$'000	HK$'000		HK$'000		HK$'000	HK$'000	HK$'000	HK$'000
31 March 2020
At 1 April 2019 (restated):
Cost	199,196		55,829			255,025		83,328		2,091		15,346		10,153		110,918	365,943
Accumulated depreciation	-		-			-		(21,665)	(2,056)	(13,228)	(6,399)	(43,348)	(43,348)

Net carrying amount	199,196		55,829			255,025		61,663			35			2,118		3,754		67,570	322,595
At 31 March 2019, net of


accumulated depreciation	-	-	-	260,859	35	2,118	3,754	266,766	266,766
Effect of adoption of
HKFRS 16	199,196	55,829		255,025	(199,196)		-		-	-	(199,196)	55,829

At 1 April 2019 (restated)	199,196		55,829			255,025		61,663			35			2,118		3,754		67,570	322,595
Additions	-	2,230			2,230		-	4,870		918		1,612		7,400	9,630
Disposals	-	-	-	-		-		-	(126)	(126)	(126)
Adjustment relating to
reassessment of
lease liabilities	-	(9,007)		(9,007)	-		-		-	-	-	(9,007)
Depreciation provided
during the year	(5,435)	(24,831)		(30,266)	(2,559)	(360)	(798)	(1,359)	(5,076)	(35,342)
Exchange realignment	(8,855)	-	(8,855)	(2,741)		-	(88)	(105)	(2,934)	(11,789)
At 31 March 2020,
net of accumulated
depreciation	184,906		24,221		209,127	56,363	4,545		2,150		3,776	66,834	275,961
At 31 March 2020:


Cost	190,170		49,052			239,222		79,797		5,441		14,766		10,489		110,493	349,715
Accumulated depreciation	(5,264)	(24,831)		(30,095)	(23,434)	(896)	(12,616)	(6,713)	(43,659)	(73,754)

Net carrying amount	184,906		24,221			209,127		56,363			4,545			2,150		3,776		66,834	275,961

	HON KWOK LAND Annual Report 2019/20	111

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

13. PROPERTY, PLANT AND EQUIPMENT (Continued)

	Leasehold			Furniture
	land and	Leasehold	and	Motor
	buildings	improvements	equipment	vehicles	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
31 March 2019
At 31 March 2018 and at
1 April 2018:
Cost	93,408		2,091	17,034	10,281	122,814
Accumulated depreciation	(19,636)	(2,019)	(14,686)	(5,467)	(41,808)
Net carrying amount	73,772		72		2,348		4,814	81,006
At 1 April 2018, net of


accumulated depreciation	73,772		72		2,348	4,814	81,006
Additions	-	-	756	402	1,158
Disposals	-	-	(22)	(30)	(52)
Transfer from investment properties	194,546		-	-	-	194,546
Depreciation provided during the year	(3,170)	(37)	(883)	(1,224)	(5,314)
Exchange realignment	(4,289)	-	(81)	(208)	(4,578)
At 31 March 2019, net of
accumulated depreciation	260,859		35		2,118	3,754	266,766


At 31 March 2019:
Cost	282,524		2,091		15,346	10,153	310,114
Accumulated depreciation	(21,665)	(2,056)	(13,228)	(6,399)	(43,348)

Net carrying amount	260,859		35		2,118	3,754	266,766

At 31 March 2020, certain of the Group's leasehold land and buildings with a net carrying amount of approximately HK$230,149,000 (2019: HK$247,921,000) were pledged to secure general banking facilities granted to the Group as detailed in note 24(a)(iii) to the financial statements.

112 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES

			2020
			Investment	Investment
	Completed	property	property
	investment	under	under
	properties	construction	construction
	at fair value	at fair value	at cost	Total
	HK$'000	HK$'000	HK$'000	HK$'000
At beginning of year	13,249,221		-	1,047,616	14,296,837
Additions	77,826		414,091	217,569	709,486
Transfer	-	1,265,185	(1,265,185)	-
Net gains/(losses) from
fair value adjustments	(838,026)	620,724	-	(217,302)
Exchange realignment	(461,121)	-	-	(461,121)
At end of year	12,027,900		2,300,000		-	14,327,900


			2019
			Investment	Investment
	Completed	property	property
	investment	under	under
	properties	construction	construction
	at fair value	at fair value	at cost	Total
	HK$'000	HK$'000	HK$'000	HK$'000
At beginning of year	6,661,309		6,172,840	841,481	13,675,630
Additions	12,975		251,361	206,135	470,471
Disposal	(2,200)	-	-	(2,200)
Net gains from fair value
adjustments	53,265		876,546	-	929,811
Exchange realignment	(223,442)	(358,887)	-	(582,329)
Transfer	6,941,860		(6,941,860)	-	-
Transfer to
owner-occupied property	(194,546)	-	-	(194,546)

At end of year	13,249,221		-	1,047,616	14,296,837

	HON KWOK LAND Annual Report 2019/20	113

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued)

The directors of the Company have determined that the Group's completed investment properties and investment property under construction are commercial properties, based on the nature, characteristics and risks of each property. The Group's completed investment properties and investment property under construction were revalued on 31 March 2020 based on valuations performed by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, at an aggregate value of HK$14,327,900,000 (2019: HK$13,249,221,000). Each year, the Group's management decides to appoint which external valuer to be responsible for the external valuations of the Group's properties. Selection criteria include market knowledge, reputation, independence and whether professional standards are maintained. The Group's management has discussions with the valuer on the valuation assumptions and valuation results twice a year when the valuation is performed for the interim and annual financial reporting.

Certain completed investment properties are leased to third parties under operating leases, further summary details of which are included in note 15 to the financial statements.

Investment property under construction included interest expense of HK$29,904,000 (2019: HK$62,156,000) that was incurred and capitalised during the year.

Investment property under construction is measured at cost until such time as fair value can be determined reliably or construction is completed. As at 31 March 2019, based on the construction progress and the percentage of rentable area that had been pre-leased, the Group had concluded that the fair value of the investment property under construction could not be measured reliably due to the construction and letting risks and it was therefore measured at cost in the consolidated statement of financial position.

During the year, the investment property under construction which was stated at cost as at 31 March 2019 was revalued based on valuations performed by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, at an aggregate value of HK$2,300,000,000.

At 31 March 2020, the Group's investment properties with an aggregate carrying value of HK$14,325,000,000 (2019: HK$14,293,837,000) were pledged to secure the banking facilities granted to the Group as detailed in note 24(a)(i) to the financial statements. In addition, certain of the Group's bank loans are secured by assignments of rental income from the leases of the Group's investment properties as detailed in note 24(a)(iv) to the financial statements.

Based on the property ownership certificates, a portion of the completed investment properties with a total gross floor area of approximately 3,023 sq.m. is designated as non-market commodity housing which is not freely transferable in the market. As at 31 March 2020, the carrying amount of such portion was HK$95,444,000 (2019: HK$103,720,930).

Further particulars of the Group's investment properties are included in "Particulars of Properties" on pages 155 to 159.

114 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued)

Fair value hierarchy

The following table illustrates the fair value measurement hierarchy of the Group's completed investment properties and certain investment properties under construction at fair value:

			Fair value measurement as
			at 31 March 2020 using
	Quoted
	prices in	Significant		Significant
	active	observable	unobservable
	markets	inputs		inputs
	(Level 1)	(Level 2)		(Level 3)	Total
	HK$'000	HK$'000		HK$'000	HK$'000
Recurring fair value
measurement for:
Commercial properties	-	-	14,327,900	14,327,900


			Fair value measurement as
			at 31 March 2019 using
	Quoted
	prices in	Significant		Significant
	active	observable		unobservable
	markets	inputs		inputs
	(Level 1)	(Level 2)		(Level 3)	Total
	HK$'000	HK$'000		HK$'000	HK$'000
Recurring fair value
measurement for:
Commercial properties	-	-	13,249,221	13,249,221

	HON KWOK LAND Annual Report 2019/20	115

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued) Fair value hierarchy (Continued)

During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 (2019: Nil).

Reconciliation of fair value measurements categorised within Level 3 of the fair value hierarchy:

	HK$'000
Carrying amount at 1 April 2018	12,834,149
Additions	264,336
Disposals	(2,200)
Transfer to owner-occupied property	(194,546)
Net gains from fair value adjustments	929,811
Exchange realignment	(582,329)
Carrying amount at 31 March 2019 and 1 April 2019	13,249,221
Additions	491,917
Transfer	1,265,185
Net loss from fair value adjustments	(217,302)
Exchange realignment	(461,121)
Carrying amount at 31 March 2020	14,327,900

116 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued) Fair value hierarchy (Continued)

Below is a summary of the valuation techniques used and the key inputs to the valuation of completed investment properties and investment property under construction at fair value:

	Valuation techniques	Significant unobservable inputs	Range or weighted average
Commercial properties			2020	2019
Completed	Income capitalisation	Estimated rental value
	approach	per sq.ft. and per month (HK$)	18 to 155	23 to 166
		per sq.m. and per month (RMB)	38 to 426	52 to 428
		Capitalisation rate	3.2% to 6.5%	3.1% to 6.5%
	Direct comparison	Unit price (HK$/unit)	2,900,000	3,000,000
	approach	Unit price (RMB/unit)	80,000 to 465,000	80,000 to 460,000
		Price per sq.ft. (HK$)	10,400 to 13,000	11,100 to 13,400
		Price per sq.m. (RMB)	-	27,100 to 83,300
	Discounted cash	Room tariff (RMB)	440	470
	flow approach	Occupancy rate	55%	70%
		Stabilised growth rate	3%	3%
		Terminal capitalisation rate	5.5%	5.5%
		Discount rate	8.5%	8.5%
Under construction	Income capitalisation	Estimated rental value
	approach	per sq.ft. and per month (HK$)	33	-
		Capitalisation rate	3.8%	-
		Estimated cost to completion (HK$)	80,000,000	-

	HON KWOK LAND Annual Report 2019/20	117

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued) Fair value hierarchy (Continued) Income capitalisation approach

Under the income capitalisation approach, fair value is estimated on the basis of capitalisation of existing rental income and reversionary market rental income.

The market rentals of the investment properties are assessed and capitalised at market yield expected by investors for this type of properties. The market rents are assessed by reference to the rentals achieved in the investment properties as well as other lettings of similar properties in the neighbourhood. The market yield, which is the capitalisation rate adopted, is made by reference to the yields derived from analysing the sales transactions of similar properties and adjusted to take account of the valuers' knowledge of the market expectation from property investors to reflect factors specific to the Group's investment properties.

The key inputs were the market rent, the market yield and the estimated cost to completion, which a significant increase/decrease in the market rent in isolation would result in a significant increase/decrease in the fair value of the investment properties and a significant increase/ decrease in the market yield and the estimated cost to completion in isolation would result in a significant decrease/increase in the fair value of the investment properties.

Direct comparison approach

Under the market approach, fair value is estimated by the direct comparison method on the assumption of the sale of the property interest with the benefit of vacant possession and by making reference to comparable sales transactions as available in the market.

The valuation takes into account the characteristics of the investment properties, which include the location, size, shape, view, floor level, year of completion and other factors collectively, to arrive at the market price per unit.

The key input was the market price per unit, which a significant increase/decrease in the market price would result in a significant increase/decrease in the fair value of the investment properties.

118 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

14. INVESTMENT PROPERTIES (Continued) Fair value hierarchy (Continued) Discounted cash flow approach

Under the discounted cash flow method, fair value is estimated using assumptions regarding the benefits and liabilities of ownership over the asset's life including an exit or terminal value. This method involves the projection of a series of cash flows on a property interest. A market-derived discount rate is applied to the projected cash flow in order to establish the present value of the income stream associated with the asset. The exit yield is normally separately determined and differs from the discount rate.

The duration of the cash flows and the specific timing of inflows and outflows are determined by events such as rent reviews, lease renewal and related reletting, redevelopment or refurbishment. The appropriate duration is driven by market behaviour that is a characteristic of the class of property. The periodic cash flow is estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance costs, agent and commission costs and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discounted.

The key inputs were the room tariff, the occupancy rate, the terminal capitalisation rate, the discount rate, and the stabilised growth rate, which a significant increase/decrease in the room tariff, the occupancy rate, and the growth rate in isolation would result in a significant increase/ decrease in the fair value of the investment properties. A significant increase/decrease in the terminal capitalisation rate and the discount rate in isolation would result in a significant decrease/ increase in the fair value of the investment properties.

	HON KWOK LAND Annual Report 2019/20	119

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

15. LEASES

The Group as a lessee

The Group has lease contracts for land and building used in its operations. Lump sum payments were made upfront to acquire the leased land from the owners with lease periods of 50 years, and no ongoing payments will be made under the terms of these land leases. Leases of buildings generally have lease terms from one to three years.

Lease liabilities
The carrying amount of lease liabilities and the movements during the year are as follows:

Carrying amount at 1 April 2019 New lease

Accretion of interest recognised during the year Adjustment relating to reassessment of lease liabilities Payments

Carrying amount at 31 March 2020

Analysed into:

Current portion

Non-current portion

2020 Leases liabilities HK$'000

55,829

2,230

2,565

(9,007)

(26,541)

25,076

17,024

8,052

The maturity analysis of lease liabilities is disclosed in note 36 to the financial statements.

120 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

15. LEASES (Continued)

The Group as a lessee (Continued)

The amounts recognised in profit or loss in relation to leases are as follows:

	2020
	HK$'000
Interest on lease liabilities	2,565
Depreciation of right-of-use assets	30,266
Variable lease payments not included in the measurement of
lease liabilities (included in cost of sales)	3,327
Total amount recognised in profit or loss	36,158

Variable lease payments
The Group leased a number of carparks which contain variable lease payment terms that are based on the Group's turnover generated from the carparks. There are also minimum annual base rental arrangements for these leases. The amounts of the fixed and variable lease payments recognised in profit or loss for the current year for these leases are HK$18,456,000 and HK$3,327,000, respectively.
The total cash outflow for leases is disclosed in note 29(c) to the financial statements.

The Group as a lessor

The Group leases its investment properties (note 14) consisting of nine commercial properties in Hong Kong and China under operating lease arrangements. The terms of the leases generally require the tenants to pay security deposits and provide for periodic rent adjustments according to the then prevailing market conditions. Rental income recognised by the Group during the year was HK$281,699,000 (2019: HK$223,331,000), details of which are included in note 5 to the financial statements.

	HON KWOK LAND Annual Report 2019/20	121

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

15. LEASES (Continued)

The Group as a lessor (Continued)

At 31 March 2020, the undiscounted lease payments receivable by the Group in future periods under non-cancellable operating leases with its tenants are as follows:

	2020		2019
	HK$'000	HK$'000
Within one year	173,469		174,276
After one year but within two years	146,095		155,768
After two year but within three years	133,930		133,396
After three year but within four years	124,820		122,597
After four year but within five years	118,777		121,492
After five years	601,240		738,060
	1,298,331		1,445,589

Certain of the Group's bank loans are secured by assignments of rental income from the leases of the Group's properties as detailed in note 24(a)(iv) to the financial statements.

122 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

16. INVESTMENT IN A JOINT VENTURE

20202019

HK$'000 HK$'000

Share of net assets	199	199

The investment in a joint venture is indirectly held by the Company.

Particulars of the Group's joint venture are as follows:

				Percentage of
	Particulars of	Place of
	issued share	incorporation	Ownership	Voting	Profit	Principal
Name	capital	and business	interest	power	sharing	activity
Two City Hall Place Limited*	Common share	Canada	50	50	50	Dormant
	capital of
	CAD100

Not audited by Ernst & Young, Hong Kong or another member firm of the Ernst & Young global network

The following table illustrates the financial information of the Group's joint venture that is not material:

	2020	2019
	HK$'000	HK$'000
Share of the joint venture's profit for the year	-	-
Share of the joint venture's other comprehensive income	-	-
Share of the joint venture's total comprehensive income	-	-
Carrying amount of the Group's investment
in the joint venture	199		199

	HON KWOK LAND Annual Report 2019/20	123

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

17. INVESTMENT IN AN ASSOCIATE/DUE TO AN ASSOCIATE

	2020	2019
	HK$'000	HK$'000
Goodwill on acquisition	18,374	18,374
Share of net assets	756,989		770,897
	775,363	789,271


Due to an associate	-	15,950

Particulars of the associate, which is held indirectly through a wholly-owned subsidiary of the Company, are as follows:

			Percentage of
		Place of	ownership interest
	Particulars of	incorporation	attributable to
Name	issued share capital	and business	the Group	Principal activity
Chinney Trading Company	HK$615,425,000	Hong Kong	20	Property development
Limited

The following table illustrates the financial information of the Group's associate that is not material:

	2020		2019
	HK$'000	HK$'000
Share of the associate's profit for the year	109,766		317,087
Share of the associate's other comprehensive loss	(22,673)	(14,527)
Share of the associate's total comprehensive income	87,093		302,560
Carrying amount of the Group's investment in the associate	775,363		789,271

The amount due to the associate was unsecured, interest-free and had no fixed terms of repayment.

124 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

18. PROPERTIES HELD FOR SALE UNDER DEVELOPMENT AND COMPLETED PROPERTIES HELD FOR SALE

	2020		2019
	HK$'000	HK$'000
Completed properties held for sale	641,873		876,556
Properties held for sale under development	1,419,606		1,175,043
	2,061,479		2,051,599


	2020		2019
	HK$'000	HK$'000
Properties held for sale under development
- expected to be recovered:
Within one year	828,790		361,594
After one year	551,263		430,181
- pending construction expected to be recovered:
After one year	39,553		383,268
	1,419,606		1,175,043

	HON KWOK LAND Annual Report 2019/20	125

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

18. PROPERTIES HELD FOR SALE UNDER DEVELOPMENT AND COMPLETED PROPERTIES HELD FOR SALE (Continued)

Properties held for sale under development and completed properties held for sale included interest expense of HK$11,382,000 (2019: HK$7,070,000) that was incurred and capitalised during the year prior to the completion of the development of the properties.

During the year, certain of the Group's properties held for sale under development with an aggregate carrying value amounting to HK$298,738,000 (2019: HK$252,772,000) at the end of the reporting period were pledged to secure the banking facilities granted to the Group as detailed in note 24(a)(ii) to the financial statements.

The Group is subject to a risk that certain land relating to the properties held for sale under development situated in the PRC, with a carrying amount of HK$828,790,000 (2019: HK$649,911,000) at the end of the reporting period, could be appropriated by the relevant government authorities in the PRC as a result of the non-compliance with the requirement to complete the construction works on the land in prior years. In the opinion of the directors, the chance that the land administration bureau will appropriate the property without paying compensation is remote because the Group had fully paid the land premium in prior years and was granted approval from the relevant government authorities for the modification and application for extension of several Construction Works Planning Permits and Construction Works Commencement Permits, and the construction works on the land have already commenced. In addition, the construction of certain property units of a different phase of the above development project was completed and those property units were delivered to purchasers from the financial year 2012/13.

Further particulars of the Group's properties held for sale under development and completed properties held for sale are included in "Particulars of Properties" on pages 155 to 159.

126 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

19. TRADE RECEIVABLES

An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice/contract date and net of loss allowance, is as follows:

	2020		2019
	HK$'000	HK$'000
Within 30 days	967		1,900
31 to 60 days	201	1,347
61 to 90 days	-	1,370
Over 90 days	19,609	16,944
	20,777		21,561

Monthly rent in respect of leased properties is payable in advance by the tenants pursuant to the terms of the tenancy agreements. The balance of the consideration in respect of the sold properties is payable by the purchasers pursuant to the terms of the sale and purchase agreements. Overdue trade debts are closely monitored by management and are provided for in full in cases of non-recoverability. In view of the aforementioned and the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

The carrying amounts of the trade receivables approximate to their fair values.

An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written off if past due for more than one year and are not subject to enforcement activity.

The financial impact of ECL for trade receivables under HKFRS 9 was insignificant for the years ended 31 March 2020 and 2019.

	HON KWOK LAND Annual Report 2019/20	127

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

20. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	2020		2019
	HK$'000	HK$'000
Prepayments	52,611		48,937
Deposits	20,568		9,725
Other receivables	137,463		88,021
Impairment	(10,524)	(10,524)

	200,118		136,159

None of the deposits is either past due or impaired. The provision for impairment relates to other receivables.

Included in the above provision for impairment of other receivables is a provision for an impaired other receivable of HK$10,524,000 (2019: HK$10,524,000) with a carrying amount before provision of HK$10,524,000 (2019: HK$10,524,000) whose receivable was considered by the directors to be irrecoverable. The Group does not hold any collateral or other credit enhancements over these balances.

The remaining balance of other receivables that were neither past due nor impaired relate to a large number of independent parties for whom there was no recent history of default and part due amounts. As at 31 March 2020 and 2019, the loss allowance was assessed to be minimal.

The Group has applied the general approach to provide for expected credit losses for financial assets included in prepayments, deposits and other receivables. The Group considers the historical loss rate and adjusts for forward looking macroeconomic data in calculating the expected credit loss rate. The Group has classified financial assets included in prepayments, deposits and other receivables in stage 1 and continuously monitors their credit risk. As at 31 March 2020 and 2019, the Group estimated that the expected loss rate for financial assets included in prepayments, deposits and other receivables was insignificant.

128 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

21. CASH AND BANK BALANCES

	2020		2019
	HK$'000	HK$'000
Cash and bank balances	1,441,871		1,504,579
Time deposits	726,183		458,421
	2,168,054		1,963,000

Included in cash and bank balances are restricted bank deposits of HK$61,839,000 (2019: HK$76,743,000) which can only be applied in the designated property development projects prior to the completion of their construction.

At the end of the reporting period, the cash and bank balances including time deposits of the Group denominated in RMB amounted to HK$1,289,258,000 (2019: HK$693,017,000). The RMB is not freely convertible into other currencies, however, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between three months and six months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

22. TRADE PAYABLES, OTHER PAYABLES AND ACCRUED LIABILITIES

Included in the trade payables, other payables and accrued liabilities are trade payables of HK$12,248,000 (2019: HK$28,088,000). An ageing analysis of the trade payables as at the end of the reporting period, based on the invoice date, is as follows:

20202019

HK$'000 HK$'000

Within 30 days	12,248	28,088

The trade payables are non-interest-bearing and are normally settled on 30-day terms.

	HON KWOK LAND Annual Report 2019/20	129

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

CONTRACT LIABILITIES
Contract liabilities mainly represent sales proceeds received from buyers in connection with the Group's pre-sales of properties. The increase in contract liabilities in 2020 was mainly due to the increase in sales proceeds received from customers in relation to the pre-sale of properties during the year.
INTEREST-BEARINGBANK BORROWINGS

		2020				2019
	Effective				Effective
	annual				annual
	interest				interest
	rate (%)	Maturity	HK$'000	rate (%)	Maturity	HK$'000
Current
Bank loans - unsecured	4.3	2020-2021	105,000		-	-		-
		2020-2021				2019-2020
Bank loans - secured	2.7-5.9	or on demand	1,749,126		2.5-5.9	or on demand	1,107,931
			1,854,126				1,107,931
Non-current
Bank loans - unsecured	4.3	2021-2023	945,000		4.2	2020-2023	1,050,000
Bank loans - secured	2.8-5.9	2021-2028	3,056,060		3.3-5.9	2020-2028	2,870,286
			4,001,060				3,920,286
			5,855,186				5,028,217

130 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

24. INTEREST-BEARING BANK BORROWINGS (Continued)

	2020		2019
	HK$'000	HK$'000
Analysed into:
Bank loans repayable:
Within one year or on demand	1,854,126		1,107,931
In the second year	1,116,639		1,248,214
In the third to fifth years, inclusive	2,820,908		2,586,041
Beyond five years	63,513		86,031
	5,855,186		5,028,217

Notes:

Certain of the Group's bank loans are secured by:
1. mortgages over certain of the Group's investment properties, which had an aggregate carrying value at the end of the reporting period of HK$14,325,000,000 (2019: HK$14,293,837,000) as detailed in note 14 to the financial statements;
2. mortgages over certain of the Group's properties held for sale under development which had an aggregate carrying value at the end of the reporting period of HK$298,738,000 as detailed in note 18 to the financial statements (2019: HK$252,772,000);
3. mortgages over certain of the Group's leasehold land and buildings, which had an aggregate carrying value at the end of the reporting period of approximately HK$230,149,000 (2019: HK$247,921,000) as detailed in note 13 to the financial statements;
4. assignments of rental income from the leases of certain of the Group's investment properties; and
5. a charge over the shares of certain subsidiaries of the Group.
Irrevocable and unconditional guarantees have been given by the Company in respect of bank borrowings of certain subsidiaries. In addition, the Company has subordinated its loans to certain subsidiaries in favour of the relevant lending banks.
Except for certain bank loans denominated in RMB equivalent to HK$1,791,245,000 (2019: HK$1,379,182,000), all bank borrowings at the end of the reporting period were denominated in Hong Kong dollars.

	HON KWOK LAND Annual Report 2019/20	131

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

INTEREST-BEARINGBANK BORROWINGS (Continued)
As further explained in note 36 to the financial statements, certain of the Group's non-currentinterest-bearing bank borrowings in the amount of HK$80,000,000 (2019: HK$94,000,000) containing a repayment on demand clause have been classified as current liabilities. For the purpose of the above analysis, the loans are included within current interest-bearing bank borrowings and analysed into bank loans repayable within one year or on demand.
Based on the maturity terms of the loans, the amounts repayable in respect of the loans are: HK$1,774,126,000 (2019: HK$1,013,931,000) payable within one year or on demand; HK$1,130,640,000 (2019: HK$1,262,214,000) payable in the second year; HK$2,886,907,000 (2019: HK$2,644,041,000) payable in the third to fifth years, inclusive; and HK$63,513,000 (2019: HK$108,031,000) payable beyond five years.
All bank loans of the Group bear interest at floating rates.
The carrying amounts of the Group's current and non-current bank borrowings approximate to their fair values.
DEFERRED TAX
The movements in deferred tax liabilities during the year are as follows:

				2020
		Depreciation
		allowance in	Revaluation
	excess of related	of investment
		depreciation	properties	Total
		HK$'000	HK$'000	HK$'000
At 1 April 2019	20,711		1,531,334	1,552,045
Deferred tax charged to the statement of
profit or loss during the year (note 10)	90		(112,523)	(112,433)
Exchange realignment		-		(67,965)	(67,965)

At 31 March 2020		20,801		1,350,846	1,371,647

132 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

25. DEFERRED TAX (Continued)
					2019
			Depreciation
			allowance in	Revaluation of
		excess of related	investment
			depreciation	properties	Total
			HK$'000	HK$'000	HK$'000
At 1 April 2018	18,675		1,390,777	1,409,452
Deferred tax charged to the statement of
	profit or loss during the year (note 10)	2,036		221,171	223,207
Exchange realignment		-		(80,614)	(80,614)

At 31 March 2019		20,711		1,531,334	1,552,045

At the end of the reporting period, the Group had unrecognised deductible temporary differences of HK$505,000 (2019: HK$992,000) and unrecognised tax losses of HK$1,695,496,000 (2019: HK$1,560,074,000) available to offset against future taxable profits. The deductible temporary differences and tax losses have not been recognised, as in the opinion of the directors, it is uncertain that there will be sufficient future taxable profits available against the utilisation of these temporary differences and tax losses.

At 31 March 2020, no deferred tax has been recognised for withholding taxes that would be payable on the unremitted earnings that are subject to withholding taxes of the Group's subsidiaries established in Mainland China and in Canada. In the opinion of the directors, it is not probable that these subsidiaries will distribute such earnings in the foreseeable future. The aggregate amount of temporary differences associated with investments in subsidiaries in Mainland China and Canada for which deferred tax liabilities have not been recognised totalled HK$1,763,938,000 at 31 March 2020 (2019: HK$1,598,893,000).

There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

	HON KWOK LAND Annual Report 2019/20	133

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

26. SHARE CAPITAL
		2020	2019
		HK$'000		HK$'000
Issued and fully paid:
	720,429,301 (2019: 720,429,301) ordinary shares	1,519,301	1,519,301

RESERVES
The amounts of the Group's reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity of the financial statements.
PARTLY-OWNEDSUBSIDIARY WITH A MATERIAL NON-CONTROLLING INTEREST Details of the Group's subsidiary that has a material non-controllinginterest are set out below:

	2020	2019
Percentage of equity interest held by non-controlling interest:
Guangzhou Honkwok Fuqiang Land Development Ltd.	40%	40%


	2020	2019
	HK$'000		HK$'000
Profit for the year allocated to non-controlling interest:
Guangzhou Honkwok Fuqiang Land Development Ltd.	22,684	142,055
Dividends paid to non-controlling interests of


Guangzhou Honkwok Fuqiang Land Development Ltd.	-	12,708
Accumulated balances of non-controlling interest


at the reporting dates:
Guangzhou Honkwok Fuqiang Land Development Ltd.	192,305	194,676

134 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

28. PARTLY-OWNED SUBSIDIARY WITH A MATERIAL NON-CONTROLLING INTEREST (Continued)

The following tables illustrate the summarised financial information of the above subsidiary. The amounts disclosed are before any inter-company eliminations:

Guangzhou Honkwok Fuqiang Land Development Ltd.

	2020			2019
	HK$'000	HK$'000
Revenue	132,035			1,035,410
Total expenses	(75,326)	(680,272)
Profit for the year	56,709		355,138
Total comprehensive income/(loss) for the year	(5,926)	290,066


Current assets	1,623,465		1,763,855
Non-current assets	796			622
Current liabilities	(77,050)	(211,340)


Net cash flows used in operating activities	(112,192)	(421,930)
Net cash flows from investing activities	1,102			4,172

Net decrease in cash and cash equivalents	(111,090)	(417,758)

	HON KWOK LAND Annual Report 2019/20	135

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

29. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

Major non-cash transactions
Certain additions of properties held for sale under development and completed properties held for sale of HK$125,762,000 (2019: HK$295,040,000) were not paid at the end of the reporting period and were recorded as accrued liabilities.
During the year, the Group had non-cash additions to right-of-use assets and lease liabilities of HK$2,230,000 and HK$2,230,000, respectively, in respect of lease arrangements for properties (2019: Nil).
Changes in liabilities arising from financing activities 2020

			Interest-bearing
	Lease		bank
	liabilities		borrowings
	HK$'000		HK$'000
At 31 March 2019	-	5,028,217
Effect of adoption of HKFRS 16	55,829			-

At 1 April 2019 (restated)	55,829			5,028,217
Changes from financing cash flows	(23,976)	888,266
New lease	2,230			-
Lease modification	(9,007)		-
Interest expense	2,565			-
Interest paid classified as operating cash flows	(2,565)		-
Exchange realignment	-			(61,297)

At 31 March 2020	25,076			5,855,186

136 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

29. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

Changes in liabilities arising from financing activities (Continued) 2019

	Interest-bearing
	bank
	borrowings
	HK$'000
At 1 April 2018	4,535,354
Changes from financing cash flows	580,497
Exchange realignment	(87,634)
At 31 March 2019	5,028,217

Total cash outflow for leases

	2020
	HK$'000
Within operating activities	(5,892)
Within financing activities	(23,976)

	(29,868)

	HON KWOK LAND Annual Report 2019/20	137

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

30. CONTINGENT LIABILITIES

At the end of the reporting period, contingent liability not provided for in the financial statements was as follows:

	2020	2019
	HK$'000	HK$'000
Guarantee given to a bank in connection
with a facility granted to an associate	-	24,000

As at 31 March 2019, the Group had given a guarantee of HK$24,000,000 to a bank in connection with a facility granted to an associate and such banking facility guaranteed by the Group to the associate was utilised to the extent of HK$24,000,000 as at 31 March 2019.

The bank loan was fully repaid by the associate during the year ended 31 March 2020.

As at 31 March 2020, the Group has given guarantees of HK$303,420,000 (2019: HK$198,487,000) to banks for housing loans extended by the banks to the purchasers of the Group's properties for a period from the date the loans are granted to the purchasers up to the date of issuance of property ownership certificates to the purchasers.
The fair value of the guarantees is not significant and the directors of the Company consider that, in case of default in payments by the purchasers, the net realisable value of the related properties will be sufficient to cover the repayment of the outstanding mortgage principals together with the accrued interest and penalties and therefore no provision has been made in the financial statements for the years ended 31 March 2020 and 2019 for the guarantees.

31. PLEDGE OF ASSETS

Details of the Group's bank loans, which are secured by the assets of the Group, are included in note 24 to the financial statements.

138 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

32. COMMITMENTS

The Group had the following capital commitments at the end of the reporting period:

	2020	2019
	HK$'000		HK$'000
Contracted, but not provided for:
Property development expenditure	404,814	774,257

Operating lease commitments as at 31 March 2019
The Group leased certain of its properties under operating lease arrangements. Leases for properties were negotiated for terms ranging from one to three years.
At 31 March 2019, the Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

	2019
	HK$'000
Within one year	30,809
In the second to fifth years, inclusive	30,449
	61,258

	HON KWOK LAND Annual Report 2019/20	139

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

33. RELATED PARTY TRANSACTIONS

In addition to those transactions disclosed elsewhere in these financial statements, the Group had the following material related party transactions during the year:

		2020	2019
	Notes	HK$'000		HK$'000
Management fees paid to the
immediate holding company	(i)	13,140	12,327
Development cost paid to a related company	(ii)	10,500	100,810
Consultancy fees paid to a related company	(iii)	6,480	9,720
Construction cost paid to a related company	(iv)	578,413	69,381

Notes:

The management fees were charged based on the underlying costs incurred by the immediate holding company in which James Sai-Wing Wong, a director of the Company, has beneficial interests.
On 20 September 2016, Chinney Investments, the Company, Chinney Alliance Group Limited ("Chinney Alliance") and Chinney Kin Wing Holdings Limited ("Chinney Kin Wing") jointly announced that a wholly-owned subsidiary of the Company conditionally agreed to engage and a wholly-owned subsidiary of Chinney Kin Wing conditionally agreed to carry out foundation construction works on the vacant site at K.C.T.L 495, Kin Chuen Street, Kwai Chung, New Territories, Hong Kong for a contract sum of HK$210,000,000. Dr. James Sai-Wing Wong is the controlling shareholder of each of Chinney Investments, the Company, Chinney Alliance and Chinney Kin Wing and thus, the above companies are connected persons to one another under the Listing Rules. The related transactions constituted a connected transaction of each of the above companies under the Listing Rules and the approval of the respective independent shareholders had been obtained at the respective extraordinary/special general meetings held on 7 November 2016. During the year, the Group paid development expenditure relating to foundation construction works to an indirectly wholly-owned subsidiary of Chinney Kin Wing. The above transaction was negotiated between the concerned parties by reference to prevailing market rates.

140 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

33. RELATED PARTY TRANSACTIONS (Continued)

In addition to those transactions disclosed elsewhere in these financial statements, the Group had the following material related party transactions during the year: (Continued)

Notes: (Continued)

1. On 12 June 2018, Gold Famous entered into a consultancy agreement with Shun Cheong Data Centre Solutions, pursuant to which Shun Cheong Data Centre Solutions was appointed by Gold Famous as a consultant to provide consultancy services in respect of the construction and development of a data centre on a parcel of land owned by Gold Famous in Kwai Chung, Hong Kong (the "Data Centre Project") at a fixed fee of HK$16,200,000 (the "Consultancy Agreement"). As Chinney Investments is interested in approximately 68.09% of the issued shares of the Company and approximately 29.10% of the issued shares of Chinney Alliance and Dr. James Sai-Wing Wong is the chairman, executive director and a controlling shareholder of each of Chinney Investments, the Company and Chinney Alliance, the transaction constituted a connected transaction for each of Chinney Investments, the Company and Chinney Alliance under the Listing Rules and is subject to the reporting and announcement requirements. The consultancy fees paid to the related company was negotiated between the concerned parties by reference to prevailing market rates. The transaction constitutes a connected transaction of the Company but exempted for circular and independent shareholders' approval requirements of the Listing Rules.
2. On 12 July 2018, Gold Famous, an indirect wholly-owned subsidiary of the Company, entered into a framework agreement with Chinney Construction Company, Limited ("Chinney Construction"), an indirect wholly-owned subsidiary of Chinney Alliance, pursuant to which Gold Famous engaged Chinney Construction to act as the main contractor to carry out construction works for the Data Centre Project at a total contract sum not exceeding HK$757,800,000 (the "Framework Agreement"). As Chinney Investments is interested in approximately 68.09% of the issued shares of the Company and approximately 29.10% of the issued shares of Chinney Alliance and Dr. James Sai-Wing Wong is the chairman, executive director and a controlling shareholder of each of Chinney Investments, the Company and Chinney Alliance, the related transaction constituted a connected transaction for each of Chinney Investments, the Company and Chinney Alliance under the Listing Rules. Since the entering into of the Consultancy Agreement dated 12 June 2018 also constituted a connected transaction and pursuant to Rules 14A.81 and 14A.82 of the Listing Rules, the Consultancy Agreement and the Framework Agreement should be aggregated as a series of transactions as they were entered into within a 12-month period and involved parties which are connected with one another. The applicable percentage ratios of the Framework Agreement on both stand-alone and the basis when aggregated with the Consultancy Agreement, are more than 5% and contract sum was more than HK$10 million, the transaction is subject to the reporting, announcement and independent shareholders' approval requirements. The transaction was approved by the independent shareholders of Chinney Investments, the Company and Chinney Alliance at the respective general meetings held by each of the companies on 24 August 2018.
Outstanding balance with a related party
The Group has an outstanding balance with an associate as at the end of the reporting period. Particulars of the terms of the balance with the associate are set out in note 17 to the financial statements.

	HON KWOK LAND Annual Report 2019/20	141

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

33. RELATED PARTY TRANSACTIONS (Continued)

Compensation of key management personnel of the Group

	2020		2019
	HK$'000	HK$'000
Short term employee benefits	31,958		30,789
Post-employment benefits	1,032		1,044
	32,990		31,833

Further details of directors' emoluments are included in note 8 to the financial statements.

34. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each category of financial instruments as at the end of the reporting period are as follows:

Financial assets

	Financial assets at
	amortised cost
	2020		2019
	HK$'000	HK$'000
Trade receivables	20,777		21,561
Financial assets included in prepayments,
deposits and other receivables	147,507		87,222
Cash and bank balances	2,168,054		1,963,000
	2,336,338		2,071,783

142 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

34. FINANCIAL INSTRUMENTS BY CATEGORY (Continued)

Financial liabilities

	Financial liabilities
	at amortised cost
	2020		2019
	HK$'000	HK$'000
Financial liabilities included in trade payables,
other payables and accrued liabilities	231,592		410,339
Lease liabilities	25,076		-
Interest-bearing bank borrowings	5,855,186		5,028,217
Customer deposits	53,423		47,582
Due to an associate	-	15,950
	6,165,277		5,502,088

35. FAIR VALUES OF FINANCIAL INSTRUMENTS

Management has assessed that the fair values of cash and bank balances, trade receivables, financial assets included in prepayments, deposits and other receivables, customer deposits, financial liabilities included in trade payables, other payables and accrued liabilities, the current portion of interest-bearing bank borrowings and lease liabilities and a balance with an associate approximate to their carrying amounts largely due to the short term maturities of these instruments.

The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair values of the non-current portion of interest-bearing bank borrowings and lease liabilities have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities. The Group's own non-performance risk for interest-bearing bank borrowings as at 31 March 2020 was assessed to be insignificant.

	HON KWOK LAND Annual Report 2019/20	143

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
Fair value hierarchy
The Group did not have any financial assets measured at fair value as at 31 March 2020 and 31 March 2019.
The Group did not have any financial liabilities measured at fair value as at 31 March 2020 and 31 March 2019. As at 31 March 2020, the Group's financial liabilities not measured at fair value but for which fair values were disclosed included interest-bearing bank borrowings (non-current portion) of HK$4,001,060,000 (2019: HK$3,920,286,000) and lease liabilities (non-current portion) of HK$8,052,000 (2019: Nil). The fair values of these financial liabilities disclosed were measured based on valuation techniques for which all inputs which have a significant effect on the recorded fair value are unobservable (Level 3).
During the year, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and financial liabilities of the Group (2019: Nil).
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group's principal financial instruments comprise interest-bearing bank borrowings and cash and bank balances. The main purpose of these financial instruments is to raise finance for the Group's operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations.
It is, and has been throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken.
The main risks arising from the Group's financial instruments are foreign currency risk, interest rate risk, credit risk and liquidity risk. Management reviews and agrees policies for managing each of these risks and they are summarised below.

144 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Foreign currency risk

The Group has transactional currency exposures. These exposures arise from revenue or expenses by operating units in currencies other than the units' functional currencies. The Group's monetary assets, financing and transactions are principally denominated in RMB and HK$. The Group is exposed to the foreign exchange risk arising from changes in the exchange rate of HK$ against RMB. At present, the Group does not intend to seek to hedge its exposure to foreign exchange fluctuations. However, the Group will constantly review the economic situation and its foreign exchange risk profile, and will consider appropriate hedging measures in future as may be necessary.

The following table demonstrates the sensitivity to a reasonably possible change in the RMB exchange rate at the end of the reporting period with all other variables held constant, of the Group's profit/loss after tax and the Group's equity (due to changes in the fair value of monetary assets and liabilities).

				Increase/
				(decrease) in
		Change in	loss after tax
	exchange rate	and equity
	%		HK$'000
2020
If the Hong Kong dollar weakens against RMB	5		135
If the Hong Kong dollar strengthens against RMB	5		(135)


				Increase/
				(decrease) in
		Change in	profit after tax
		exchange rate	and equity
	%	HK$'000
2019
If the Hong Kong dollar weakens against RMB	5		(175)
If the Hong Kong dollar strengthens against RMB	5		175

	HON KWOK LAND Annual Report 2019/20	145

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Interest rate risk

The Group's exposure to the risk of changes in market interest rates relates primarily to the Group's long term debt obligations with floating interest rates. The interest rates and terms of repayment of the Group's borrowings are disclosed in note 24 to the financial statements. The Group's policy is to obtain the most favourable interest rates available for its borrowings. Management monitors interest rate exposure and will consider hedging significant interest rate exposures should the need arise.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates at the end of the reporting period, with all other variables held constant, of the Group's profit/ loss after tax and the Group's equity (through the impact on floating rate borrowings) and after the effect of interest being capitalised under property development projects of HK$10,141,000 (2019: HK$4,799,000).

			Increase/
	Increase/	(decrease) in
	(decrease) in	loss after tax
	basis points	and equity
			HK$'000
2020
Hong Kong dollar	100	17,406
RMB	50		4,568
Hong Kong dollar	(100)	(17,406)
RMB	(50)	(4,568)


			Increase/
	Increase/	(decrease) in
	(decrease) in	profit after tax
	basis points	and equity
			HK$'000
2019
Hong Kong dollar	100	(17,381)
RMB	50		(3,520)
Hong Kong dollar	(100)	17,381
RMB	(50)	3,520

146 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Credit risk

The Group trades only with recognised and creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the Group's exposure to bad debts is not significant.

Maximum exposure and year-end staging

The table below shows the credit quality and the maximum exposure to credit risk based on the Group's credit policy, which is mainly based on past due information unless other information is available without undue cost or effort, and year-end staging classification as at 31 March. The amounts presented are gross carrying amounts for financial assets.

As at 31 March 2020

		12-month
		ECLs		Lifetime ECLs
								Simplified
		Stage 1	Stage 2		Stage 3		approach		Total
		HK$'000	HK$'000		HK$'000		HK$'000		HK$'000
Trade receivables		-	-		-	20,777	20,777
Financial assets included in
prepayments, deposits and
other receivables
- Normal*	158,031	-		-		-	158,031
Cash and bank balances	2,168,054	-		-		-	2,168,054

	2,326,085		-		-	20,777	2,346,862

	HON KWOK LAND Annual Report 2019/20	147

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Maximum exposure and year-end staging (Continued)

As at 31 March 2019
		12-month
		ECLs			Lifetime ECLs
									Simplified
		Stage 1	Stage 2		Stage 3	approach		Total
		HK$'000	HK$'000		HK$'000	HK$'000		HK$'000
Trade receivables		-	-		-	21,561	21,561
Financial assets included in
prepayments, deposits and
other receivables
- Normal*	97,746	-		-	-	97,746
Cash and bank balances	1,963,000	-		-	-	1,963,000

	2,060,746		-			-	21,561	2,082,307

The credit quality of the financial assets included in prepayments, deposits and other receivables are considered as "normal" when they are not past due and there is no information indicating that the financial assets have significant increase in credit risk since initial recognition. Otherwise, the credit quality of the financial assets is considered as "doubtful".

Liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial instruments and financial assets (e.g., trade receivables) and projected cash flows from operations.

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of interest-bearing bank borrowings and other fund raising exercises. The Group will consistently maintain a prudent financing policy and ensure that it maintains sufficient cash and credit lines to meet its liquidity requirements. 32% (2019: 22%) of the Group's debts, which comprise interest-bearing bank borrowings and lease liabilities, would mature in less than one year as at 31 March 2020 based on the carrying value of debts reflected in the financial statements. If based on the maturity dates as set out in the loan agreements, 30% (2019: 20%) of the Group's debts would mature in less than one year.

148 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Liquidity risk (Continued)

The maturity profile of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted payments, is as follows:

						2020
				Less than	1 to	Over
	On demand	12 months	2 years	2 years	Total
		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Financial liabilities included in trade
payables, other payables and
accrued liabilities	4,001		227,591	-	-	231,592
Lease liabilities		-	18,335	7,842	664	26,841
Interest-bearing bank borrowings	94,000	1,973,920	1,263,582	3,038,806	6,370,308
Customer deposits	53,423	-	-	-	53,423
Guarantees given to banks in
respect of mortgage facilities
granted to certain purchasers of
the Group's properties		303,420	-	-	-	303,420

		454,844		2,219,846	1,271,424	3,039,470	6,985,584

	HON KWOK LAND Annual Report 2019/20	149

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued) Liquidity risk (Continued)

					2019
			Less than	1 to	Over
	On demand	12 months	2 years	2 years	Total
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
Financial liabilities included in trade
payables, other payables and
accrued liabilities	4,065		406,274	-	-	410,339
Due to an associate	15,950	-	-	-	15,950
Interest-bearing bank borrowings	106,000	1,065,397	1,376,819	2,834,744	5,382,960
Customer deposits	47,582	-	-	-	47,582
Guarantee given to a bank in
connection with a facility
granted to an associate	24,000	-	-	-	24,000
Guarantees given to banks in
respect of mortgage facilities
granted to certain purchasers of
the Group's properties	198,487	-	-	-	198,487

	396,084		1,471,671	1,376,819	2,834,744	6,079,318

In respect of interest-bearing bank borrowings of HK$94,000,000 (2019: HK$106,000,000), the loan agreements contain a repayment on demand clause giving the bank the unconditional right to call in the loans at any time and therefore, for the purpose of the above maturity profile, the total amount is classified as "on demand".

Notwithstanding the above clause, the directors do not believe that the loans will be called in their entirety within 12 months, and they consider that the loans will be repaid in accordance with the maturity dates as set out in the loan agreements. This evaluation was made considering: the financial position of the Group at the date of approval of the financial statements; the Group's compliance with the loan covenants; the lack of events of default; and the fact that the Group has made all previously scheduled repayments on time.

In accordance with the terms of the loans, the contractual undiscounted payments at 31 March 2020 for the interest-bearing bank borrowings in respect of the Group are HK$1,990,249,000 (2019: HK$1,079,933,000) payable within one year, HK$1,279,540,000 (2019: HK$1,393,025,000) payable in the second year, and HK$3,107,530,000 (2019: HK$2,919,105,000) payable beyond two years.

150 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)

Capital management

The primary objectives of the Group's capital management are to safeguard the Group's ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholders' value.

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2020 and 2019.

The Group monitors capital using a gearing ratio, which is net interest-bearing debt divided by the equity attributable to owners of the Company plus non-controlling interests. Net interest-bearing debt includes interest-bearing bank borrowings and lease liabilities less cash and bank balances. The gearing ratios as at the end of the reporting periods were as follows:

	31 March	1 April	31 March
	2020		2019	2019
	HK$'000	HK$'000	HK$'000
			(note)
Interest-bearing bank borrowings	5,855,186		5,028,217	5,028,217
Lease liabilities	25,076		55,829	-
Less: Cash and bank balances	(2,168,054)	(1,963,000)	(1,963,000)

Net interest-bearing debt	3,712,208		3,121,046	3,065,217


Equity attributable to owners of the Company	11,311,379		11,874,204	11,874,204
Non-controlling interests	191,982	194,353	194,353

Total equity	11,503,361		12,068,557	12,068,557


Gearing ratio	32%		26%	25%

Note: The Group has adopted HKFRS 16 using the modified retrospective approach and the effect of the initial adoption is adjusted against the opening balances as at 1 April 2019 with no adjustments to the comparative amounts as at 31 March 2019. This resulted in an increase in the Group's net debt and hence the Group's gearing ratio increased from 25% to 26% on 1 April 2019 when compared with the position as at 31 March 2019.

	HON KWOK LAND Annual Report 2019/20	151

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

37. STATEMENT OF FINANCIAL POSITION OF THE COMPANY

Information about the statement of financial position of the Company at the end of the reporting period is as follows:

	2020		2019
	HK$'000	HK$'000
NON-CURRENT ASSETS
Property, plant and equipment	14,668		452
Investments in subsidiaries	1		1
Amounts due from subsidiaries	414,676		507,030
Total non-current assets	429,345		507,483
CURRENT ASSETS
Amounts due from subsidiaries	3,284,641		2,991,361
Prepayments, deposits and other receivables	11,729		4,031
Time deposits	723,609		455,804
Cash and bank balances	50,413		545,792
Total current assets	4,070,392		3,996,988
CURRENT LIABILITIES
Amounts due to subsidiaries	2,774,870		2,649,947
Trade payables, other payables and accrued liabilities	7,094		6,553
Lease liability	7,322		-
Total current liabilities	2,789,286		2,656,500
NET CURRENT ASSETS	1,281,106		1,340,488
TOTAL ASSETS LESS CURRENT LIABILITIES	1,710,451		1,847,971
NON-CURRENT LIABILITY
Lease liability	2,482		-
Net assets	1,707,969		1,847,971

152 HON KWOK LAND Annual Report 2019/20

NOTES TO THE FINANCIAL STATEMENTS (Continued)

31 March 2020

37. STATEMENT OF FINANCIAL POSITION OF THE COMPANY (Continued)

	2020	2019
	HK$'000		HK$'000
EQUITY
Equity attributable to owners of the Company
Share capital	1,519,301	1,519,301
Reserves (note)	188,668		328,670
Total equity	1,707,969	1,847,971

James Sai-Wing Wong		Philip Bing-Lun Lam
Director				Director
Note:
A summary of the Company's reserves is as follows:
	Capital reserve	Retained profits	Total reserves
		HK$'000		HK$'000	HK$'000
At 1 April 2018	647		675,241	675,888
Total comprehensive loss for the year		-	(221,143)	(221,143)
Final and special 2018 dividends declared		-			(126,075)	(126,075)

At 31 March 2019 and 1 April 2019		647			328,023	328,670
Total comprehensive loss for the year		-	(49,948)	(49,948)
Final 2019 dividend declared		-			(90,054)	(90,054)

At 31 March 2020		647			188,021	188,668

38. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 26 June 2020.

	HON KWOK LAND Annual Report 2019/20	153

FIVE YEAR FINANCIAL SUMMARY

A summary of the results and of the assets, liabilities and non-controlling interests of the Group for the last five financial years, as extracted from the published audited financial statements, is set out below.

				Year ended 31 March
	2020		2019	2018		2017	2016
	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
RESULTS
REVENUE	638,477		1,478,353	1,781,043		1,574,444	1,569,505


PROFIT/(LOSS) FOR THE YEAR	(13,262)	1,300,562	3,108,920		700,779	529,238
Profit/(loss) attributable to:


Owners of the Company	(35,946)	1,158,507	2,979,893		584,879	460,100
Non-controlling interests	22,684			142,055		129,027		115,900	69,138

	(13,262)	1,300,562	3,108,920		700,779	529,238

					As at 31 March
	2020		2019	2018	2017	2016
	HK$'000	HK$'000		HK$'000	HK$'000	HK$'000
ASSETS, LIABILITIES AND
NON-CONTROLLING INTERESTS
TOTAL ASSETS	19,860,918		19,536,834	19,661,250	18,085,797	17,359,427
TOTAL LIABILITIES	(8,357,557)	(7,468,277)	(8,198,120)	(9,841,925)	(9,239,499)

NET ASSETS	11,503,361		12,068,557	11,463,130	8,243,872	8,119,928
NON-CONTROLLING INTERESTS	(191,982)	(194,353)	(91,035)	(406,947)	(307,307)
SHAREHOLDERS' FUNDS
11,311,379		11,874,204	11,372,095	7,836,925	7,812,621

154 HON KWOK LAND Annual Report 2019/20

PARTICULARS OF PROPERTIES

31 March 2020

GROUP I - PROPERTIES HELD FOR DEVELOPMENT
						Estimated	Attributable
					Development progress	completion	interest of
Location	Use	Site area	Gross floor area	(up to 26 June 2020)	date	the Group
			(sq.m./sq.ft.)	(sq.m./sq.ft.)			(%)
MAINLAND CHINA
1.	Metropolitan Oasis (雅瑤綠洲)	Low density	247,987 sq.m.	272,786 sq.m.	Phase 3 apartments	2020	100
	Da Li District	residential	(2,668,340 sq.ft.)	(2,935,177 sq.ft.)	of ~ 81,100 sq.m.
	Nanhai				- Finishing works
	Guangdong Province				in progress
2.	45-65 Beijing Nan Road	Commercial/	5,430 sq.m.	36,013 sq.m.	Foundation works in	2023	100
	Yue Xiu District	Residential	(58,427 sq.ft.)	(387,500 sq.ft.)	progress
	Guangzhou
	Guangdong Province
3.	67-107 Beijing Nan Road	Commercial/	4,025 sq.m.	41,366 sq.m.	Foundation works in	2023	100
	Yue Xiu District	Office	(43,309 sq.ft.)	(445,098 sq.ft.)	progress
	Guangzhou
	Guangdong Province
4.	Enterprise Square (僑城坊)	Composite	48,764 sq.m.	224,500 sq.m.	Phase 1 of 128,000 sq.m.	-	20
	Qiaoxiang Road North		(524,700 sq.ft.)	(2,415,620 sq.ft.)	and Phase 2 of
	Nanshan District				50,500 sq.m.
	Shenzhen				- Completed
	Guangdong Province				Phase 2 of 46,000 sq.m.	2020
					- Under Interior
					fitting out
HONG KONG
5.	Lot 716 & Others	-	35,386 sq.ft.	-	Temporary open storage	-	100
	in DD111, Yuen Long
	New Territories

For illustration purposes, sq.m. has been translated into sq.ft. at the rate of 1 sq.m. ≈ 10.76 sq.ft.

	HON KWOK LAND Annual Report 2019/20	155

PARTICULARS OF PROPERTIES (Continued)

31 March 2020

GROUP II - COMPLETED PROPERTIES
					Attributable
		Remaining	Gross	Car parking	interest of
Location	Use	unsold units	floor area	spaces	the Group
			(sq.m./sq.ft.)		(%)
MAINLAND CHINA
6. Ganghui Huating (港滙華庭)	Commercial	4-storey of	4,157 sq.m.	71	100
5 Beijing Road		commercial	(44,729 sq.ft.)
Yue Xiu District		podium
Guangzhou
Guangdong Province
7. Botanica Phases 1, 2, 3 & 4	Commercial	6 ground floor	338 sq.m.	2,145	60
(寶翠園一、二、三及四期)		shops	(3,637 sq.ft.)
Tian He District
Guangzhou
Guangdong Province
8. Metropolitan Oasis Phases 1 & 2	Low density	7 apartment	21,779 sq.m.	635	100
(雅瑤綠洲第一及二期)	residential	units and 67	(234,342 sq.ft.)
Da Li District		town houses
Nanhai
Guangdong Province

For illustration purposes, sq.m. has been translated into sq.ft. at the rate of 1 sq.m. ≈ 10.76 sq.ft.

156 HON KWOK LAND Annual Report 2019/20

PARTICULARS OF PROPERTIES (Continued)

31 March 2020

GROUP III - PROPERTIES HELD FOR INVESTMENT
				No. of		Attributable
			Gross	apartments/	Ownership	interest of
Location	Use	floor area	hotel rooms	status	the Group
			(sq.m./sq.ft.)			(%)
MAINLAND CHINA
9.	City Square (城市天地廣場)/	5-storey of	20,308 sq.m.	162 hotel rooms	Medium	100
	The Bauhinia Hotel (Shenzhen)	commercial	(218,514 sq.ft.)		term lease
	(寶軒酒店(深圳))	podium
	Jia Bin Road	comprising hotel
	Luo Hu District	and commercial
	Shenzhen
	Guangdong Province
10.	City Suites (寶軒公寓)	Serviced	3,692 sq.m.	64 apartment	Medium	100
	Jia Bin Road	apartments	(39,725 sq.ft.)	units	term lease
	Luo Hu District
	Shenzhen
	Guangdong Province
11.	Chongqing Hon Kwok Centre	Commercial/	107,802 sq.m.	-	Medium	100
	(重慶漢國中心)	Office	(1,159,949 sq.ft.)		term lease
	Lot no. B-01-03
	Jin Shan Pian Qu
	Jin Kai Yuan
	Bei Bu Xin Qu
	Chongqing
12.	Chongqing Jinshan	Commercial/	173,291 sq.m. ~300 hotel rooms	Medium	100
	Shangye Zhongxin	Office/Hotel	(1,864,611 sq.ft.)		term lease
	(重慶金山商業中心)
	Lot no. B-01-02
	Jin Shan Pian Qu
	Jin Kai Yuan
	Bei Bu Xin Qu
	Chongqing
13.	Ganghui Dasha (港滙大廈)	Commercial/	13,053 sq.m.	-	Medium	100
	3 Beijing Road	Office	(140,450 sq.ft.)		term lease
	Yue Xiu District

Guangzhou

Guangdong Province

For illustration purposes, sq.m. has been translated into sq.ft. at the rate of 1 sq.m. ≈ 10.76 sq.ft.

	HON KWOK LAND Annual Report 2019/20	157

PARTICULARS OF PROPERTIES (Continued)

31 March 2020

GROUP III - PROPERTIES HELD FOR INVESTMENT (Continued)
			No. of		Attributable
		Gross	apartments/	Ownership	interest of
Location	Use	floor area	hotel rooms	status	the Group
		(sq.m./sq.ft.)			(%)

MAINLAND CHINA

14. Hon Kwok City Commercial Centre (漢國城市商業中心) Junction of

Shen Nan Zhong Road and Fu Ming Road

Fu Tian District Shenzhen Guangdong Province

Commercial/	128,356 sq.m.	-	Medium	100
Office	(1,381,110 sq.ft.)		term lease

For illustration purposes, sq.m. has been translated into sq.ft. at the rate of 1 sq.m. ≈ 10.76 sq.ft.

158 HON KWOK LAND Annual Report 2019/20

PARTICULARS OF PROPERTIES (Continued)

31 March 2020

GROUP III - PROPERTIES HELD FOR INVESTMENT (Continued)
			No. of		Attributable
		Gross	apartments/	Ownership	interest of
Location	Use	floor area	hotel rooms	status	the Group
		(sq.m./sq.ft.)			(%)
HONG KONG
15. Hon Kwok Jordan Centre	Commercial/Office	62,127 sq.ft.	-	Medium	100
(漢國佐敦中心)				term lease
5, 7 & 7A Hillwood Road
Tsim Sha Tsui
Kowloon
16. The Bauhinia (寶軒)/	Serviced	123,283 sq.ft.	112 apartment	Long	100
The Bauhinia Hotel (Central)	apartments/		units and	term lease
(寶軒酒店(中環))	Hotel/Commercial		42 hotel rooms
119-121 Connaught Road Central &			with a total of
237-241 Des Voeux Road Central			213 rooms
Hong Kong
17. The Bauhinia Hotel (TST)	Hotel/Commercial	60,893 sq.ft.	98 hotel rooms	Medium	100
(寶軒酒店(尖沙咀))				term lease
5-9 Observatory Court
Tsim Sha Tsui
Kowloon
18. Kwai Chung Town Lot No. 495	Data centre	228,033 sq.ft.	-	Medium	100
Kin Chuen Street				term lease
Kwai Chung
New Territories

For illustration purposes, sq.m. has been translated into sq.ft. at the rate of 1 sq.m. ≈ 10.76 sq.ft.

	HON KWOK LAND Annual Report 2019/20	159

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Hon Kwok Land Investment Company, Limited (the "Company") will be held at Full Moon Shanghai Restaurant, Macau Jockey Club, 3rd Floor, East Wing, Shun Tak Centre, 200 Connaught Road Central, Hong Kong on Thursday, 27 August 2020 at 11:00 a.m. for the following purposes:

To receive and consider the audited financial statements, the report of the directors and the independent auditor's report for the year ended 31 March 2020.
To declare a final dividend for the year ended 31 March 2020.
To re-elect directors and to authorise the directors to fix the directors' remuneration.
To re-appoint auditor and to authorise the directors to fix the auditor's remuneration.
As special business, to consider and, if thought fit, pass with or without amendments, the following resolution as an Ordinary Resolution:
"THAT the exercise by the directors during the Relevant Period (as defined below) of all the powers of the Company to allot, issue and deal with additional shares of the Company and to make or grant offers, agreements and options, including warrants to subscribe for shares, which would or might require shares to be allotted, issued or dealt with, whether during or after the end of the Relevant Period be and is hereby generally and unconditionally approved, provided that, otherwise than pursuant to: (a) a rights issue where shares of the Company are offered for a period fixed by the directors to shareholders on a fixed record date in proportion to their then holdings of shares (subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or having regard to any legal restrictions under the laws of the relevant place, or the requirements of the relevant regulatory body or any stock exchange in that place); or (b) any scrip dividend or similar arrangement providing for the allotment of securities in lieu of the whole or part of a dividend on shares of the Company in accordance with the Articles of Association of the Company; or (c) the exercise of any options under any share option scheme of the Company or similar arrangement for the grant or issue to the employees of the Company and/or any of its subsidiaries of shares or rights to acquire shares of the Company; or (d) a specific authority granted by the shareholders of the Company in general meeting, the additional shares allotted, issued or dealt with (including shares agreed conditionally or unconditionally to be allotted, issued or dealt with, whether pursuant to an option or otherwise) shall not in aggregate exceed 20% of the number of issued shares of the Company at the date of passing this Ordinary Resolution (subject to adjustment in the case of any conversion of all or any of the shares of the Company into a larger or smaller number of shares in accordance with Section 170(2)(e) of the Companies Ordinance after the passing of this Ordinary Resolution) and the said approval shall be limited accordingly.

160 HON KWOK LAND Annual Report 2019/20

NOTICE OF ANNUAL GENERAL MEETING (Continued)

For the purpose of this Ordinary Resolution, "Relevant Period" means the period from the passing of this Ordinary Resolution until whichever is the earlier of:

the conclusion of the next annual general meeting of the Company;
the expiration of the period within which the next annual general meeting is required by any applicable laws or the Company's Articles of Association to be held; and
the revocation or variation of the authority given under this Ordinary Resolution by an ordinary resolution of the shareholders in general meeting."

By Order of the Board

Ka-Yee Wan

Company Secretary

Hong Kong, 28 July 2020

Notes:

Any member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to represent respectively the number of shares held by such member, to attend and to speak and vote instead of him. A proxy need not be a member of the Company.
To be valid, a proxy form, together with any power of attorney or other authority (if any) under which it is signed or a notarially certified copy thereof must be completed and deposited with the Company's share registrar, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 48 hours before the time appointed for holding the meeting or any adjournment thereof.
In the case of joint holders of a share, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the above meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members in respect of such share shall alone be entitled to vote in respect thereof.
All the resolutions set out in this notice will be decided by poll.
With regard to resolution 3 in this notice, Mr. David Tak-Wai Ma ("Mr. Ma"), who was appointed subsequent to the last annual general meeting of the Company, will hold office until the meeting and, being eligible, offer himself for re-election in accordance with article 95 of the articles of association of the Company (the "Articles of Association").
Mr. James Sing-Wai Wong ("Mr. Wong") and Mr. Xiao-Ping Li ("Mr. Li") will retire by rotation at the meeting in accordance with article 104 of the Articles of Association. Mr. Wong and Mr. Li, being eligible, will offer themselves for re-election at the meeting.

	HON KWOK LAND Annual Report 2019/20	161

NOTICE OF ANNUAL GENERAL MEETING (Continued)

6. Details of the directors who stand for re-election at the meeting are set out below:-

David Tak-Wai Ma

Mr. Ma is a permanent honorary Premier of Hong Kong South China Athletic Association (SCAA). He was also a member of Hong Kong Rotary Club Admiralty Chapter.

He was raised in both Hong Kong and the United States and obtained his Bachelor of Business Administration's degree from university in the United States.

Save as disclosed above, Mr. Ma does not hold any other positions in the Company or any members of the Group, and did not hold any directorships in any listed public companies in the past three years. He does not have any relationship with any directors, senior management or substantial or controlling shareholders of the Company. At the date hereof, Mr. Ma does not have any interests in the shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of Laws of Hong Kong) (the "SFO").

Mr. Ma has entered into a letter of appointment with the Company. Pursuant to the letter of appointment, Mr. Ma is not appointed for a specific term but is subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with the Articles of Association. Mr. Ma is entitled to a director's fee of HK$200,000 per annum which is based on the remuneration policy of the Group.

Save as disclosed above, there is no other information relating to Mr. Ma which is required to be disclosed pursuant to paragraphs (h) to (v) of Rule 13.51(2) of the Rules (the "Listing Rules") Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") and there is no other matter that needs to be brought to the attention of the shareholders of the Company.

162 HON KWOK LAND Annual Report 2019/20

NOTICE OF ANNUAL GENERAL MEETING (Continued)

6. Details of the directors who stand for re-election at the meeting are set out below:- (Continued)

James Sing-Wai Wong

Aged 56, was appointed as a non-executive director of the Company in August 2017 and subsequently re- designated as an executive director of the Company in July 2018. He graduated from the University of Washington with a Bachelor's degree with honors in Economics. He also holds a Juris Doctor degree from the University of California Hastings College of Law, and a Master's degree in Systems Engineering and Information Systems from the Florida Institute of Technology. He is licensed to practice law in the United States of America and the State of California, where he also holds a Real Estate Broker's License. He has accumulated over 30 years of experience in economics, law, management, and information systems in Hong Kong, United States, Canada, the United Kingdom, and the Mainland China.

Mr. Wong was a non-executive director of Chinney Investments, Limited ("Chinney Investments") (Stock Code: 216) during the period from June 2013 to August 2017 and subsequently appointed as an executive director of Chinney Investments in August 2018. He is also an executive director of Chinney Alliance Group Limited ("Chinney Alliance") (Stock Code: 385) and Chinney Kin Wing Holdings Limited ("Chinney Kin Wing") (Stock Code: 1556). Chinney Investments, Chinney Alliance and Chinney Kin Wing are all listed on the Main Board of the Stock Exchange. He is also a director of certain subsidiaries of the Company.

Mr. Wong is a director of Lucky Year Finance Limited, Chinney Holdings Limited and Chinney Investments, all being substantial shareholders of the Company and deemed to be interested in the same parcel of 490,506,139 shares of the Company (representing 68.09% interests in the issued shares of the Company). He is also a director of Chinney Capital Limited which is a shareholder of the Company beneficially interested in 11,756,000 shares of the Company (representing 1.63% interests in the issued shares of the Company). He is the son of Dr. James Sai-Wing Wong, the Chairman and a substantial shareholder of the Company.

Mr. Wong was a director of Lion Mark Holdings Limited and Lion Foods Limited (collectively the "Lion Group") during the period from May 1995 to July 2007. Lion Group was incorporated in the United Kingdom and engaged in food manufacturing, processing and ingredient trading. Lion Group was put into administration proceedings on 10 October 2002. The entire business was sold by the administrators in the same year and Lion Group was subsequently dissolved in July 2007.

At the date hereof, Mr. Wong does not have any interests in the shares of the Company within the meaning of Part XV of the SFO. Save as disclosed above, Mr. Wong does not hold any other positions in the Company or any members of the Group, and did not hold any directorships in any listed public companies in the past three years and does not have any relationship with any directors, senior management or substantial or controlling shareholders of the Company.

There is no service contract between the Company and Mr. Wong and he is not appointed for a specific term but is subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with the Articles of Association. The remuneration of Mr. Wong will be determined by the Board with reference to his duties and responsibilities of the Company and its subsidiaries.

Save as disclosed above, there is no other information relating to Mr. Wong which is required to be disclosed pursuant to paragraphs (h) to (v) of Rule 13.51(2) of the Listing Rules and there is no other matter that needs to be brought to the attention of the shareholders of the Company.

	HON KWOK LAND Annual Report 2019/20	163

NOTICE OF ANNUAL GENERAL MEETING (Continued)

Details of the directors who stand for re-election at the meeting are set out below:- (Continued)
Xiao-Ping Li
Aged 68, joined the Group in 1999 and was appointed as an executive director of the Company in 2009. He is also a director of certain subsidiaries of the Company. Mr. Li was not appointed for a specific term but is subject to retirement by rotation and re-election at the Company's annual general meeting in accordance with the Articles of Association. He has over 39 years of experience in economics and management in the People's Republic of China (the "PRC"). He has obtained a senior economist qualification certificate of PRC. He is a member of the Plant Maintenance Association of Chinese Mechanical Engineering Society.
At the date hereof, Mr. Li does not have any interests in the shares of the Company within the meaning of Part XV of the SFO. Save as disclosed above, Mr. Li does not hold any other positions in the Company or any members of the Group, and did not hold any directorships in any listed public companies in the past three years. He does not have any relationship with any directors, senior management or substantial or controlling shareholders of the Company.
No service contract has been signed between the Company and Mr. Li. However, Mr. Li has an employment contract with the Company. He is currently entitled to an annual salary of HK$5,200,000 plus discretionary bonus to be determined by the Board.
Save as disclosed above, there is no other information relating to Mr. Li which is required to be disclosed pursuant to paragraphs (h) to (v) of Rule 13.51(2) of the Listing Rules and there is no other matter that needs to be brought to the attention of the shareholders of the Company.
If a Typhoon Signal No. 8 or above is hoisted or a Black Rainstorm Warning Signal is in force at any time after 9:00 a.m. on the date of the meeting, the meeting will be adjourned. The Company will post an announcement on the Company's website (www.honkwok.com.hk) and the HKEXnews website (www.hkexnews.hk) to notify shareholders of the date, time and place of the adjourned meeting.
The meeting will be held as scheduled when Amber or a Red Rainstorm Warning Signal is in force. Shareholders should decide on their own whether they would attend the meeting under bad weather conditions bearing in mind their own situations.
Taking into account of the recent development of the pandemic caused by COVID-19 coronavirus ("COVID-19"), the Company will implement the following prevention and control measures at the meeting to protect the shareholders from the risk of infection:
1. Compulsory body temperature check will be conducted for every shareholder or proxy at the entrance of the venue. Any person with a body temperature of over 37.5 degrees Celsius will not be admitted to the venue;
2. Every shareholder or proxy is required to wear surgical facial mask throughout the meeting;
3. Hand sanitizer will be provided; and
4. No refreshment will be served.

Furthermore, the Company strongly encourages the shareholders, particularly those who are unwell or subject to quarantine in relation to COVID-19, to appoint the chairman of the meeting as a proxy to vote on the resolutions instead of attending the meeting in person.

Due to the constantly evolving situation relating to the COVID-19 pandemic in Hong Kong, the Company may implement further precautionary measures or may be required to change the meeting arrangements at short notice. Shareholders should visit the websites of the Company at "http://www.honkwok.com.hk" and HKEXnews at "http://www.hkexnews.hk" for future announcements and updates on the meeting arrangements.
At the date hereof, the directors of the Company are Dr. James Sai-Wing Wong (Chairman), Mr. James Sing-Wai Wong, Mr. Xiao-Ping Li and Mr. Philip Bing-Lun Lam as executive directors; and Mr. Zuo Xiang, Ms. Janie Fong and Mr. David Tak-Wai Ma as independent non-executive directors.

164 HON KWOK LAND Annual Report 2019/20

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Hon Kwok Land Investment Co. Ltd. published this content on 27 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2020 08:35:06 UTC

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Apr. 19	Hon Kwok Land Investment Company, Limited Announces Appointment of Donald Yin-Shing Lam as an Executive Director	CI
Jan. 11	Hon Kwok-Controlled Joint Venture Buys Hotel in Osaka for 785 Million Yen	MT

Hon Kwok Land Investment Company, Limited

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HK0160011786

Real Estate Development & Operations

Hon Kwok Land Investment : Annual Report 2019/20

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