OUR VISION The Group aims to become a leading player in the gaming, entertainment and tourist-related industries and contribute to the sustainable development of these sectors. We endeavour to create long-term value for all of our stakeholders, while adhering to a high standard of corporate governance. Dr. Ma Ho Man, Hoffman Ms. Chiu Nam Ying, Agnes Audit Committee Mr. Chin Wing Lok, Ambrose (Chairman) Mr. Choi Kin Pui, Russelle Ms. Yeung Mo Sheung, Ann Mr. Chong Ming Yu Remuneration Committee Ms. Yeung Mo Sheung, Ann (Chairman) Mr. Yeung Hoi Sing, Sonny Mr. Choi Kin Pui, Russelle Mr. Chin Wing Lok, Ambrose Mr. Chong Ming Yu Nomination Committee Mr. Yeung Hoi Sing, Sonny (Chairman) Mr. Choi Kin Pui, Russelle Ms. Yeung Mo Sheung, Ann Mr. Chin Wing Lok, Ambrose Mr. Chong Ming Yu Executive Committee Mr. Yeung Hoi Sing, Sonny (Chairman) Dr. Ma Ho Man, Hoffman Auditors HLB Hodgson Impey Cheng Limited Certified Public Accountants Iu, Lai & Li Legal Advisers on Bermuda Laws Conyers Dill & Pearman Principal Bankers Chong Hing Bank Limited Industrial and Commercial Bank of China (Canada) Royal Bank of Canada The Bank of East Asia, Limited The Hongkong and Shanghai Banking Corporation Limited Principal Share Registrar and Transfer Agent in Bermuda MUFG Fund Services (Bermuda) Limited The Belvedere Building 69 Pitts Bay Road Pembroke HM08 Bermuda Branch Share Registrar and Transfer Office in Hong Kong Tricor Tengis Limited Level 22, Hopewell Centre 183 Queen’s Road East Hong Kong Registered Office Clarendon House 2 Church Street Hamilton HM 11 Bermuda Head Office and Principal Place of Business Suite 1601-2 & 8-10, 16/F. Great Eagle Centre 23 Harbour Road Wanchai Hong Kong Share Listing The Stock Exchange of Hong Kong Limited Stock Code: 00487 Website www.successug.com 2014 2013 2012 HK$’000 HK$’000 HK$’000 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Total assets 1,199,307 1,343,771 Total liabilities 189,758 577,776 Net assets 1,089,567 1,009,549 765,995 CHAIRMAN’S STATEMENT With continuous commitment to building a sustainable and diversified platform of gaming, entertainment and tourist-related businesses, the Group has successfully seized opportunities and achieved a significant improvement in performance in 2014. remarkable results during the reporting year. Our technology service platform for sports lottery has generated impressive revenue while being proven to be reliable and capable of handling massive volume of transactions during the World Cup event. Our specialised online portal – 128cai.com has established itself as a distinguished website for lottery information and game analysis through years of marketing efforts. On top of the sports lottery business, we have successfully ventured into telephone agency sales services of welfare lottery in Shanghai and Tianjin during the reporting year. The welfare lottery market is a bigger segment amounting to approximately RMB206.0 billion which accounted for approximately 54% of total China lottery sales in 2014. With reference to our previous achievements in sports lottery, we are confident to replicate our success in sports lottery to the newly expanded welfare lottery. As part of the Group’s continuous corporate social responsibility initiative, we made a sponsorship to the ice sports programme of Heilongjiang province. This not only fulfilled our belief in giving back to the communities where we operate our business, but also helped to enhance the Group’s brand image. Yeung Hoi Sing, Sonny Chairman Hong Kong 30 March 2015 ‧ Earnings per share from continuing operations was 1.48 HK cents for 2014 ‧ Adjusted EBITDA* of the flagship investment project Ponte 16 increased by approximately 19% year-on-year to approximately HK$461.0 million. Shared profit relating to Ponte 16 amounted to approximately HK$88.1 million, representing approximately 73% year-on-year growth ‧ Stimulated by the FIFA World Cup 2014, the Group’s lottery business achieved an encouraging result. Its revenue increased by approximately 185% year-on-year to approximately HK$201.1 million for 2014 and a segment profit of approximately HK$24.5 million for 2014 was recorded, representing a turnaround from a loss in 2013 * Adjusted EBITDA: Earnings Before Interest, Taxation, Depreciation and Amortisation (and excluded interest income from the pledged bank deposit) MANAGEMENT DISCUSSION AND ANALYSIS Capitalising the exceptional growth and development of lottery business and the flagship project, the Group achieved encouraging results in 2014. 　 2012. The maximum guarantee amount borne by the Company under the Guarantee was HK$1,176 million. The outstanding loan under the Syndicated Loan Facilities as at 31 December 2014 was approximately HK$564.8 million (31 December 2013: approximately HK$1,048.8 million). Human Resources As at 31 December 2014, the Group had a total of 192 employees. Remuneration is determined on the basis of qualifications, experience, responsibilities and performance. In addition to the basic remuneration, staff benefits include medical insurance and retirement benefits. Share options may also be granted to eligible employees of the Group as a long-term incentive. PROSPECTS Macau gaming industry remains challenging in 2015 arising from the structural change and policies reviewed by the Macau Government. However, with the support of a solid economic development, entertainment and tourist-related industries in China are expected to grow steadily and the Group will actively enhance its business portfolio in the future. The lottery industry in China is expected to grow at a healthy pace backed by the steady growth of disposable income per capita, which will create a favourable environment for the Group to develop its lottery business. The Group’s sports lottery technology service platform has been proven reliable and capable of handling massive traffic and user demand during FIFA World Cup 2014 event. With a track record in generating strong revenues, the Group will strive to penetrate into more provinces and cities in China to broaden its geographical coverage. The development of the Group’s new welfare lottery service platform is expected to be completed in the first half of 2015. With solid foundation and experience in sports lottery, the Group is optimistic that its upcoming welfare lottery business will generate positive contributions in the near future. Also, the Group will carry forward marketing programmes on 128cai.com to accumulate an even larger pool of loyal customers and strengthen its position as the preferred website for lottery players in China. 　 which, the iconic “MJ in 3D” zone will be a special exhibition incorporating exclusive MJ collectibles with 3D elements. For its travel business in North America, the Group plans to put more weight on travel packages and arrangements to the USA and Canada targeting high-end travellers in order to capture the increasing demand for long-haul travelling from the affluent middle class from China and Southeast Asian countries. With an existing network of global customers, the Group will utilise every cross-selling opportunity with Ponte 16 to establish synergies between both business segments. With an aim to become a leading player in the gaming, entertainment and tourist-related industries, the Group will continue to explore new business opportunities, to further strengthen its business platform, and at the same time to maximise returns for the shareholders of the Company. The Board currently consists of six members, including two executive Directors, namely Mr. Yeung Hoi Sing, Sonny (Chairman) and Dr. Ma Ho Man, Hoffman (Deputy Chairman); a non-executive Director, namely Mr. Choi Kin Pui, Russelle (the “NED”); and three independent non-executive Directors, namely Ms. Yeung Mo Sheung, Ann, Mr. Chin Wing Lok, Ambrose and Mr. Chong Ming Yu (collectively “INEDs” or each of them “INED”). With a majority of NED and INEDs, the Board has a strong independent element. All Directors, including the NED and all INEDs, have brought a wide spectrum of valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning. The Board is also characterised by diversity, whether considered in terms of gender, age, educational background, professional experience, skills and knowledge and independence. A list of Directors identifying their role and function is available on the Company’s website and on the website of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). The Directors’ biographical information is set out in the biographical details of Directors and senior management on pages 44 and 45 of this annual report. The roles of the Chairman and the Deputy Chairman of the Board (the “Deputy Chairman”) who performs the function of chief executive are segregated and assumed by separate individuals to strike a balance of power and authority so that power and job responsibilities are not concentrated in any one individual of the Board. The Chairman, Mr. Yeung Hoi Sing, Sonny, is responsible for overseeing the function of the Board and formulating overall strategies and policies of the Company, while the Deputy Chairman, Dr. Ma Ho Man, Hoffman, is responsible for implementing the Company’s strategies regarding the business development of the Company and its subsidiaries (collectively the “Group”) as well as managing the Group’s business and operations. The functions and responsibilities between the Chairman and the Deputy Chairman are clearly segregated. Except that Dr. Ma Ho Man, Hoffman is the nephew of Mr. Yeung Hoi Sing, Sonny, to the best knowledge of the Directors, there is no financial, business, family and/or other material/relevant relationship among members of the Board and between the Chairman and the Deputy Chairman who performs the function of chief executive. 　 (practising) and a fellow member of the Hong Kong Institute of Certified Public Accountants, a fellow member of The Association of Chartered Certified Accountants as well as a certified tax adviser and a fellow member of The Taxation Institute of Hong Kong. He has over 28 years of experience in auditing, accounting and taxation. The NED and all INEDs entered into service contracts with the Company for a term of one year, save that the term of appointment of Mr. Chong Ming Yu under his service contract is for the period from 1 December 2014 to 31 December 2015. All executive Directors also entered into service contracts with the Company without specific term of office. Pursuant to the bye-laws of the Company (the “Bye-laws”), all Directors appointed by the Board shall hold office until the next following general meeting of the Company (in case of filling a casual vacancy) or until the next following annual general meeting of the Company (in case of an addition to the number of Directors) after their appointment and the retiring Director shall be eligible for re-election. In addition, at each annual general meeting of the Company, one-third of the Directors shall retire from office by rotation such that all Directors should be subject to retirement by rotation at least once every three years. The Board meets regularly throughout the year as and when required. Notices of at least 14 days are given to all Directors for all regular Board meetings. The company secretary of the Company (the “Company Secretary”) assists the Chairman in preparing the agendas for the meetings and all Directors are consulted to include any matters in the agendas. Agenda and accompanying board papers are given to all Directors in a timely manner and at least 3 days before the appointed date of each meeting. During the year under review, four regular Board meetings and six non-regular Board meetings were held. Details of attendance of the Directors at the said Board meetings are set out below: Number of Board meetings Directors attended/held Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) 9/10 Dr. Ma Ho Man, Hoffman (Deputy Chairman) 10/10 Non-executive Director Mr. Choi Kin Pui, Russelle 9/10 Independent non-executive Directors Ms. Yeung Mo Sheung, Ann 9/10 Mr. Chin Wing Lok, Ambrose 10/10 Mr. Chong Ming Yu (appointed with effect from 1 December 2014) 1/1 Mr. Luk Ka Yee, Patrick (resigned with effect from 1 December 2014) 9/9 During the year under review, one general meeting of the Company, namely the annual general meeting, was held on 5 June 2014 (“2014 AGM”). Details of attendance of the Directors at the 2014 AGM are set out below: Directors 2014 AGM attendance Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) 1/1 Dr. Ma Ho Man, Hoffman (Deputy Chairman) 1/1 Non-executive Director Mr. Choi Kin Pui, Russelle 1/1 Independent non-executive Directors Ms. Yeung Mo Sheung, Ann 1/1 Mr. Chin Wing Lok, Ambrose 1/1 Mr. Chong Ming Yu (appointed with effect from 1 December 2014) N/A Mr. Luk Ka Yee, Patrick (resigned with effect from 1 December 2014) 1/1 Executive Directors Mr. Yeung Hoi Sing, Sonny (Chairman) A, B Dr. Ma Ho Man, Hoffman (Deputy Chairman) A, B Non-executive Director Mr. Choi Kin Pui, Russelle A, B Independent non-executive Directors Ms. Yeung Mo Sheung, Ann A, B Mr. Chin Wing Lok, Ambrose A, B Mr. Chong Ming Yu (appointed with effect from 1 December 2014) A, B Mr. Luk Ka Yee, Patrick (resigned with effect from 1 December 2014) A Notes: A: Reading materials regarding applicable rules and regulations updates B: Attending an in-house seminar on “Connected Transactions and Latest Consultations Updates” CORPORATE GOVERNANCE REPORT (CONTINUED) 　 DELEGATION BY THE BOARD The Board has established four Board committees, namely the audit committee (the “Audit Committee”), the remuneration committee (the “Remuneration Committee”), the nomination committee (the “Nomination Committee”) and the executive committee (the “Executive Committee”) to oversee particular aspects of the Company’s affairs and to assist in sharing the Board’s responsibilities. The Board has reserved for its decision or consideration on matters covering corporate strategy, annual and interim results, changes of members of the Board and its committees, major acquisitions, disposals and capital transactions, and other significant operational and financial matters. All the Board committees have clear written terms of reference and have to report to the Board regularly on their decisions and recommendations. The day-to-day running of the Group, including implementation of the strategies and plans adopted by the Board and its committees, is delegated to management with divisional heads responsible for different aspects of the business/affairs. AUDIT COMMITTEE The Company formulated written terms of reference for the Audit Committee in accordance with the requirements of the Listing Rules, full text of which is available on the Company’s website and the website of the Stock Exchange. The Audit Committee currently consists of the NED and all INEDs and is chaired by Mr. Chin Wing Lok, Ambrose who possesses appropriate professional accounting qualification as required under the Listing Rules. The Board has delegated to the Audit Committee the responsibility to perform the corporate governance duties set out in the CG Code. The primary duties of the Audit Committee include, inter alia, monitoring integrity of the financial statements of the Company and ensuring objectivity and credibility of financial reporting, reviewing effectiveness of the internal control system of the Group (“Internal Control System”), overseeing the relationship with the external auditors of the Company (“External Auditors”) as well as ensuring maintenance of good corporate governance standard and procedures by the Company. During the year under review, five Audit Committee meetings were held and details of attendance of the Audit Committee members at the said Audit Committee meetings are set out below: Number of Audit Committee Audit Committee members meetings attended/held Mr. Chin Wing Lok, Ambrose (Chairman of the Audit Committee) 5/5 Mr. Choi Kin Pui, Russelle 5/5 Ms. Yeung Mo Sheung, Ann 5/5 Mr. Chong Ming Yu (appointed with effect from 1 December 2014) 1/1 Mr. Luk Ka Yee, Patrick (resigned with effect from 1 December 2014) 4/4 – – – – – – – – – – Reviewed the training and continuous professional development of all Directors and senior management of the Company (“Senior Management”); – Reviewed the Company’s policies and practices on compliance with legal and regulatory requirements; and – Reviewed the codes of conduct, policy, guidelines and compliance manuals applicable to the Directors and the Employees. REMUNERATION COMMITTEE The Company formulated written terms of reference for the Remuneration Committee in accordance with the requirements of the Listing Rules, full text of which is available on the Company’s website and the website of the Stock Exchange. The Remuneration Committee currently consists of the Chairman of the Board, the NED and all INEDs and is chaired by Ms. Yeung Mo Sheung, Ann, who was appointed as the chairman of the Remuneration Committee in replacement of Mr. Luk Ka Yee, Patrick with effect from 1 December 2014. The major responsibilities of the Remuneration Committee are to make recommendations to the Board on the Company’s policy and structure for remuneration of all Directors and the Senior Management and on the establishment of a formal and transparent procedure for developing remuneration policy, to determine specific remuneration packages of all executive Directors and the Senior Management and also to make recommendations to the Board of the remuneration of the NED and all INEDs. The Remuneration Committee takes into consideration on factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors and the Senior Management. 　 Remuneration Committee members at the said Remuneration Committee meeting are set out below: Reviewed the Company’s remuneration policy and structure for all Directors and the Senior Management; – Reviewed the terms of the service contracts of all executive Directors; and – Considered the annual performance bonus for the Senior Management. NOMINATION COMMITTEE The Company formulated written terms of reference for the Nomination Committee in accordance with the requirements of the Listing Rules, full text of which is available on the Company’s website and the website of the Stock Exchange. The Nomination Committee currently consists of the Chairman of the Board, the NED and all INEDs with Mr. Yeung Hoi Sing, Sonny acts as the chairman of the Nomination Committee. The major responsibilities of the Nomination Committee are to review the structure, size and composition (including the skills, knowledge, experience and diversity of perspectives) of the Board annually, to identify individuals suitably qualified to become Board members and select or make recommendations to the Board on selection for directorships, to assess the independence of INEDs, to make recommendations to the Board on the appointment or re-appointment of Directors and succession planning of Directors, and to review the Board diversity policy of the Company (the “Board Diversity Policy”) as appropriate. The Board has adopted the Board Diversity Policy which set out the approach to achieve diversity on the Board. The Company recognises and embraces the benefits of having a diverse Board to enhance the quality of its performance, and will select candidates for the Board basing on a range of diversity perspectives, including but not limited to gender, age, educational background, professional experience, skills, knowledge and independence (the “Measurable Objectives”). The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board. The Nomination Committee will review the Measurable Objectives set for implementing the Board Diversity Policy by considering the Company’s business model and specific needs from time to time and will recommend any revision thereof, if necessary, to the Board for consideration and approval. – Reviewed the policy for the nomination of Directors (the “Nomination Policy”); and – Reviewed the Board Diversity Policy. The Nomination Committee nominated a candidate, namely Mr. Chong Ming Yu, to the Board for its approval for the appointment as an INED in replacement of Mr. Luk Ka Yee, Patrick during the year. In identifying and evaluating Mr. Chong Ming Yu to be nominated for appointment as an INED by the Board, the Nomination Committee considered the selection criteria set out in the Nomination Policy including, inter alia, the following: (i) the qualifications, experience and knowledge of Mr. Chong Ming Yu that would bring contributions to the Board; (ii) maintenance of the Board diversity, having taken into account of the Measurable Objectives; (iii) the requirement for the Board to have at least three INEDs in accordance with the Listing Rules and whether Mr. Chong Ming Yu would be considered independent with reference to the independence guidelines set out in the Listing Rules; and (iv) the existing structure, size and composition of the Board. CORPORATE GOVERNANCE REPORT (CONTINUED) 　 EXECUTIVE COMMITTEE The Executive Committee was established by the Board with specific written terms of reference. It currently consists of all executive Directors, namely Mr. Yeung Hoi Sing, Sonny and Dr. Ma Ho Man, Hoffman with Mr. Yeung Hoi Sing, Sonny acts as the chairman of the Executive Committee. The Executive Committee is responsible for reviewing and approving, inter alia, any matters concerning the day-to-day management, business and operations affairs of the Company, and any During the year under review, five Executive Committee meetings were held and details of attendance of the Executive Number of Executive Committee meetings attended/held 5/5 5/5 System was effective. The Audit Committee has also reviewed the adequacy of resources of the Accounting Function, the qualifications and experience of the Accounting Staff, and their training programmes and budget during the year. The Board, through the review made by the Audit Committee, considered that the resources of the Accounting Function as well as the qualifications and experience of the Accounting Staff are adequate and the training programmes and budget for the Accounting Staff are sufficient. DIRECTORS’ AND AUDITORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS The Directors acknowledge their responsibilities for the preparation of the financial statements of the Group and ensure that the financial statements are prepared in accordance with statutory requirements and applicable accounting standards. The Directors also ensure the timely publication of the financial statements of the Group. The statement of the External Auditors, HLB Hodgson Impey Cheng Limited (“HLB”), about their reporting responsibilities on the financial statements of the Group is set out under the section headed “Auditors’ responsibility” in the independent auditors’ report on page 46 of this annual report. The Directors confirm that, to the best of their knowledge, information and belief, having made all reasonable enquiries, 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. and auditors independence. Separate resolutions are proposed at general meetings on each substantially separate issues, including the election of individual Directors. Notices of at least 20 clear business days and 10 clear business days are given to the Shareholders for all AGMs and special general meetings (“SGM(s)”) of the Company respectively. Detailed procedures for conducting a poll are clearly explained at the commencement of the general meetings. The Board has adopted a Shareholders’ communication policy for the purposes of ensuring that the Shareholders are provided with ready, equal and timely access to information about the Company, enabling the Shareholders to exercise their rights in an informed manner and allowing the Shareholders to engage actively with the Company. Details regarding the necessary procedures for the Shareholders to propose a person for election as a Director are set out in the “Procedures for Shareholders to Propose a Person for Election as a Director”, which is available on the Company’s website. COMPANY SECRETARY Ms. Chiu Nam Ying, Agnes is the Company Secretary. Her biographical information is set out in the section headed “Company Secretary” in the biographical details of Directors and Senior Management on page 45 of this annual report. During the year under review, in compliance with Rule 3.29 of the Listing Rules, the Company Secretary has taken no less than 15 hours of relevant professional training. CORPORATE GOVERNANCE REPORT (CONTINUED) 　 SHAREHOLDERS’ RIGHTS the detail contact information to the Company Secretary at the Head Office at Suite 1601-2 & 8-10, 16/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong. The request will be verified with the Company’s Branch Share Registrar in Hong Kong and upon their confirmation that the request is proper and in order, the Company Secretary will ask the Board to include the resolution in the agenda for the general meeting. The notice period to be given to all the Shareholders for consideration of the proposal raised by the Shareholders concerned at AGM or SGM varies according to the nature of the proposal, as follows: (a) Not less than 21 clear days’ notice or not less than 20 clear business days’ notice (whichever is longer) in writing if the proposal constitutes an ordinary resolution of the Company in an AGM and not less than 21 clear days’ notice or not less than 10 clear business days’ notice (whichever is longer) in writing if the proposal constitutes a special resolution of the Company in any SGM; or (b) Not less than 14 clear days’ notice or not less than 10 clear business days’ notice (whichever is longer) in writing if the proposal constitutes an ordinary resolution of the Company in all other SGMs. Shareholders’ enquiries The Shareholders should direct their questions about their shareholdings to the Company’s Branch Share Registrar in Hong Kong. The Shareholders may at any time make a request for the Company’s information to the extent such information is publicly available. The Shareholders may also make enquiries to the Board in writing with their contact information and deposited at the Head Office at Suite 1601-2 & 8-10, 16/F., Great Eagle Centre, 23 Harbour Road, Wanchai, Hong Kong for the attention of the Company Secretary. CONSTITUTIONAL DOCUMENTS During the year under review, there was no change in the Company’s memorandum of association and the Bye-laws. FIVE-YEAR FINANCIAL SUMMARY A financial summary of the Group for the past five financial years is set out on page 128. RESERVES Details of the movements in the reserves of the Group during the year are set out in the consolidated statement of changes in equity on page 53 of this annual report and other details of the reserves of the Group are set out in note 38 to the consolidated financial statements. CHARITABLE CONTRIBUTIONS No charitable and other donations were made by the Group during the year (2013: nil). PROPERTY, PLANT AND EQUIPMENT Details of the movements in the property, plant and equipment of the Group during the year are set out in note 17 to the consolidated financial statements. SHARE CAPITAL There was no movement in the share capital of the Company during the year. Details of the share capital of the Company are set out in note 36 to the consolidated financial statements. REPORT OF DIRECTORS (CONTINUED) 　 LOANS AND BORROWINGS In accordance with bye-law 87 of the Bye-laws, Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”) and Mr. Chin Wing Lok, Ambrose (“Mr. Chin”) shall retire by rotation and, being eligible, will offer themselves for re-election at the 2015 AGM. The Company has received from each of Ms. Yeung Mo Sheung, Ann (“Ms. Yeung”) and Mr. Chin, INEDs, an annual confirmation of her/his independence pursuant to Rule 3.13 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). Besides, another INED, Mr. Chong, has met all the independence guidelines as set out in Rule 3.13 of the Listing Rules and has submitted to The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) a written confirmation of his independence pursuant to the said Rule 3.13 with a copy to the Company after his appointment. All of the said existing INEDs were considered to be independent. CHANGES OF DIRECTORS’ INFORMATION Ms. Yeung, an INED, was appointed as an independent non-executive director of E Lighting Group Holdings Limited, a company whose issued shares are listed on the Growth Enterprise Market of the Stock Exchange with effect from 11 September 2014. Dr. Ma Ho Man, Hoffman, an executive Director and the Deputy Chaiman of the Company, retired as an executive director and the chairman of See Corporation Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange, with effect from 13 November 2014. Mr. Yeung, an executive Director and the Chairman of the Company, became the sole beneficial owner of Silver Rich Macau Development Limited (“Silver Rich”, being a controlling shareholder of the Company) with effect from 26 January 2015. Save as disclosed above, there was no change in the information of the Directors required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules subsequent to the date of the Interim Report 2014 of the Company and up to the date of this report. under Chapter 14A of the Listing Rules. Details of other connected transactions of the Company during the year which are fully exempt from shareholders’ approval and all disclosure requirements under Chapter 14A of the Listing Rules are set out in notes 39(a) and 42(e) to the consolidated financial statements. Save as disclosed above, there were no contracts of significance to which the Company or any of its subsidiaries was a party and in which any of the Directors or controlling shareholders or its subsidiaries had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. DIRECTORS’ INTERESTS IN COMPETING BUSINESS During the year ended 31 December 2014, none of the Directors and their respective associates was interested in any business, apart from the Group’s businesses, which competes or is likely to compete, either directly or indirectly, with the Group’s businesses, other than those businesses where the Directors were appointed as directors to represent the interests of the Group. MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or subsisted during the year. REPORT OF DIRECTORS (CONTINUED) 　 As at 31 December 2014, the Directors or chief executive of the Company and/or any of their respective associates had the following interests and 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 Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the “SFO”)) as recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise, notified to the Company and the Stock Exchange pursuant to the Model Code for Approximate Number of percentage of Nature of interest Shares held shareholding % Corporate interest 2,466,557,462 50.07 As at 31 December 2014, Mr. Yeung, an executive Director and the Chairman of the Company, was deemed to have corporate interest in 2,466,557,462 Shares by virtue of the interest of the Shares held by Silver Rich, which was wholly-owned by a discretionary trust, the SHARE OPTION SCHEMES AND DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES At the annual general meeting of the Company held on 5 June 2014, the shareholders of the Company approved the termination of the share option scheme which was adopted by the Company on 20 August 2004 (“2004 Share Option Scheme”) and the adoption of a new share option scheme (“2014 Share Option Scheme”). Summaries of the 2004 Share Option Scheme and the 2014 Share Option Scheme are set out below: (A) 2004 Share Option Scheme The Company adopted the 2004 Share Option Scheme on 20 August 2004 for the purpose of providing incentives or rewards to participants for their contribution to the Group or any entity in which the Group holds any equity interest. The 2004 Share Option Scheme was terminated with effect from 10 June 2014. Under the 2004 Share Option Scheme, the Directors are authorised at their absolute discretion to invite participants to take up options to subscribe for Shares. Participants under the 2004 Share Option Scheme include (i) any employee (whether full time or part time and including executive director) of any member(s) of the Group or any entity in which the Group holds any equity interest; (ii) any non-executive director (including independent non-executive director) of any member of the Group or any entity in which the Group holds any equity interest; (iii) any consultant, adviser or agent engaged by any member of the Group or any entity in which the Group holds any equity interest, who is eligible to participate in a share option scheme of the Company; and (iv) any vendor, supplier of goods or services or customer of or to any member of the Group or any entity in which the Group holds any equity interest, who is eligible to participate in a share option scheme of the Company. by the Board in its absolute discretion but in any event the exercise price shall not be less than the highest of (i) the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the date of offer of the option, which must be a business day; (ii) the average of the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange for the five business days immediately preceding the date on which the option is offered; and (iii) the nominal value of a Share. The offer of a grant of share option must be accepted not later than 28 days after the date of offer, upon payment of a consideration of HK$1 by the grantee. The exercise period of the share option granted is determined by the Board, save that such period shall not exceed a period of 10 years commencing on the date upon which the share option is granted. No share options had been granted under the 2004 Share Option Scheme since its adoption and up to the date of its termination. (B) 2014 Share Option Scheme The 2014 Share Option Scheme became effective on 10 June 2014 and, unless early termination by the Company in general meeting or by the Board, shall be valid and effective for a period of 10 years from the date of its adoption on 5 June 2014. The purpose of the 2014 Share Option Scheme is to provide incentives or rewards to eligible persons for their contribution to the Group or any entity in which any member of the Group holds any equity interest and any subsidiary of such entity (“Invested Entity”). REPORT OF DIRECTORS (CONTINUED) 　 the total number of Shares which may be issued upon exercise of all options to be granted under the 2014 Share Notwithstanding aforesaid in above, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2014 Share Option Scheme and any other share option scheme(s) of the Company must not exceed 30% of the total number of Shares in issue from time to time. The total number of Shares issued and to be issued upon exercise of the options granted and to be granted under the 2014 Share Option Scheme or any other share option scheme(s) adopted by the Company (whether exercised, cancelled or outstanding) to each eligible person in any 12-month period up to and including the date of offer shall not exceed 1% of the total number of Shares in issue on the date of offer, unless such grant is approved by the shareholders of the Company in general meeting at which such eligible person and his or her associates shall abstain from voting. The exercise price in respect of any option granted under the 2014 Share Option Scheme shall be a price determined by the Board in its absolute discretion but in any event the exercise price shall not be less than the highest of (i) the closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the date of offer of the option, which must be a business day; (ii) the average closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange for the five business days immediately preceding the date on which the option is offered; and (iii) the nominal value of a Share. The offer of a grant of share option must be accepted not later than 28 days after the date of offer, upon payment of a consideration of HK$1 by the grantee. The exercise period of the share option granted is determined by the Board, save that such period shall not exceed a period of 10 years commencing on the date upon which the share option is granted. No share options had been granted under the 2014 Share Option Scheme since its adoption and up to 31 December 2014. At no time during the year was the Company or any of its subsidiaries, a party to any arrangements to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Number of Capacity Shares held Beneficial owner 2,466,557,462 Trustee 2,466,557,462 Interest of controlled 2,466,557,462 corporation Interest of spouse 2,466,557,462 Interest of spouse 2,466,557,462 Maruhan Corporation Long position Beneficial owner 956,633,525 19.42 Notes: 1. As at 31 December 2014, the entire issued share capital of Silver Rich was held by Fiducia Suisse SA, which was a trustee of a discretionary trust, the beneficiaries of which were family members of Mr. Yeung. Fiducia Suisse SA was wholly-owned by Mr. David Henry Christopher Hill. Accordingly, each of Fiducia Suisse SA and Mr. David Henry Christopher Hill was deemed to be interested in 2,466,557,462 Shares held by Silver Rich. 2. As at 31 December 2014, Mrs. Rebecca Ann Hill, being the spouse of Mr. David Henry Christopher Hill, was deemed to be interested in 2,466,557,462 Shares in which Mr. David Henry Christopher Hill had a deemed interest. 3. As at 31 December 2014, Ms. Liu Siu Lam, Marian, being the spouse of Mr. Yeung, was deemed to be interested in 2,466,557,462 Shares in which Mr. Yeung had a deemed interest. Save as disclosed above, as at 31 December 2014, no other person (other than a Director or chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares and underlying Shares which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO. REPORT OF DIRECTORS (CONTINUED) 　 Group’s Consolidated attributable balance sheet interests HK$’000 HK$’000 The shareholder’s loans provided by World Fortune are unsecured, interest-free and had no fixed terms of repayment. Further details are set out in notes 21 and 41 to the consolidated financial statements. Set out below is a consolidated balance sheet of Pier 16 – Property Development and the Group’s attributable interests in this associate according to its audited consolidated financial statements for the year ended 31 December 2014: Non-current assets 1,857,287 910,071 Current assets 495,777 242,931 Current liabilities (422,085) (206,822) Non-current liabilities (2,299,699) (1,126,853) CONVERTIBLE SECURITIES, OPTIONS, WARRANTS OR SIMILAR RIGHTS The Company had no outstanding convertible securities, options, warrants or other similar rights as at 31 December 2014. PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES During the year ended 31 December 2014, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed securities of the Company. of the NED and all INEDs. Factors which include, inter alia, salaries paid by comparable companies, qualifications, experience, time commitment and responsibilities of the Directors and the Senior Management as well as prevailing market condition are considered by the Remuneration Committee for determining/making proposals on remuneration of the relevant Directors and Senior Management. The remuneration packages of employees of the Group (other than the executive Directors and the Senior Management) are determined and reviewed periodically on the basis of their respective qualifications, experience, responsibilities and performance as well as prevailing market condition. In addition to salaries, the Company offers staff benefits which include medical insurance and retirement benefits under the Mandatory Provident Fund Scheme. The Group also operates a share option scheme pursuant to which share options might be granted as a long-term incentive to its directors and employees. RETIREMENT BENEFIT SCHEME Details of the retirement benefit scheme of the Group are set out in note 37(a) to the consolidated financial statements. CORPORATE GOVERNANCE The Company has published its Corporate Governance Report, details of which are set out on pages 24 to 33 of this annual report. REPORT OF DIRECTORS (CONTINUED) 　 AUDITORS Administration and Honorary Doctorate of Management by Lincoln University in 2009 and 2010 respectively. He is the nephew of Mr. Yeung. NON-EXECUTIVE DIRECTOR Mr. Choi Kin Pui, Russelle, aged 60, joined the Group in 2003. He is a non-executive director of the Company as well as a member of the audit committee (the “Audit Committee”) of the Board, the Remuneration Committee and the Nomination Committee. Mr. Choi graduated from St. Pius X High School in 1976. He has over 21 years of management experience in the telecommunication industry in Hong Kong, the United States of America (the “US”) and the People’s Republic of China (the “PRC”). Mr. Choi established Elephant Talk Limited in 1994, a wholly-owned subsidiary of Elephant Talk Communications Inc. (“ETCI”). ETCI was an American corporation whose securities are quoted on the Over-The-Counter Bulletin Board in the US and engaged in the provision of telecommunications services in Hong Kong and the US. Mr. Choi was a director of ETCI from 2002 to 2008 as well as the president and the chief executive officer of ETCI from 2002 to 2006 and was responsible for the planning of the overall strategy of ETCI. He also served as the chairman of ET Network Services Limited, a Hong Kong company engaged in the provision of internet access and outsourcing services in the PRC and Hong Kong. 　 INDEPENDENT NON-EXECUTIVE DIRECTORS commercial. Mr. Chong has over 18 years of experience in legal field and is presently a consultant to Messrs. Kong & Tang, Solicitors, a legal firm in Hong Kong. COMPANY SECRETARY Ms. Chiu Nam Ying, Agnes, aged 41, joined the Group in 2003. She is the company secretary of the Company and is responsible for overseeing all legal matters of the Group. Ms. Chiu is a qualified solicitor and an associate member of The Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. She holds a Master degree of Laws from The University of Sheffield, United Kingdom. Before joining the Group, Ms. Chiu was a practicing solicitor in a local law firm and possessed experience in banking and finance as well as property related matters. FINANCIAL CONTROLLER Mr. Wong Chi Keung, Alvin, aged 52, joined the Group in 2008. He is the financial controller of the Group as well as the qualified accountant of the Company, and is responsible for financial and accounting matters of the Group. Mr. Wong is a fellow member of the Hong Kong Institute of Certified Public Accountants and The Association of Chartered Certified Accountants and an associate member of The Chartered Institute of Management Accountants. He is currently an independent non-executive director, the chairman of both the audit committee and the remuneration committee as well as a member of the nomination committee of ITC Properties Group Limited, a company whose issued shares are listed on the Main Board of the Stock Exchange. He has over 27 years of experience in accounting and corporate finance gained in entertainment and travel-related, property development, construction and manufacturing companies. that are free from material misstatement, whether due to fraud or error. AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. INDEPENDENT AUDITORS’ REPORT (CONTINUED) 　 OPINION In our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2014 and of the Group’s profit and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance. HLB Hodgson Impey Cheng Limited Certified Public Accountants Shek Lui Practising Certificate Number: P05895 Hong Kong, 30 March 2015 Profit for the year from discontinued operation 15(a) 44,312 475 Profit for the year 117,782 12,245 Attributable to: Owners of the Company 96,890 18,644 Non-controlling interests 20,892 (6,399) Profit for the year 117,782 12,245 Earnings per share From continuing and discontinued operations – Basic and diluted 16 1.97 HK cents 0.42 HK cents From continuing operations – Basic and diluted 1.48 HK cents 0.41 HK cents The accompanying notes form an integral part of these consolidated financial statements. The accompanying notes form an integral part of these consolidated financial statements. Success Universe Group Limited | Annual Report 2014 49 Financial guarantee contract 32 19,995 19,995 Finance lease liabilities – current portion 33 – 24 59,045 60,075 NET CURRENT ASSETS 165,886 79,017 TOTAL ASSETS LESS CURRENT LIABILITIES 1,146,692 1,139,232 Approved and authorised for issue by the board of directors on 30 March 2015. On behalf of the board Yeung Hoi Sing, Sonny Ma Ho Man, Hoffman Director Director The accompanying notes form an integral part of these consolidated financial statements. Loan from a director and controlling shareholder 35 – 50,000 29,995 99,990 NET ASSETS 1,172,385 1,207,044 CAPITAL AND RESERVES Share capital Reserves 36 38 49,265 1,123,120 49,265 1,157,779 TOTAL EQUITY 1,172,385 1,207,044 Approved and authorised for issue by the board of directors on 30 March 2015. On behalf of the board Yeung Hoi Sing, Sonny Ma Ho Man, Hoffman Director Director The accompanying notes form an integral part of these consolidated financial statements. Attributable to owners of the Company CapitalNon-ShareShareDistributableredemptionExchangeOther AccumulatedcontrollingTotalcapital premium reserve reserve reserve reserve losses Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January 2013 40,649 1,193,840 52,333 976 752 – (546,916) 741,634 24,361 765,995 Profit/(loss) for the year – – – – – – 18,644 18,644 (6,399) 12,245 Other comprehensive loss for the year – – – – (2,290) – – (2,290) (140) (2,430) Total comprehensive (loss)/income for the year – – – – (2,290) – 18,644 16,354 (6,539) 9,815 Issue of consideration shares (note 36) 8,616 – – – – – – 8,616 – 8,616 Issue of consideration shares at premium (note 36) – 225,123 – – – – – 225,123 – 225,123 Acquisition of additional interests in a subsidiary (note 39(d)) – – – – – – (7,003) (7,003) 7,003 – At 31 December 2013 49,265 1,418,963 52,333 976 (1,538) – (535,275) 984,724 24,825 1,009,549 At 1 January 2014 49,265 1,418,963 52,333 976 (1,538) – (535,275) 984,724 24,825 1,009,549 Profit for the year – – – – – – 96,890 96,890 20,892 117,782 Other comprehensive loss for the year – – – – (2,972) – – (2,972) (592) (3,564) Total comprehensive (loss)/income for the year – – – – (2,972) – 96,890 93,918 20,300 114,218 Acquisition of additional interests in a subsidiary (note 39(a)) – – – – – – (440) (440) 440 – Dividend paid to non-controlling shareholders – – – – – – – – (34,200) (34,200) Transfer to other reserve – – – (976) – 976 – – – – At 31 December 2014 49,265 1,418,963 52,333 – (4,510) 976 (438,825) 1,078,202 11,365 1,089,567 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2014 The accompanying notes form an integral part of these consolidated financial statements. Decrease in inventories 1,522 308 Increase in trade and other receivables (98,082) (1,603) Increase in trade and other payables 4,956 7,424 Decrease in deferred income (882) (906) Cash used in operations (47,165) Income tax refunded/(paid) – Overseas tax refunded/(paid) 343 (188) NET CASH USED IN OPERATING ACTIVITIES (47,353) Cash and cash equivalents at the beginning of the year 80,423 239,581 Effect of foreign exchange rate changes (484) (492) CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 71,574 80,423 Analysis of balances of cash and cash equivalents Cash and bank balances 26 71,574 80,423 The accompanying notes form an integral part of these consolidated financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2014 1. ORGANISATION AND PRINCIPAL ACTIVITIES The Company was incorporated as an exempted company with limited liability in Bermuda on 27 May 2004 under the Companies Act 1981 of Bermuda and is listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). Its controlling shareholder is Silver Rich Macau Development Limited, a company incorporated in the British Virgin Islands with limited liability. The principal activity of the Company is investment holding. The principal activities of its subsidiaries are set out in note 20 to the consolidated financial statements. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Statement of compliance These consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“HKFRS(s)”), which collective term includes all applicable individual HKFRSs, Hong Kong Accounting Standards (“HKAS(s)”) and interpretations issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and accounting principles generally accepted in Hong Kong. These consolidated financial statements also comply with the applicable requirements of the Hong Kong Companies Ordinance, which for this financial year and the comparative period continue to be those of the predecessor Hong Kong Companies Ordinance (Cap. 32), in accordance with transitional and saving arrangements for Part 9 of the new Hong Kong Companies Ordinance (Cap. 622) (the “Companies Ordinance”), “Accounts and Audit”, which are set out in sections 76 to 87 of Schedule 11 to the Companies Ordinance. These consolidated financial statements also comply with the applicable disclosure requirements of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”). A summary of the significant accounting policies adopted by the Group (as defined hereinafter) is set out below. The HKICPA has issued certain amendments and interpretations which are or have become effective. It also issued certain new and revised standards, amendments and interpretation (“New HKFRSs”), which are first effective or available for early adoption for the current accounting period of the Group (as defined hereinafter) and the Company. Note 3 provides information on initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements. (b) Basis of preparation of the consolidated financial statements The consolidated financial statements include the financial statements of the Company and its subsidiaries (together the “Group”) and the Group’s interests in associates and joint ventures made up to 31 December each year. The consolidated financial statements are presented in Hong Kong dollars (HK$), which is the same as the functional currency of the Company. All values are rounded to the nearest thousand (“HK$’000”) except when otherwise indicated. Basis of measurement The measurement basis used in the preparation of the consolidated financial statements is the historical cost. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transactions between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or liability, the Group takes into account the characteristic of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2, leasing transactions that are within the scope of HKAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 or value in use in HKAS 36. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of preparation of the consolidated financial statements (continued) Basis of measurement (continued) In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: ‧ Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date; ‧ Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and ‧ Level 3 inputs are unobservable inputs for the asset or liability. The preparation of consolidated financial statements in conformity with HKFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amount of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of HKFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in note 5. (c) Subsidiaries and non-controlling interests The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company: ‧ has power over the investee; ‧ is exposed, or has rights, to variable returns from its involvement with the investee; and ‧ has the ability to use its power to affect its returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more or the three elements of control listed above. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Subsidiaries and non-controlling interests (continued) When the Group has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power, including: ‧ the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders; ‧ potential voting rights held by the Group, other vote holders or other parties; ‧ right arising from other contractual arrangements; and ‧ any additional facts and circumstances that indicate that the Group has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expense of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income and expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Changes in the Group’s ownership interests in existing subsidiaries Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair values of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Subsidiaries and non-controlling interests (continued) Changes in the Group’s ownership interests in existing subsidiaries (continued) When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable HKFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under HKAS 39 or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture. Loans from holders of non-controlling interests and other contractual obligations towards these holders are presented as financial liabilities in the consolidated statement of financial position in accordance with note 2(k). In the Company’s statement of financial position, an investment in subsidiaries is stated at cost less impairment losses (see note 2(i)). (d) Associates and joint ventures An associate is an entity over which the Group has 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 joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exits only when decisions about the relevant activities require unanimous consent of the parties sharing control. The results and assets and liabilities of associates or joint ventures are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment, or a portion thereof, is classified as held for sale, in which case it is accounted for in accordance with HKFRS 5. Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Associates and joint ventures (continued) The requirements of HKAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate or a joint venture. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with HKAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less cost of disposal) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases. The Group discontinues the use of equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with HKAS 39. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued. The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests. When the Group reduces its ownership interests in associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interests if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities. When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group. In the Company’s statement of financial position, investments in associate and joint venture are stated at cost less impairment loss (see note 2(i)). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Goodwill Goodwill represents the excess of the cost of a business combination or an investment in an associate or a jointly controlled entity over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business combination is allocated to each cash-generating units (“CGU(s)”) or groups of CGUs, that is expected to benefit from the synergies of the combination and is tested annually for impairment (see note 2(i)). In respect of associate or joint venture, the carrying amount of goodwill is included in the carrying amount of the interest in the associate or joint venture and the investment as a whole is tested for impairment whenever there is objective evidence of impairment (see note 2(i)). Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over the cost of a business combination or an investment in an associate or joint venture is recognised immediately in profit or loss. On disposal of a CGU of an associate or a joint venture, any attributable amount of purchased goodwill is included in the calculation of the profit or loss on disposal. (f) Property, plant and equipment Property, plant and equipment are stated in the consolidated statement of financial position at cost less accumulated depreciation and impairment losses (see note 2(i)). Gain or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds on disposal and the carrying amount of the item and are recognised in profit or loss on the date of retirement or disposal. Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful life at the following rates per annum: Building 2.5% Cruise ship 5% Leasehold improvements Over lease terms Plant and machinery 20% Furniture, fittings and office equipment 18% – 331/3% Motor vehicles 30% – 331/3% Motor yacht 20% Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually. There is no depreciation imposed on the freehold land. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Intangible assets (other than goodwill) Intangible assets, other than goodwill, identified on business combinations are capitalised on their fair values. They represent mainly trademark and relationship with customers. Subsequent to initial recognition, intangible assets with finite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation for intangible assets with finite useful lives is charged to profit or loss on a straight-line basis from the date of acquisition over their estimated useful lives as follows: Client list 15 years The asset’s useful lives and their amortisation method are reviewed annually. Intangible assets with indefinite useful lives are not amortised. The intangible asset and its status are reviewed annually to determine whether events and circumstances continue to support indefinite useful life. Should the useful life of an intangible asset change from indefinite to finite, the change would be accounted for prospectively from the date of change and in accordance with the policy for amortisation of intangible assets with finite lives as set out above. Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. (h) Operating lease charges Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal installments over the accounting periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred. (i) Impairment of assets (i) Impairment of investments in debt and equity securities and other receivables Investments in debt and equity securities and other current and non-current receivables that are stated at cost or amortised cost or are classified as available-for-sale securities are reviewed at the end of each reporting period to determine whether there is objective evidence of impairment. If any such evidence exists, any impairment loss is determined and recognised as follows: – For unquoted equity securities and current receivables that are carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for current receivables are reversed if in a subsequent period the amount of the impairment loss decreases. Impairment losses for equity securities are not reversed. – For financial assets carried at amortised cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Impairment of assets (continued) (i) Impairment of investments in debt and equity securities and other receivables (continued) If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profit or loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognised in prior years. Impairment losses in respect of other receivables are reversed if the subsequent increase in fair value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of impairment losses in such circumstances are recognised in profit or loss. (ii) Impairment of other assets Internal and external sources of information are reviewed at the end of each reporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised no longer exists or may have decreased: – property, plant and equipment; – intangible assets; – investments in subsidiaries, associates and joint ventures; and – goodwill If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, the recoverable amount is estimated annually whether or not there is any indication of impairment. – Calculation of recoverable amount The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a CGU). – Recognition of impairment losses An impairment loss is recognised in profit or loss whenever the carrying amount of an asset, or the CGU to which it belongs, exceeds its recoverable amount. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying amount of asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Impairment of assets (continued) (ii) Impairment of other assets (continued) – Reversals of impairment losses In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognised. (j) Inventories Inventories are carried at the lower of cost and net realisable value. Cost is calculated using the first-in, first-out formula and comprises all costs of purchase in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When inventories are consumed, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write down or loss occurs. The amount of any reversal of any write-down of inventories is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs. (k) Financial instruments Financial assets and financial liabilities are recognised when an entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at “fair value through profit or loss” (“FVTPL”)) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. Financial assets Financial assets are classified into the following specified categories: financial assets at FVTPL, “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and “loans and receivables”. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. Effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (k) Financial instruments (continued) Financial assets (continued) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, amounts due from subsidiaries, associates and a joint venture, pledged bank deposits as well as cash and cash equivalents) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables where the recognition of interest would be immaterial. Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For all other financial assets, objective evidence of impairment could include: – significant financial difficulty of the issuer or counterparty; or – breach of contract, such as a default or delinquency in interest or principal payments; or – it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or – the disappearance of an active market for that financial asset because of financial difficulties. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of other receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. Financial liabilities Other financial liabilities Other financial liabilities (including trade and other payables, profit guarantee liabilities, loans payables, finance lease liabilities, bank loans as well as loan from a director and controlling shareholder) are subsequently measured at amortised cost using the effective interest method. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (k) Financial instruments (continued) Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. Financial guarantee contracts issued by the Group are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of: – the amount of the obligation under the contract, as determined in accordance with HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets”; and – the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies. Derecognition The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group continues to recognise the asset to the extent of its continuing involvement and recognises an associated liability. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. On derecognition of a financial asset other than in its entirety. The Group allocates the previous carrying amount of the financial asset between the part it continues to recognise, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. (l) Cash and cash equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (m) Employee benefits (i) Short term employee benefits and contributions to defined contribution retirement plans Salaries, annual bonuses, paid annual leave, contributions to defined contribution plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. (ii) Termination benefits Termination benefits are recognised when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal. (n) Income tax Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit before taxation” as reported in the consolidated statement of profit or loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. 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 profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (n) Income tax (continued) Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. (o) Provisions and contingent liabilities Provisions are recognised for other liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. (p) Revenue recognition Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognised in profit or loss as follows: (i) Cruise ship leasing and management fee income – Cruise ship leasing income is recognised on an accrual basis in accordance with the terms of the leasing agreement. – Cruise ship management fee income is recognised when the management service is rendered. (ii) Travel-related agency service fee income – Revenue from the sale of air tickets is recognised when the tickets are issued. – Revenue from the sale of tour packages is recognised when travel arrangements have been booked and confirmed with customers. Deposits from customers are reported as liabilities. – Revenue from the sale of` group tours is recognised at the point of group departure. Deposits from customers are reported as liabilities until the tour departs. (iii) Lottery commission and services income is recognised when the sales agency services are provided, net of business tax. (iv) Management fee income is recognised when the amounts are measurable and the ultimate collections are reasonably assumed. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (p) Revenue recognition (continued) (v) Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is established. (vi) Interest income is recognised on a time-apportioned basis using the effective interest method. (vii) Services income is recognised when services are provided. (viii) Deferred income comprises of a sign-up bonus for an on-line ticket processing system and is recognised as revenue in accordance with the terms of the agreement. (ix) Other income consists of revenue earned based on volume sales through various on-line ticket processing systems. Other income is recognised when it is measurable and all contractual obligations have been fulfilled. (q) Foreign currencies In preparing the consolidated financial statements of each individual entity, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: – exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; – exchange differences on transactions entered into in order to hedge certain foreign currency risks (see the accounting policies below); and – exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Group (i.e. HK$) using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity under the heading of foreign currency translation reserve (attributed to non-controlling interests as appropriate). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (q) Foreign currencies (continued) On the disposal of a foreign operation (i.e. a disposal involving loss of significant influence over an associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. For all other partial disposals (i.e. partial disposals of associates that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments on identifiable assets acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in equity under the heading of foreign currency translation reserve. (r) Borrowing costs Borrowing costs are expensed in profit or loss in the period in which they are incurred, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale. The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete. (s) Related parties (a) A person, or a close member of that person’s family, is related to the Group if that person: (i) has control or joint control over, the Group; (ii) has significant influence over the Group; or (iii) is a member of the key management personnel of the Group or the Group’s parent. (b) An entity is related to the Group if any of the following conditions applies: (i) the entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (ii) one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) the entity and the Group are joint ventures of the same third party. (iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity. (v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. (vi) the entity is controlled or jointly controlled by a person identified in (a). (vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (s) Related parties (continued) Close family members of an individual are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. (t) Segment reporting Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Group’s chief operating decision maker (“CODM”) for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical location. Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. (u) Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable. 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS In the current year, the Group has applied for the first time, the following New HKFRSs issued by the HKICPA, which are effective for the Group’s financial year beginning on 1 January 2014. HKFRS 10, HKFRS 12 Investment Entities and HKAS 27 (Amendments) HKAS 32 (Amendments) Offsetting Financial Assets and Financial Liabilities HKAS 36 (Amendments) Recoverable Amount Disclosures for Non-Financial Assets HKAS 39 (Amendments) Novation of Derivatives and Continuation of Hedge Accounting HK(IFRIC) – Int 21 Levies NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) Amendments to HKFRS 10, HKFRS 12 and HKAS 27 (2011) – Investment Entities The amendments to HKFRS 10 define an investment entity and require a reporting entity that meets the definition of an investment entity not to consolidate its subsidiaries but instead to measure its subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. To qualify as an investment entity, a reporting entity is required to: ‧ obtain funds from one or more investors for the purpose of providing them with professional investment management services; ‧ commit to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and ‧ measure and evaluate performance of substantially all of its investments on a fair value basis. Consequential amendments have been made to HKFRS 12 and HKAS 27 to introduce new disclosure requirements for investment entities. Amendments to HKAS 32 “Offsetting Financial Assets and Financial Liabilities” The amendments to HKAS 32 clarify existing application issues relating to the offset of financial assets and financial liabilities requirements. Specifically, the amendments clarify the meaning of “currently has a legally enforceable right of set-off” and “simultaneous realisation and settlement”. Amendments to HKAS 36 “Recoverable Amount Disclosures for Non-Financial Assets” The amendments to HKAS 36 remove the requirement to disclose the recoverable amount of a CGU to which goodwill or other intangible assets with indefinite useful lives had been allocated when there has been no impairment or reversal of impairment of the related CGU. Furthermore, the amendments introduce additional disclosure requirements regarding the fair value hierarchy, key assumptions and valuation techniques used when the recoverable amount of an asset or CGU was determined based on its fair value less costs of disposal. These new disclosures include the fair value hierarchy, key assumptions and valuation techniques used which are in line with the disclosure required by HKFRS 13 “Fair Value Measurements”. Amendments to HKAS 39 “Novation of Derivatives and Continuation of Hedge Accounting” The amendments to HKAS 39 provide relief from the requirement to discontinue hedge accounting when a derivative hedging instrument is novated under certain circumstances. The amendments also clarify that any change to the fair value of the derivative hedging instrument arising from the novation should be included in the assessment of hedge effectiveness. HK (IFRIC) – Int 21 “Levies” HK (IFRIC) – Int 21 “Levies” addresses the issue of when to recognise a liability to pay a levy. The interpretation defines a levy, and specifies that the obligating event that gives rise to the liability is the activity that triggers the payment of the levy, as identified by legislation. The interpretation provides guidance on how different levy arrangements should be accounted for, in particular, it clarifies that neither economic compulsion nor the going concern basis of financial statements preparation implies that an entity has a present obligation to pay a levy that will be triggered by operating in a future period. The application of the above New HKFRSs had no material impact on the Group’s consolidated financial performance and positions for the current and prior years. Accordingly, no prior period adjustments had been required. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) The Group has not early applied the following New HKFRSs that have been issued but are not yet effective. Amendments to HKFRSs Annual Improvement to HKFRSs 2010-2012 cycle2 Amendments to HKFRSs Annual Improvement to HKFRSs 2011-2013 cycle1 Amendments to HKFRSs Annual Improvement to HKFRSs 2012-2014 cycle3 HKAS 16 and HKAS 38 Clarification of Acceptable Methods of Depreciation (Amendments) and Amortisation3 HKAS 16 and HKAS 41 Agriculture: Bearer Plant3 (Amendments) HKAS 19 (Amendments) Defined Benefits Plans: Employee Contribution1 HKAS 27 (Amendments) Equity Method in Separate Financial Statements3 HKFRS 9 Financial Instruments5 HKFRS 10 and HKAS 28 Sale or Contribution of Assets between an Investor and its Associate (Amendments) or Joint Venture3 HKFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint Operations3 HKFRS 14 Regulatory Deferral Accounts6 HKFRS 15 Revenue from Contracts with Customers4 1 Effective for annual periods beginning on or after 1 July 2014, with earlier application permitted 2 Effective for annual periods beginning on or after 1 July 2014, with limited exceptions. Earlier application is permitted 3 Effective for annual periods beginning on or after 1 January 2016, with earlier application permitted 4 Effective for annual periods beginning on or after 1 January 2017, with earlier application permitted 5 Effective for annual periods beginning on or after 1 January 2018, with earlier application permitted 6 Effective for first annual HKFRS financial statements beginning on or after 1 January 2016, with earlier applications permitted HKFRS 9 “Financial Instruments” HKFRS 9 issued in 2009 introduced new requirements for the classification and measurement of financial assets. HKFRS 9 was subsequently amended in 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition, and further amended in 2013 to include the new requirements for general hedge accounting. Another revised version of HKFRS 9 was issued in 2014 mainly to include a) impairment requirements for financial assets and b) limited amendments to the classification and measurement requirements by introducing a ‘fair value through other comprehensive income’ (FVTOCI) measurement category for certain simple debt instruments. Key requirements of HKFRS 9 are described below: ‧ All recognised financial assets that are within the scope of HKAS 39 “Financial Instruments: Recognition and Measurement” to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent reporting periods. Debt instruments that are held with a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial assets that give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at FVTOCI. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods. In addition, under HKFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) HKFRS 9 “Financial Instruments” (continued) ‧ With regard to the measurement of financial liabilities designated as at fair value through profit or loss, HKFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value of financial liabilities attributable to changes in the financial liabilities’ credit risk are not subsequently reclassified to profit or loss. Under HKAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss was presented in profit or loss. ‧ In relation to the impairment of financial assets, HKFRS 9 requires an expected credit loss model, as opposed to an incurred credit loss model under HKAS 39. The expected credit loss model requires an entity to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer necessary for a credit event to have occurred before credit losses are recognised. ‧ The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the type of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced. HKFRS 15 “Revenue from Contracts with Customers” In July 2014, HKFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. HKFRS 15 will supersede the current revenue recognition guidance including HKAS 18 “Revenue”, HKAS 11 “Construction Contracts” and the related Interpretations when it becomes effective. The core principle of HKFRS 15 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach to revenue recognition: ‧ Step 1: Identify the contract(s) with a customer ‧ Step 2: Identify the performance obligations in the contract ‧ Step 3: Determine the transaction price ‧ Step 4: Allocate the transaction price to the performance obligations in the contract ‧ Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation Under HKFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. Far more prescriptive guidance has been added in HKFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required by HKFRS 15. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) Amendments to HKFRS 11 “Accounting for Acquisitions of Interests in Joint Operations” The amendments to HKFRS 11 provide guidance on how to account for the acquisition of a joint operation that constitutes a business as defined in HKFRS 3 “Business Combinations”. Specifically, the amendments state that the relevant principles on accounting for business combinations in HKFRS 3 and other standards (e.g. HKAS 36 “Impairment of Assets” regarding impairment testing of a cash generating unit to which goodwill on acquisition of a joint operation has been allocated) should be applied. The same requirements should be applied to the formation of a joint operation if and only if an existing business, as defined in HKFRS 3, is contributed to the joint operation on its formation by one of the parties that participate in the joint operation. A joint operator is also required to disclose the relevant information required by HKFRS 3 and other standards for business combinations. Amendments to HKAS 16 and HKAS 38 “Clarification of Acceptable Methods of Depreciation and Amortisation” The amendments to HKAS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to HKAS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances: a) when the intangible asset is expressed as a measure of revenue; or b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated. Amendments to HKAS 16 and HKAS 41 “Agriculture: Bearer Plants” The amendments to HKAS 16 and HKAS 41 define a bearer plant and require biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with HKAS 16, instead of HKAS 41. The produce growing on bearer plants continues to be accounted for in accordance with HKAS 41. Amendments to HKAS 19 “Defined Benefit Plans: Employee Contributions” The amendments to HKAS 19 clarify how an entity should account for contributions made by employees or third parties to defined benefit plans, based on whether those contributions are dependent on the number of years of service provided by the employee. For contributions that are independent of the number of years of service, the entity may either recognise the contributions as a reduction in the service cost in the period in which the related service is rendered, or to attribute them to the employees’ periods of service using the projected unit credit method; whereas for contributions that are dependent on the number of years of service, the entity is required to attribute them to the employees’ periods of service. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) Amendments to HKAS 27 “Equity Method in Separate Financial Statements” The amendments allow an entity to account for investments in subsidiaries, joint ventures and associates in its separate financial statements: ‧ At cost; ‧ In accordance with HKFRS 9 “Financial Instruments” (or HKAS 39 “Financial Instruments: Recognition and Measurement” for entities that have not yet adopted HKFRS 9), or ‧ Using the equity method as described in HKAS 28 “Investments in Associates and Joint Ventures”. The accounting option must be applied by category of investments. The amendments also clarify that when a parent ceases to be an investment entity, or becomes an investment entity, it shall account for the change from the date when the change in status occurred. In addition to the amendments to HKAS 27, there are consequential amendments to HKAS 28 to avoid a potential conflict with HKFRS 10 “Consolidated Financial Statements” and to HKFRS 1 “First time Adoption of Hong Kong Financial Reporting Standards”. Amendments to HKFRS 10 and HKAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to HKAS 28: ‧ The requirements on gains and losses resulting from transactions between an entity and its associate or joint venture have been amended to relate only to assets that do not constitute a business. ‧ A new requirement has been introduced that gains or losses from downstream transactions involving assets that constitute a business between an entity and its associate or joint venture must be recognised in full in the investor’s financial statements. ‧ A requirement has been added that an entity needs to consider whether assets that are sold or contributed in separate transactions constitute a business and should be accounted for as a single transaction. Amendments to HKFRS 10: ‧ An exception from the general requirement of full gain or loss recognition has been introduced into HKFRS 10 for the loss control of a subsidiary that does not contain a business in a transaction with an associate or a joint venture that is accounted for using the equity method. ‧ New guidance has been introduced requiring that gains or losses resulting from those transactions are recognised in the parent’s profit or loss only to the extent of the unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses resulting from the remeasurement at fair value of investments retained in any former subsidiary that has become an associate or a joint venture that is accounted for using the equity method are recognised in the former parent’s profit or loss only to the extent of the unrelated investors’ interests in the new associate or joint venture. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) Annual Improvements to HKFRSs 2010-2012 Cycle The Annual Improvements to HKFRSs 2010-2012 Cycle include a number of amendments to various HKFRSs, which are summarised below. The amendments to HKFRS 2 (i) clarify the definitions of ‘vesting condition’ and ‘market condition’; and (ii) separate the definitions of ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’. The amendments to HKFRS 2 are effective for share-based payment transactions for which the grant date is on or after 1 July 2014. The amendments to HKFRS 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of HKFRS 9 or HKAS 39 or a non-financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to HKFRS 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014. The amendments to HKFRS 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker (“CODM”). The amendments to the basis for conclusions of HKFRS 13 clarify that the issue of HKFRS 13 and consequential amendments to HKAS 39 and HKFRS 9 might be perceived as removing the ability to measure short term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. As the amendments do not contain any effective date, they are considered to be immediately effective. The amendments to HKAS 16 and HKAS 38 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. The amendments to HKAS 24 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. Annual Improvements to HKFRSs 2011-2013 Cycle The Annual Improvements to HKFRSs 2011-2013 Cycle include a number of amendments to various HKFRSs, which are summarised below. The amendments to HKFRS 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONTINUED) Annual Improvements to HKFRSs 2011-2013 Cycle (continued) The amendments to HKFRS 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, HKAS 39 or HKFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within HKAS 32. The amendments to HKAS 40 clarify that HKAS 40 and HKFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: ‧ the property meets the definition of investment property in terms of HKAS 40; and ‧ the transaction meets the definition of a business combination under HKFRS 3. Annual Improvements to HKFRSs 2012-2014 Cycle The Annual Improvements to HKFRSs 2012-2014 Cycle include a number of amendments to various HKFRSs, which are summarised below. The amendments to HKFRS 5 introduce specific guidance in HKFRS 5 for when an entity reclassifies an asset (or disposal group) from held for sale to held for distribution to owners (or vice versa), or when held-for-distribution accounting is discontinued. The amendments shall be applied prospectively. The amendments to HKFRS 7 provide additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset for the purpose of the disclosures required in relation to transferred assets and clarify that the offsetting disclosures (introduced in the amendments to HKFRS 7 “Disclosure – Offsetting Financial Assets and Financial Liabilities” issued in December 2011 and effective for periods beginning on or after 1 January 2013) are not explicitly required for all interim periods. However, the disclosures may need to be included in condensed interim financial statements to comply with HKAS 34 “Interim Financial Reporting”. The amendments to HKAS 19 clarify that the high quality corporate bonds used to estimate the discount rate for post-employment benefits should be issued in the same currency as the benefits to be paid. These amendments would result in the depth of the market for high quality corporate bonds being assessed at currency level. The amendments apply from the beginning of the earliest comparative period presented in the financial statements in which the amendments are first applied. Any initial adjustment arising should be recognised in opening retained earnings of the earliest comparative period presented. The amendments to HKAS 34 clarify the requirements relating to information required by HKAS 34 that is presented elsewhere in the interim financial report. The amendments require that such information be incorporated by way of a cross reference from the interim financial statements to the other part of the interim financial report that is available to users on the same terms and at the same time as the interim financial statements. The Group is in the process of assessing the potential impact of the above New HKFRSs upon initial application but is not yet in a position to state whether the above New HKFRSs will have a significant impact on the Group’s results of operations and financial position. instrument fails to meet its contractual obligations, and the Group’s credit risk is primarily attributable to the trade and other receivables and cash and cash equivalents. Management has a credit policy in a place and the exposures to these credit risks are monitored on an ongoing basis. The management has established a credit policy under which credit evaluations are performed on all customers requiring credit. Trade receivables are due within 3 months from the date of billing. Trade debtors with balances that are more than 3 months are requested to settle all outstanding balance before any further credit is granted. Normally, the Group does not obtain collateral from customers. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. At the end of the reporting period, the Group has a certain concentration of credit risk as approximately 13% and 46% (2013: approximately 1% and 2%) of the total trade and other receivables were due from the Group’s largest customer and the five largest customers respectively. The maximum exposure to credit risk without taking account of any collateral held is represented by the carrying amount of each financial asset, including derivative financial instruments, in the consolidated statement of financial position after deducting any impairment allowance. Except for a financial guarantee given by the Company as set out in note 32, the Group does not provide any other guarantees which would expose the Group or the Company to credit risk. The maximum exposure to credit risk in respect of this financial guarantee at the Company’s statement of financial position is disclosed in note 32. Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade and other receivables are set out in note 24. Bank loans 1,176 1,176 13,209 15,561 10,344 39,493 18,072 13,209 70,774 65,557 Within 1 year or on demand HK$’000 At 31 December 2013 More than More than Total 1 year but 2 years but contractual less than less than undiscounted 2 years 5 years cash flow HK$’000 HK$’000 HK$’000 Carrying amount HK$’000 Trade and other payables Profit guarantee liabilities Finance lease liabilities Loans payables Loan from a director and controlling shareholder Bank loans 33,265 5,308 24 – – 1,268 – – 24 17,766 – 1,268 – – 83 – 52,500 15,504 33,265 5,308 131 17,766 52,500 18,040 33,265 5,308 131 17,766 50,000 11,756 39,865 19,058 68,087 127,010 118,226 48,218 – 52,500 100,718 98,218 As at 31 December 2014 and 2013, it was not probable that the counter parties to the financial guarantee will claim under the contracts. Consequently, the carrying amount of the financial guarantee contract of approximately HK$50.0 million (2013: approximately HK$70.0 million) has not been presented above. Guarantee given to bank in respect of banking facilities granted to an associate 1,176,000 2017 1,176,000 2017 (iii) Currency risk Presently, there is no hedging policy with respect to the foreign exchange exposure. The Group’s transactional currency are HK$, Renminbi (“RMB”), Canadian dollars and United States dollars as substantially all the turnover from continuing operations are in RMB, Canadian dollars and United States dollars. The Group’s and the Company’s transactional foreign exchange exposure was insignificant. (iv) Interest rate risk The market risk exposure of the Group is the changes in interest rates. The Group has no significant interest-bearing assets and liabilities. Accordingly, the Group’s income and operating cash flows are substantially independent of changes in market interest rate. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 4. FINANCIAL INSTRUMENTS (CONTINUED) (b) Financial risk management and fair values (continued) (v) Fair value The fair values of the Group’s financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices or rates from observable current market transactions. The directors of the Company (“Director(s)”) consider that the carrying amounts of the financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements are not materially different from their fair values as at 31 December 2014 and 2013. The Group does not have any financial instrument that is measured subsequent to initial recognition at fair value. (vi) Other price risk The Group is exposed to other price risk mainly through the cost of fuel oil. The Group manages this exposure by entering into an agreement with the lessee of the cruise ship for reimbursement of fluctuation of price of fuel oil while its price is over a certain amount. The other price risk is minimal as the Group has disposed of the cruise ship during the year. 5. ACCOUNTING ESTIMATES AND JUDGEMENTS (a) Key sources of estimated uncertainty In the process of applying the Group’s accounting policies which are described in note 2, management has made certain key assumptions concerning the future, and other key sources of estimated uncertainty at the end of the reporting period, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, as discussed below: (i) Impairment of property, plant and equipment and freehold land and buildings The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset, which requires significant judgement relating to the level of revenue and the amount of operating costs. The Group uses all readily available information in determining an amount that is a reasonable approximation of the recoverable amount, including estimates based on reasonable and supportable assumptions and projections of revenue and operating costs. Changes in these estimates could have a significant impact on the carrying amount of the assets and could result in additional impairment charge or reversal of impairment in future periods. (ii) Impairment of receivables The Group maintains impairment allowance for doubtful accounts based upon evaluation of the recoverability of the trade receivables and other receivables, where applicable, at the end of each reporting period. The estimates are based on the aging of the trade receivables and other receivables balances and the historical write-off experience, net of recoveries. If the financial condition of the debtors were to deteriorate, additional impairment allowance may be required. (iii) Impairment of goodwill The Group performs annual test on whether there has been impairment of goodwill in accordance with the accounting policy stated in note 2(i). The recoverable amounts of CGUs are determined based on value in use calculations. These calculations require the use of estimates and assumptions made by management on the future operation of the business, pre-tax discount rates, and other assumptions underlying the value in use calculations. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 5. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (a) Key sources of estimated uncertainty (continued) (iv) Impairment of intangible assets The Group performs annual test on whether there has been impairment of intangible assets in accordance with the accounting policy stated in note 2(i). The recoverable amounts of CGUs are determined based on value in use calculations. These calculations require the use of estimates and assumptions made by management on the future operation of the business, pre-tax discount rates, and other assumptions underlying the value in use calculations. (v) Amortisation of intangible assets Intangible assets are amortised on a straight-line basis over their estimated useful lives. The determination of the useful lives involves management’s estimation. The Group reassesses the useful life of the intangible assets and if the expectation differs from the original estimate, such a difference may impact the amortisation in the year and the estimate will be changed in the future period. (b) Critical accounting judgements in applying the Group’s accounting policies In determining the carrying amounts of some assets and liabilities, the Group makes assumptions for the effects of uncertain future events on those assets and liabilities at the end of each reporting period. These estimates involve assumptions about such items as cash flows and discount rates used. The Group’s estimates and assumptions are based on historical experience and expectations of future events and are reviewed periodically. In addition to assumptions and estimations of future events, judgements are also made during the process of applying the Group’s accounting policies. (i) Impairment test for interests in associates The Group completed its annual impairment test for interests in associates by comparing the recoverable amount of interests in associates to its carrying amount as at 31 December 2014. The Group has engaged Roma Appraisals Limited (“Roma”), an independent professional valuer, who has among their staff, fellow members of the Hong Kong Institute of Surveyor, to carry out a valuation of the interests in associates as at 31 December 2014 based on the value in use calculations. This valuation uses cash flow projections based on financial estimates covering a five-year period, and a pre-tax discount rate of 14.86% (2013: 17.00%). The cash flows beyond the five-year period are extrapolated using a steady 5.25% (2013: 4.28%) growth rate for the casino and hotel industries in which are operated by associates. Management has considered the above assumptions and valuation and also taken into account the business plan going forward. The valuation depends upon an estimate of future cash flows from the interests in associates and other key assumptions, which are based on the Directors’ best estimates. The valuation is sensitive to these parameters. Changes in these parameters could lead to a material revision of the valuation which may have effects on the net assets and results of the Group. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 5. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (b) Critical accounting judgements in applying the Group’s accounting policies (continued) (ii) Maruhan Put Option On 1 October 2007, Golden Sun Profits Limited (“Golden Sun”), an indirect subsidiary of the Company, as vendor and the Company as Golden Sun’s guarantor entered into a sale and purchase agreement with Maruhan Corporation (“Maruhan”), a then independent third party, as purchaser regarding (i) the disposal of 10.2% interest of the entire issued share capital (the “World Fortune Sale Shares”) of World Fortune Limited (“World Fortune”), a subsidiary of Golden Sun; and (ii) the assignment of all rights, title, interests and benefits of and in the shareholder’s loan of approximately HK$66,468,000 due by World Fortune to Golden Sun for a total consideration of approximately HK$208,501,000 (the “World Fortune Disposal”). The World Fortune Disposal was completed on 29 October 2007. On the date of completion of the World Fortune Disposal, Golden Sun, the Company, Maruhan and World Fortune entered into a shareholders’ agreement (the “World Fortune Shareholders’ Agreement”). Pursuant to the terms of the World Fortune Shareholders’ Agreement, (i) Golden Sun, in consideration of HK$1 paid by Maruhan, granted to Maruhan the right to require Golden Sun to purchase or procure the purchase of Maruhan’s entire equity interest in World Fortune and the entire amount of shareholder’s loan provided by Maruhan to World Fortune (the “Maruhan Put Option”); and (ii) Maruhan shall advance to World Fortune a further sum of approximately HK$116,369,000 by way of shareholder’s loan to World Fortune which would on-lend the same to Pier 16 – Property Development Limited (“Pier 16 – Property Development”) for the purpose of financing and completing the development of Ponte 16, the integrated casino-entertainment resort. The Maruhan Put Option shall be exercised at any time on any business day during the period commencing from the fifth anniversary of 29 October 2007, the date of entering into the World Fortune Shareholders’ Agreement, and ending on the day falling six months thereafter. The Maruhan Put Option purchase price shall be determined based on Maruhan’s effective interest of 4.998% in the properties held by Pier 16 – Property Development (the “Property”) and with reference to a 30% discount to the then prevailing market value of the Property to be determined by an independent professional valuer to be agreed by the shareholders of World Fortune. If the value of the Property as determined by the said valuer after taking into account a 30% discount exceeds HK$6,500 million or is below HK$3,900 million, the Maruhan Put Option purchase price shall be calculated with reference to HK$6,500 million or HK$3,900 million (as the case may be) and to be settled as to 50% by cash and 50% by allotment and issue of new shares by the Company. The Directors considered that after the completion of the World Fortune Disposal, the Group still retains substantially all the risks and rewards of ownership of the World Fortune Sale Shares. Therefore, the Group continues to account for World Fortune as a wholly-owned subsidiary of the Company. The consideration of approximately HK$208,501,000 received has been recognised as liabilities and classified under loans payables and long-term payables in the consolidated statement of financial position. As the Group does not have the unconditional rights to avoid settlement under the Maruhan Put Option, the Group has to recognise the relevant financial liabilities at the amount of the present value of the estimated future cash outflows when it is required to acquire the World Fortune Sale Shares. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 5. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (b) Critical accounting judgements in applying the Group’s accounting policies (continued) (ii) Maruhan Put Option (continued) Reference was made to the Company’s announcements dated 18 February 2013 and 28 March 2013 as well as the Company’s circular dated 29 April 2013. In May 2013, Golden Sun completed its acquisition of the legal and beneficial ownership of the entire equity interest of Maruhan in World Fortune together with the entire amount of the shareholder’s loans provided by Maruhan to World Fortune pursuant to the exercise of option by Maruhan. The details please refer to note 39(b) of the consolidated financial statements. (iii) SBI Macau Put Option On 7 July 2008, Favor Jumbo Limited (“Favor Jumbo”), an indirect wholly-owned subsidiary of the Company, as vendor and the Company as Favor Jumbo’s guarantor entered into a sale and purchase agreement with SBI Macau Holdings Limited (“SBI Macau”), an independent third party, as purchaser regarding (i) the disposal of 910 shares (the “Golden Sun Sale Shares”) of Golden Sun, being 4.55% of the entire issued share capital of Golden Sun, a subsidiary of Favor Jumbo; and (ii) the assignment of all rights, title, interests and benefits of and in 4.55% of the entire amount of the interest-free shareholder’s loan due by Golden Sun to Favor Jumbo at face value which amounting to approximately HK$39,486,000 (collectively the “Golden Sun Disposal”). The total consideration for the Golden Sun Disposal was HK$130.0 million. In addition, Favor Jumbo guaranteed that SBI Macau shall be entitled to a return of not less than HK$9.1 million for each full fiscal year for a period of sixty successive months immediately after the date of completion of the Golden Sun Disposal. The details of the profit guarantee liabilities have been set out in note 29 to the consolidated financial statements. The Golden Sun Disposal was completed on 8 August 2008. On the date of completion of the Golden Sun Disposal, Favor Jumbo, the Company, SBI Macau, SBI Holdings, Inc. (SBI Macau’s holding company) and Golden Sun entered into a shareholders’ agreement (the “Golden Sun Shareholders’ Agreement”). Pursuant to the terms of the Golden Sun Shareholders’ Agreement, Favor Jumbo, in consideration of HK$1 paid by SBI Macau, granted to SBI Macau the right to require Favor Jumbo to purchase or procure the purchase of the entire equity interest in Golden Sun and the entire amount of the shareholder’s loan owing by Golden Sun to SBI Macau (the “SBI Macau Put Option”). The SBI Macau Put Option purchase price shall be HK$99,465.77 per ordinary share in the share capital of Golden Sun held by SBI Macau as at completion of the SBI Macau Put Option plus the face value of the entire amount of the shareholder’s loan owing by Golden Sun to SBI Macau as at completion of the SBI Macau Put Option, and the reserve as calculated in accordance with the terms of the Golden Sun Shareholders’ Agreement. The SBI Macau Put Option can be exercised at any time on any business day during the period commencing from the fifth anniversary of 8 August 2008, the date of entering into the Golden Sun Shareholders’ Agreement, and ending on the day falling two months thereafter. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 5. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) (b) Critical accounting judgements in applying the Group’s accounting policies (continued) (iii) SBI Macau Put Option (continued) The Group may need to settle a sum being HK$130.0 million plus reserves as calculated in accordance with the terms of the Golden Sun Shareholders’ Agreement, of which 50% will be settled by cash and the balance by allotment and issue of new shares, provided that the Company would be able to comply with minimum public float requirements under the Listing Rules after the issuance of the new shares, the number of shares to be issued would be reduced and the outstanding balance would be settled in cash accordingly, if the SBI Macau Put Option is exercised. The Directors considered that after the completion of the Golden Sun Disposal, the Group still retains substantially all the risks and rewards of ownership of the Golden Sun Sale Shares. Therefore, the Group accounts for Golden Sun as a wholly-owned subsidiary of the Company. The consideration of HK$130.0 million received has been recognised as liabilities and classified under profit guarantee liabilities, the loans payables and long-term payables in the consolidated statement of financial position. As the Group does not have the unconditional rights to avoid settlement under the SBI Macau Put Option, the Group has to recognise the relevant financial liabilities at the amount of the present value of the estimate future cash outflow when it is required to acquire the Golden Sun Sale Shares. Reference was made to the Company’s announcements dated 6 September 2013 and 3 October 2013. In October 2013, Favor Jumbo completed its acquisition of the legal and beneficial ownership of the entire equity interest of SBI Macau in Golden Sun and the entire amount of the shareholder’s loan owing by Golden Sun to SBI Macau pursuant to the exercise of option by SBI Macau. The details please refer to note 39(c) of the consolidated financial statements. 6. SEGMENT INFORMATION Operating segments are identified on the basis of internal reports which provide information about components of the Group. This information are reported to and reviewed by the CODM for the purposes of resource allocation and performance assessment. The CODM consider the business from both geographic and service perspective. The Group has presented the following two reportable segments. These segments are managed separately. The travel segment and lottery segment provide different services and require different information technology systems and marketing strategies. The cruise ship leasing and management segment was discontinued for the year ended 31 December 2014. The segment information reported below does not include any amounts for this discontinued operation, which are described in more detail in note 15 to the consolidated financial statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 6. SEGMENT INFORMATION (CONTINUED) (a) Segment results, assets and liabilities The travel reportable operating segment derives their revenue primarily from sales of air tickets and provision of travel-related services. Geographically, management considers the performance of the travel business in North America. The lottery reportable operating segment provides lottery sales agency services to the lottery market in the People’s Republic of China (“PRC”) through the subsidiaries of a joint venture company of the Company. For the purposes of assessing segment performance and allocating resources between segments, the Group’s CODM monitors the results, assets and liabilities attributable to each reportable segment on the following basis: Segment profit represents the profit from each segment without allocation of corporate administrative costs such as directors’ salaries, share of results of associates and joint ventures, investment income and corporate finance costs. To arrive at reportable segment profit, the management additionally provide segment information concerning interest income, finance costs and major non-cash items such as depreciation, amortisation and impairment losses derived from reportable segments. Unallocated corporate income mainly comprises amortisation on financial guarantee contract, management fee income from an associate and other sundry income. This is the measure reported to the CODM for the purposes of resource allocation and performance assessment. Taxation credit is not allocated to reportable segments. Revenue and expenses are allocated to the reportable segments with reference to sales generated by those segments and the expenses incurred by those segments. The revenue from external parties reported to the CODM is measured in a manner consistent with that in the consolidated statement of profit or loss. All assets are allocated to reportable segments other than tax recoverable, interests in associates and joint ventures. Unallocated corporate assets mainly include part of the property, plant and equipment, cash and cash equivalents of the central administration companies. All liabilities are allocated to reportable segments other than deferred tax liabilities and corporate liabilities. Unallocated corporate liabilities mainly include profit guarantee liabilities, loans payables, financial guarantee contracts, loan from a director and controlling shareholder and part of other payables borne by the central administration companies. Consolidated profit for the year 73,470 11,770 Travel At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Lottery At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Total At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Reportable segment assets 48,082 69,450 138,224 38,577 186,306 108,027 Assets relating to cruise ship leasing and management (now discontinued) 51,240 90,346 Unallocated corporate assets – Interests in associates 937,820 947,774 – Interests in joint ventures 1,562 1,716 – Tax recoverable 7 381 – Corporate assets 28,802 51,063 1,205,737 1,199,307 Reportable segment liabilities Liabilities relating to cruise ship leasing and management (now discontinued) Unallocated corporate liabilities – Deferred tax liabilities – Corporate liabilities 30,837 37,353 31,889 15,581 62,726 774 488 52,182 52,934 7,948 526 128,350 116,170 189,758 Sales of air tickets 1,036,597 1,358,110 Travel and related service fee income 66,947 72,072 Lottery commission and services income 201,125 70,600 1,304,669 1,500,782 (d) Geographical information The following is an analysis of geographical location of (i) the Group’s revenue from external customers; and (ii) the Group’s non-current assets. The geographical location of customers refers to the location at which the services were provided. The Group’s non-current assets included property, plant and equipment, goodwill, intangible assets, interests in associates and joint ventures. The geographical location of property, plant and equipment is based on the physical location of the asset under consideration. In the case of intangible assets and goodwill, it is based on the location of operations to which these intangibles are allocated. In the case of interests in associates and joint ventures, it is based on the location of operations of such associates and joint ventures. 7. TURNOVER The principal activities of the Group are travel-related business and provision of sales agency services of lottery in PRC. Turnover represents travel-related agency service fee income as well as lottery commission and services income. The amount of each significant category of revenue recognised in turnover during the year is as follows: 2014 2013 Continuing operations HK$’000 HK$’000 Lottery commission and services income 201,125 70,600 Travel-related agency service fee income – Sales of air tickets 1,036,597 1,358,110 – Travel and related service fee income 66,947 72,072 1,103,544 1,430,182 1,304,669 1,500,782 Reversal of impairment loss recognised on other receivable* (note 24(b)) 264 – 20,323 103,444 Total 30,013 110,000 # It represented cash received from unconditional grants by the local government to encourage the business operations in the PRC. Government grants are recognised in profit or loss when received. * It represented impairment on debts due by a debtor which has been long-outstanding. The Directors considered that the amounts due could not be recovered. Therefore, full impairment has been made in the previous years. During the year, the debtor has made repayment in respect of such long-outstanding amount, therefore, the reversal of impairment loss was recognised for the year (note 24(b)). (c) Other operating expenses Loss on derecognition of a long-term payable Impairment loss recognised on – goodwill – intangible assets – other receivable (d) Other items Auditors’ remuneration – audit services – other services Amortisation on intangible assets Bad debts written off Depreciation on owned property, plant and equipment Depreciation on leased property, plant and equipment Operating lease rentals – properties – plant and machinery – – 16,380 1,374 280 328 2,163 3,076 15 9,791 674 71,842 2,549 213 268 74,872 1,500 280 356 354 3,411 18 9,643 696 Loss on disposal of property, plant and equipment 2 – Continuing operations HK$’000 HK$’000 Profit before taxation from continuing operations 73,470 11,597 Notional tax on loss before tax, calculated at the tax rates applicable to loss in the countries concerned (9,521) Tax effect of share of results of associates 14,528 8,417 Tax effect of share of results of joint ventures 57 61 Tax effect of non-deductible expenses 2,709 17,054 Tax effect of non-taxable revenue (3,582) (17,236) Tax effect of unrecognised tax losses (12,004) 807 Unrecognised temporary differences (175) 245 Tax credit for the year – (173) HIGHEST EMOLUMENTS (a) Five highest paid individuals The five individuals with the highest emoluments, none (2013: one) is a director whose emoluments is disclosed in note 11. The aggregate of the emoluments in respect of the other five (2013: four) individuals, included one (2013: one) of senior management, are as follows: 2014 2013 HK$’000 HK$’000 Salaries, allowances and other benefits 4,952 4,135 Retirement benefit scheme contributions 84 59 5,036 4,194 The emoluments of the five (2013: four) individuals with the highest emoluments are within the following band: Number of individuals 2014 2013 Nil – HK$1,000,000 4 3 HK$1,000,001 to HK$1,500,000 – 1 HK$1,500,001 to HK$2,000,000 1 – million and the disposal was completed in August 2014. The operation of the cruise ship represented the entire business segment of cruise ship leasing and management of the Group and therefore the cessation of the business was treated as discontinued operation in these consolidated financial statements in accordance with HKFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. The comparative consolidated statement of profit or loss, profit before taxation stated in these consolidated financial statements and the relevant disclosure notes for profit or loss items are re-presented for discontinued operation in the current year. charging/(crediting) the following: 2014 2013 HK$’000 HK$’000 Auditors’ remuneration – audit services 100 128 Cost of inventories 19,617 31,332 Staff costs 17,524 23,126 Depreciation on property, plant and equipment 3,314 6,040 Gain on disposal of property, plant and equipment (45,150) – Interest income (100) (57) Net exchange gain (106) (163) Operating lease rentals – properties 271 401 Reimbursement on cost of fuel oil (1,785) (3,467) Reversal of impairment loss recognised on other receivable (note 24(b)) – (3,864) Other information: Addition to non-current assets 958 424 (c) Cash flows from discontinued operation: 2014 HK$’000 2013 HK$’000 Net cash (outflow)/inflow from operating activities (1,239) 9,205 2014 2013 HK$’000 HK$’000 Profit: Profit for the year attributable to the owners of the Company 96,890 18,644 Less: profit for the year attributable to the owners of the Company from discontinued operation (24,372) (261) 72,518 18,383 The denominators used are the same as those detailed above for both basic and diluted earnings per share. Diluted earnings per share for the years ended 31 December 2014 and 2013 was the same as the basic earnings per share. There were no potential dilutive ordinary shares outstanding for both years presented. (c) From discontinued operation: The calculation of the basic earnings per share from discontinued operation attributable to the owners of the Company is based on the following data: 2014 2013 HK$’000 HK$’000 Profit: Profit for the year attributable to the owners of the Company from discontinued operation 24,372 261 Exchange alignment (1,371) – (350) – (652) (42) – (2,415) At 31 December 2014 17,528 – 5,472 – 11,426 2,673 4,700 41,799 Accumulated depreciation At 1 January 2013 1,109 42,120 3,626 13,580 3,723 1,652 4,700 70,510 Charge for the year 444 4,680 1,287 1,339 1,533 186 – 9,469 Written back on disposals – – (10) – (36) – – (46) Exchange alignment (100) – (153) – (458) (34) – (745) At 31 December 2013 and 1 January 2014 1,453 46,800 4,750 14,919 4,762 1,804 4,700 79,188 Charge for the year 419 2,730 661 566 1,753 276 – 6,405 Written back on disposals – (49,530) (1,121) (15,485) (2,703) (59) – (68,898) Exchange alignment (130) – (285) – (545) (33) – (993) At 31 December 2014 1,742 – 4,005 – 3,267 1,988 4,700 15,702 Carrying amount At 31 December 2014 15,786 – 1,467 – 8,159 685 – 26,097 At 31 December 2013 17,446 46,800 1,756 1,992 6,617 274 – 74,885 At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Freehold land and building held outside Hong Kong 15,786 17,446 At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Cruise ship management CGU – 1,313 At 31 December 2014 HK$’000 At 31 December 2013 HK$’000 South China Sea, other than in Hong Kong – 1,313 The recoverable amount of the CGU is determined on value in use calculations. These calculations use cash flow projections based on the financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business in which the CGU operates. The goodwill in the cruise ship management CGU had been fully impaired for the year ended 31 December 2014 as the Group has disposed of the cruise ship during the year (note 15). Growth rate of zero and pre-tax discount rate of 5% were used in the value in use calculation of cruise ship management CGU as at 31 December 2013. An impairment loss of approximately HK$1,313,000 was recognised for the year ended 31 December 2014 (2013: nil). The travel CGU had been fully impaired in 2013 as its recoverable amount was lower than its carrying amount based on value in use calculation. Growth rate of 2% and pre-tax discount rate of 14.17% were used in the value in use calculation of travel CGU as at 31 December 2013. At 31 December 2014 (13,745) (8,126) (21,871) Carrying amount At 31 December 2014 15,327 – 15,327 At 31 December 2013 31,144 3,383 34,527 Trademark In accordance with HKAS 36 “Impairment of Assets” (“HKAS 36”), the Group completed its annual impairment test for the trademark by comparing its recoverable amount to its carrying amount as at 31 December 2014. The Group has conducted a valuation of the trademark based on the value in use calculations. With reference to the valuations carried out by Roma, the recoverable amount of the trademark is lower than its carrying amount. The recoverable amount of trademark was reduced equivalent to approximately HK$15,327,000 (31 December 2013: equivalent to approximately HK$31,144,000). Therefore, an impairment loss equivalent to approximately HK$13,567,000 has been recognised for the year ended 31 December 2014 (2013: equivalent to approximately HK$190,000). The recognition of impairment loss is mainly contributed by the decrease in revenue as previously expected due to a more competitive environment of the travel industry. Any adverse change in the assumptions used in the calculation of the recoverable amount would result in further impairment loss. The valuation of the trademark is based on the relief-from-royalty method and uses cash flow projections based on financial estimates covering a five-year period, the expected sales deriving from the trademark in the travel CGU and a pre-tax discount of 15.62% (2013: 18.01%). The cash flows beyond the five-year period are extrapolated using a steady 1.64% (2013: 2%) growth rate. This growth rate does not exceed the long-term average growth rate for travel markets in which the Group operates. Management has considered the above assumptions and valuation and also taken into account the business plan going forward. Unlisted shares, at cost 40,655 40,655 Deemed capital contribution 99,978 99,978 Amounts due from subsidiaries 1,540,335 1,525,980 1,680,968 1,666,613 Less: impairment loss# (380,941) (333,634) 1,300,027 1,332,979 # After considering the accumulated losses and net liabilities positions of the relevant subsidiaries, the Directors are of the opinion that an additional impairment loss of approximately HK$47.3 million (2013: approximately HK$83.3 million) has been recognised for the year ended 31 December 2014. As stated in note 21(e) to the consolidated financial statements, the Group has engaged Roma to carry out a valuation on the interests in associates based on value in use calculations. The recoverable amount of the interests in associates is higher than its carrying amount, therefore, the Directors considered that there is no impairment loss on interests in associates except for the reduction in the carrying amount of the deemed capital contribution for the year. On this basis, the Directors considered that no impairment should be made for the investments in those subsidiaries which held the interests in associates. The valuation depends upon an estimate of future cash flows from the interests in associates and other key assumptions on the growth of the business, which is based on the Directors’ best estimates. The valuation is sensitive to these parameters. Changes in these parameters could lead to a material revision of the valuation which may have effects on the Directors’ impairment assessment on investments in those subsidiaries which held the interests in associates. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 20. INVESTMENTS IN SUBSIDIARIES (CONTINUED) (a) The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the Group. The class of shares held is ordinary unless otherwise stated. All of these are controlled subsidiaries as defined under note 2(c) and have been consolidated into the financial statements of the Group. Proportion of ownership interest Place of Particulars of Group’s Held incorporation/ issued shares and effective by the Held by Principal Name of subsidiary operations paid up share capital interest Company subsidiaries activities % % % Macau Success (Hong Kong) Hong Kong 10,000,000 shares/ 100 100 – Investment holding Limited (note (i)) HK$1,076,000 Favor Jumbo British Virgin Islands 100 shares of US$1 each 100 – 100 Investment holding Golden Sun British Virgin Islands 20,000 shares of US$1 each 100 – 100 Investment holding Macau Success Management Hong Kong 100 shares/HK$100 100 – 100 Provision of Services Limited administration services World Fortune Hong Kong 1,000 shares/HK$1,000 100 – 100 Investment holding 665127 British Columbia Ltd. Canada 9,400 common shares Approx. 85 – Approx. 85 Investment holding (“665127 BC Ltd.”) without par value Jade Travel Ltd. (“Jade Travel Canada 15,000 class “A” non-voting Approx. 85 – Approx. 85 Wholesale and retail (Canada)”) special shares of CAD business of selling 1,500,000 and airline tickets and 7 common shares tour packages without par value Jade Travel Ltd. United States of America 100 common shares without Approx. 85 – Approx. 85 Wholesale and retail par value business of selling airline tickets and tour packages 上海德彩置佳科技服務有限公司 PRC HK$25,000,000 paid up 80 – 80 Provision of technical (“德彩置佳”) (note (ii)) capital support 致勝盈彩網絡科技有限公司 PRC RMB50,000,000 paid up 80 – 80 Provision of (“致勝盈彩”) (note (iii)) capital technology service platform and sales agency services of lottery Capture Success Limited British Virgin Islands/ 100 shares of US$1 each 55 – 55 Cruise ship leasing South China Sea, other than in Hong Kong Hover Management Limited Hong Kong/South China Sea, 100 shares/HK$100 55 – 55 Provision of cruise other than in Hong Kong ship management services Notes: (i) In accordance with the transitional provisions set out in section 37 of Schedule 11 to the Companies Ordinance, on 3 March 2014, any amount standing to the credit of the capital redemption reserve account has become part of the company’s share capital. (ii) 德彩置佳 is a wholly foreign owned enterprise established in the PRC, the Group had 80% of controlling interest for this company. (iii) 致勝盈彩 is formerly known as 上海德彩譽富網絡科技有限公司. 致勝盈彩 is a limited liability company established in the PRC, the Group had 80% of controlling interest for this company. Revenue 1,108,630 1,435,641 Expenses (1,124,285) (1,448,948) Loss for the year (13,307) Other comprehensive expenses (1,663) Loss and total comprehensive loss for the year (16,110) (14,970) Net cash outflow from operating activities (14,777) (5,562) Net cash (outflow)/inflow from investing activities (69) 1,272 Net cash outflow from financing activities 14,312 3,519 Net cash outflow (534) (771) Current assets Non-current assets Current liabilities 51,196 45 773 40,184 50,912 8,191 2014 HK$’000 2013 HK$’000 Revenue 103,254 91,551 Expenses (58,942) (91,076) Net cash (outflow)/inflow from operating activities (1,239) 9,205 Net cash inflow/(outflow) from investing activities 90,940 (368) Net cash outflow from financing activity (76,000) – Net cash inflow 13,701 8,837 Net liabilities of the associates (548,407) Proportion of the Group’s ownership interest 49% 49% Share of net liabilities of the associates (268,719) Goodwill 19,409 19,409 Effect of fair value adjustments at acquisition 240,687 240,687 Deemed capital contribution 99,978 99,978 Amounts due from associates (note 42(b)) 758,419 856,419 937,820 947,774 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 21. INTERESTS IN ASSOCIATES (CONTINUED) (a) The following list contains only the particulars of associates, all of which are unlisted corporate entities, which principally affected the results or assets of the Group: Proportion of ownership interest Place of Particulars of Group’ s Held incorporation/ issued and paid up effective by the Held by a Principal Name of associate operations share capital interest Company subsidiary activity % % % Pier 16 – Property Development Macau 100,000 shares of 49 – 49 Property holding (note) MOP100 each Note: As at 31 December 2014 and 2013, Pier 16 – Property Development held the equity interests of the following companies with the details as below: Proportion of effective interest held by Place of Particulars of Pier 16 – incorporation/ issued and paid up Property Name of associate operations share capital Development Principal activity % Pier 16 – Entertainment Macau 2 shares of MOP24,000 100 Provision of management Group Corporation Limited and MOP1,000 respectively services for casino operations Pier 16 – Gaming Promotion, Macau 1 share of MOP50,000 100 Provision of gaming promotion Limited services Pier 16 – Management Limited Macau/Hong Kong 2 shares of MOP24,000 100 Hotel management and Macau and MOP1,000 respectively (b) The deemed capital contribution is referenced to the financial guarantee contract (note 32) granted by the Group to the associates. (c) Goodwill Because goodwill is included in the carrying amount of the interests in associates and is not separately recognised, it is not tested for impairment separately by applying the requirements for impairment testing in HKAS 36. Instead, the entire carrying amount of the interests in associates is tested for impairment as set out in note 21(d) below. Non-current assets 1,857,287 2,168,606 Current assets 495,777 721,447 Current liabilities (422,085) (502,678) Non-current liabilities (2,299,699) (2,935,782) Net liabilities (368,720) (548,407) 2014 2013 HK$’000 HK$’000 Revenue 1,119,254 1,075,280 Other revenue and gains 25,925 23,559 Profit 179,687 104,110 HK$’000 HK$’000 Net assets of the joint venture 8,325 7,459 Less: Non-controlling interests (5,541) (5,367) Net assets attributable to owners of joint venture 2,784 2,092 Proportion of the Group’s ownership interest 50% 50% Share of net assets of the joint venture 1,392 1,046 Amount due from a joint venture (note 42(b)) 10,870 11,370 Impairment loss (10,700) (10,700) 1,562 1,716 (a) Details of the Group’s interests in the joint ventures are as follows: Form of Particulars of Group’s business Place of issued and paid up effective Principal Name of joint venture structure incorporation share capital interest activity Surplus Win Enterprises Incorporated British Virgin Islands 2 shares of US$1 each 50% Investment holding Limited (note) Note: As at 31 December 2014 and 2013, Surplus Win Enterprises Limited held 80% effective interests in Double Diamond International Limited (“Double Diamond”), a company incorporated in the British Virgin Islands with limited liability. The principal activity of Double Diamond is operation of pier. The amount due from a joint venture is unsecured, interest-free and has no fixed terms of repayment. Profit for the year 866 920 23. INVENTORIES The Group At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Fuel oil – 1,522 The analysis of the amount of inventories recognised as an expense and included in consolidated statement of profit or loss under discontinued operation is as follows: 2014 2013 HK$’000 HK$’000 Carrying amount of inventories used (note 15(b)) 19,617 31,332 Included in trade and other receivables, the aging analysis for trade receivables is as follows: The Group At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Current 30,334 13,862 31 to 60 days overdue 12,827 2,274 61 to 90 days overdue 9,872 2,699 Over 90 days overdue 33,098 602 86,131 19,437 At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Neither past due nor impaired 30,334 13,862 Past due but not impaired – Less than 1 month past due 12,827 2,274 – 1 to 3 months past due 42,970 3,301 55,797 5,575 86,131 19,437 Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default. Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances. deposits carry fixed interest rate of approximately 0.05% to 0.4% per annum (2013: approximately 0.5% to 0.8% per annum). 26. CASH AND CASH EQUIVALENTS The Group The Company At At At At 31 December 31 December 31 December 31 December 2014 2013 2014 2013 HK$’000 HK$’000 HK$’000 HK$’000 Cash and bank balances 65,574 55,908 3,954 8,322 Non-pledged bank deposits 6,000 24,515 – 24,515 Cash and cash equivalents in the consolidated statements of financial position and cash flows 71,574 80,423 3,954 32,837 Deposits with banks carry interest at market rates which is approximately 0.6% per annum for current year (2013: approximately 0.5% to 1.0% per annum). Included in cash and bank balances as at 31 December 2014 is an amount denominated in RMB of approximately RMB2,050,000 (equivalent to approximately HK$2,589,000) (2013: approximately RMB1,888,000, equivalent to approximately HK$2,433,000). Remittance of RMB out of the PRC is subject to exchange restrictions imposed by the PRC government. Current 9,776 8,796 31 to 60 days 550 911 61 to 90 days 228 361 Over 90 days 439 192 10,993 10,260 28. DEFERRED INCOME Deferred income is comprised of a sign-up bonus for an on-line ticket processing system and is recognised as revenue in accordance with the terms of the agreements. In the event the amounts received by SBI Macau from the distribution of the profits of Golden Sun for any fiscal year during the Relevant Period falls short (“Shortfall”) of the higher of the return (the “Return”) as stipulated in the Golden Sun Shareholders’ Agreement or the Guaranteed Amount (pro-rated, if necessary), Favor Jumbo shall pay to SBI Macau such Shortfall within six months from the end of the relevant fiscal year during the Relevant Period. If the aggregate of the Return and the Shortfall payments received by SBI Macau from Golden Sun and/or Favor Jumbo in respect of the Relevant Period exceeds the total Guaranteed Amount (pro-rated, if necessary) for the Relevant Period (the “Excess”), SBI Macau shall refund and pay to Favor Jumbo the lesser of (a) the aggregate amount of the Shortfall paid by Favor Jumbo to SBI Macau during the Relevant Period; and (b) the Excess, within three months upon notice from Favor Jumbo the amount payable by SBI Macau after the expiry of the Relevant Period. In October 2013, the Group has entered into a sale and purchase agreement with SBI Macau to acknowledge the total amount of Return for the Relevant Period and the balance of Return to be settled within six months from 31 December 2013. 31. LOANS PAYABLES Note The Group At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Loans from non-controlling shareholders – Mrs. Yung Yuen Ping Kwok – SABC Holdings Ltd. – Up Fly Limited (“Up Fly”) (i) (ii) (iii) – 9,590 7,306 2,538 7,922 7,306 Amounts shown under non-current liabilities 16,896 17,766 Notes: (i) Mrs. Yung Yuen Ping Kwok (“Mrs. Yung”) was a non-controlling shareholder of 665127 BC Ltd.. In March 2014, Mrs. Yung assigned to (1) 1338 Successful Venture Ltd., being an indirect wholly-owned subsidiary of the Company and the immediate holding company of 665127 BC Ltd., an approximately 85% interest in all of her right, title and interest in and to a debt of CAD300,000 (equivalent to approximately HK$2.2 million) owed by a wholly-owned subsidiary of 665127 BC Ltd. at a consideration of CAD1 (equivalent to approximately HK$7); (2) SABC Holdings Ltd., being another non-controlling shareholder of 665127 BC Ltd., an approximately 15% interest in all of her right, title and interest in and to a debt of CAD300,000 (equivalent to approximately HK$2.2 million) together with a debt of CAD48,000 (equivalent to approximately HK$0.3 million) owed by a wholly-owned subsidiary of 665127 BC Ltd. at a total consideration of CAD2 (equivalent to approximately HK$14). The loan was unsecured and interest-free. For details, please refer to note 39(a) to the consolidated financial statements. (ii) SABC Holdings Ltd. is a non-controlling shareholder of 665127 BC Ltd.. The loan is unsecured, interest-free and not expected to be settled within one year. (iii) Up Fly is a non-controlling shareholder of an 80% indirectly owned subsidiary of the Company, namely Honour Rich China Development Limited (“Honour Rich”). The loan is unsecured, interest-free and not expected to be settled within one year. The carrying amounts of the loans payables are approximately to their fair value. contract was approximately HK$100.0 million at the date of issuance of the financial guarantee contract with corresponding increase in its interests in associates as deemed capital contribution. The carrying amount of the financial guarantee contract recognised in the Group’s consolidated statement of financial position was in accordance with HKAS 39 “Financial Instruments: Recognition and Measurement” and is carries at amortised cost. No provision for financial guarantee contracts have been made at 31 December 2014 and 2013 as the default risk is low. 33. FINANCE LEASE LIABILITIES The Group leases plant and machinery under finance lease. The terms are 6 years with no interest underlying. The future minimum lease payment is as follows: The Group At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Within one year – 24 In the second to fifth years inclusive – 96 Over five years – 11 – 131 Less: Amount shown under current liabilities – (24) Amount shown under non-current liabilities – 107 In July 2014, the Group has fully repaid the outstanding finance lease and recognised a loss on disposal of property, plant and equipment of approximately HK$2,000. Exchange alignment (38) At 31 December 2013 and 1 January 2014 Debited to the consolidated statement of profit or loss Exchange alignment 10(a) 526 – (38) At 31 December 2014 488 The Group At At 31 December 31 December 2014 2013 HK$’000 HK$’000 Net deferred tax liabilities recognised on the consolidated statement of financial position 488 526 (c) Unrecognised deferred tax assets Deferred tax assets are recognised for tax loss carried forward to the extent that the realisation of the related tax benefit through utilisation against future taxable profits is probable. At 31 December 2014, the Group had tax losses of approximately HK$174.7 million (2013: approximately HK$170.0 million) that are available to carry forward indefinitely for offsetting against future taxable profits. Estimated tax losses of approximately HK$35.5 million and HK$25.7 million (2013: approximately HK$50.1 million and HK$5.2 million) will expire within 1 to 5 years and over 5 years respectively. No deferred tax asset has been recognised in respect of the unused tax losses due to the unpredictability of future tax profit streams. Notes Number of shares ’000 Nominal value HK$’000 Authorised: Ordinary shares of HK$0.01 each At 1 January 2013, 31 December 2013, 1 January 2014 and 31 December 2014 160,000,000 1,600,000 Issued and fully paid: Ordinary shares of HK$0.01 each At 1 January 2013 Allotment and issue of consideration shares (a, b) 4,064,940 861,551 40,649 8,616 At 31 December 2013, 1 January 2014 and 31 December 2014 4,926,491 49,265 Notes: (a) The Company issued consideration shares of 550,546,025 new ordinary shares in relation to the World Fortune Acquisition (as defined in note 39(b)) in May 2013. (b) The Company issued consideration shares of 311,004,784 new ordinary shares in relation to the Golden Sun Acquisition (as defined in note 39(c)) in October 2013. The owners of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 37. EMPLOYEE RETIREMENT BENEFITS (a) Defined contribution retirement plan The Group participates in a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income increased from HK$25,000 to HK$30,000 effective from 1 June 2014 (before 1 June 2014: HK$25,000). Contributions to the plan vest immediately. Pursuant to the regulations of the relevant authorities in the PRC, the Group participates in the relevant social retirement benefit schemes (the “PRC Schemes”) whereby the Group is required to contribute to the PRC Schemes to fund the retirement benefits of the eligible employees. Contributions made to the PRC Schemes are calculated based on certain percentages of the applicable payroll costs as stipulated under the requirements in the PRC. The relevant authorities of the PRC are responsible for the entire pension obligations payable to the retired employees. The only obligation of the Group with respect to the PRC Schemes is to pay the ongoing required contributions under the PRC Schemes. The retirement benefit schemes contribution represents gross contributions by the Group to the PRC Schemes operated by the relevant authorities of the PRC. (b) Share Option Schemes During the year, the share option scheme which was adopted by the Company on 20 August 2004 (“2004 Share Option Scheme”) was terminated and a new share option scheme (“2014 Share Option Scheme”) was adopted by the Company. Summaries of the 2004 Share Option Scheme and the 2014 Share Option Scheme are set out below: (i) 2004 Share Option Scheme The Company adopted the 2004 Share Option Scheme on 20 August 2004 for the purpose of providing incentives or rewards to participants for their contribution to the Group or any entity in which the Group holds any equity interest. The 2004 Share Option Scheme was terminated with effect from 10 June 2014. Under the 2004 Share Option Scheme, the Directors are authorised at their absolute discretion to invite participants to take up options to subscribe for Shares. Participants under the 2004 Share Option Scheme include (i) any employee (whether full time or part time and including executive director) of any member(s) of the Group or any entity in which the Group holds any equity interest; (ii) any non-executive director (including independent non-executive director) of any member of the Group or any entity in which the Group holds any equity interest; (iii) any consultant, adviser or agent engaged by any member of the Group or any entity in which the Group holds any equity interest, who is eligible to participate in a share option scheme of the Company; and (iv) any vendor, supplier of goods or services or customer of or to any member of the Group or any entity in which the Group holds any equity interest, who is eligible to participate in a share option scheme of the Company. There is no provision in the 2004 Share Option Scheme to require a grantee to fulfill any performance target or to hold the option for a certain period before exercising the option, but the board of Directors (the “Board”) may at its absolute discretion from time to time provide such requirements in the offer of grant of options. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 37. EMPLOYEE RETIREMENT BENEFITS (CONTINUED) (b) Share Option Schemes (continued) (i) 2004 Share Option Scheme (continued) The maximum number of Shares which may be issued upon exercise of all options to be granted under the 2004 Share Option Scheme and any other share option scheme(s) of the Company shall not in aggregate exceed 10% of the total number of Shares in issue as at the date of adoption of the 2004 Share Option Scheme. The Company may seek approval of its shareholders in general meeting for refreshing the 10% limit under the 2004 Share Option Scheme save that the total number of Shares which may be issued upon exercise of all options to be granted under the 2004 Share Option Scheme and any other share option scheme(s) of the Company under the limit as “refreshed” shall not exceed 10% of the total number of Shares in issue as at the date of approval of the limit. Options previously granted under the 2004 Share Option Scheme and any other share option scheme(s) of the Company (including those outstanding, cancelled, lapsed in accordance with any other share option scheme(s) or exercised options) will not be counted for the purpose of calculating the limit as “refreshed”. Notwithstanding aforesaid in above, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2004 Share Option Scheme and any other share option scheme(s) of the Company must not exceed 30% of the total number of Shares in issue from time to time. The total number of Shares issued and to be issued upon exercise of the options granted and to be granted under the 2004 Share Option Scheme or any other share option scheme(s) adopted by the Company (whether exercised, cancelled or outstanding) to each participant in any 12-month period up to the date of offer shall not exceed 1% of the total number of Shares in issue on the date of offer, unless such grant is approved by the shareholders of the Company in general meeting at which such participant and his or her associates shall abstain from voting. The exercise price in respect of any option granted under the 2004 Share Option Scheme shall be determined by the Board in its absolute discretion but in any event the exercise price shall not be less than the highest of (i) the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the date of offer of the option, which must be a business day; (ii) the average of the official closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange for the five business days immediately preceding the date on which the option is offered; and (iii) the nominal value of a Share. The offer of a grant of share option must be accepted not later than 28 days after the date of offer, upon payment of a consideration of HK$1 by the grantee. The exercise period of the share option granted is determined by the Board, save that such period shall not exceed a period of 10 years commencing on the date upon which the share option is granted. No share options had been granted under the 2004 Share Option Scheme since its adoption and up to the date of its termination. (ii) 2014 Share Option Scheme The 2014 Share Option Scheme was adopted by the Company on 5 June 2014 and became effective on 10 June 2014. Unless early termination by the Company in general meeting or by the Board, the 2014 Share Option Scheme shall be valid and effective for a period of 10 years from the date of its adoption. The purpose of the 2014 Share Option Scheme is to provide incentives or rewards to eligible persons for their contribution to the Group or any entity in which any member of the Group holds any equity interest and any subsidiary of such entity (“Invested Entity”). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 37. EMPLOYEE RETIREMENT BENEFITS (CONTINUED) (b) Share Option Schemes (continued) (ii) 2014 Share Option Scheme (continued) Under the 2014 Share Option Scheme, the Directors are authorised at their absolute discretion to invite eligible persons to take up options to subscribe for Shares. Eligible persons under the 2014 Share Option Scheme include (i) any employee (whether full time or part time and including executive director) of any member(s) of the Group or any Invested Entity; (ii) any non-executive director (including independent non-executive director) of any member of the Group or any Invested Entity; (iii) any consultant, adviser or agent engaged by any member of the Group or any Invested Entity, who is eligible to participate in a share option scheme of the Company; and (iv) any vendor, supplier of goods or services or customer of or to any member of the Group or any Invested Entity, who is eligible to participate in a share option scheme of the Company. There is no provision in the 2014 Share Option Scheme to require a grantee to fulfill any performance target or to hold the option for a certain period before exercising the option, but the Board may at its absolute discretion from time to time provide such requirements in the offer of grant of options. The maximum number of Shares available for issue under options which may be granted under the 2014 Share Option Scheme and any other share option scheme(s) of the Company is 492,649,119 Shares (being not more than 10% of the total number of Shares in issue as at the date of adoption of the 2014 Share Option Scheme (the “Scheme Limit”)), representing approximately 10% of the total number of Shares in issue as at the date of this annual report. The Company may seek approval of its shareholders in general meeting for refreshing the Scheme Limit save that the total number of Shares which may be issued upon exercise of all options to be granted under the 2014 Share Option Scheme and any other share option scheme(s) of the Company under the Scheme Limit so refreshed shall not exceed 10% of the total number of Shares in issue as at the date of such approval (the “New Scheme Limit”). Options previously granted under the 2014 Share Option Scheme and any other share option scheme(s) of the Company (including those outstanding, cancelled, lapsed in accordance with the respective provisions of the scheme(s) of the Company or exercised options) will not be counted for the purpose of calculating the New Scheme Limit. Notwithstanding aforesaid in above, the maximum number of Shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the 2014 Share Option Scheme and any other share option scheme(s) of the Company must not exceed 30% of the total number of Shares in issue from time to time. The total number of Shares issued and to be issued upon exercise of the options granted and to be granted under the 2014 Share Option Scheme or any other share option scheme(s) adopted by the Company (whether exercised, cancelled or outstanding) to each eligible person in any 12-month period up to and including the date of offer shall not exceed 1% of the total number of Shares in issue on the date of offer, unless such grant is approved by the shareholders of the Company in general meeting at which such eligible person and his or her associates shall abstain from voting. The exercise price in respect of any option granted under the 2014 Share Option Scheme shall be a price determined by the Board in its absolute discretion but in any event the exercise price shall not be less than the highest of (i) the closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange on the date of offer of the option, which must be a business day; (ii) the average closing price of the Shares as stated in the daily quotation sheets of the Stock Exchange for the five business days immediately preceding the date on which the option is offered; and (iii) the nominal value of a Share. The offer of a grant of share option must be accepted not later than 28 days after the date of offer, upon payment of a consideration of HK$1 by the grantee. The exercise period of the share option granted is determined by the Board, save that such period shall not exceed a period of 10 years commencing on the date upon which the share option is granted. No share options had been granted under the 2014 Share Option Scheme since its adoption and up to 31 December 2014. 38. RESERVES AND NON-CONTROLLING INTERESTS The Group Attributable to owners of the Company Capital Non-Share Distributable redemption Exchange Other Accumulated controlling Total premium reserve reserve reserve reserve losses Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1 January 2013 1,193,840 52,333 976 752 – (546,916) 700,985 24,361 725,346 Profit/(loss) for the year – – – – – 18,644 18,644 (6,399) 12,245 Other comprehensive loss for the year – – – (2,290) – – (2,290) (140) (2,430) Total comprehensive (loss)/income for the year – – – (2,290) – 18,644 16,354 (6,539) 9,815 Issue of consideration shares at premium (note 36) 225,123 – – – – – 225,123 – 225,123 Acquisition of additional interests in a subsidiary (note 39(d)) – – – – – (7,003) (7,003) 7,003 – At 31 December 2013 1,418,963 52,333 976 (1,538) – (535,275) 935,459 24,825 960,284 At 1 January 2014 1,418,963 52,333 976 (1,538) – (535,275) 935,459 24,825 960,284 Profit for the year – – – – – 96,890 96,890 20,892 117,782 Other comprehensive loss for the year – – – (2,972) – – (2,972) (592) (3,564) Total comprehensive (loss)/income for the year – – – (2,972) – 96,890 93,918 20,300 114,218 Acquisition of additional interests in a subsidiary (note 39(a)) – – – – – (440) (440) 440 – Dividend paid to non-controlling shareholders – – – – – – – (34,200) (34,200) Transfer to other reserve – – (976) – 976 – – – – At 31 December 2014 1,418,963 52,333 – (4,510) 976 (438,825) 1,028,937 11,365 1,040,302 Nature and purpose of reserves (a) Share premium The application of the share premium account is governed by section 40 of the Companies Act 1981 of Bermuda. (b) Exchange reserveThe exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in note 2(q). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 controlling shareholder (the “Share Repurchase”). The Group recognised a decrease in equity attributable to the owners of the Company of approximately CAD62,000 (equivalent to approximately HK$440,000) and a corresponding increase in non-controlling interests at approximately CAD62,000 (equivalent to approximately HK$440,000). Besides, the said non-controlling shareholder assigned to 1338 Successful Venture Ltd., an indirect wholly-owned subsidiary of the Company and the immediate holding company of 665127 BC Ltd., an approximately 85% interest in all of her right, title and interest in and to a debt of approximately CAD300,000 (equivalent to approximately HK$2.2 million) owed by a wholly-owned subsidiary of 665127 BC Ltd. as of the date of the Share Repurchase at a consideration of CAD1 (equivalent to approximately HK$7). The Group recognised a gain on settlement of loans payables of approximately CAD255,000 (equivalent to approximately HK$1.8 million) (note 8). Immediately after the Share Repurchase, the Company increased its effective beneficial interests in 665127 BC Ltd. from 80% to approximately 85%. The Share Repurchase constituted a connected transaction under Chapter 14A of the Listing Rules which was in force in March 2014, but was fully exempt from shareholders’ approval and all disclosure requirements under the said Chapter 14A of the Listing Rules. (b) In February 2013, Golden Sun received a notice from Maruhan in respect of the exercise of the option by Maruhan to require Golden Sun to purchase or procure the purchase of the legal and beneficial ownership of the entire equity interest (being 10.2% equity interest) in World Fortune owned by Maruhan together with the entire amount of the shareholder’s loans provided by Maruhan to World Fortune (collectively the “World Fortune Interest”) pursuant to the terms of the World Fortune Shareholders’ Agreement (as defined in note 5(b)(ii)) (the “World Fortune Acquisition”). The purchase price of the World Fortune Interest of HK$219,117,318 was settled as to HK$109,558,659 by cash and as to HK$109,558,659 by way of allotment and issue of 550,546,025 new ordinary shares of the Company. The World Fortune Acquisition was completed in May 2013. For details of the World Fortune Acquisition, please refer to the Company’s announcement dated 18 February 2013 and 28 March 2013 as well as the Company’s circular dated 29 April 2013. (c) profit or loss which was derived from the difference between the fair value of the purchase price of the Golden Sun Interest and the aggregate of the carrying amount of the outstanding shareholder’s loans from SBI Macau to Favor Jumbo of approximately HK$39.5 million together with the present value of the SBI Macau Put Option of approximately HK$90.5 million. (d) In December 2013, Victory Devotion Limited, a direct wholly-owned subsidiary of the Company, acquired 10% equity interest in Honour Rich from Up Fly, at a consideration of an amount equivalent to HK$7.8 (the “Honour Rich Acquisition”). The Company increased its effective beneficial interest in Honour Rich from 70% to 80% after the Honour Rich Acquisition. 40. COMMITMENTS (a) There is no capital commitments outstanding at 31 December 2014 not provide for in the consolidated financial statements (2013: nil). (b) At 31 December 2014, the total future minimum lease payments under non-cancellable operating leases are payable as follows: The Group The Company At At At At 31 December 31 December 31 December 31 December 2014 2013 2014 2013 HK$’000 HK$’000 HK$’000 HK$’000 Within one year 6,255 6,144 – – In the second to fifth years, inclusive 6,246 903 – – 12,501 7,047 – – The Group lease certain office premises under operating leases. The leases typically run for period ranging from two to five years. None of leases includes contingent rentals. (b) The outstanding balances with related parties at the end of the reporting period are as follows: The Group At At 31 December 31 December 2014 2013 Note HK$’000 HK$’000 Other receivable from a related party (i) 5,867 5,867 Total emoluments are included in “staff costs” 5,640 5,480 (d) On 1 December 2008, Mr. Yeung, being a Director and a controlling shareholder of the Company, provided a HK$200 million term loan facility to the Company which is unsecured and charged with interest at the prime rate quoted for Hong Kong dollars loans by The Hongkong and Shanghai Banking Corporation Limited. The principal amount of the loan facility was increased up to HK$290 million on 14 April 2009 and the final repayment date of the loan and all other sums owing to Mr. Yeung under the revised loan facility was further extended from 31 October 2014 to 31 October 2016 by a letter agreement dated 21 March 2014. The said loan from Mr. Yeung constitutes a connected transaction under Chapter 14A of the Listing Rules, but is fully exempt from shareholders’ approval and all disclosure requirements under Chapter 14A of the Listing Rules. For further details please refer to note 35 to the consolidated financial statements. (e) A management and services contract entered into between Jade Travel (Canada) and a company controlled by a director of Jade Travel (Canada) in an amount of equivalent to approximately HK$1,730,000 (2013: equivalent to approximately HK$1,833,000) also constitutes a connected transaction under Chapter 14A of the Listing Rules, but is fully exempt from shareholders’ approval and all disclosure requirements under Chapter 14A of the Listing Rules. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2014 43. CAPITAL RISK MANAGEMENT The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholders returns that might be possible with higher level of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions. The Group monitors its capital structure on the basis of debt-to-capital ratio. For this purpose the Group defines debt as total borrowings which are bearing a fixed interest rates such as bank loans (note 30) and loan from a director and controlling shareholder (note 35). Capital represents total equity attributable to owners of the Company in the consolidated statement of financial position. The Group’s strategy was to maintain the debt-to-capital ratio as low as feasible. In order to maintain or adjust the ratio, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. As at 31 December 2014, the debt-to-capital ratio was approximately 1% (2013: approximately 6%). 44. PLEDGE OF ASSETS As at 31 December 2014, the Group has pledged the following assets: (a) The Group pledged the time deposits of approximately HK$9.4 million (2013: approximately HK$9.7 million) to certain banks for the issuance of several bank guarantees as well as a standby letter of credit and overdraft facility of approximately HK$10.6 million (2013: approximately HK$11.6 million) for the operations of the Group; (b) World Fortune pledged all (2013: all) of its shares in Pier 16 – Property Development to a bank, for and on behalf of the syndicate of lenders, in respect of the Syndicated Loan Facilities; and (c) The Group’s self-occupied properties with carrying amount equivalent to approximately HK$15.8 million (2013: equivalent to approximately HK$17.4 million) together with a time deposit equivalent to approximately HK$1.0 million (2013: equivalent to approximately HK$1.1 million) were pledged to bank to secure bank loans to Jade Travel (Canada). 45. COMPARATIVES The comparative statement of profit or loss has been re-presented as the cruise ship leasing and management segment discontinued during the current year. Certain comparative amounts have been reclassified to conform to the current year’s presentation. In the opinion of the Company’s directors, such reclassification provide a more appropriate presentation on the Group’s business segments. 1,500,782 1,554,578 1,398,931 1,375,302 11,597 (40,378) (84,797) (77,552) 173 (471) 1,069 (2,226) 11,770 (40,849) (83,728) (79,778) 475 2,872 (7,761) (1,886) 12,245 (37,977) (91,489) (81,664) 18,644 (33,034) (77,666) (80,782) Non-controlling interest 20,892 (6,399) (4,943) (13,823) (882) Profit/(loss) for the year 117,782 12,245 (37,977) (91,489) (81,664) Earnings/(loss) per share attributable to owners of the Company: From continuing and discontinued operations – Basic and diluted 1.97 HK cents 0.42 HK cents (0.83) HK cents (3.18) HK cents (3.31) HK cents ASSETS AND LIABILITIES 2014 HK$’000 As at 31 December 2013 2012 HK$’000 HK$’000 2011 HK$’000 2010 HK$’000 Total assets 1,205,737 1,199,307 1,343,771 1,407,971 1,475,374 Total liabilities (116,170) (189,758) (577,776) (905,915) (881,823) Net assets 1,089,567 1,009,549 765,995 502,056 593,551 Total equity attributable to owners of the Company 1,078,202 984,724 741,634 470,157 547,890 Non-controlling interests 11,365 24,825 24,361 31,899 45,661 Total equity 1,089,567 1,009,549 765,995 502,056 593,551