THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt as to any aspect of this circular or as to the action you should take, you should consult
your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other
professional adviser.
If you have sold or transferred all your shares in Winsor Properties Holdings Limited, you should at once hand
this circular and the accompanying form of proxy to the purchaser or the transferee or to the bank, licensed
securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected
for transmission to the purchaser or the transferee.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility
for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim
any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the
contents of this circular.
This circular appears for information purpose only and does not constitute an invitation or offer to acquire, purchase
or subscribe for the securities in Winsor Properties Holdings Limited.
(Stock Code: 1036)
(1) GROUP REORGANISATION OF WINSOR
(2) DISTRIBUTION IN SPECIE OF PRIVATECO SHARES AND PAYMENT
OF SPECIAL CASH DIVIDEND
(3) CONNECTED TRANSACTION AND EXEMPT CONTINUING
CONNECTED TRANSACTIONS FOR WINSOR AND SPECIAL DEALS
(4) NEW TENANCY AGREEMENTS
Financial adviser to Winsor Properties Holdings Limited
CIMB Securities Ltd.
Independent Financial Adviser to the
Independent Board Committee and Independent Shareholders
Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed
‘‘Definitions’’ in this circular.
A letter from the Board is set out on pages 10 to 43 of this circular and a letter from the Independent Board
Committee is set out on pages 44 to 45 of this circular. A letter from the Independent Financial Adviser containing
their advice to the Independent Board Committee and the Independent Shareholders is set out on pages 46 to 84 of
this circular.
A notice convening the extraordinary general meeting of the Company to be held at 10:00 am on Monday, 9 July
2012 at 8th Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong is set out
on pages 344 to 351 of this circular. Whether or not you intend to attend the meeting or any adjournment thereof,
please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as
possible and in any event not less than 48 hours before the time appointed for holding the meeting or any
adjournment thereof to the principal place of business of the Company, 8th Floor, AXA Tower, Landmark East, 100
How Ming Street, Kwun Tong, Kowloon, Hong Kong. Completion and return of the form of proxy will not preclude
you from attending and voting at the meeting or any adjournment meeting if you so wish.
20 June 2012
CONTENTS
Page
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . .
44
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . .
46
— INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
85
APPENDIX II
— ACCOUNTANT’S REPORT OF THE COMPANY . . . . . . . . . . . . . . .
96
APPENDIX III
— ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP . . . . . .
164
APPENDIX IV
— MANAGEMENT DISCUSSION AND ANALYSIS ON EACH
OF THE BUSINESS UNDER THE REMAINING GROUP
ENTITIES AND THE DISTRIBUTED BUSINESSES . . . . . . . . . . .
221
— UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
234
— UNAUDITED PRO FORMA FINANCIAL
INFORMATION OF THE PRIVATECO GROUP . . . . . . . . . . . . . .
246
APPENDIX VII — PROPERTY VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
258
APPENDIX VIII — SUMMARY OF THE CONSTITUTION OF PRIVATECO
AND BVI COMPANY LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
312
— GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
328
NOTICE OF EXTRAORDINARY GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . .
344
APPENDIX I
APPENDIX V
APPENDIX VI
APPENDIX IX
–i–
EXPECTED TIMETABLE
Latest time for lodging transfer of Shares to be entitled
to attend and vote at the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Friday,
6 July 2012
Latest time for lodging proxy form for EGM . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Saturday,
7 July 2012
Register of members of the Company closed on . . . . . . . . . . . . . . . . . . . . . . . Monday, 9 July 2012
Record date for the EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 9 July 2012
EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10:00 a.m. on Monday,
9 July 2012
Announcement of the poll results of EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 9 July 2012
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 10 July 2012
Last day for dealing in the Shares cum-entitlement
in the Distribution In Specie and Special Cash Dividend . . . . . . . . . . . . . . . Tuesday, 10 July 2012
First day for dealing in the Shares ex-entitlement
in the Distribution In Specie and Special Cash Dividend . . . . . . . . . . . . . Wednesday, 11 July 2012
Latest time for lodging transfer of Shares to be entitled
to the Distribution In Specie and Special Cash Dividend . . . . . . . . . . . . . . . 4:30 p.m. on Thursday,
12 July 2012
Register of members of the Company closed on . . . . . . . . . . . . . . . . . . . . . . . Friday, 13 July 2012
Record Date for determining entitlements to the Distribution
In Specie and Special Cash Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 13 July 2012
Register of members of the Company re-opens . . . . . . . . . . . . . . . . . . . . . . . Monday, 16 July 2012
Share Sale Completion, completion of the Distribution In Specie
and payment of Special Cash Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 16 July 2012
Listco Offer and Privateco Offer open . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . no later than Monday,
23 July 2012
First closing date of the Listco Offer and Privateco Offer . . . . . . . . . . . . . . . . . no later than Monday,
13 August 2012
Notes:
1.
A detailed timetable on the Listco Offer and the Privateco Offer will be set out in the Listco Offer Document and the
Privateco Offer Document respectively.
2.
Dates and deadlines stated in this circular for events in the timetable are indicative only and may be extended or varied.
Any changes to the expected timetable will be announced as appropriate. All times and dates refer to Hong Kong local time.
– ii –
DEFINITIONS
In this circular, the following expressions shall have the following meanings, unless the context
otherwise requires:
‘‘Access Rich’’
Access Rich Limited, a company incorporated in Hong Kong with
limited liability and an indirect wholly-owned subsidiary of the
Company
‘‘Acquisition’’
the acquisition of the Privateco Shares by Wing Tai pursuant to
the Privateco Offer
‘‘acting in concert’’
has the meaning defined in the Takeovers Code
‘‘associate(s)’’
has the meaning ascribed thereto under the Listing Rules
‘‘Begin Land’’
Begin Land Limited, a company incorporated in Hong Kong with
limited liability and an indirect wholly-owned subsidiary of the
Company before the completion of the Distribution In Specie and
an indirect wholly-owned subsidiary of the Privateco
‘‘Board’’
the board of Directors
‘‘Business Day’’
a day (excluding a Saturday or Sunday and any day on which a
tropical cyclone warning signal no. 8 or above or a ‘‘black’’
rainstorm warning signal is hoisted or remains hoisted in Hong
Kong at any time between 9:00 a.m. to 5:00 p.m.) on which
licensed banks in Hong Kong are open for general banking
business
‘‘BVI’’
the British Virgin Islands
‘‘Chericourt’’
Chericourt Company Limited, a company incorporated in Hong
Kong with limited liability and a direct wholly-owned subsidiary
of WPFSL
‘‘CITIC’’
CITIC Securities Corporate Finance (HK) Limited, a corporation
licensed under the SFO to carry out Type 1 (dealing in
securities), Type 4 (advising on securities) and Type 6 (advising
on corporate finance) regulated activities as defined in schedule 5
of the SFO, and the financial adviser to the Purchaser and the
Offeror
‘‘Combined Cash Exit’’
HK$34 per Share comprising the Special Cash Dividend, the
Listco Offer and the Privateco Offer
‘‘Company’’ or ‘‘Winsor’’
Winsor Properties Holdings Limited, a company incorporated in
the Cayman Islands with limited liability and the issued shares of
which are listed on the main board of the Stock Exchange (Stock
Code: 1036)
–1–
DEFINITIONS
‘‘Deed of Indemnity’’
the deed of indemnity to be executed by Wing Tai in favour of
the Company (for itself and other members of the Remaining
Group) in respect of the indemnification of (i) the tax liabilities
of the Remaining Group arising in respect of the period prior to
the Share Sale Completion, and (ii) any liabilities incurred by the
Remaining Group arising or in connection with the Group
Reorganisation
‘‘Director(s)’’
the director(s) of the Company
‘‘Disposal’’
the disposal of the Shares by Wing Tai to the Purchaser pursuant
to the Share Sale Agreement
‘‘Distributed Businesses’’
all businesses of the Group, other than the business of holding or
relating to the Property, to be carried on by the Privateco Group
‘‘Distribution In Specie’’
the conditional distribution in specie of the Privateco Shares by
the Company to the Shareholders as described in the section
headed ‘‘Distribution In Specie and Payment of Special Cash
Dividend’’ in the Letter from the Board
‘‘East Sun Estate Management’’
East Sun Estate Management Company Limited, a company
incorporated in Hong Kong with limited liability, an indirect
wholly-owned subsidiary of the Company before the completion
of the Distribution In Specie and an indirect wholly-owned
subsidiary of the Privateco
‘‘EGM’’
the extraordinary general meeting of the Company to be held to
consider and, if thought fit, approve the resolutions in respect of
the Distribution In Specie and the Special Cash Dividend, the
Special Deals, the New Tenancy Agreements, and the transactions
contemplated thereunder
‘‘Executive’’
the Executive Director of the Corporate Finance Division of the
SFC and any delegate of the Executive Director
‘‘Further Shares’’
any Shares (other than the Sale Shares) which may be acquired by
Wing Tai prior to the completion of the Listco Offer pursuant to
an agreement entered into between Wing Tai and SCB Singapore
dated 22 October 2010
‘‘Group’’
the Company and its subsidiaries, and which, after the
Distribution in Specie, will exclude the Privateco Group
‘‘Group Reorganisation’’
the proposed reorganisation of the Group, details of which are set
out in the section headed ‘‘Group Reorganisation’’ in the Letter
from the Board
–2–
DEFINITIONS
‘‘Guarantor’’
Vanke Real Estate (Hong Kong) Company Limited, a company
incorporated in Hong Kong with limited liability
‘‘HK$’’
Hong Kong dollars, the lawful currency of Hong Kong
‘‘Hong Kong’’
the Hong Kong Special Administrative Region of the People’s
Republic of China
‘‘Independent Board Committee’’
an independent committee of the Board comprising all the
independent non-executive Directors who have no direct or
indirect interest in the Transactions, the Special Deals and the
New Tenancy Agreements (namely Mr. Christopher Patrick
Langley, Dr. Lo Ka Shui and Mr. Haider Hatam Tyebjee Barma)
established for the purpose of advising the Independent
Shareholders in respect of the Distribution In Specie, the Special
Cash Dividend, the Special Deals, the New Tenancy Agreements
and the respective transactions contemplated thereunder
‘‘Independent Financial Adviser’’
Somerley Limited, which is a corporation licensed to conduct
Type 1 (dealing in securities), Type 4 (advising on securities),
Type 6 (advising on corporate finance) and Type 9 (asset
management) regulated activities under the SFO, being the
independent financial adviser to the Independent Board
Committee and the Independent Shareholders in relation to the
Distribution In Specie, the Special Cash Dividend, the Special
Deals, the New Tenancy Agreements and the respective
transactions contemplated thereunder
‘‘Independent Shareholder(s)’’
Shareholder(s) other than those who are involved in or interested
in the Transactions, the Special Deals and the New Tenancy
Agreements, including Wing Tai, the Purchaser and their
respective associates and parties acting in concert with each of
them
‘‘Joint Announcement’’
the joint announcement issued by the Company, Wing Tai and
Wkland Investments dated 14 May 2012 in relation to, among
other things, the Share Sale Agreement, the Group
Reorganisation, the Distribution In Specie, the Special Cash
Dividend, the Special Deals, the New Tenancy Agreements, the
Listco Offer and the Privateco Offer
‘‘Last Trading Day’’
13 April 2012, being the last day on which the Shares were
traded on the Stock Exchange prior to the suspension of trading
in the Shares pending the release of the Joint Announcement
‘‘Latest Practicable Date’’
15 June 2012, being the latest practicable date prior to the
printing of this circular for ascertaining certain information
referred to in this circular
–3–
DEFINITIONS
‘‘Letter from the Board’’
the letter from the Board to the Shareholders as set out in this
circular
‘‘Listco Offer’’
the unconditional mandatory cash offer to be made by CITIC on
behalf of the Offeror to acquire all the issued Shares (other than
those already owned or agreed to be acquired by the Purchaser,
the Offeror and parties acting in concert with it)
‘‘Listco Offer Document’’
the offer and response document (in either composite or separate
form) together with the form of acceptance and transfer to be
dispatched to the Shareholders pursuant to the Listco Offer
‘‘Listing Rules’’
the Rules Governing the Listing of Securities on the Stock
Exchange
‘‘Management Agreement’’
the management agreement dated 18 June 2012 between Privateco
and the Remaining Holdco to provide for the continuation of the
existing management and administration services provided by
members of the Privateco Group to members of the Remaining
Group, details of which are set out in the paragraph headed
‘‘Special Deal — The Management Agreement’’ in the section
headed ‘‘Special Deals’’ in the Letter from the Board
‘‘New Tenancy Agreements’’
the new tenancy agreements and new licence agreements all dated
18 June 2012, details of which are set out in the paragraph
headed ‘‘Continuing Connected Transactions and/or Special Deal
— New Tenancy Agreements’’ in the section headed ‘‘Special
Deals’’ in the Letter from the Board
‘‘Offeror’’ or ‘‘Wkland
Investments’’
Wkland Investments Company Limited, a company incorporated
in the BVI with limited liability and an indirect wholly-owned
subsidiary of the Purchaser
‘‘Offers’’
the Listco Offer and the Privateco Offer
‘‘Parex’’
Parex International Limited, a company incorporated in Hong
Kong with limited liability
‘‘Pooling Agreement’’
the pooling agreement dated 1 June 2005 between Chericourt,
Suntec Investment (H.K.) Ltd., Winsor Parking, Brilion Trading
Limited, East Sun Estate Management and Winsor Estate Agents
in respect of pooling of interest of the units and carparks in
Regent Centre owned by Chericourt, Suntec Investment (H.K.)
Limited, Winsor Parking and Brilion Trading Limited and sharing
of the pooled income and expenses
–4–
DEFINITIONS
‘‘Privateco’’
Cherrytime Investments Limited, a company incorporated in the
BVI with limited liability pursuant to the Group Reorganisation
for the purpose of holding the Distributed Businesses and a
wholly-owned subsidiary of the Company before the completion
of the Distribution In Specie
‘‘Privateco Group’’
Privateco and its subsidiaries
‘‘Privateco Offer’’
the unconditional voluntary cash offer to be made by SCB on
behalf of Wing Tai (or a wholly-owned subsidiary of Wing Tai)
to acquire all the Privateco Shares (other than those already
owned or agreed to be acquired by Wing Tai)
‘‘Privateco Offer Document’’
the offer and response document (in either composite or separate
form) and the form of acceptance and transfer to be dispatched to
the Privateco Shareholders pursuant to the Privateco Offer
‘‘Privateco Share(s)’’
ordinary share(s) of HK$0.01 each in the share capital of the
Privateco
‘‘Privateco Shareholder(s)’’
holder(s) of the Privateco Shares
‘‘Project Management Agreement’’
the project management agreement dated 18 June 1996 between
Chericourt and East Sun Estate Management in respect of
property management services for the units and car parking
spaces in the Property owned by Chericourt
‘‘Property’’
all those units and car park podium in Regent Centre owned by
members of the Remaining Group (excluding Units 505–510, 5/F,
Tower B of Regent Centre which will form part of the Distributed
Businesses), as set out in the valuation report in section A of
Appendix VII to this circular, situated at 63 Wo Yi Hop Road
and 70 Ta Chuen Ping Street, Kwai Chung, New Territories,
Hong Kong with a total gross floor area of approximately
657,000 square feet representing approximately 63.8% of the total
gross floor area of Regent Centre
‘‘Purchaser’’
Vanke Property (Hong Kong) Company Limited, a company
incorporated in Hong Kong with limited liability
‘‘Record Date’’
13 July 2012, a date for determining entitlements of the
Shareholders to the Distribution In Specie and the Special Cash
Dividend
–5–
DEFINITIONS
‘‘Regent Centre
Valuation Report’’
the independent valuation report prepared by Jones Lang LaSalle
Limited dated 28 March 2012 on the market value of the
Company’s interest in Regent Centre as at 31 December 2011
(including those units and car park podium comprising the
Property and other parts of Regent Centre, being Units 505–510,
5/F, Tower B of Regent Centre which will form part of the
Distributed Businesses)
‘‘Remaining Group’’
the Company, the Remaining Holdco and the Remaining Group
Entities upon completion of the Group Reorganisation and the
Distribution In Specie
‘‘Remaining Group Entities’’
Access Rich, Chericourt, Winsor Parking and WPFSL
‘‘Remaining Holdco’’
Future Best Developments Limited, a company incorporated in
the BVI with limited liability pursuant to the Group
Reorganisation for the purpose of holding the Remaining Group
Entities and a wholly-owned subsidiary of the Company
‘‘RMB’’
Renminbi, the lawful currency of the People’s Republic of China
‘‘Sale Shares’’
the aggregate interest of 191,935,845 Shares directly and
indirectly owned by Wing Tai as at the date of the Share Sale
Agreement
‘‘SCB’’
Standard Chartered Bank (Hong Kong) Limited, a corporation
licensed to conduct Type 1 (dealing in securities), Type 4
(advising on securities), Type 6 (advising on corporate finance)
and Type 9 (asset management) regulated activities under the
SFO and the financial adviser to Wing Tai
‘‘SCB Singapore’’
Standard Chartered Bank, Singapore Branch
‘‘Securities Exchange Offer’’
the voluntary conditional securities exchange offer on 10 April
2007 made by Cazenove Asia Limited on behalf of USI Holdings
Limited (as Wing Tai was formerly known) to acquire all the
issued shares in the capital of the Company
‘‘SFC’’
Securities and Futures Commission of Hong Kong
‘‘SFO’’
the Securities and Futures Ordinance, Chapter 571 of the Laws of
Hong Kong
‘‘Share(s)’’
ordinary share(s) of HK$0.01 in the share capital of the Company
‘‘Shareholder(s)’’
holder(s) of the Share(s)
–6–
DEFINITIONS
‘‘Share Sale Agreement’’
the agreement dated 13 May 2012 entered into between Wing Tai,
the Purchaser and the Guarantor in respect of the acquisition by
the Purchaser of the Sale Shares and (if applicable) the Further
Shares
‘‘Share Sale Completion’’
completion of the Share Sale Agreement
‘‘Special Cash Dividend’’
a conditional cash dividend of HK$0.7803 per Share to be made
at the same time as the completion of the Distribution In Specie
‘‘Special Deals’’
(a) the Management Agreement and (b) (i) the acquisition of the
WPFSL Sale Shares by the Remaining Holdco, (ii) the repayment
of outstanding shareholders’ loans that are owed to Parex by
WPFSL in connection with the Winsor Connected Transaction,
and (iii) the declaration and payment of dividends by Chericourt
and WPFSL in connection with the Winsor Connected
Transaction
‘‘Stock Exchange’’
The Stock Exchange of Hong Kong Limited
‘‘Takeovers Code’’
Hong Kong Code on Takeovers and Mergers
‘‘Transactions’’
the transactions contemplated in the Share Sale Agreement,
including the sale and purchase of the Sale Shares and the
Further Shares, the Group Reorganisation, the Distribution In
Specie, the Special Cash Dividend, the Listco Offer and the
Privateco Offer
‘‘True Synergy’’
True Synergy Limited, a company incorporated in Hong Kong
with limited liability and an indirect wholly-owned subsidiary of
Wing Tai
‘‘Twin Dragon’’
Twin Dragon Investments Limited, a wholly-owned subsidiary of
Wing Tai Properties (B.V.I.) Limited, which is a wholly-owned
subsidiary of Wing Tai
‘‘Vanke’’
China Vanke Co., Ltd., a joint stock company with limited
liability incorporated in the People’s Republic of China and the
issued shares of which are listed on the Shenzhen Stock
Exchange, which is the ultimate 100% holding company of the
Purchaser and the Offeror
‘‘Wing Tai’’
Wing Tai Properties Limited, a company incorporated in Bermuda
with limited liability and the issued shares of which are listed on
the main board of the Stock Exchange (stock code: 369)
–7–
DEFINITIONS
‘‘Wing Tai Connected Transaction’’
the acquisition of the Privateco Shares from Mr. Chow Wai Wai,
John, Mr. Kwok Ping Luen, Raymond, Ms. Chen Chou Mei Mei,
Vivien and Ms. Cheng Chan Sau Ching, Ivy and their respective
associates and any other connected persons of Wing Tai under the
Privateco Offer
‘‘Wing Tai Group’’
(i) before the completion of the Distribution In Specie, Wing Tai
and its subsidiaries (including the Privateco Group and the
Remaining Group), or (ii) after the completion of the Distribution
In Specie, Wing Tai and its subsidiaries (including the Privateco
Group but excluding the Remaining Group)
‘‘Wing Tai SGM’’
the special general meeting of Wing Tai to be held to consider
and, if thought fit, approve the resolution(s) in respect of the
disposal of the Sale Shares and the Further Shares by Wing Tai to
the Purchaser, the acquisition of the Privateco Shares and the
transactions contemplated thereunder
‘‘Wing Tai Shareholder(s)’’
holder(s) of the share(s) in Wing Tai
‘‘Winnion’’
Winnion Limited, a company incorporated in Hong Kong with
limited liability and an indirect wholly-owned subsidiary of the
Company before the completion of the Distribution In Specie and
an indirect wholly-owned subsidiary of the Privateco
‘‘Winsor Connected Transaction’’
a connected transaction of each of the Company and Wing Tai,
details of which are set out in the paragraph headed ‘‘Winsor
Connected Transaction’’ in the section headed ‘‘Special Deals’’ in
the Letter from the Board
‘‘Winsor Estate Agents’’
Winsor Estate Agents Limited, a company incorporated in Hong
Kong with limited liability, an indirect wholly-owned subsidiary
of the Company before the completion of the Distribution In
Specie and an indirect wholly-owned subsidiary of the Privateco
‘‘Winsor Estate Management’’
Winsor Estate Management Limited, a company incorporated in
Hong Kong with limited liability, an indirect wholly-owned
subsidiary of the Company before the completion of the
Distribution In Specie and an indirect wholly-owned subsidiary
of the Privateco
‘‘Winsor Health’’
Winsor Health Products Limited, a company
Hong Kong with limited liability and in which
Wai, John and Ms. Chen Chou Mei Mei, Vivien
effective shareholding of approximately 6% and
as at the Latest Practicable Date
–8–
incorporated in
Mr. Chow Wai
have an indirect
5% respectively
DEFINITIONS
‘‘Winsor HK’’
Winsor Properties (Hong Kong) Limited, a company incorporated
in the BVI with limited liability, a wholly-owned subsidiary of
the Company before the completion of the Distribution In Specie
and a direct wholly-owned subsidiary of the Privateco
‘‘Winsor Parking’’
Winsor Parking Limited, a company incorporated in Hong Kong
with limited liability and an indirect wholly-owned subsidiary of
the Company
‘‘WPFSL’’
Winsor Properties Financial Services Limited, a company
incorporated in Hong Kong with limited liability and an indirect
subsidiary of the Company
‘‘WPFSL Group’’
WPFSL and its subsidiary
‘‘WPFSL Sale Shares’’
the aggregate interest of 40 shares of HK$1 each in the issued
share capital of WPFSL owned by Parex as at the date of the
WPFSL Shares Sale Agreement
‘‘WPFSL Shares Sale Agreement’’
the agreement dated 18 June 2012 entered into between Parex, the
Remaining Holdco and WPFSL in respect of the acquisition by
the Remaining Holdco of the WPFSL Sale Shares
‘‘WTPDL’’
Wing Tai Properties Development Limited, a company
incorporated in Hong Kong with limited liability and an indirect
wholly-owned subsidiary of Wing Tai
‘‘WTPHKL’’
Wing Tai Properties (Hong Kong) Limited, a company
incorporated in Hong Kong with limited liability and an indirect
wholly-owned subsidiary of Wing Tai
‘‘%’’
per cent.
The English text of this circular shall prevail over its Chinese text.
–9–
LETTER FROM THE BOARD
(Stock Code: 1036)
Registered office:
PO Box 309
Ugland House
Grand Cayman KY1-1104
Cayman Islands
Executive Directors:
Chow Wai Wai, John (Managing Director)
Chen Chou Mei Mei, Vivien
Au Hing Lun, Dennis
Non-Executive Directors:
Cheng Wai Chee, Christopher, GBS, JP (Chairman)*
Cheng Wai Sun, Edward, SBS, JP*
Independent Non-Executive Directors:
Christopher Patrick Langley, OBE
Lo Ka Shui, GBS, JP
Haider Hatam Tyebjee Barma, GBS, CBE, ISO, JP
Principal place of business:
8th Floor, AXA Tower, Landmark East
100 How Ming Street
Kwun Tong
Kowloon
Hong Kong
* Alternate: Fung Ching Man, Janet
20 June 2012
To the Shareholders
Dear Sir/Madam,
(1) GROUP REORGANISATION OF WINSOR
(2) DISTRIBUTION IN SPECIE OF PRIVATECO SHARES AND PAYMENT
OF SPECIAL CASH DIVIDEND
(3) CONNECTED TRANSACTION AND EXEMPT CONTINUING
CONNECTED TRANSACTIONS FOR WINSOR AND SPECIAL DEALS
(4) NEW TENANCY AGREEMENTS
INTRODUCTION
On 13 May 2012, Wing Tai entered into the Share Sale Agreement with the Purchaser and the
Guarantor relating to the sale by Wing Tai to the Purchaser of 191,935,845 Shares (representing
approximately 73.91% of the issued share capital of the Company as at the Latest Practicable Date),
being Wing Tai’s entire interest in the Company as at the Latest Practicable Date at an aggregate cash
consideration of HK$1,078,621,868 (representing HK$5.6197 per Sale Share) (which is conditional
upon, amongst other things, the approval of Wing Tai Shareholders and the Independent Shareholders
for certain aspects of the Transactions, a distribution in specie by the Company of shares in a private
company holding premium investment properties of the Group and the payment of a special cash
dividend by the Company), followed by offers for Shares post Share Sale Completion and for shares in
– 10 –
LETTER FROM THE BOARD
the private company distributed in specie by the Company. On a combined basis, the Transactions
represent an opportunity for the Shareholders to realise their entire investment in the Company for a
Combined Cash Exit equal to HK$34.00 per Share.
The Group Reorganisation, which reorganises the Distributed Businesses under the Privateco
Group, is necessary to achieve the Distribution In Specie. The Distribution In Specie in turn will lead to
the Privateco Offer, and is a condition precedent to the Share Sale Completion, which in turn will
ultimately lead to the Listco Offer.
Subject to the Share Sale Completion having taken place, Wing Tai has also agreed to sell, and the
Purchaser has agreed to purchase or procure that the Offeror purchases, any Further Shares which Wing
Tai may acquire prior to the completion of the Listco Offer pursuant to the exercise of the options under
an agreement dated 22 October 2010 entered into between Wing Tai and SCB Singapore, such sale and
purchase to be for the same consideration of HK$5.6197 per Share and on the same terms and
conditions as the sale and purchase of the Sale Shares under the Share Sale Agreement. The Share Sale
Completion is conditional upon, among other things, the completion of the Group Reorganisation and
will take place at the same time as the Distribution In Specie and the payment of the Special Cash
Dividend.
The Purchaser has confirmed that upon the Share Sale Completion (assuming that no Further
Shares will be acquired by Wing Tai subsequent to the Latest Practicable Date and then sold to the
Purchaser or the Offeror pursuant to the Share Sale Agreement before the Share Sale Completion), the
Purchaser or the Offeror will hold in aggregate 191,935,845 Shares, representing approximately 73.91%
of the issued share capital of the Company as at the Latest Practicable Date. Upon completion of the
sale and purchase of the Further Shares in full, the Purchaser will hold through the Offeror 205,835,845
Shares, representing approximately 79.26% of the issued share capital of Winsor as at the Latest
Practicable Date. Subject to the Share Sale Completion, CITIC will, on behalf of the Offeror and
pursuant to the Takeovers Code, make the Listco Offer, which is an unconditional mandatory cash offer
to acquire all the issued Shares (other than those already owned or agreed to be acquired by the
Purchaser, the Offeror and parties acting in concert with any of them). The offer price of the Listco
Offer will be HK$5.6197 for each Share, which is equal to the price per Sale Share under the Share Sale
Agreement. Details of the Listco Offer are set out in part A of Appendix I to this circular.
Subject to, amongst other things, the Independent Shareholders’ approval being obtained at the
EGM and the completion of the Group Reorganisation, and on the same date as the Share Sale
Completion, the Company will distribute all of its Privateco Shares in specie and pay the Special Cash
Dividend to the Shareholders whose names appear on the register of members of the Company on the
Record Date on basis of one Privateco Share and HK$0.7803 in cash for each Share held.
After the Share Sale Completion and the Distribution In Specie having been made and the Special
Cash Dividend having been paid, SCB will, on behalf of Wing Tai (or a wholly-owned subsidiary of
Wing Tai) and pursuant to the Takeovers Code, make the Privateco Offer to the Privateco Shareholders
to acquire all the Privateco Shares (other than those already owned or agreed to be acquired by Wing
Tai, but including those owned by certain connected persons of Wing Tai whose Privateco Shares may
be acquired under the Wing Tai Connected Transaction (for details on such connected persons of Wing
Tai and their respective shareholdings in the Company, please refer to the note under the paragraph
– 11 –
LETTER FROM THE BOARD
headed ‘‘Effect of the Share Sale Completion on the shareholding structure of the Company’’ below)) on
the basis of HK$27.60 for each Privateco Share held. Details of the Privateco Offer are set out in part B
of Appendix I to this circular.
The purpose of this circular is to provide you with, inter alia, further information about the Group
Reorganisation, the Distribution In Specie, the Special Cash Dividend, the Special Deals, the New
Tenancy Agreements, the Listco Offer, and the Privateco Offer, a letter of recommendation from the
Independent Board Committee and a letter of advice from the Independent Financial Adviser in respect
of the Distribution In Specie, the Special Cash Dividend, the Special Deals and the New Tenancy
Agreements and a notice of the EGM.
A.
SHARE SALE AGREEMENT
Date
13 May 2012
Parties
(i)
Wing Tai (as vendor);
(ii)
Purchaser (as purchaser); and
(iii) Guarantor.
To the best knowledge, information and belief of the directors of Wing Tai, having made all
reasonable enquires, each of the Purchaser, the Guarantor and parties acting in concert with each
of them is a third party independent of and not connected with Wing Tai, the Company and their
respective connected persons (as defined in the Listing Rules).
Subject matter
Wing Tai has conditionally agreed to sell or procure the sale of, and the Purchaser has
conditionally agreed to purchase or procure that the Offeror purchases, the Sale Shares, being
191,935,845 Shares (comprising 148,944,458 Shares registered in the name of Wing Tai and
42,991,387 Shares registered in the name of Twin Dragon, a wholly-owned subsidiary of Wing
Tai), representing the entire direct and indirect shareholding of Wing Tai in the Company and
approximately 73.91% of the issued share capital of the Company as at the Latest Practicable Date,
at an aggregate cash consideration of HK$1,078,621,868, representing HK$5.6197 per Sale Share.
Subject to the Share Sale Completion having taken place, Wing Tai has also agreed to sell
and the Purchaser has agreed to purchase or procure that the Offeror purchases, any Further Shares
which Wing Tai may acquire prior to the completion of the Listco Offer pursuant to the exercise of
options under an agreement dated 22 October 2010 entered into between Wing Tai and SCB
Singapore. Such sale and purchase will be for the same consideration of HK$5.6197 per Share and
on the same terms and conditions as the sale and purchase of the Sale Shares under the Share Sale
Agreement. Details of which are set out in the section headed ‘‘Information on the Further Shares’’
on page 15 of the circular.
– 12 –
LETTER FROM THE BOARD
Consideration
The aggregate consideration for the Sale Shares of HK$1,078,621,868, representing
approximately HK$5.6197 per Sale Share, was determined after arm’s length negotiations between
Wing Tai and the Purchaser taking into account the fair value of the Property by reference to the
value used in the preparation of the audited consolidated accounts of the Group for the year ended
31 December 2011 (which was based on the Regent Centre Valuation Report), the listed status of
the Company and the fact that the Purchaser can obtain a controlling interest in the Company.
The aggregate consideration for the Sale Shares shall be satisfied as follows:
(a)
as to HK$30,000,000 payable by the Purchaser immediately upon the signing of the
Share Sale Agreement as a refundable deposit (the ‘‘Deposit’’) and part payment of the
consideration to Wing Tai; and
(b)
the balance of the consideration of HK$1,048,621,868 payable by the Purchaser upon
the Share Sale Completion.
If the Share Sale Completion does not take place and the Share Sale Agreement is terminated,
the Deposit shall be refunded to the Purchaser, unless the failure to complete the Share Sale
Agreement is due to a breach of the Share Sale Agreement by the Purchaser, in which case the
Deposit shall be non-refundable and shall be paid to and entitled to be retained by Wing Tai
absolutely.
Any consideration payable by the Purchaser for any Further Shares shall be made at the same
consideration of HK$5.6197 per Share on the later of (i) the date of the Share Sale Completion and
(ii) the day falling three days after the day of any such acquisition of Shares by Wing Tai.
Specific warranties
Wing Tai has provided certain representations and warranties to the Purchaser, including that
the audited consolidated net asset value of the Remaining Group as at the date of the Share Sale
Completion will not be less than HK$1,129,350,000, calculated in accordance with accounting
principles and practices adopted by the Company in the preparation of the audited consolidated
accounts of the Group for the year ended 31 December 2011 and on the basis that the Property is
valued at HK$1,129,350,000 (which was the value used in the preparation of the audited
consolidated accounts of the Group for the year ended 31 December 2011 which was based on the
Regent Centre Valuation Report).
For the avoidance of doubt, there shall be no upward adjustment to the consideration per
Share under the Share Sale Agreement and no additional payment shall be required to be made by
the Purchaser to Wing Tai under the Share Sale Agreement if the audited consolidated net asset
value of the Remaining Group as at the date of the Share Sale Completion is more than
HK$1,129,350,000. The offer price of the Listco Offer therefore represents the maximum price of
HK$5.6197 per Sale Share payable by the Purchaser for the acquisition of the Shares under the
Share Sale Agreement.
– 13 –
LETTER FROM THE BOARD
Conditions precedent
The Share Sale Completion shall be subject to the following conditions precedent being
fulfilled (or, where applicable, waived):
(a)
the passing by the Independent Shareholders at a duly convened and held extraordinary
general meeting of the Company of resolutions to approve the Distribution In Specie,
the Special Cash Dividend, the Special Deals and any other matters contemplated by the
Group Reorganisation, the Share Sale Agreement or related thereto that require
shareholder approval in accordance with the Listing Rules and/or the Takeovers Code
or as required by the Stock Exchange or, as applicable, the SFC;
(b)
the passing by the Wing Tai Shareholders at a duly convened and held special general
meeting of Wing Tai of resolutions to approve Wing Tai’s entry into and performance
of the Share Sale Agreement, the disposal of the Sale Shares and (if applicable) the
Further Shares, the making of the Privateco Offer and the acquisition of the Privateco
Shares and any other matters contemplated by the Group Reorganisation, the Share Sale
Agreement or related thereto that require shareholder approval in accordance with the
Listing Rules and/or the Takeovers Code or as required by the Stock Exchange or, as
applicable, the SFC;
(c)
as at the Share Sale Completion, the Shares remaining listed and traded on the main
board of the Stock Exchange, and no notification being received from the Stock
Exchange or the SFC prior to the Share Sale Completion that the listing of the Shares
on the Stock Exchange will or may be, for whatever reason, withdrawn or suspended
for more than five (5) consecutive Business Days (excluding any suspension for the
purposes of obtaining clearance from the SFC or Stock Exchange for an announcement
or any other announcement or in relation to the transactions contemplated in the Share
Sale Agreement, provided the suspension for the aforesaid clearance shall not in any
event exceed one month from the first day of suspension);
(d)
full legal title to the Property being vested in the Remaining Group free from title
defects and encumbrances;
(e)
as at the Share Sale Completion, none of the warranties given by Wing Tai in the Share
Sale Agreement are untrue or inaccurate or misleading to an extent that would lead to
damages being recoverable by the Purchaser under the Share Sale Agreement (after any
breach has been remedied or rectified by Wing Tai and taking into account the
limitations set out in the Share Sale Agreement);
(f)
as at the Share Sale Completion, there being no applicable laws or regulations which
legally prohibit the consummation by Wing Tai or the Company of any of the
transactions contemplated in the Share Sale Agreement;
(g)
as at the Share Sale Completion, there being no applicable laws or regulations which
legally prohibit the completion of the Share Sale Agreement by the Purchaser or the
making of the Listco Offer; and
– 14 –
LETTER FROM THE BOARD
(h)
the due completion of the Group Reorganisation in compliance with relevant laws, rules
and regulations and in accordance with the terms under the Share Sale Agreement,
subject only to such elements of the Group Reorganisation that will take place
contemporaneously with the Share Sale Completion.
Wing Tai shall use all reasonable endeavours, and the Purchaser shall use its best endeavours
to fulfil the conditions insofar as they relate to each of them respectively. The Purchaser may, in
its absolute discretion, waive the conditions as set out in (e) and (g) above.
If the conditions precedent set out above have not been fulfilled or waived on or before a
long-stop date of (i) 12:00 noon on 31 July 2012 or (ii) 12:00 noon on the date falling 30 days
after the satisfaction of the conditions referred to in (a) and (b) above, whichever is later (but in
any event no later than 31 August 2012), either Wing Tai or the Purchaser may terminate the Share
Sale Agreement and in such event the Share Sale Agreement (except surviving terms) shall cease
and determine and the parties shall not have any obligations and liabilities thereunder save for any
antecedent breaches of the terms thereof. The Purchaser may request Wing Tai to extend the initial
long-stop date for a further 60 days if any of the conditions relating to it cannot be fulfilled on or
prior to the initial long-stop date referred to above, but such extension of the long-stop date will be
subject to agreement between the parties.
Guarantee
The Guarantor has entered into the Share Sale Agreement in order to guarantee the due and
punctual performance and the payment obligations of the Purchaser under the Share Sale
Agreement and other agreements or documents entered into pursuant to the Share Sale Agreement.
All shareholders of the Guarantor have passed the necessary resolutions for providing the
guarantee in respect of the obligations of the Purchaser under the Share Sale Agreement.
Completion
The Share Sale Completion is to take place on (i) the fifth Business Day following the day
on which the conditions referred to in (a) and (b) above have been satisfied; or (ii) such other date
as Wing Tai and the Purchaser may agree in writing.
Information on the Further Shares
Reference is made to the discloseable transactions announcement of Wing Tai dated 22
October 2010.
On 10 April 2007, Wing Tai and the Company jointly announced the Securities Exchange
Offer, which closed on 13 July 2007. Immediately following the close of the Securities Exchange
Offer, Wing Tai held in aggregate approximately 79.26% of the shares in the Company. On 22
October 2010, Wing Tai and SCB Singapore entered into a sale and purchase agreement for the
sale by Wing Tai of 13,900,000 Shares to SCB Singapore in order to restore the minimum public
float requirement under the Listing Rules. On the same date, Wing Tai entered into an option
agreement with SCB Singapore. Under the option agreement, Wing Tai agreed to grant the put
options (comprising 13,900,000 Shares, representing approximately 5.35% of the issued share
capital of the Company as at the Latest Practicable Date) to SCB Singapore in accordance with the
– 15 –
LETTER FROM THE BOARD
terms of the option agreement. Other than in limited circumstances (which include a general offer
for the Company), the put options can only be exercised by SCB Singapore on the scheduled
expiry date (being 29 October 2012) unless Wing Tai gives SCB Singapore a written notice
requiring SCB Singapore to exercise its put options in accordance with the terms of the option
agreement.
If any of the outstanding put options are exercised, or deemed to be exercised, on or before
the scheduled expiry date, SCB Singapore shall deliver to Wing Tai or its nominee the Shares
represented by the put options exercised by it and Wing Tai shall pay to SCB Singapore the
amount equal to the product of the number of Shares subject to the put options exercised (namely
13,900,000 Shares) and the exercise price (being HK$12.12 per Share as at the Latest Practicable
Date, such that SCB Singapore would have received HK$168,468,000 if the put options were
exercised in full on the Latest Practicable Date). The exercise price under the put options is subject
to adjustments from time to time if, amongst other things, any distributions or bonus issues are
made by the Company or if the Shares are sub-divided or consolidated.
Wing Tai intends to give such written notice to SCB Singapore so that it will be the
registered owner of those 13,900,000 Shares on or before the Record Date (and as a consequence
Wing Tai will receive the Privateco Shares and the Special Cash Dividend attributable to such
13,900,000 Shares as well as, subject to Share Sale Completion taking place, the consideration
from the Purchaser for the sale and purchase of the Further Shares on the date of the Share Sale
Completion or, if later, three Business Days after completion of the transfer to Wing Tai of the
13,900,000 Shares under the option arrangements).
– 16 –
LETTER FROM THE BOARD
Effect of the Share Sale Completion on the shareholding structure of the Company
Set out below is the shareholding structure of the Company as at the Latest Practicable Date
and immediately upon the Share Sale Completion (assuming the transfer of the Further Shares to
Wing Tai by SCB Singapore pursuant to the option agreement mentioned under the paragraph
headed ‘‘Information on the Further Shares’’ in the section headed ‘‘Share Sale Agreement’’ above
has not yet completed and there are no other changes in the issued share capital and shareholding
in the Company from the Latest Practicable Date up to the Share Sale Completion but before the
commencement of the Listco Offer):
Immediately upon the Share
Sale Completion but before
As at the
the commencement of the
Latest Practicable Date
Listco Offer
Number of Approximately
Number of Approximately
Shares
%
Shares
%
Wing TaiNote
1
Wing Tai’s associates and parties
acting in concert with it
(excluding SCB
Singapore) Note 1 and Note 2
191,935,845
73.91
—
—
2,810,500
1.09
2,810,500
1.09
—
—
191,935,845
73.91
13,900,000
5.35
13,900,000
5.35
51,038,943
19.65
51,038,943
19.65
259,685,288
100.00
259,685,288
100.00
The Purchaser, the Offeror and
parties acting in concert with it
Public
— SCB Singapore Note
1
— Other public Shareholders
Total
Note 1: The above table assumes that the number of Shares held by Wing Tai and its associates and parties acting
in concert with it include: (i) 13,900,000 Shares (representing approximately 5.35% of the issued share
capital of the Company as at the Latest Practicable Date) held by SCB Singapore, which are the subject of
the options under an agreement dated 22 October 2010 entered into between Wing Tai and SCB Singapore,
and (ii) 2,810,500 Shares (representing approximately 1.09% of the issued share capital of the Company as
at the Latest Practicable Date) held by Mr. Chow Wai Wai, John, Mr. Kwok Ping Luen, Raymond, Ms.
Chen Chou Mei Mei, Vivien and Ms. Cheng Chan Sau Ching, Ivy. As at the Latest Practicable Date, Wing
Tai and its associates and parties acting in concert with it collectively held 208,646,345 Shares,
representing approximately 80.35% of the issued share capital of the Company.
Note 2: As at the Latest Practicable Date, Mr. Chow Wai Wai, John, Mr. Kwok Ping Luen, Raymond, Ms. Chen
Chou Mei Mei, Vivien and Ms. Cheng Chan Sau Ching, Ivy hold 2,713,000 Shares, 500 Shares, 70,000
Shares and 27,000 Shares, respectively. Upon the Share Sale Completion and completion of the
Distribution In Specie, they will hold Privateco Shares. Mr. Chow Wai Wai, John, as a Director and a
director of Wing Tai, and Ms. Chen Chou Mei Mei, Vivien, as a Director, are connected persons of the
Company and Wing Tai under the Listing Rules. Ms. Cheng Chan Sau Ching, Ivy, the wife of Mr. Cheng
Wai Chee, Christopher who is a Director and a director of Wing Tai, is also a connected person of the
Company and Wing Tai under the Listing Rules. Mr. Kwok Ping Luen, Raymond, as a director of Wing
Tai, is a connected person of Wing Tai under the Listing Rules.
– 17 –
LETTER FROM THE BOARD
B.
GROUP REORGANISATION
Pursuant to the Group Reorganisation, amongst other things:
(i)
the Remaining Holdco and the Privateco will be established as directly wholly-owned
subsidiaries of the Company;
(ii)
there will be an internal transfer of interests in the Group as a result of which the Remaining
Holdco will beneficially own the Remaining Group Entities and the Privateco will hold the
Distributed Businesses;
(iii) any minority interest in the Remaining Group Entities will be acquired such that the
Remaining Group Entities will be directly or indirectly wholly-owned subsidiaries of the
Remaining Holdco;
(iv) the sole real estate asset of the Remaining Group after the Distribution In Specie and the
Special Cash Dividend will be the Property and the Remaining Group will not carry on any
business other than the business of holding, or relating to the operation and management of,
the Property currently operated by the Remaining Group Entities;
(v)
all existing corporate guarantees and securities given by the Remaining Group will be
released and discharged in full, conditional only upon the Share Sale Completion, and all
existing corporate guarantees and securities given by the Privateco Group in favour of the
Remaining Group (if any) will be released and discharged in full, conditional only upon the
Share Sale Completion;
(vi) all banking facilities and other indebtedness entered into by members of the Remaining
Group will be repaid in full and cancelled;
(vii) any outstanding intra-group balances between the Remaining Group and the Privateco Group
will be settled in full such that there will not be any borrowings, loans or liabilities between
the Remaining Group and the Privateco Group; and
(viii) the execution of the Deed of Indemnity by Wing Tai in favour of the Company.
As at the date of this circular, step (i) and certain transfers contemplated in step (ii) as referred to
above have been completed.
Regarding step (iii), please refer to the paragraph headed ‘‘Winsor Connected Transaction’’ in the
section headed ‘‘Special Deals’’ below for more details.
The Group Reorganisation (other than steps (i) and (ii)) will not be completed unless the
Independent Shareholders’ approval has been obtained at the EGM for the Distribution In Specie, the
Special Cash Dividend and the Special Deals.
– 18 –
LETTER FROM THE BOARD
C.
DISTRIBUTION IN SPECIE AND PAYMENT OF SPECIAL CASH DIVIDEND
Subject to, amongst other things, the Independent Shareholders’ approval being obtained at the
EGM and the completion of the Group Reorganisation, and on the same date as the Share Sale
Completion, the Company will distribute all of its Privateco Shares in specie and pay the Special Cash
Dividend to the Shareholders whose names appear on the register of members of the Company on the
Record Date on the following basis:
for every Share held . . . . . . . . . . . . . . . . . . . . one Privateco Share and HK$0.7803 in cash
The Distribution In Specie will be effected by distribution out of the reserves of the Company
lawfully available for distribution and the amount to be distributed will be equivalent to the carrying
amount of the Privateco Group which will be ascertained immediately prior to the Distribution In Specie
being made.
The Privateco Shares, when issued, will rank pari passu in all respects with each other. No
application will be made for the listing of, and permission to deal in, the Privateco Shares on the Stock
Exchange or any other stock exchange.
As a result of the Distribution In Specie, the Privateco and its subsidiaries will cease to be
subsidiaries of the Company, and the Company’s sole business upon completion of the Distribution In
Specie and the Special Cash Dividend will be the holding of, or related to the operation and
management of, the Property.
Conditions to the Distribution In Specie and the Special Cash Dividend
The Distribution In Specie and the payment of the Special Cash Dividend are conditional
upon:
(a)
the passing of ordinary resolutions by the Independent Shareholders at the EGM to
approve the Distribution In Specie, the Special Cash Dividend, the Special Deals and
the transactions contemplated thereunder;
(b)
completion of the Group Reorganisation; and
(c)
all of the conditions to the Share Sale Completion having been satisfied or waived.
Completion of the Distribution In Specie and the payment of the Special Cash Dividend will
not take place unless all the above conditions precedent of the Distribution In Specie and the
Special Cash Dividend have been fulfilled. None of the above conditions can be waived. The
completion of the Distribution In Specie will take place, and the payment of the Special Cash
Dividend will be made, on the same date as the Share Sale Completion.
Wing Tai and the Purchaser, and their respective associates and parties acting in concert with
them will abstain from voting on the relevant resolutions regarding the Distribution In Specie, the
Special Cash Dividend, the Special Deals and the New Tenancy Agreements, which will be taken
by poll at the EGM.
– 19 –
LETTER FROM THE BOARD
The Group structure before and after the Group Reorganisation
The chart below shows the simplified group structure of the Company as at the Latest
Practicable Date and immediately before the implementation of the Group Reorganisation
(assuming no other changes in the shareholding structure of the Group since the Latest Practicable
Date):
SCB
Singapore
Wing Tai
73.91%
Public
5.35%
20.74%
Winsor
Distributed
Businesses
Business of the
Remaining Group
The charts below show the respective simplified group structures of the Privateco Group and
the Remaining Group immediately after completion of the Group Reorganisation, the Share Sale
Completion, completion of the Distribution In Specie and payment of the Special Cash Dividend,
but before the sale of the Further Shares and the commencement of the Privateco Offer and the
Listco Offer (assuming no other changes in the shareholding structure of the Group during this
period):
Purchaser
73.91%
SCB
Singapore
5.35%
Public
20.74%
Wing Tai
73.91%
Winsor
SCB
Singapore
5.35%
Privateco
Remaining
Holdco
Business of the
Remaining Group
Distributed
Businesses
– 20 –
Public
20.74%
LETTER FROM THE BOARD
Reasons for and effects of the Group Reorganisation, the Distribution In Specie and the
Special Cash Dividend
During the negotiations between the parties to the Share Sale Agreement, the parties agreed
that as the Purchaser would not be acquiring the Distributed Businesses, those businesses should
be distributed to the Shareholders. Wing Tai thus has agreed to make the Privateco Offer which is
structured to enable the Independent Shareholders to achieve liquidity with all cash consideration.
Due to the limited average daily trading volume of the Shares, the Independent Shareholders
currently have limited opportunities to realise the full value of their shareholdings in the Company
in a single transaction.
Upon the Share Sale Completion, the Purchaser through the Offeror will become a
controlling shareholder and the Offeror will be obliged to make the Listco Offer, which is an
unconditional mandatory cash offer, to acquire all the Shares (other than those already owned or
agreed to be acquired by the Purchaser, the Offeror and the parties acting in concert with any of
them) at HK$5.6197 per Share, which is the same as the price per Share payable to Wing Tai
under the Share Sale Agreement. In the aggregate, the consideration resulting from the Distribution
In Specie, the Special Cash Dividend, the Listco Offer and the Privateco Offer together provide an
opportunity to the Independent Shareholders to fully realise their investment in the Company on an
all cash basis. Should Independent Shareholders wish to retain their investment in the Distributed
Businesses, which are unlisted and may be illiquid, they are entitled to keep the Privateco Shares
distributed to them pursuant to the Distribution In Specie. However, there will be no liquid market
for the Privateco Shares which will hold the Distributed Businesses and there is no intention to list
the Privateco Shares on any stock exchange.
The Group Reorganisation, which reorganises the Distributed Businesses under the Privateco
Group, is a necessary step for achieving the Distribution In Specie which in turn will lead to the
Privateco Offer, and is a condition precedent to the Share Sale Completion which in turn will
ultimately lead to the Listco Offer.
At the same time as the Distribution in Specie, the Special Cash Dividend will be paid to the
Shareholders, both of which are conditional upon the Distribution in Specie, the Special Cash
Dividend and the Special Deals having been approved by the Independent Shareholders at the
EGM, completion of the Group Reorganisation and all of the conditions to the Share Sale
Completion having been satisfied or waived.
The result of all of the steps involved in the Transactions (including the Distribution In
Specie, the Special Cash Dividend, the Listco Offer and the Privateco Offer) will provide a
Combined Cash Exit of HK$34.00 per Share to any Shareholder who wishes to realise all or part
of his/her/its interests in the Company at a premium of approximately 30.8%, 51.9%, 52.5%,
61.6% and 94.3% over the closing price of HK$26.00 per Share as quoted on the Stock Exchange
on the Last Trading Day and the average of the closing prices of approximately HK$22.38,
HK$22.29, HK$21.04 and HK$17.50 per Share, respectively, for the 10, 20, 30 and 90 consecutive
trading days up to and including the Last Trading Day.
– 21 –
LETTER FROM THE BOARD
Information on the Distributed Businesses and the Property
The Company is an investment holding company and its subsidiaries are principally engaged
in property investment and management, warehousing and investment holding.
The Distributed Businesses to be operated by the Privateco Group will consist of the
businesses of the Group, other than those relating to the Property, which principally include: (i) the
rental and property management businesses which currently holds office properties comprising
developments known as Landmark East in Kwun Tong and W Square in Wan Chai and industrial
properties comprising developments known as Winner Godown Building in Tsuen Wan and Shui
Hing Centre in Kowloon Bay; (ii) the warehousing business; (iii) investment holding; and (iv)
from time to time, property development activities.
Pursuant to the Group Reorganisation, the Remaining Holdco was incorporated in the BVI on
19 April 2012 and the Privateco was incorporated in the BVI on 29 May 2012. The Company’s
interest in the Remaining Group Entities (other than the WPFSL Sale Shares to be transferred to
the Remaining Holdco pursuant to the Winsor Connected Transaction) have been, prior to the date
of this circular, transferred to the Remaining Holdco to form the Remaining Group which will
continue their existing business operations. Members of the Group other than the Company, the
Remaining Holdco and the Remaining Group Entities have been, prior to the date of this circular,
transferred to the Privateco to form the Privateco Group which will continue their existing business
operations. The business of the Privateco Group will, after the completion of the Distribution In
Specie, continue to be operated by the Group’s management team and Mr. Chow Wai Wai, John
and Mr. Au Hing Lun, Dennis, both current Directors, were appointed directors of the Privateco on
29 May 2012. No independent non-executive directors will be appointed to the board of directors
of the Privateco.
The Remaining Group will be engaged solely in the business of holding, and the operation
and management of, the Property.
The Property (which does not include Units 505-510, 5/F, Tower B of Regent Centre and
other units in Regent Centre not owned by the Group) is situated at 63 Wo Yi Hop Road and 70
Ta Chuen Ping Street, the remaining portion of Lot no. 299 in D.D No. 444, Kwai Chung, New
Territories, Hong Kong. The Property is an investment property held by the Group for rental
income and has a total gross floor area of approximately 657,000 square feet.
Financial information of the Privateco
Set out below is the audited combined financial information of the Privateco for each of the
three years ended 31 December 2011 extracted from the accountant’s report of the Privateco Group
as set out in Appendix III to this circular:
For the year ended 31 December
2009
2010
2011
HK$’000
HK$’000
HK$’000
(Audited)
(Audited)
(Audited)
Revenue
Profit before taxation
Profit attributable to shareholder(s)
of the Privateco
– 22 –
228,405
412,505
341,459
2,368,244
414,824
2,359,681
389,869
2,351,875
2,326,073
LETTER FROM THE BOARD
Net assets
As at 31 December
2009
2010
HK$’000
HK$’000
(Audited)
(Audited)
2011
HK$’000
(Audited)
3,108,110
7,137,899
5,287,024
As at the date of this circular, the Privateco is the holding company of the Distributed
Businesses.
Financial effects of the Group Reorganisation, the Distribution In Specie and the Special
Cash Dividend
Set out in Appendix V to this circular is the unaudited pro forma financial information of the
Remaining Group which illustrates the financial impact of the Group Reorganisation, the
Distribution In Specie and the payment of the Special Cash Dividend on the results and cash
flows of the Remaining Group as if the Group Reorganisation, the Distribution In Specie, the
payment of the Special Cash Dividend had taken place on 1 January 2011, the beginning of the
financial year ended 31 December 2011, and the financial impact of the Group Reorganisation, the
Distribution In Specie and the payment of the Special Cash Dividend on the assets and liabilities
of the Remaining Group as if the Group Reorganisation, the Distribution In Specie and the
payment of the Special Cash Dividend had taken place on 31 December 2011. Upon completion of
the Distribution In Specie, all the Company’s subsidiaries and associated companies other than the
Remaining Holdco and the Remaining Group Entities will cease to be the Company’s subsidiaries
and associated companies and their financial results will not be consolidated into or accounted for
in the Company’s financial results.
According to the unaudited pro forma financial information of the Remaining Group as set
out in Appendix V to this circular, assuming the Group Reorganisation, the Distribution In Specie
and the payment of the Special Cash Dividend had taken place on 31 December 2011, the pro
forma total assets of the Remaining Group would be approximately HK$1,173.0 million, which
represented a decrease of approximately HK$12,847.1 million from the Group’s total assets of
approximately HK$14,020.1 million as at 31 December 2011, the pro forma total liabilities of the
Remaining Group would be approximately HK$43.6 million, which represented a decrease of
approximately HK$2,619.3 million from the Group’s total liabilities of approximately HK$2,662.9
million as at 31 December 2011, and the pro forma net assets of the Remaining Group would be
approximately HK$1,129.4 million, which represented a decrease of approximately HK$10,227.8
million from the Group’s net assets of approximately HK$11,357.2 million as at 31 December
2011.
According to the unaudited pro forma financial information of the Remaining Group as set
out in Appendix V to this circular, assuming the Group Reorganisation, the Distribution In Specie
and the payment of the Special Cash Dividend had taken place on 1 January 2011, the beginning
of the financial year ended 31 December 2011, the Remaining Group would record a pro forma
profit of approximately HK$157.1 million, as compared to profit for the year of approximately
– 23 –
LETTER FROM THE BOARD
HK$2,472.4 million of the Group for the financial year, which was mainly due to pro forma
adjustments relating to the Group Reorganisation and the Distribution In Specie which had a net
financial effect of a decrease in earnings by approximately HK$2,315.3 million.
D.
SPECIAL DEALS
(i)
Winsor Connected Transaction
As at the date of this circular, the Remaining Holdco owns approximately 95.24% of the
issued share capital of WPFSL. WPFSL is an investment holding company which beneficially
holds the entire issued share capital of Chericourt and also holds a unit in Regent Centre for rental
income. Chericourt owns certain units in Regent Centre and the car park podium in Regent Centre
for rental income. The units and the car park podium in Regent Centre held by WPFSL, Chericourt
and other Remaining Group Entities (excluding Units 505–510, 5/F, Tower B of Regent Centre)
constitute the Property.
As part of the Group Reorganisation, Parex will sell, and the Remaining Holdco will
purchase, the outstanding approximately 4.76% minority interest in WPFSL. Contemporaneously
with the Remaining Holdco’s acquisition of the WPFSL Sale Shares, WPFSL will (a) repay all of
the outstanding shareholders’ loans that are owed to Parex by WPFSL (the ‘‘Shareholders’ Loan
Repayment’’), (b) procure that Chericourt declares and pays dividends to WPFSL comprising all or
substantially all of Chericourt’s distributable reserves, and (c) declare and pay dividends to the
shareholders of WPFSL, i.e. the Remaining Holdco and Parex, comprising all of its distributable
reserves, including the reserves distributed to it by Chericourt (the ‘‘WPFSL Dividend Payment’’).
Financial information of WPFSL
Set out below is the audited financial information of WPFSL and its subsidiary for each
of the three years ended 31 December 2011.
For the year ended 31 December
2009
2010
2011
HK$’000
HK$’000
HK$’000
(Audited)
(Audited)
(Audited)
Revenue
Profit before tax
Profit attributable to shareholders of
WPFSL
60,531
101,775
60,894
106,384
63,527
143,063
94,321
99,425
136,538
As at 31 December
2009
2010
HK$’000
HK$’000
(Audited)
(Audited)
Net assets
517,967
– 24 –
617,392
2011
HK$’000
(Audited)
753,930
LETTER FROM THE BOARD
On 18 June 2012, the Remaining Holdco, Parex and WPFSL entered into the WPFSL
Shares Sale Agreement. Particulars of the WPFSL Shares Sale Agreement are set out below.
Date
18 June 2012
Parties
(i)
Parex (as vendor);
(ii)
the Remaining Holdco (as purchaser); and
(iii) WPFSL
Parex is a company wholly-owned by Mr. Cheng Wai Chee, Christopher, Mr. Cheng
Wai Keung and Mr. Cheng Wai Wing, Edmund. As (a) Mr. Cheng Wai Chee, Christopher is
a Director and, as at the Latest Practicable Date, was interested in 27,000 Shares through his
wife Ms. Cheng Chan Sau Ching, Ivy and (b) Mr. Cheng Wai Keung and Mr. Cheng Wai
Wing, Edmund are brothers of Mr. Cheng Wai Chee, Christopher, Parex is an associate of a
Director and thus a connected person of the Company. The acquisition of the WPFSL Sale
Shares by the Remaining Holdco under the WPFSL Shares Sale Agreement therefore
constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules.
Subject matter
Parex shall sell, and the Remaining Holdco shall purchase, the WPFSL Sale Shares. The
WPFSL Sale Shares represent approximately 4.76% of the issued share capital of WPFSL.
Consideration
The total consideration for the WPFSL Sale Shares will be made in cash and shall be
equal to 1/21 of the consolidated net asset value of WPFSL and its subsidiary on the
completion date of the WPFSL Shares Sale Agreement after:
(i)
the Shareholders’ Loan Repayment; and
(ii)
the WPFSL Dividend Payment,
such consolidated net asset value to be derived from the pro forma consolidated accounts of
the WPFSL Group as at the completion date of the WPFSL Shares Sale Agreement (the
‘‘WPFSL Pro Forma Accounts’’). For the purposes of the WPFSL Pro Forma Accounts, the
valuation of those units and car park podium of the Property owned by the WPFSL Group
shall be the valuation attributed to such units and car park podium in the Regent Centre
Valuation Report.
– 25 –
LETTER FROM THE BOARD
If requested in writing by either Parex or the Remaining Holdco after the completion of
the WPFSL Shares Sale Agreement, the Remaining Holdco and WPFSL shall procure that an
audit is conducted on the WPFSL Group for the period from 1 January 2012 to and including
the completion date of the WPFSL Shares Sale Agreement, such consolidated accounts to be
prepared in accordance with accounting principles and practices adopted by the Company in
the preparation of its audited consolidated accounts for the year ended 31 December 2011
consistently applied (the ‘‘Completion Accounts’’), provided that the valuation of those units
and the car park podium of the Property owned by WPFSL and its subsidiary shall be the
valuation attributed to such units and the car park podium in the Regent Centre Valuation
Report.
In the event that 1 / 21 of the consolidated net asset value of the WPFSL Group as shown
by the audited Completion Accounts:
(i)
is less than the amount paid by way of consideration to Parex at the completion
date of the WPFSL Shares Sale Agreement, Parex shall pay to the Remaining
Holdco an amount equivalent to such shortfall on a dollar-for-dollar indemnity
basis; or
(ii)
exceeds the amount paid by way of consideration to Parex at the completion date
of the WPFSL Shares Sale Agreement, the Remaining Holdco shall pay to Parex
an amount equivalent to such excess on a dollar-for-dollar indemnity basis.
The consideration in respect of the WPFSL Sale Shares under the WPFSL Shares Sale
Agreement was determined after arm’s length negotiations between the Remaining Holdco
and Parex. Such consideration will be satisfied from internal resources of the Group and
payable upon completion of the WPFSL Shares Sale Agreement.
Based on the audited net asset value of the WPFSL Group at 31 December 2011 of
HK$753.9 million, the consideration payable to Parex after the WPFSL Dividend Payment of
HK$453.5 million, is approximately HK$14.3 million. The Shareholders’ Loan Repayment of
HK$32.5 million at 31 December 2011 does not affect the consolidated net asset value of the
WPFSL Group. Since the net asset value of the WPFSL Group after the Group
Reorganisation may be different to the net asset value as at 31 December 2011, the
consideration payable under the Winsor Connected Transaction may also be different.
Conditions
The WPFSL Shares Sale Agreement is conditional upon satisfaction of the following
conditions:
i.
the passing by the Independent Shareholders at the EGM of resolutions to approve
the WPFSL Shares Sale Agreement, the Distribution In Specie, the Special Cash
Dividend, the Special Deals and any other matters contemplated by the Group
Reorganisation or related thereto that require Shareholders’ approval in accordance
with the Listing Rules and/or the Takeovers Code or as required by the Stock
Exchange or, as applicable, the SFC;
– 26 –
LETTER FROM THE BOARD
ii.
the granting by the Executive of its consent for the sale and purchase of the
WPFSL Sale Shares, the Shareholders’ Loan Repayment and the WPFSL Dividend
Payment, and fulfilment of all conditions (if any) attaching to such consent;
iii.
the passing by the Wing Tai Shareholders at the Wing Tai SGM of resolutions to
approve Wing Tai’s entry into and performance of the Share Sale Agreement, the
disposal of the Sale Shares and (if applicable) the Further Shares, the making of
the Privateco Offer and the acquisition of the Privateco Shares and any other
matters contemplated by the Group Reorganisation, the Share Sale Agreement or
related thereto that require shareholders’ approval in accordance with the Listing
Rules and/or the Takeovers Code or as required by the Stock Exchange or, as
applicable, the SFC;
iv.
as at completion of the WPFSL Shares Sale Agreement, none of Parex’s
warranties stated in the WPFSL Shares Sale Agreement are untrue or inaccurate
or misleading in any material respect by reference to the facts and circumstances
then prevailing; and
v.
as at completion of the WPFSL Shares Sale Agreement, there being no applicable
laws which legally prohibit the completion of the WPFSL Shares Sale Agreement
by the Remaining Holdco or Parex or any of the transactions contemplated under
the agreement.
Completion
Completion will take place after the above conditions have been satisfied and on the
same date as, but immediately prior to, the Share Sale Completion.
Listing Rules Implication
As each of the applicable percentage ratios is less than 5% for the Company, the
acquisition of the WPFSL Sale Shares by the Remaining Holdco under the WPFSL Shares
Sale Agreement constitutes a connected transaction under Rule 14A.32(1) of the Listing
Rules for the Company and is subject to the reporting and announcement requirements set out
in Chapter 14A of the Listing Rules but exempt from the Independent Shareholders’ approval
requirements under Chapter 14A of the Listing Rules.
Takeovers Code Implication
As (a) Mr. Cheng Wai Chee, Christopher is a director of Wing Tai and, as at the Latest
Practicable Date, was interested in 27,000 Shares through his wife Ms. Cheng Chan Sau
Ching, Ivy and (b) Mr. Cheng Wai Keung and Mr. Cheng Wai Wing, Edmund are brothers of
Mr. Cheng Wai Chee, Christopher, the acquisition of the WPFSL Sale Shares by the
Remaining Holdco, the Shareholders’ Loan Repayment and the WPFSL Dividend Payment
constitute special deals in relation to the Offers under Rule 25 of the Takeovers Code in
relation to the Offers.
– 27 –
LETTER FROM THE BOARD
An application has been made by the Company to the Executive for consent to proceed
with (a) the acquisition of the WPFSL Sale Shares by the Remaining Holdco, (b) the
Shareholders’ Loan Repayment, and (c) the WPFSL Dividend Payment. Such consent, if
granted, will be subject to (i) the opinion of the Independent Financial Adviser to the
Independent Board Committee and the Independent Shareholders that (x) the acquisition of
the WPFSL Sale Shares by the Remaining Holdco, (y) the Shareholders’ Loan Repayment,
and (z) the WPFSL Dividend Payment are fair and reasonable, and (ii) the approval of
acquisition of the WPFSL Sale Shares by the Remaining Holdco, the Shareholders’ Loan
Repayment and the WPFSL Dividend Payment by the Independent Shareholders by way of
poll at the EGM.
General
The Winsor Connected Transaction will be part of the Group Reorganisation, the
completion of which is one of the pre-conditions for the Share Sale Completion.
(ii)
Special Deal — The Management Agreement
The operation and management of the companies and properties within the Group are, as at
the Latest Practicable Date, centrally organised.
Pursuant to the Group Reorganisation, the sole real estate asset of the Remaining Group after
the Distribution In Specie has been made and the Special Cash Dividend has been paid will be the
Property. The Remaining Group will not carry on any business other than the business of holding,
or relating to the operation and management of, the Property. All the employees whose roles were,
prior to the Group Reorganisation, to operate and manage the Property, including providing estate
and leasing management and the provision of company secretarial, bookkeeping and other related
administrative services, are employed by companies within the Privateco Group, and which will,
after completion of the Distribution In Specie, cease to be part of the Group.
In order for the Remaining Group to be able to continue operating without interruption after
the Distribution In Specie has been made, the Privateco and the Remaining Holdco have entered
into the Management Agreement on 18 June 2012 to provide for the continuation of the existing
management and administration services provided by the relevant members of the Privateco Group
to the Remaining Group on a basis consistent with the provision of those services over the
preceding 12 months (including as to pricing).
On 18 June 2012, the Management Agreement was entered into between the Privateco and
Remaining Holdco. Particulars of the terms of the Management Agreement are set out below.
Date
18 June 2012
Parties
(i)
Privateco
(ii)
Remaining Holdco
– 28 –
LETTER FROM THE BOARD
Scope of Services
A.
Provision of company secretarial, bookkeeping and other
administrative services by members of the Privateco Group to
members of the Remaining Group in a manner and on terms
consistent with the provision of such services over the 12 months
immediately preceding the date of the Share Sale Agreement
B.
Provision of property management services by East Sun Estate
Management to Chericourt in accordance with the Project
Management Agreement
C.
Provision of property management services by East Sun Estate
Management to WPFSL and Access Rich in a manner and on
terms consistent with the provision of such services by East Sun
Estate Management to Chericourt under the Project Management
Agreement
D.
Provision of property management services by East Sun Estate
Management to Winsor Parking in accordance with the Pooling
Agreement
E.
Provision of staffing relating to car park podium of the Property
by Winsor Estate Management to Chericourt in a manner and on
terms consistent with the provision of such services over the 12
months immediately preceding the date of the Share Sale
Agreement
F.
Provision of brokerage and agency services for the disposal of
units in the Property by Winsor Estate Agents to members of the
Remaining Group (other than Winsor Parking) in a manner and
on terms consistent with the provision of such services to
members of the Remaining Group (other than Winsor Parking)
over the 12 months immediately preceding the date of the Share
Sale Agreement
G.
Provision of brokerage and agency services for the disposal of
units in the Property by Winsor Estate Agents to Winsor Parking
in a manner and on terms consistent with the provision of such
services to Winsor Parking over the 12 months immediately
preceding the date of the Share Sale Agreement
H.
Provision of leasing services by Winsor Estate Agents to Winsor
Parking in relation to the procurement of leasing for units in the
Property in accordance with the Pooling Agreement
– 29 –
LETTER FROM THE BOARD
I.
Provision of leasing services by Winsor Estate Agents to
members of the Remaining Group (other than Winsor Parking) in
relation to the procurement of leasing for units in the Property in
a manner and on terms consistent with the provision of such
services to them over the 12 months immediately preceding the
date of the Share Sale Agreement
Conditions
The Management Agreement is conditional upon (i) the completion of
the Group Reorganisation and the Distribution in Specie; (ii) the
passing by the Independent Shareholders of resolutions to approve the
Management Agreement in accordance with the requirements of the
Takeovers Code; and (iii) consent being given by the Executive for the
Management Agreement which constitutes a special deal under Rule 25
to the Takeovers Code and all conditions (if any) attached to such
consent being fulfilled
Term
The Management Agreement will be effective upon the fulfilment of
the conditions mentioned above, and shall continue until terminated in
accordance with the provisions thereof
Consideration
For each of the services set out under ‘‘Scope of Services’’ above, the
corresponding consideration is set out below:
A.
HK$80,200 per month
B.
Monthly fee of 1% of the gross monthly income derived from the
Property attributable to, and actually received by, Chericourt
during that calendar month as calculated in accordance with the
Project Management Agreement
C.
Monthly fee of 1% of the gross monthly income derived from the
Property attributable to, and actually received by, Access Rich
and WPFSL during that calendar month as calculated in a manner
and on terms consistent with the Project Management Agreement
D.
Monthly fee of 3% of the gross monthly income attributable to,
and actually received by, Winsor Parking during that calendar
month as calculated in accordance with the Pooling Agreement
E.
HK$188,000 per month
F.
1.5% of the consideration in connection with disposal of any unit
in the Property
G.
1% of the consideration in connection with disposal of any unit in
the Property
– 30 –
LETTER FROM THE BOARD
Termination
H.
One (1) month of rent for the procurement of a new lease,
tenancy or licence and 20% of one (1) month of rent for the
renewal of an existing lease, tenancy or licence in accordance
with the Pooling Agreement, in each case multiplied by a fraction
equal to the length of the relevant lease, tenancy or licence
(exclusive of any option term) divided by two (2) years
I.
1.5 months of rent for the procurement of a new lease, tenancy or
licence through Winsor Estate Agents, 50% of one (1) month of
rent for a new lease, tenancy or licence procured through a third
party and 20% of one (1) month of rent for the renewal of an
existing lease, tenancy or licence, in each case multiplied by a
fraction equal to the length of the relevant lease, tenancy or
licence (exclusive of any option term) divided by two (2) years
The Management Agreement is terminable by either party on giving
one month’s notice.
Without prejudice to the above, each of the services to be provided
pursuant to the Management Agreement is terminable by either party
on giving one month’s notice to the other party and such termination
shall not affect the continuation of the other services under the
Management Agreement.
Particulars of the Project Management Agreement and the Pooling Agreement as referred to
in the items (B), (C), (D) and (H) above are summarised below.
The Project Management Agreement
Date
18 June 1996
Parties
(i)
East Sun Estate Management
(ii)
Chericourt
Scope of services
The services provided by East Sun Estate Management shall include (i)
assisting Chericourt in the letting of units and car parking spaces in the
Property (the ‘‘Letting’’), (ii) undertaking the duties as laid down in a
deed of mutual covenant dated 24 March 1997 as the building manager
of the Property, (iii) undertaking management of the Letting,
maintenance and management of the car parking spaces owned by
Chericourt in the Property.
Term
The Project Management Agreement, with effect from 18 June 1996,
shall continue until terminated in accordance with the provisions
thereof.
– 31 –
LETTER FROM THE BOARD
Consideration
Monthly fee of 1% of the gross monthly income derived from the
Property attributable to, and actually received by, Chericourt during
that calendar month.
Termination
The Project Management Agreement is terminable by either party on
giving one month’s notice.
The Pooling Agreement
Date
1 June 2005
Parties
(i)
Chericourt
(ii)
East Sun Estate Management
(iii) Winsor Estate Agents
(iv) Suntec Investment (H.K.) Ltd., Winsor Parking and Brilion
Trading Limited (collectively the ‘‘Owners’’, and each an
‘‘Owner’’)
Subject matter
The Owners and Chericourt together formed a pool (the ‘‘Pool’’)
comprising all units and car parking spaces in the Regent Centre owned
by the Owners, Chericourt and WPFSL from time to time (collectively,
the ‘‘Pooled Units’’) for the purpose of sharing revenue and expenses
pertaining to the Pooled Units.
In consideration of Chericourt agreeing to enter into the Pooling
Agreement, the Owners shall appoint East Sun Estate Management as
their agent for the provision of property management services and
Winsor Estate Agents as their agent for the provision of leasing agency
services in relation to the units and car parking spaces in the Regent
Centre owned by the Owners.
Term
The Pooling Agreement, with effect from 1 June 2005, shall continue
until terminated in accordance with the provisions thereof.
Consideration
Project management services
Each of the Owners shall pay to East Sun Estate Management a
monthly fee at the rate of 3% of the pooled gross monthly income
attributable to its respective units and car parking spaces in the Regent
Centre.
– 32 –
LETTER FROM THE BOARD
Leasing agency services
Each of the Owners shall remunerate Winsor Estate Agents upon
Winsor Estate Agents entering into a binding agreement with any new
or sitting lessee/tenant/licensee in respect of its respective units in the
Regent Centre, such remuneration shall amount to one (1) month rental
payable by the relevant lessee/tenant/licensee in the case of a new
lease/tenancy/licence and 20% of one (1) month rental payable by the
relevant lessee/tenant/licensee in the case of a lease/tenancy/licence
renewal, in each case multiplied by a fraction equal to the length of the
relevant lease, tenancy or licence (exclusive of any option term)
divided by two (2) years.
Termination
Any Owner is entitled to withdraw from the Pooling Agreement by
serving not less than one (1) month’s prior notice in writing to the
other parties specifying therein the effective date of withdrawal which
shall be the first day of a calendar month.
In May 2012, Suntec Investment (H.K.) Ltd and Brilion Trading Limited served notices
to withdraw their participation in the Pooling Agreement with effect from 1 July 2012 in
accordance with the provisions of the Pooling Agreement.
Takeovers Code Implication
The Privateco Group will remain as part of the Wing Tai Group after the completion of
the Distribution In Specie. As the benefits under the ongoing management and administration
services are not capable of being extended to other Shareholders, the Management Agreement
constitutes a special deal in relation to the Offers under Rule 25 of the Takeovers Code.
An application has been made by the Company to the Executive for consent to enter
into the Management Agreement. Such consent, if granted, will be subject to (a) the opinion
of the Independent Financial Adviser to the Independent Board Committee and the
Independent Shareholders that the terms of the Management Agreement are fair and
reasonable, and (b) the approval of the Management Agreement by the Independent
Shareholders by way of poll at the EGM.
– 33 –
LETTER FROM THE BOARD
(iii) Continuing Connected Transactions and/or Special Deal — New Tenancy Agreements
Principal terms of the New Tenancy Agreements are set out below.
New Tenancy Agreements
(1)
(2)
27/F, Two Landmark East
Date:
18 June 2012
Landlord:
Begin Land
Tenant:
WTPHKL
Premises:
27/F of Two Landmark East, 100 How Ming Street, Kwun
Tong, Kowloon, Hong Kong with a total gross floor area of
approximately 19,906 square feet
Condition:
This tenancy agreement is conditional upon, consent being
given by the Executive for this tenancy agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 25 July 2012 (or such earlier date
as Begin Land and WTPHKL may agree in writing).
Term:
Three years from 25 July 2012 to 24 July 2015 (both dates
inclusive)
Rental:
HK$507,603 per month, payable in advance on the first day
of each month, exclusive of management fee, government
rates, and all other tenant’s outgoings
Rent free period:
Nil
Management fee:
HK$85,595.80 per month, payable in advance on the first
day of each month (subject to review by Begin Land or the
property manager from time to time)
25/F and Penthouse, W Square
Date:
18 June 2012
Landlord:
Winnion
Tenant:
WTPDL
Premises:
25/F and Penthouse of W Square, 314–324 Hennessy Road,
Wan Chai, Hong Kong with a total gross floor area of
approximately 8,091 square feet
– 34 –
LETTER FROM THE BOARD
(3)
Condition:
This tenancy agreement is conditional upon, consent being
given by the Executive for this tenancy agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 31 July 2012 (or such earlier date
as Winnion and WTPDL may agree in writing).
Term:
From the date on which the above Executive consent for this
tenancy agreement has been given and all conditions
attaching to such consent have been fulfilled to 8 July 2013
(both dates inclusive)
Rental:
HK$303,412.50 per month, payable in advance on the first
day of each month, exclusive of management fee and airconditioning charges, government rates, and all other tenant’s
outgoings
Rent free period:
Nil
Management fee and
air-conditioning
charges:
HK$40,455 per month, payable in advance on the first day of
each month (subject to review by Winnion or the property
manager from time to time)
6/F, W Square
Date:
18 June 2012
Landlord:
Winnion
Tenant:
True Synergy
Premises:
6/F of W Square, 314–324 Hennessy Road, Wan Chai, Hong
Kong with a total gross floor area of approximately 5,511
square feet
Condition:
This tenancy agreement is conditional upon, consent being
given by the Executive for this tenancy agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 1 October 2012 (or such earlier date
as Winnion and True Synergy may agree in writing).
Term:
Nine months and eight days from 1 October 2012 to 8 July
2013 (both dates inclusive)
Rental:
HK$192,885 per month, payable in advance on the first day
of each month, exclusive of management fee and airconditioning charges, government rates, and all other
tenant’s outgoings
Rent free period:
Nil
– 35 –
LETTER FROM THE BOARD
Management fee and
air-conditioning
charges:
(4)
(5)
HK$35,821.50 per month, payable in advance on the first
day of each month (subject to review by Winnion or the
property manager from time to time)
Unit 701, 7/F, Tower B, Regent Centre
Date:
18 June 2012
Licensor:
Chericourt
Licensee:
East Sun Estate Management
Premises:
Unit 701, 7/F, Tower B, Regent Centre, 70 Ta Chuen Ping
Street, Kwai Chung, New Territories, Hong Kong with a
total gross floor area of approximately 1,432 square feet
Condition:
This licence agreement is conditional upon, consent being
given by the Executive for this licence agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 1 September 2012 (or such earlier
date as Chericourt and East Sun Estate Management may
agree in writing).
Term:
One year from 1 September 2012 to 31 August 2013 (both
dates inclusive)
Early termination right:
Either party has the right to early terminate the licence
agreement by giving 1 month’s notice
Licence fee:
HK$9,751.92 per month, payable in advance on the first day
of each month, exclusive of management fee, government
rent and rates and all other tenant’s outgoings
Licence fee free period:
One month from 1 September 2012 to 30 September 2012
(both dates inclusive) during which East Sun Estate
Management shall be responsible for management fee,
government rent and rates, and all other tenant’s outgoings
Management fee:
HK$2,577.60 per month, payable in advance on the first day
of each month (subject to review by the property manager
from time to time)
Unit 2209, 22/F, Tower B, Regent Centre
Date:
18 June 2012
Licensor:
Chericourt
– 36 –
LETTER FROM THE BOARD
(6)
Licensee:
Winsor Estate Agents
Premises:
Unit 2209, 22/F, Tower B, Regent Centre, 70 Ta Chuen Ping
Street, Kwai Chung, New Territories, Hong Kong with a
total gross floor area of approximately 1,348 square feet
Condition:
This licence agreement is conditional upon, consent being
given by the Executive for this licence agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 3 October 2012 (or such earlier date
as Chericourt and Winsor Estate Agents may agree in
writing).
Term:
One year from 3 October 2012 to 2 October 2013 (both dates
inclusive)
Early termination right:
Either party has the right to early terminate the licence
agreement by giving 1 month’s notice
Licence fee:
HK$10,527.88 per month, payable in advance on the first
day of each month, exclusive of management fee,
government rent and rates, and all other tenant’s outgoings
Licence fee free period:
One month from 3 October 2012 to 2 November 2012 (both
dates inclusive) during which Winsor Estate Agents shall be
responsible for management fee, government rent and rates,
and all other tenant’s outgoings
Management fee:
HK$2,426.40 per month, payable in advance on the first day
of each month (subject to review by the property manager
from time to time)
Units 818–819, 8/F, Tower A, Regent Centre
Date:
18 June 2012
Landlord:
Chericourt
Tenant:
Winsor Health
Premises:
Units 818–819, 8/F, Tower A, Regent Centre, 63 Wo Yi Hop
Road, Kwai Chung, New Territories, Hong Kong with a total
gross floor area of approximately 2,599 square feet
– 37 –
LETTER FROM THE BOARD
Condition:
This tenancy agreement is conditional upon, consent being
given by the Executive for this tenancy agreement which
constitutes a special deal under Rule 25 of the Takeovers
Code, and all conditions attached to such consent being
fulfilled, in each case by 31 October 2012 (or such earlier
date as Chericourt and Winsor Health may agree in writing).
Term:
10 months from 1 January 2013 to 31 October 2013 (both
dates inclusive)
Rental:
HK$18,452.90 per month, payable in advance on the first
day of each month, exclusive of management fee,
government rent and rates, and all other tenant’s outgoings
Rent free period:
Nil
Management fee:
HK$4,678.20 per month, payable in advance on the first day
of each month (subject to review by the property manager
from time to time)
Listing Rules Implication
Items (1) to (3) of the above constitute continuing connected transactions of the
Company under Chapter 14A of the Listing Rules as each of the relevant tenants (namely,
WTPHKL, WTPDL and True Synergy respectively) under such three New Tenancy
Agreements is an indirect wholly-owned subsidiary of Wing Tai. As all the applicable
percentage ratios under Rule 14.07 of the Listing Rules for such three New Tenancy
Agreements on an aggregated and annual basis fall within the threshold prescribed in Rule
14A.34 of the Listing Rules, each of such three New Tenancy Agreements is subject to the
reporting and announcement requirements but exempt from the Independent Shareholders’
approval requirements under Chapter 14A of the Listing Rules.
Items (4) and (5) of the above do not constitute continuing connected transactions of
the Company under Chapter 14A of the Listing Rules as Chericourt (being the licensor) is a
95.24% owned subsidiary of the Company whereas East Sun Estate Management and Winsor
Estate Agents (each being the respective licensee) are both wholly-owned subsidiaries of the
Company before the completion of the Distribution In Specie.
Item (6) of the above does not constitute a continuing connected transaction of the
Company under Chapter 14A of the Listing Rules. Ms. Chen Chou Mei Mei, Vivien, who is
an executive Director, has an indirect effective shareholding of approximately 5% in Winsor
Health (being the tenant under such New Tenancy Agreement) as at the Latest Practicable
Date, and Mr. Chow Wai Wai John, who is an executive Director, has an indirect effective
shareholding of approximately 6% in Winsor Health as at the Latest Practicable Date. As the
shareholding of Ms. Chen Chou Mei Mei, Vivien and Mr. Chow Wai Wai John in Winsor
Health is each below 30% and they do not control the composition of the majority of the
board of Winsor Health, Winsor Health is not an associate of either Ms. Chen Chou Mei Mei,
– 38 –
LETTER FROM THE BOARD
Vivien or Mr. Chow Wai Wai John and is therefore not a connected person of the Company
under the definitions of the Listing Rules. The Company does not have any interest, direct or
indirect, in the shares of Winsor Health.
Takeovers Code Implication
As the New Tenancy Agreements were entered into during the offer periods of the
Offers, and as the arrangements under any New Tenancy Agreements are not capable of
being extended to all Shareholders, the New Tenancy Agreements constitute special deals in
relation to the Offers under Rule 25 of the Takeover Code.
An application has been made by the Company to the Executive for consent to enter
into each of the New Tenancy Agreements. Such consent, if granted, will be subject to (a)
the opinion of the Independent Financial Adviser to the Independent Board Committee and
the Independent Shareholders that the terms of the relevant New Tenancy Agreement are fair
and reasonable, and (b) the approval of the relevant New Tenancy Agreement by the
Independent Shareholders by way of poll at the EGM.
General
The entry into of the New Tenancy Agreements is not a condition to the Share Sale
Completion, completion of the Distribution In Specie or payment of the Special Cash
Dividend. If any of the above New Tenancy Agreements is not approved by the Independent
Shareholders at the EGM, the relevant New Tenancy Agreement will not become
unconditional and will cease to have effect. However, the Share Sale Completion,
completion of the Distribution In Specie and payment of the Special Cash Dividend will not
be affected.
E.
POSSIBLE UNCONDITIONAL MANDATORY CASH OFFER FOR THE SHARES
Upon the Share Sale Completion (assuming that no Further Shares will be acquired by Wing Tai
subsequent to the Latest Practicable Date and then sold to the Purchaser or the Offeror pursuant to the
Share Sale Agreement up to the Share Sale Completion), the Purchaser or the Offeror will hold
191,935,845 Shares, representing approximately 73.91% of the issued share capital of the Company as at
the Latest Practicable Date. Upon the Share Sale Completion, the completion of the Distribution In
Specie and the payment of the Special Cash Dividend, CITIC will, on behalf of the Offeror and pursuant
to the Takeovers Code, make the Listco Offer, which is an unconditional mandatory cash offer to
acquire all the issued Shares (other than those already owned or agreed to be acquired by the Purchaser,
the Offeror and parties acting in concert with any of them) on the following basis:
for each Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$5.6197 in cash
The making of the Listco Offer is subject to the Share Sale Completion which in turn is
subject to a number of conditions precedent as referred to in the paragraph headed ‘‘Share Sale
Agreement — Conditions precedent’’ above and therefore is a possibility only and it may or may
not proceed.
In the event that the Listco Offer is made, it will be an unconditional mandatory cash offer.
– 39 –
LETTER FROM THE BOARD
As at the Latest Practicable Date, there are 259,685,288 Shares in issue. As at the Latest
Practicable Date, the Company has no outstanding securities, options, warrants or derivatives which are
convertible into or which confer rights to require the issue of Shares and the Company has no other
relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code).
As at the Latest Practicable Date, the Offeror has not received any indication or irrevocable
commitment from any Shareholder that he/she/it will accept or reject the Listco Offer.
Further information on the Listco Offer is set out in part A of Appendix I to this circular.
F.
POSSIBLE UNCONDITIONAL VOLUNTARY CASH OFFER FOR THE PRIVATECO
SHARES
Based on the current shareholding structure of the Company, Wing Tai together with its associates
and parties acting in concert with it (but excluding connected persons of Wing Tai to whom the
Privateco Offer will extend and whose Privateco Shares may be acquired under the Wing Tai Connected
Transaction) will be interested in a total of 205,835,845 Privateco Shares, representing approximately
79.26% of the issued share capital of the Privateco following the Distribution In Specie.
Given that the Privateco Shares will not be listed on the Stock Exchange or any other stock
exchange, it will be difficult, if not impossible, for holders of the Privateco Shares to liquidate their
holdings in the Privateco Shares. Wing Tai considers, in these circumstances, that it is appropriate to
provide the Privateco Shareholders with an opportunity to realise their holdings in the Privateco Shares
by making the Privateco Offer on a voluntary basis pursuant to the Takeovers Code.
After the Share Sale Completion, completion of the Distribution In Specie and payment of the
Special Cash Dividend, SCB will, on behalf of Wing Tai (or a wholly-owned subsidiary of Wing Tai)
and pursuant to the Takeovers Code, make the Privateco Offer to the Privateco Shareholders to acquire
all the Privateco Shares (other than those already owned or agreed to be acquired by Wing Tai, but
including those owned by certain connected persons of Wing Tai whose Privateco Shares may be
acquired under the Wing Tai Connected Transaction) on the following basis:
for each Privateco Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$27.60 in cash
* The number of the Privateco Shares to be in issue will be equal to the total number of the Shares in issue on the Record
Date.
As at the Latest Practicable Date, there were 259,685,288 Shares in issue and one Privateco Share
in issue. The number of Privateco Shares in issue on the Record Date will be equal to the number of
Shares in issue as at that date. As at the Latest Practicable Date, Privateco has no outstanding securities,
options, warrants or derivatives which are convertible into or which confer rights to require the issue of
Privateco Shares and Privateco has no other relevant securities (as defined in Note 4 to Rule 22 of the
Takeovers Code).
The making of the Privateco Offer is subject to the Share Sale Completion which in turn is
subject to a number of conditions precedent as referred to in the paragraph headed ‘‘Share Sale
Agreement — Conditions precedent’’ above and therefore is only a possibility and may or may not
proceed. In the event that the Privateco Offer is made, it will be an unconditional cash offer.
– 40 –
LETTER FROM THE BOARD
Further information on the Privateco Offer is set out in part B of Appendix I to this circular.
Other arrangements
Privateco was incorporated in the BVI on 29 May 2012. Wing Tai has confirmed that:
(a)
as at the Latest Practicable Date, none of Wing Tai, its ultimate beneficial owners, or
parties acting in concert with any of them (other than the Company) owned or had
control or direction over any voting rights or rights over the Privateco Shares or
convertible securities, options, warrants or derivatives of Privateco;
(b)
none of Wing Tai, its ultimate beneficial owners, or parties acting in concert with any
of them (other than the Company) had dealt in any shares, convertible securities,
options, warrants or derivatives of Privateco during the period from the incorporation of
the Privateco on 29 May 2012 up to the Latest Practicable Date. None of Wing Tai, its
ultimate beneficial owners, or parties acting in concert with any of them had entered
into any agreements in relation to the issue of any convertible securities, options,
warrants or derivatives of Privateco;
(c)
there are no other arrangements, whether by way of option, indemnity or otherwise, in
relation to the Privateco Shares or the shares of Wing Tai and which may be material to
the Privateco Offer;
(d)
other than the Share Sale Agreement, there are no other agreements or arrangements to
which Wing Tai is a party and relate to the circumstances in which it may or may not
invoke or seek to invoke a precondition or a condition to the Privateco Offer; and
(e)
as at the Latest Practicable Date, none of Wing Tai, its ultimate beneficial owners, or
parties acting in concert with any of them had entered into any contracts in relation to
the outstanding derivatives in respect of the securities in the Privateco and have not
borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the
Takeovers Code) in the Privateco.
Based on the shareholding structure of the Company as at the Latest Practicable Date, Wing
Tai and parties acting in concert with it will be interested in a total of 208,646,345 Privateco
Shares, representing approximately 80.35% of the issued share capital of the Privateco following
completion of the Distribution In Specie. Further announcement(s) will be made as and when
appropriate to comply with Rule 3.5(c)(iii) of the Takeovers Code.
G.
INFORMATION ON THE REMAINING GROUP
Upon completion of the Group Reorganisation, the Remaining Group will be engaged solely in the
business of holding, and the operation and management of, the Property.
The Property is an investment property held by the Group for rental income and comprises units
and car park podium in Regent Centre with an aggregate gross floor area of approximately 657,000
square feet (representing approximately 63.8% of the total gross floor area of Regent Centre). The
Property does not include Units 505–510, 5/F, Tower B of Regent Centre owned by Chericourt and
which form part of the Distributed Businesses (with an aggregate floor area of approximately 8,000
square feet representing approximately 0.8% of total gross floor area of Regent Centre), or units in
Regent Centre not owned by the Group (with an aggregate gross floor area of approximately 365,000
– 41 –
LETTER FROM THE BOARD
square feet representing approximately 35.4% of the total gross floor area of Regent Centre). The
Property is situated at 63 Wo Yi Hop Road and 70 Ta Chuen Ping Street, Kwai Chung, New Territories,
Hong Kong.
H.
FINANCIAL AND TRADING PROSPECT OF THE REMAINING GROUP
Upon completion of the Group Reorganisation, the Remaining Group will be engaged solely in the
business of holding, and the operation and management of, the Property.
As shown in note 38(d) to the Accountant’s Report of the Company in Appendix II to this circular,
the Property generated net profit of approximately HK$145.6 million and revenue of approximately
HK$67.2 million for the year ended 31 December 2011. Average occupancy of the Property was
approximately 90% during the year ended 31 December 2011.
Approximately 47% of the tenancies in the Property by floor area will expire in 2012. In view of
the progress of the new and renewal leases up to the Latest Practicable Date, the Property is expected to
maintain a high level of occupancy in 2012. As advised by the Offeror and the Purchaser, as at the
Latest Practicable Date, (i) the Offeror and the Purchaser intended to continue the principal business of
the Remaining Group of property investment and management and investment holding and the Offeror
and the Purchaser might consider diversifying the business of the Remaining Group with an objective to
broaden its income sources should suitable investment or business opportunities arise; and (ii) no such
investment or business opportunities have been identified.
The management discussion and analysis on the businesses under the Remaining Group Entities is
set out in Appendix IV to this circular.
I.
GENERAL
EGM
The EGM will be held for the purpose of considering and, if thought fit, approving the
resolutions in respect of the Distribution In Specie, the Special Cash Dividend, the Special Deals,
the New Tenancy Agreements, and the transactions contemplated thereunder by the Independent
Shareholders, by way of poll at the EGM. Wing Tai, the Purchaser, and any other Shareholders
who are involved in or interested in the Transactions, the Special Deals and the New Tenancy
Agreements, and the transactions contemplated thereunder and their respective associates and
parties acting in concert with each of them (including Mr. Chow Wai Wai, John, Mr. Kwok Ping
Luen, Raymond, Ms. Chen Chou Mei Mei, Vivien, Ms. Cheng Chan Sau Ching, Ivy and SCB
Singapore) will abstain from voting on the relevant resolution(s) at the EGM. There is (i) no
voting trust or other agreement or arrangement or understanding entered into by or binding upon
any of the abstaining Shareholders, and (ii) no obligation or entitlement of any such abstaining
Shareholder as at the Latest Practicable Date, whereby he/she/it may have temporarily or
permanently passed control over the exercise of the voting rights in respect of his/her/its Shares to
a third party, either generally or on a case-by-case basis.
As at the Latest Practicable Date, Wing Tai, its associates and parties acting in concert with
it (but excluding those Shares held by its connected persons to whom the Privateco Offer will
extend and whose Privateco Shares may be acquired under the Wing Tai Connected Transaction)
– 42 –
LETTER FROM THE BOARD
held 205,835,845 Shares, representing approximately 79.26% of the entire existing issued share
capital in the Company. When taken together with the Shares held by its connected persons that
are the subject of the Wing Tai Connected Transaction, Wing Tai, and its associates and parties
acting in concert with it beneficially owned a total of 208,646,345 Shares (representing
approximately 80.35% of the entire existing issued share capital of the Company) as at the Latest
Practicable Date.
A notice convening the EGM is set out on pages 344 to 351 of this circular. Whether or not
you intend to attend the meeting or any adjournment thereof, please complete and return the
enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and
in any event not less than 48 hours before the time appointed for holding the meeting or any
adjournment thereof to the principal place of business of the Company at 8th Floor, AXA Tower,
Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong. Completion and return
of the form of proxy will not preclude you from attending and voting at the meeting or any
adjournment meeting if you so wish.
Independent Board Committee
The Independent Board Committee comprising all the independent non-executive directors of
the Company who have no direct or indirect interest in the Transactions, the Special Deals and the
New Tenancy Agreements (namely Mr. Christopher Patrick Langley, Dr. Lo Ka Shui and Mr.
Haider Hatam Tyebjee Barma) has been formed in order to make a recommendation to the
Independent Shareholders as to whether the Distribution In Specie, the Special Cash Dividend, the
Special Deals, the New Tenancy Agreements, and the respective transactions contemplated
thereunder are fair and reasonable so far as the Independent Shareholders are concerned.
Somerley Limited has been appointed to advise the Independent Board Committee and the
Independent Shareholders in relation to the above.
J.
RECOMMENDATION
The Board (other than members of the Independent Board Committee, whose view is set out in the
‘‘Letter from the Independent Board Committee’’ in this circular) believes that the terms of the
Distribution In Specie, the Special Cash Dividend, the Special Deals, the New Tenancy Agreements, and
the respective transactions contemplated thereunder (where appropriate) are fair and reasonable and
recommends the Independent Shareholders to vote in favour of the resolutions to be proposed at the
EGM to approve the Distribution In Specie, the Special Cash Dividend, the Special Deals, the New
Tenancy Agreements, and the respective transactions contemplated thereunder (where appropriate).
K.
FURTHER INFORMATION
Your attention is drawn to the additional information set out in the appendices to this circular.
Yours faithfully,
For and on behalf of
Winsor Properties Holdings Limited
Cheng Wai Chee, Christopher
Chairman
– 43 –
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
Set out below is the text of the letter of recommendation from the Independent Board Committee in
respect of the Distribution In Specie, the Special Cash Dividend, the Special Deals and the New
Tenancy Agreements.
(Stock Code: 1036)
20 June 2012
To the Independent Shareholders
Dear Sir or Madam,
(1) DISTRIBUTION IN SPECIE OF THE PRIVATECO SHARES AND
PAYMENT OF THE SPECIAL CASH DIVIDEND
(2) THE SPECIAL DEALS
(3) THE NEW TENANCY AGREEMENTS
We refer to the circular of the Company to the Shareholders dated 20 June 2012 (the ‘‘Circular’’),
of which this letter forms a part. Unless the context requires otherwise, capitalised terms used in this
letter will have the same meanings given to them in the section headed ‘‘Definitions’’ of the Circular.
We have been appointed by the Board to advise the Independent Shareholders as to whether the
terms of the Distribution In Specie, the Special Cash Dividend, the Special Deals and the New Tenancy
Agreements, are fair and reasonable so far as the Independent Shareholders are concerned.
The Distribution In Specie, payment of Special Cash Dividend and the Special Deals are to
facilitate completion of the Share Sale Completion, upon which CITIC on behalf of the Offeror will
make the Listco Offer and SCB on behalf of Wing Tai (or a wholly-owned subsidiary of Wing Tai) will
make the Privateco Offer. Your voting decision on the ordinary resolutions to be proposed at the EGM
to approve the Distribution In Specie, the Special Cash Dividend and the Special Deals will determine
whether or not the whole of the Transactions may take place.
We also wish to draw your attention to the letter of advice from Somerley Limited, being the
Independent Financial Adviser appointed to advise the Independent Board Committee and the
Independent Shareholders on the terms of the Distribution In Specie, the Special Cash Dividend, the
Special Deals and the New Tenancy Agreements, which contains, among other things, its advice,
opinions and recommendations regarding the terms of the Distribution In Specie, the Special Cash
Dividend, the Special Deals and the New Tenancy Agreements as set out on pages 46 to 84 of the
Circular, and the letter from the Board as set out on pages 10 to 43 of the Circular.
– 44 –
LETTER FROM THE INDEPENDENT BOARD COMMITTEE
Having given due consideration to the factors and reasons relating to the captioned proposals (1),
(2) and (3) and in particular to the advice, opinions and recommendations of Somerley Limited as stated
in its letter of advice dated 20 June 2012,
(i)
we concur with Somerley Limited that the discount to the adjusted net asset value of the
Company attributable to the Shareholders of approximately 21.4% and the significant uplift
in the price of the Shares to HK$34 per Share, as arrived at in the Combined Cash Exit,
represent, fair and reasonable offers to the Independent Shareholders;
(ii)
we consider that the terms of the Distribution In Specie and the Special Cash Dividend are
fair and reasonable so far as the Independent Shareholders are concerned and accordingly we
recommend such Independent Shareholders to vote in favour of the ordinary resolution to be
proposed at the EGM to approve the Distribution In Specie and payment of the Special Cash
Dividend;
There may however be Independent Shareholders who have a clear preference to remain
shareholders of Winsor as it is presently constituted, whether by reason of the relative
reliability of income by way of dividends, the relative transparency of reporting (as compared
to Privateco), and/or any other reasons, and who may therefore consider voting against the
Distribution In Specie and the Special Cash Dividend resolution. Such shareholders should
bear in mind, however, the likelihood of (a) the significant fall in the price of the Shares that
might result from the ordinary resolution to approve the Distribution In Specie and the
payment of the Special Cash Dividend not being passed at the EGM, and (b) the subsequent
relatively illiquid market in the Shares; and
(iii) we consider that the terms of the Special Deals and the New Tenancy Agreements are fair
and reasonable so far as the Independent Shareholders are concerned and accordingly, we
recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be
proposed at the EGM to approve the Special Deals and the New Tenancy Agreements.
Yours faithfully,
Independent Board Committee
Winsor Properties Holdings Limited
Christopher Patrick Langley
Lo Ka Shui
Haider Hatam Tyebjee Barma
Independent Non-Executive Directors
– 45 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The following is the full text of a letter of advice from Somerley Limited to the Independent Board
Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in
this circular.
SOMERLEY LIMITED
10th Floor
The Hong Kong Club Building
3A Chater Road
Central
Hong Kong
20 June 2012
To: the Independent Board Committee and
the Independent Shareholders
Dear Sirs,
DISTRIBUTION IN SPECIE OF THE PRIVATECO SHARES
AND PAYMENT OF THE SPECIAL CASH DIVIDEND
SPECIAL DEALS AND THE NEW TENANCY AGREEMENTS
INTRODUCTION
We refer to our appointment to advise the Independent Board Committee and the Independent
Shareholders in connection with the Special Deals, the New Tenancy Agreements, the Distribution In
Specie, the Special Cash Dividend, and the respective transactions contemplated thereunder (the
‘‘Proposal’’). Details of the Proposal are contained in the circular dated 20 June 2012 (the ‘‘Circular’’),
of which this letter forms a part. Terms used in this letter shall have the same meanings as those defined
in the Circular unless the context otherwise requires.
On 13 May 2012, the Share Sale Agreement was entered between Wing Tai, the Purchaser and the
Guarantor, pursuant to which approximately 73.91% of the issued share capital of the Company was
agreed to be sold by its controlling shareholder, Wing Tai, at a consideration of HK$5.6197 per Sale
Share, or an aggregate consideration of approximately HK$1,078.6 million, subject to certain conditions.
The Share Sale Completion is conditional upon a reorganisation exercise to be undertaken by the Group
(i.e. the Group Reorganisation), including a separation of the current businesses of the Group into the
Remaining Group and the Privateco Group.
Conditional upon, among other things, the completion of the Group Reorganisation, the Company
will, on the same date as the Share Sale Completion, effect a distribution in specie of the Privateco
Shares and pay the Special Cash Dividend to the Shareholders, on the basis of one Privateco Share and
HK$0.7803 in cash for every Share held.
– 46 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As part of the whole exercise, certain transactions, namely the Winsor Connected Transaction, the
Management Agreement and the New Tenancy Agreements, constitute special deals under Rule 25 of the
Takeovers Code and require approval from the Independent Shareholders.
The Proposal is subject to the approval by the Independent Shareholders by way of poll at the
EGM. Wing Tai and the Purchaser, and their respective associates and parties acting in concert with
each of them will abstain from voting on the relevant resolutions regarding the Special Deals, the New
Tenancy Agreements, the Distribution In Specie and the Special Cash Dividend which will be taken by
way of poll at the EGM.
The Independent Board Committee, comprising all of the independent non-executive Directors,
namely Mr. Christopher Patrick Langley, Dr. Lo Ka Shui and Mr. Haider Hatam Tyebjee Barma, has
been established to make a recommendation to the Independent Shareholders as to whether the terms of
the Proposal are fair and reasonable so far as the Independent Shareholders are concerned and whether
the Independent Shareholders should be recommended to vote in favour of the Proposal at the EGM.
The Independent Board Committee has approved the appointment of Somerley Limited as the
Independent Financial Adviser to advise the Independent Board Committee and the Independent
Shareholders in this regard.
We are not associated with the Company, Wing Tai or any party acting, or presumed to be acting,
in concert with any of them and, accordingly, are considered eligible to give independent advice on the
Proposal. Apart from normal professional fees payable to us in connection with this appointment, no
arrangement exists whereby we will receive any fees or benefits from the Company, Wing Tai or any
party acting, or presumed to be acting, in concert with any of them.
In formulating our advice and recommendation, we have relied on the information and facts
supplied, and the opinions expressed, by the directors and management of the Company, which we have
assumed to be true, accurate and complete at the time they were made and up to the date of the Circular.
Shareholders will be informed as soon as reasonably practicable after we become aware of any material
change to the above. We have reviewed the published information on the Company, including its annual
reports for the three years ended 31 December 2009, 2010 and 2011, the accountant’s reports of the
Company and the Privateco Group as set out in Appendix II and Appendix III respectively, the
unaudited pro forma financial information of the Remaining Group and the Privateco Group as set out in
Appendix V and Appendix VI respectively, and the property valuation reports as set out in Appendix
VII to the Circular. We have sought and received confirmation from the Directors that no material facts
have been omitted from the information supplied and opinions expressed by them. We consider that the
information we have received is sufficient for us to reach our opinion and advice as set out in this letter.
We have no reason to doubt the truth and accuracy of the information provided to us or to believe that
any material facts have been omitted or withheld. We have not, however, conducted any independent
investigation into the business and affairs of the Group, nor have we carried out any independent
verification of the information supplied.
PRINCIPAL FACTORS AND REASONS CONSIDERED
The Proposal comprises the Special Deals, the New Tenancy Agreements, the Distribution In
Specie and the Special Cash Dividend. The Distribution In Specie and the Special Cash Dividend will be
voted on at the EGM under the same resolution.
– 47 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
In formulating our opinion and recommendation with regard to the Proposal, we have taken into
account the following principal factors and reasons:
A
THE DISTRIBUTION IN SPECIE AND THE SPECIAL CASH DIVIDEND
1.
Background to and reasons for the Proposal
The Company is principally engaged in property investment and management,
warehousing and investment holding. The Group’s rental and property management business
generated over 95% of the Group’s revenue and segment results for each of two years ended
31 December 2010 and 2011. As at 31 December 2011, the Group’s investment properties,
which principally consist of Grade A office buildings located in Wan Chai and Kwun Tong,
Hong Kong and industrial buildings located in Kwai Chung, Kowloon Bay and Tsuen Wan,
Hong Kong, have a value of approximately HK$12,168 million.
Wing Tai, the parent of the Company, is principally engaged in property development,
property investment and management, hospitality investment and management, garment
manufacturing and investing activities. As at the Latest Practicable Date, Wing Tai held
approximately 73.91% of the issued share capital of the Company (directly through itself and
indirectly through Twin Dragon, a wholly-owned subsidiary of Wing Tai).
Background to the Proposal
The Company announced on 13 April 2012 that Wing Tai was in discussions with
the Company and an independent third party purchaser in relation to a possible
transaction involving a corporate restructuring relating to, and possible offer for, the
Company. Subsequently, the Share Sale Agreement was entered into between Wing Tai,
the Purchaser and the Guarantor on 13 May 2012 relating to the sale of its entire
interest in the Company, the Distribution In Specie and the payment of the Special Cash
Dividend, followed by the Listco Offer and the Privateco Offer. In particular, it was
agreed that:
—
Wing Tai will sell its entire interest in the Company to the Purchaser or the
Offeror;
—
Before the Share Sale Completion, the Company will undergo the Group
Reorganisation, such that the existing business of the Group will be
separated into (i) the Remaining Group, which will hold the Property, (ii) the
Privateco Group, which will hold the other existing property assets and
businesses of the Group;
—
On the same date as the Share Sale Completion, the Company will distribute
all of its Privateco Shares in specie (i.e. the Distribution In Specie) and pay
the Special Cash Dividend to the Shareholders;
—
Upon the Share Sale Completion, the completion of the Distribution In
Specie and the payment of the Special Cash Dividend, the Listco Offer will
be made for the acquisition of the Shares by the Offeror;
– 48 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
—
At around the same time as the Listco Offer, the Privateco Offer will be
made for the acquisition of the Privateco Shares by Wing Tai; and
—
Any Further Shares acquired by Wing Tai from SCB Singapore before the
completion of the Listco Offer will also be sold to the Purchaser or the
Offeror.
The Distribution In Specie and the Special Cash Dividend
On the same date as the Share Sale Completion, the Company will distribute all of
its Privateco Shares in specie (i.e. the Distribution In Specie) and pay the Special Cash
Dividend to the Shareholders, such that one Privateco Share and HK$0.7803 in cash
will be distributed or paid for every Share held. In aggregate, the Special Cash
Dividend will absorb approximately HK$202.6 million.
Following completion of the Distribution In Specie, the Privateco and its
subsidiaries will cease to be subsidiaries of the Company. Shareholders will hold equal
number of shares in the Company and the Privateco, which will be subject to the Listco
Offer and the Privateco Offer respectively.
The Remaining Group and the Privateco Group
Following the completion of the Group Reorganisation and the Distribution In
Specie, the Remaining Group will only be engaged in the business of holding, and the
operation and management of, the Property, which represents certain units and carparks
in Regent Centre situated in Kwai Chung, the New Territories, Hong Kong. The
Property has a total gross floor area of approximately 657,000 square feet, and
represents approximately 63.8% of the total gross floor area of Regent Centre.
According to Note 38 of the Accountant’s Report of the Company as set out in
Appendix II to the Circular, the revenue and the profit attributable to the Remaining
Holdco in 2011 were approximately HK$67.2 million and HK$139.1 million
respectively. Excluding the effect of the change in fair value of investment properties
of approximately HK$98.7 million, the profit attributable to the Remaining Holdco
amounted to approximately HK$40.4 million according to the Management Discussion
and Analysis on the business under the Remaining Group Entities as contained in
Appendix IV to the Circular. As at 31 December 2011, the pro forma net asset value
(‘‘NAV’’) of the Remaining Group was approximately HK$1,129.3 million.
Following the completion of the Group Reorganisation, the Privateco Group will
hold the Distributed Businesses, representing all existing businesses of the Group other
than the business of holding or relating to the Property. The Distributed Businesses
principally include (i) the rental and property management business which currently
holds office properties comprising Landmark East (Kwun Tong) and W Square (Wan
Chai), and industrial properties comprising Winner Godown Building (Tsuen Wan) and
Shui Hing Centre (Kowloon Bay); (ii) warehousing business; and (iii) investment
holding. According to the Accountant’s Report of the Privateco Group as set out in
Appendix III to the Circular, the revenue and the profit attributable to the Privateco
Shareholders in 2011 were approximately HK$414.8 million and HK$2,326.1 million
– 49 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
respectively. Excluding the effect of the change in fair value of investment properties
and derivative financial instruments and gain on acquisition of an associated company
of approximately HK$1,907.5 million, the Privateco Group’s profit attributable to the
Privateco Shareholders amounted to approximately HK$418.6 million according to the
Management Discussion and Analysis on the Distributed Businesses as contained in
Appendix IV to the Circular. As stated in the Letter from the Board, Mr. Chow Wai
Wai, John and Mr. Au Hing Lun, Dennis, both being executive directors of the
Company, were appointed as directors of the Privateco, and the businesses of the
Privateco Group will continue to be operated by the existing management team of the
Company.
The pro forma NAV attributable to the Privateco Shareholders was approximately
HK$9,864.9 million as at 31 December 2011, significantly larger than the pro forma
NAV of the Remaining Group of approximately HK$1,129.3 million as at the same
date. Accordingly, the Distribution In Specie will effectively be a distribution of most
of the assets and liabilities of the existing Group to the Shareholders.
Reasons for and benefits of the Distribution In Specie and the Special Cash Dividend
As a result of negotiation between parties to the Share Sale Agreement, the
Purchaser agreed only to acquire the business of the Remaining Group, i.e. the business
relating to the Property held by the Group. It was therefore agreed that the businesses
of the Company would be separated into the business of the Remaining Group and the
Distributed Businesses through the proposed Group Reorganisation. The Privateco,
which will hold the Distributed Businesses, will be distributed to the Shareholders
along with the payment of the Special Cash Dividend, while the Company will only
hold the business of the Remaining Group and the Shares held by Wing Tai and Twin
Dragon will be sold to the Purchaser or the Offeror.
As stated in the Letter from the Board, since no application will be made for the
listing of the Privateco Shares on the Stock Exchange or any other stock exchange, the
Privateco, a company incorporated in the BVI, will be a public, but unlisted, company.
Assuming the Distribution In Specie and the Special Cash Dividend are approved at the
EGM, the Independent Shareholders are entitled to keep the Privateco Shares distributed
to them pursuant to the Distribution In Specie, although there will be no liquid market
for the trading of shares in the Privateco and it will be difficult for the Independent
Shareholders to realise their holdings of the Privateco Shares except through the
Privateco Offer. Alternatively, the Privateco Offer enables Independent Shareholders to
realise their holdings of the Privateco Shares for an all-cash consideration. A Special
Cash Dividend of HK$0.7803 per Share will also be paid to the Shareholders along
with the Distribution In Specie.
Effects of the Group Reorganisation, the Listco Offer and the Privateco Offer
The Distribution In Specie and the Special Cash Dividend, together with the
Listco Offer and the Privateco Offer that follow, represent an uplift of the market value
of the Shares compared to their price prior to the Joint Announcement regarding the
Transactions. On a combined basis, the Transactions represent an opportunity for
– 50 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Shareholders to realise their entire investment in the Company for an aggregate cash
exit equal to HK$34.00 per Share, as follows:
HK$ per Share
1. Special Cash Dividend
2. Listco Offer
3. Privateco Offer
0.7803
5.6197
27.60
Combined Cash Exit
34.00
The Combined Cash Exit of HK$34.00 per Share represents a premium of
approximately 30.8% over the closing price of HK$26.00 per Share on the Last Trading
Day, and premiums of approximately 61.6% and 94.3% over the average closing prices
of HK$21.04 and HK$17.50 per Share for the 30 and 90 consecutive trading days up to
and including the Last Trading Day respectively. As further analysed in the section
below headed ‘‘Comparison of the Combined Cash Exit and trading performance of the
Shares’’, previous trading volume of the Shares has been low.
The Combined Cash Exit of HK$34 per Share compares to unaudited net asset
value attributable to Shareholders of approximately HK$43.26 per Share as at 31
December 2011 (after adjusting for the 2011 final dividend of HK$0.47 per Share and
valuation of investment properties as at 30 April 2012), a discount of approximately
21.4%:
NAV attributable to the Shareholders
as at 31 December 2011
Upward adjustment based on valuation of investment
properties of the Group as at 30 April 2012 (Note)
HK$11,319.1 million
HK$37.0 million
HK$11,356.1 million
— per Share
Less: 2011 final dividend of HK$0.47 per Share
Adjusted NAV attributable to the Shareholders
per Share
Combined Cash Exit
Discount to adjusted NAV attributable to the
Shareholders
HK$43.73
HK$(0.47)
HK$43.26
HK$34.00
21.4%
Note: Most of the Group’s assets represent investment properties, which are stated at valuation in the
consolidated balance sheet of the Group as at 31 December 2011. We have, for the purpose of
assessing the above discount, checked against the valuation of the Group’s investment properties
as at 30 April 2012 according to the valuation reports contained in Appendix VII to the Circular.
The valuation of the Group’s investment properties as at 30 April 2012 of approximately
HK$12,204.9 million was approximately HK$37.0 million higher than their valuation as at 31
– 51 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
December 2011 of approximately HK$12,167.9 million (as shown on page 100 in Appendix II
of the Circular). Details of the valuation of the Group’s investment properties as at 30 April
2012 of approximately HK$12,204.9 million are as follows:
Page reference in
Appendix VII
Valuation
HK$’million
Properties of the Remaining Group
— as valued by Jones Lang LaSalle Limited
269
1,129.3
Properties of the Privateco Group
— as valued by Jones Lang LaSalle Limited
— as valued by B.I. Appraisals Limited
277
298
11,067.7
7.9
Total
12,204.9
As discussed above, most of the existing assets and liabilities of the Group will be
injected into the Privateco under the Group Reorganisation, followed by the Privateco
Offer by Wing Tai (or a wholly-owned subsidiary of Wing Tai) on the Privateco Shares.
Minority shareholders who wish their investment to be liquid and tradable in the market
would not normally choose to hold shares in a private company that are distributed to
them, and accordingly would accept an offer to sell their holdings in the private
company.
If the Distribution In Specie and the Privateco Offer are together viewed as a sale
of assets to Wing Tai, it would effectively be equivalent to Wing Tai proposing to
purchase the investment properties of the Group at a discount of approximately 27.6%,
calculated as follows:
Pro forma NAV attributable to the Privateco
Shareholders as extracted from Appendix VI
Upward adjustment based on valuation of investment
properties of the Privateco Group
as at 30 April 2012 (Note)
HK$9,864.9 million
HK$37.0 million
HK$9,901.9 million
— per Privateco Share
HK$38.13
Privateco Offer
HK$27.6
Discount to pro forma NAV attributable to
the Privateco Shareholders
27.6%
Note: The HK$37 million upward adjustment to Privateco Group’s investment properties was the same
as the adjustment made to the Group as shown in the previous table which analysed the discount
to adjusted NAV attributable to the Shareholders, as all of the upward adjustments made to the
Group related to the Privateco Group’s investment properties, where the valuation of the
Remaining Group’s investment properties was the same as at 31 December 2011 and as at 30
– 52 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
April 2012 (i.e. HK$1,129.3 million). For details of the HK$37 million upward adjustment,
please refer to the note to the previous table which analysed the discount to adjusted NAV
attributable to Shareholders.
Shareholders should note that the abovementioned Privateco Offer of HK$27.6 per
Privateco Share represents only part of the Combined Cash Offer of HK$34.0 per Share
which, apart from the Privateco Offer, includes also the Special Cash Dividend of
HK$0.7803 per Share and the Listco Offer of HK$5.6197 per Share.
2.
Key terms for the Distribution In Specie and the Special Cash Dividend
On the same date as the Share Sale Completion, the Company will effect the
Distribution In Specie of all the Privateco Shares and pay the Special Cash Dividend to the
Shareholders whose names appear on the register of members of the Company on the Record
Date, on the following basis:
for every Share held. . . . . . . . . . . . . . one Privateco Share and HK$0.7803 in cash
The Privateco Offer, which will be effected following the Distribution In Specie, will
be an unconditional cash offer. That means once the Privateco Offer is made, Wing Tai will
have an obligation to purchase the Privateco Shares from those Independent Shareholders
who accept the Privateco Offer.
The number of the
the Shares in issue on
Distribution In Specie
immediately prior to the
Privateco Shares to be in issue will be equal to the total number of
the Record Date. The amount to be distributed pursuant to the
will be equal to the carrying amount of the Privateco Group
Distribution In Specie being made.
No application will be made for the listing of, and permission to deal in, the Privateco
Shares on the Stock Exchange or any other stock exchange.
Shareholding structure
The following chart illustrates the simplified group structure of the Company as at
the Latest Practicable Date:
SCB
Singapore
Wing Tai
73.91%
5.35%
Public
20.74%
The
Company
Distributed
Businesses
Business of the
Remaining Group
– 53 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
The following charts illustrate the simplified group structures of the Privateco
Group and the Remaining Group immediately after completion of the Group
Reorganisation, the Share Sale Agreement, the Distribution In Specie and the payment
of the Special Cash Dividend, but before the sale of the Further Shares and the
commencement of the Privateco Offer and the Listco Offer (assuming there are no other
changes in the shareholding structure of the Group during this period):
SCB
Singapore
Purchaser
73.91%
5.35%
Public
20.74%
SCB
Singapore
Wing Tai
73.91%
5.35%
The
Company
Public
20.74%
Privateco
100%
Remaining
Holdco
Business of the
Remaining Group
Distributed
Businesses
Conditions precedent
The Distribution In Specie and the payment of the Special Cash Dividend are
conditional upon:
(a)
the passing of ordinary resolutions by the Independent Shareholders at the
EGM to approve the Distribution In Specie, the Special Cash Dividend, the
Special Deals and the transactions contemplated thereunder;
(b)
completion of the Group Reorganisation; and
(c)
all of the conditions to the Share Sale Completion having been satisfied or
waived.
None of the above conditions can be waived. As at the Latest Practicable Date,
none of the above conditions has been fulfilled.
3.
Reduced level of protection for Independent Shareholders as regards their interests
in the Privateco
The Privateco is a company incorporated in the BVI. A summary of the constitution of
the Privateco and BVI company law is contained in Appendix VIII to the Circular.
Shareholders should note that, upon completion of the Distribution In Specie, the Privateco,
as an unlisted company, will only be governed by the Listing Rules as a subsidiary of Wing
Tai, a listed company, where the interests of the Wing Tai Shareholders are being
– 54 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
safeguarded. From the perspective of the Independent Shareholders, the Privateco will not be
subject to the same corporate governance and minority protection requirements as set out in
the Listing Rules. In particular, existing protections under the Chapter 14 and Chapter 14A of
the Listing Rules regarding notifiable transactions and connected transactions that currently
apply to the Company as a listed company will not apply to the Privateco so far as the
minority shareholders of the Privateco are concerned. This means, for example, Wing Tai can
sell properties to the Privateco for cash or agree large transactions without the need for any
approval from minority shareholders of the Privateco. In relation to dilution of shareholdings,
there are currently no pre-emption rights under the articles of the Privateco in relation to
issues of new shares in the Privateco, in contrast to the more stringent requirements under the
Listing Rules, such as the requirement of shareholders’ approval for general mandate to issue
new shares, which is limited to a maximum of 20% of the issued share capital without
specific shareholders’ approval and if such limit has been exceeded, specific shareholders’
approval is required. Requirements of appointing independent non-executive directors under
the Listing Rules also do not apply to the Privateco.
Certain provisions under the SFO would also not apply to the Privateco. For instance,
certain market misconduct provisions and the provisions concerning offences relating to
dealings in securities, as provided for in Parts XIII and XIV of the SFO, will not apply in
relation to the Privateco Shares. However, were the Privateco minded ever to raise additional
funds by means of an allotment of new securities to the public in Hong Kong (which includes
any class of the public, and may include the holders of the Privateco Shares from time to
time) the provisions relating to offers of investments, as contained in Part IV of the SFO
(including all potentially relevant exemptions provided for therein), would apply to the
Privateco.
Following the completion of the Distribution In Specie, the Privateco will still be
considered a public company in Hong Kong under, and accordingly will still continue to be
subject to, the Takeovers Code as long as it remains a public company. In the event that the
Privateco ceases to be a public company, for example due to having less than 50 members, it
will no longer be subject to the Takeovers Code. In that case, the interests of the Privateco
Shareholders will be safeguarded primarily by the proposed memorandum and articles of
association of the Privateco and provisions regarding minority shareholders’ interest
protection under the BVI Business Companies Act, which do not provide the level of
minority protections that would be available had the Takeovers Code continued to apply.
4.
Information about the Remaining Group
The Remaining Group will be engaged in the business of holding, or relating to the
operation and management of, the Property, which represents certain units and carparks in
Regent Centre situated in Kwai Chung, the New Territories, Hong Kong.
– 55 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Financial information of the Remaining Group
Financial performance of the Remaining Group:
Set out below is a summary of the income statement of the Remaining Group
Entities as extracted from Note 38 of the Accountant’s Report of the Company as set
out in Appendix II to the Circular and the Management Discussion and Analysis on the
business under the Remaining Group Entities as set out in Appendix IV to the Circular:
Revenue
Profit attributable to
the Remaining Holdco
Profit attributable to
the Remaining Holdco excluding
the change in fair value of
investment properties
31/12/2009
HK$’million
Year ended
31/12/2010
HK$’million
31/12/2011
HK$’million
64.0
64.4
67.2
94.8
108.1
139.1
37.5
38.3
40.4
As advised by the management of the Group, the Property has achieved a stable
occupancy rate over the years and its revenues were approximately HK$64.0 million,
HK$64.4 million and HK$67.2 million for the three years ended 31 December 2009,
2010 and 2011 respectively. As stated in the Letter from the Board, the average
occupancy of the Property was approximately 90% during 2011.
Profit attributable to the Remaining Holdco increased from approximately
HK$94.8 million in 2009 to approximately HK$108.1 million in 2010, and further
increased to approximately HK$139.1 million in 2011. However, such profit has been
affected by fair value change of the investment properties. Excluding the fair value
change of investment properties, the profit attributable to the Remaining Holdco grew
from approximately HK$37.5 million in 2009 to approximately HK$38.3 million in
2010, then further increased to approximately HK$40.4 million in 2011.
– 56 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Major assets and liabilities of the Remaining Group:
Set out below is a breakdown of the pro forma assets and liabilities of the
Remaining Group as at 31 December 2011 (on the assumption that the proposed Group
Reorganisation, the Distribution in Specie and payment of the Special Cash Dividend
had been completed) as extracted from Appendix V to the Circular:
31/12/2011
HK$’million
Non-current assets
Current assets
Current liabilities
Non-current liabilities
1,131.8
41.2
(19.6)
(24.1)
Equity attributable to shareholders of the Remaining Group
1,129.3
The Property, which represents over 95% in value of the pro forma total assets of
the Remaining Group, has a pro forma carrying value of approximately HK$1,129.3
million as at 31 December 2011. The pro forma bank balances and cash of the
Remaining Group amounted to approximately HK$36.1 million as at 31 December
2011, which represented approximately 87.6% of the Remaining Group’s current assets
as at 31 December 2011. The pro forma net asset value of the Remaining Group
amounted to approximately HK$1,129.3 million as at 31 December 2011, or
approximately HK$4.35 per Share.
Net asset value of the Remaining Group adjusted to latest valuation:
The valuation of the investment property held by the Remaining Group as at 30
April 2012 is set out in the valuation report by Jones Lang LaSalle Limited (the
‘‘Remaining Group Valuer’’) as contained in Appendix VII to the Circular. The
Remaining Group Valuer has carried out inspections, made relevant enquiries and
searches for the purpose of the valuation. We have reviewed and discussed with the
Remaining Group Valuer the bases and assumptions adopted for the valuation of the
investment property held by the Remaining Group. According to the valuation report of
the Remaining Group Valuer, the valuation of the Property, the only investment
property of the Remaining Group, was approximately HK$1,129.3 million as at 30
April 2012, which was the same as its valuation as at 31 December 2011.
Intention of the Offeror regarding the Remaining Group
As disclosed in the Letter from the Board, it is the intention of the Offeror and the
Purchaser to continue the principal business of the Remaining Group of (i) property
investment and management and (ii) investment holding. Following the Share Sale
Completion, the Offeror may consider diversifying the business of the Remaining Group
with an objective to broaden its income sources, although, as at the Latest Practicable
– 57 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Date, no such investment or business opportunities have been identified. Moreover, it is
the intention of the Offeror and the Purchaser to maintain the listing status of the
Company.
5.
Information about the Privateco Group
Following the completion of the Group Reorganisation, the Privateco Group will hold
the Distributed Businesses, representing all existing businesses of the Group other than the
business of holding or relating to the Property. The Distributed Businesses principally
include (i) the rental and property management business which currently holds office
properties comprising Landmark East (Kwun Tong) and W Square (Wan Chai), and industrial
properties comprising Winner Godown Building (Tsuen Wan) and Shui Hing Centre
(Kowloon Bay); (ii) warehousing business; and (iii) investment holding.
Financial information of the Privateco Group
Financial performance of the Privateco Group:
Set out below is a summary of the combined financial information of the Privateco
Group for the three years ended 31 December 2011 based on the Accountant’s Report of
the Privateco Group as set out in Appendix III to the Circular and the Management
Discussion and Analysis on the Distributed Businesses as set out in Appendix IV to the
Circular:
31/12/2009
HK$’million
Year ended
31/12/2010
HK$’million
31/12/2011
HK$’million
Revenue
Rental and property management
Warehousing
228.4
213.9
14.5
341.5
328.2
13.3
414.8
399.0
15.8
Gross profit
Increase in fair value of
investment properties
140.5
265.4
320.8
279.3
1,727.1
1,855.2
Profit attributable to
the Privateco Shareholders
389.9
2,351.9
2,326.1
47.5
607.8
418.6
Profit attributable to
the Privateco Shareholders
excluding change in fair value of
investment properties and
derivative financial instruments
and gain on acquisition of an
associated company
– 58 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As shown above, over 90% of the revenue of the Privateco Group is generated
from its rental and property management business, which consists of a varied property
portfolio in Hong Kong from Grade A office buildings to industrial buildings
(excluding the Property).
(i)
Rental and property management segment
The Privateco Group recorded revenue of approximately HK$328.2 million
in 2010, demonstrating a growth of approximately 53.4% when compared to 2009.
Such increase was mainly attributable to improved occupancy in Landmark East
during the year. In 2011, the revenue from the rental and property management
segment increased by approximately 21.6% to approximately HK$399 million.
Such increase in revenue was mainly due to lease-up of Landmark East towards its
full occupancy during the year.
(ii)
Warehousing segment
The revenue in this segment decreased by approximately 8.3% from
approximately HK$14.5 million in 2009 to approximately HK$13.3 million in
2010, which was mainly attributable to the reduced storage from one of the major
customers of the Privateco Group. The increase in revenue in 2011 as compared to
the prior year was mainly due to better performance achieved by the Privateco
Group’s warehousing business in Hong Kong during the year.
The gross profit margin of the Privateco Group is directly related to the Privateco
Group’s rental and property management segment, which is the major revenue source of
the Privateco Group. In 2010, it showed an increase from approximately 61.5% in 2009
to approximately 77.7%, which was primarily due to increased profitability in
Landmark East. In 2011, the gross profit margin maintained at around 77.3%.
A substantial part of the Privateco Group’s profit comes from its increase in fair
value of the Privateco Group’s investment properties, which amounted to HK$279.3
million, HK$1,727.1 million and HK$1,855.2 million in 2009, 2010 and 2011
respectively. The increase in fair value by approximately 5.2 times from 2009 to 2010
was mainly due to the appreciation in capital value of investment properties considering
the turnaround of global economy since the first half of 2009 and the higher occupancy
rate in Landmark East during 2010. The increase in fair value of investment properties
in 2011 was in line with the further strengthening of the property market in Hong Kong
during the year.
The profit attributable to the Privateco Shareholders excluding change in fair
value of investment properties and derivative financial instruments and gain on
acquisition of an associated company (the ‘‘Adjusted Privateco Profit’’) was
approximately HK$47.5 million in 2009, which increased to approximately HK$607.8
million in 2010, principally due to (i) the approximately HK$300.3 million share of
profits of associated companies (2009: share of losses of approximately HK$3.1
million) and (ii) the gains on disposals of investment properties in 2010 of
approximately HK$146.5 million (2009: Nil). The Adjusted Privateco Profit dropped to
– 59 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
approximately HK$418.6 million in 2011 which was mainly due to the absence of the
abovementioned gains on disposal of investment properties in 2010 and reduced share
of profits of associated companies to approximately HK$151.2 million, which were
partially offset by the increase in gross profit of approximately HK$55.4 million.
Major assets and liabilities of the Privateco Group:
Set out below is a breakdown of the pro forma major assets and liabilities of the
Privateco Group as at 31 December 2011 (on the assumption that the proposed Group
Reorganisation, the Distribution in Specie and payment of the Special Cash Dividend
had been completed) as extracted from Appendix VI to the Circular:
31/12/2011
HK$’million
Non-current assets
Investment properties
Interests in associated companies
Available-for-sale financial assets
Other non-current assets
11,038.6
696.1
319.4
115.9
12,170.0
Current assets
Current liabilities
Non-current liabilities
Non-controlling interests
168.9
(781.4)
(1,690.4)
(2.2)
Equity attributable to the Privateco Shareholders
9,864.9
As at 31 December 2011, pro forma total assets of the Privateco Group amounted
to approximately HK$12,338.9 million, which mainly comprised (i) investment
properties of approximately HK$11,038.6 million, representing approximately 89.5% of
the total assets; (ii) interests in associated companies of approximately HK$696.1
million. Interests in associated companies mainly represented (a) a 30% interest in a
cold storage business in Mainland China, (b) a residential project in Hong Kong held
through Wing Tai which the Group entitled to a 20% interest, (c) a residential project in
Singapore held through Wing Tai Holdings Limited which the Group entitled to a 30%
interest, (d) a 40% interest in a property located in Hong Kong where the Lanson Place
Hotel is situated, and (e) a 24.8% interest in a property located in Mainland China; (iii)
the Privateco Group’s available-for-sale financial assets of HK$319.4 million, which
mainly represented certain real estate investment trust units listed outside Hong Kong;
and (iv) bank balances and cash of approximately HK$103.3 million which mainly
consisted of short-term bank deposits.
– 60 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As at 31 December 2011, pro forma total liabilities of the Privateco Group
amounted to approximately HK$2,471.8 million, which mainly comprised secured bank
loans of approximately HK$2,076.8 million.
The pro forma NAV attributable to the Privateco Shareholders of approximately
HK$9,864.9 million as at 31 December 2011 was different from the NAV attributable to
the Privateco Shareholders of approximately HK$7,135.7 million on the same date as
extracted from the Accountant’s Report of the Privateco Group as contained in
Appendix III to the Circular. As advised by the management of the Group, the
difference of approximately HK$2,729.2 million represented mainly the settlement of
the outstanding payable by the Privateco Group to the Company by issuing ordinary
shares of certain members of the Privateco Group to the Company pursuant to the
Group Reorganisation. For the purpose of assessing the NAV of the Privateco Group as
if the proposed Group Reorganisation, the Distribution in Specie and payment of the
Special Cash Dividend had been completed, please refer to the pro forma NAV of the
Privateco Group of approximately HK$9,864.9 million.
Although the net profit of the Privateco Group has fluctuated in the recent three
years due to factors such as fair value changes to the investment properties, considering
the steadily increasing revenue stream and gross profit, and the fact that the Privateco
Group is not highly geared, it appears, based on the above analysis and the present
business model of the Privateco Group, that the Privateco Group will be running a
sustainable business, although the future dividend stream from the Privateco, as an
unlisted company, is uncertain.
Net asset value of the Privateco Group adjusted to latest valuation:
The valuations of the investment properties held by the Privateco Group as at 30
April 2012 are set out in the valuation reports by Jones Lang LaSalle Limited and B.I.
Appraisals Limited (the ‘‘Privateco Group Valuers’’) as contained in Appendix VII to
the Circular. The Privateco Group Valuers have carried out inspections, made relevant
enquiries and searches for the purpose of the valuation. We have reviewed and
discussed with the Privateco Group Valuers the bases and assumptions adopted for the
valuation of the investment properties held by the Privateco Group. According to the
valuation reports of the Privateco Group Valuers, the aggregate valuation of the
investment properties of the Privateco Group was approximately HK$11,075.6 million
as at 30 April 2012, which was approximately 0.3% (or approximately HK$37.0
million) higher than their aggregate valuation as at 31 December 2011 of approximately
HK$11,038.6 million.
As advised by the management of the Group, except for certain units in Shenzhen,
the PRC which was valued at HK$3.8 million as at 30 April 2012, where no valuation
was performed as at 31 December 2011 and which we considered insignificant, the
valuation of investment properties of the Privateco Group grouped as interests in
associated companies as at 30 April 2012 was the same as their valuation as at 31
December 2011. We also understand from the management of the Group that other
property interests grouped as interests in associated companies are mainly properties for
– 61 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
sale which are carried at cost instead of valuation, and the carrying value of which is
considered insignificant compared to the carrying value of the Privateco Group’s
investment properties.
Intention of Wing Tai regarding the Privateco
As disclosed in Appendix I to the Circular, it is the intention of Wing Tai that the
Privateco Group will not make changes to its principal businesses nor conduct any
business other than the Distributed Businesses. It is also the intention of Wing Tai that
the Privateco Group will not hold any assets other than those relating to the Distributed
Businesses, nor be injected any major assets, nor dispose of any major assets, after the
close of the Privateco Offer.
6.
Comparison of the Combined Cash Exit and trading performance of the Shares
(i)
Comparison of the Combined Cash Exit against previous closing prices of the
Shares
The Combined Cash Exit of HK$34.0 represents:
(a)
a premium of approximately 30.8% over the closing price of HK$26.0 per
Share as quoted on the Stock Exchange on the Last Trading Day;
(b)
a premium of approximately 51.9% over the average of the closing prices of
approximately HK$22.38 per Share as quoted on the Stock Exchange for the
ten trading days up to and including the Last Trading Day;
(c)
a premium of approximately 61.6% over the average of the closing prices of
approximately HK$21.04 per Share as quoted on the Stock Exchange for the
thirty trading days up to and including the Last Trading Day;
(d)
a premium of approximately 94.3% over the average of the closing prices of
approximately HK$17.50 per Share as quoted on the Stock Exchange for the
ninety trading days up to and including the Last Trading Day;
(e)
a premium of approximately 1.2% over the closing price of HK$33.6 per
Share as quoted on the Stock Exchange on the Latest Practicable Date; and
(f)
a discount of approximately 21.4% to the audited consolidated total equity
attributable to Shareholders of approximately HK$43.26 per Share as at 31
December 2011 (after taking into account the deduction of 2011 final
dividend amount to approximately HK$0.47 per Share and valuation of
investment properties as at 30 April 2012).
– 62 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(ii)
Historical price performance of the Shares
Set out below is the movement of the closing prices of the Shares at the Stock
Exchange during the period from 1 April 2010, being approximately two years prior to
the Last Trading Day, to the Latest Practicable Date (the ‘‘Relevant Period’’):
35
57,000
Release of the
Joint Announcement
52,000
25
47,000
20
42,000
37,000
15
32,000
10
27,000
5
Hang Seng Properties Sub-Index
22,000
0
Hang Seng Properties Sub-Index
1-6-12
1-5-12
1-4-12
1-3-12
1-2-12
1-1-12
1-12-11
1-11-11
1-9-11
Share Price
1-10-11
1-8-11
1-7-11
1-6-11
1-5-11
1-4-11
1-3-11
1-2-11
1-1-11
1-12-10
1-11-10
1-10-10
1-9-10
1-8-10
1-7-10
1-6-10
1-5-10
17,000
1-4-10
Share Price (HK$)
30
Latest
Practicable
Date
Combined Cash Exit
Source: Bloomberg
As shown in the above chart, the price of the Shares has, during the Relevant
Period, out-performed the Hang Seng Properties Sub-Index, which is a sub-index of the
Hang Seng Index designed to measure the performance of the property sector. The price
of the Shares increased from the range of HK$10 from the beginning of the Relevant
Period to the range of HK$18 in early March 2012, before a rise in the Share price
followed by a suspension of trading in relation to the Transactions. During the same
period, the Hang Seng Properties Sub-Index showed a decrease, from around 29,000
from the beginning of the Relevant Period to around 27,000 in early March 2012. Set
out in the paragraphs below is a detailed analysis of the price performance of the Shares
during the Relevant Period.
The 2009 annual results of the Group were announced on 28 March 2010. The
2009 profit attributable to Shareholders of approximately HK$429.2 million represented
an increase by approximately 1.76 times when compared to 2008, which was principally
due to an increase in fair value of investment properties by approximately HK$274.8
million in 2009 as compared with 2008. The Share price did not fluctuate much from 1
April 2010 to 25 June 2010, where the Share price was within a range of HK$9.2 per
Share and HK$10.3 per Share. The Company announced the disposal of Unimix
Industrial Centre on 10 June 2010 and subsequently the disposal of Lucky Industrial
Building on 25 June 2010 so as to realise its long-term investments at attractive returns.
– 63 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Since then, the Share price showed an upward trend and fluctuated within a range
of HK$10.2 per Share to HK$17.5 per Share. On 8 May 2011, an announcement was
released regarding an acquisition of 40% equity interest from independent third parties
of an investment holding company holding a property in which Lanson Place Hotel is
situated.
From 9 May 2011 onwards to February 2012, no material event was announced to
the public and the Share price continued to fluctuate within a range between HK$13.1
per Share and HK$18.2 per Share. On 12 March 2012, price of the Shares surged to
HK$19.8 per Share from HK$18.4 per Share from the last trading day, and continued to
increase to a high of HK$23.7 per Share on 27 March 2012. The Share price dropped
back to HK$20 per Share on 5 April 2012 but increased again to a high of HK$26 per
Share, immediately before the suspension of Shares on the Last Trading Day.
After the trading hours on the Last Trading Day, it was announced that the
Company was approached by Wing Tai in relation to a possible transaction and
corporate restructuring relating to the Company and a possible offer for the Company,
and the discussions of which had not been finalised pending the release of the Joint
Announcement.
The price of the Shares rose from HK26 per Share on the Last Trading Day to
HK$33.1 per Share on 15 May 2012, being the first day of resumption in trading of the
Shares immediately after the publication of the Joint Announcement. The Share price
after resumption in trading has remained strong and has traded at around the level of
Combined Cash Exit up to the Latest Practicable Date.
In general, the prices of the Shares had been trading at significant discount to the
Combined Cash Exit of HK$34 per Share before the release of the Joint Announcement.
– 64 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
We have also compared the historical average closing price of the Shares against
the then latest consolidated net asset value attributable to equity holders of the
Company. We have assumed that such information is available to the market from the
date following the publication of the relevant annual or interim results announcements
and that the Share price has reflected such information.
Period
29/03/2010*–29/08/2010
30/08/2010*–30/03/2011
31/03/2011*–30/08/2011
31/08/2011*–28/03/2012
29/03/2012*–Last Trading Day
Consolidated net
asset value
attributable to
equity holders
per Share
(Note 1)
HK$
Average
closing price
per Share
(Note 2)
HK$
Discount to
consolidated net
asset value
attributable to
equity holders
per Share
Approximate %
23.812
27.500
36.363
41.608
43.588
10.491
14.550
16.118
15.906
22.278
55.9
47.1
55.7
61.8
48.9
Simple average of the discounts to the
consolidated net asset value
attributable to equity holders per Share
represented by average closing price
for the above respective periods (the
‘‘Average Discount’’)
*
53.9
the date following the release of the Company’s annual or interim results announcement
Note:
1.
Consolidated net asset value attributable to equity holders per Share is calculated based on the
consolidated net asset value of the Company, which is extracted from the respective Company’s
annual reports or interim reports, divided by the total number of issued shares of the Company
as at the relevant year end/period end date.
2.
The average closing prices per Share were extracted from Bloomberg.
We note from the above that the closing prices of the Shares have been
consistently trading at discounts to the then underlying net asset value attributable to
equity holders since the date following the release of the 2009 final results of the
Company up to the Last Trading Day. We also note that the discount of approximately
21.4% represented by the Combined Cash Exit based on the adjusted NAV of the Group
represents a significant improvement over the Average Discount of approximately
53.9% as shown above.
– 65 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(iii) Liquidity of the Shares
Set out in the table below are the monthly total trading volumes of the Shares and
the percentages of such monthly total trading volumes to the total issued share capital
and public float of the Company during the Relevant Period:
Total monthly
trading volume
of the Shares
Percentage
of the total
monthly
trading volume
of the Shares to
the total issued
Shares
(Note 1)
Percentage of
the total
monthly
trading volume
of the Shares to
public float
(Note 2)
2010
April
May
June
July
August
September
October
November
December
374,747
341,500
109,000
120,900
117,855
331,250
241,000
181,500
132,750
0.14%
0.13%
0.04%
0.05%
0.05%
0.13%
0.09%
0.07%
0.05%
0.73%
0.67%
0.21%
0.24%
0.23%
0.65%
0.47%
0.36%
0.26%
2011
January
February
March
April
May
June
July
August
September
October
November
December
113,250
61,000
320,416
662,000
995,000
94,500
63,500
291,850
346,013
275,750
68,001
32,667
0.04%
0.02%
0.12%
0.25%
0.38%
0.04%
0.02%
0.11%
0.13%
0.11%
0.03%
0.01%
0.22%
0.12%
0.63%
1.30%
1.95%
0.19%
0.12%
0.57%
0.68%
0.54%
0.13%
0.06%
2012
January
February
March
April
May
15,000
141,200
349,000
366,000
2,694,758
0.01%
0.05%
0.13%
0.14%
1.04%
0.03%
0.28%
0.68%
0.72%
5.28%
Average
340,016
0.13%
0.67%
From 1 June 2012 to the
Latest Practicable Date
611,900
0.24%
1.20%
Source: Bloomberg and information from the Company
– 66 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Notes:
1.
The calculation is based on the number of the Shares in issue as at the end of each month.
2.
The calculation is based on the number of Shares in issue as set out in note 1 above excluding
the Shares held by the connected persons of the Company in the corresponding month.
The trading volume of the Shares from April 2010 to May 2012 represented
between approximately 0.01% and 1.04% of the total issued Shares and between
approximately 0.03% and 5.28% of the issued Shares constituting the public float of the
Company. The comparatively higher trading volume of the Shares in May 2012
possibly be due to the announcement of the Transactions as detailed in the Joint
Announcement dated 14 May 2012. The number of the Shares traded from 1 June 2012
up to the Latest Practicable Date represented approximately 0.24% and 1.20% of the
total issued Shares in issue and the issued Shares constituting the public float of the
Company respectively. On this basis, the trading of the Shares is generally inactive
during the Relevant Period.
We consider that the Proposal provides a suitable opportunity to the Independent
Shareholders to realise their investment at the Combined Cash Exit which is
substantially higher than the closing prices of the Shares before the publication of the
Joint Announcement.
7.
Comparables
(i)
Comparable Transactions
Set out in the table below are comparable transactions involving, among other
things, distribution in specie of unlisted shares of subsidiaries by companies listed in
Hong Kong. We have researched and identified the following seven companies listed on
the Stock Exchange which have their relevant circulars/composite offer and response
documents published for the period of 1 January 2008 up to the Latest Practicable Date
(the ‘‘Comparable Transactions’’). The table below, which we consider represents an
exhaustive list of companies with the above criteria that we were able to identify from
the Stock Exchange’s website, illustrates (i) the total assets of the remaining listed
company compared to the total assets of the listed companies before distribution; and
(ii) any provisions of shareholders’ protection in the constitutions of the private
company.
– 67 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Total assets in the
remaining listed Shareholders’ protection in
company compared the private company
to total assets of the distributed similar to the
listed company corresponding Listing Rules
Date of initial
announcement
Company
Principal business
before distribution provisions
%
2011
October
Chinlink International Holdings Manufacturing and trading
Limited (formerly known as
of furniture and fixture,
Decca Holdings Limited)
provision of decoration
(stock code 997)
works, interior design
16.6% N/A
and renovation services
September
Noble Jewelry Holdings
Design, manufacture and
Limited
trading of fine jewelry
(stock code 475)
products
10.1% Notifiable transactions,
connected transactions,
shareholders’ approval to
issue new shares
August
Paul Y. Engineering
Management contracting,
Group Limited
property development
(stock code 577)
management and
51.0% Connected transactions
(Note 1)
property investment
2010
November
Enterprise Development
Manufacturing and
0.4% Notifiable transactions,
(Note 2)
connected transactions,
Holdings Limited
marketing of bare
(formerly known as Tai-I
copper wires and
shareholders’ approval to
International Holdings
magnet wires and
issue new shares
Limited) (‘‘Tai-I’’)
provision of processing
(stock code 1808)
services and investment
holding, development of
computer software and
related matters
July
Gemini Investments (Holdings) Property investment and
59.9% Notifiable transactions,
Limited (formerly known as
securities investment,
connected transactions,
Kee Shing (Holdings)
trading of electroplating
shareholders’ approval to
Limited) (stock code 174)
materials, paint and
issue new shares
coating chemicals and
stainless steel
– 68 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Total assets in the
remaining listed Shareholders’ protection in
company compared the private company
to total assets of the distributed similar to the
listed company corresponding Listing Rules
Date of initial
announcement
Company
Principal business
before distribution provisions
%
2009
September
China Overseas Grand
Manufacturing and
80.4% Notifiable transactions,
Oceans Group Limited
marketing of electric
connected transactions,
(formerly known as Shell
fans and other electrical
shareholders’ approval to
Electric Mfg. (Holdings)
household appliances
issue new shares
Company Limited)
and contract
(stock code 81)
manufacturing business,
property leasing,
investment and
development
2008
September
Cinda International Holdings
Provision of leveraged
50.5% Notifiable transactions,
Limited (formerly known as
foreign exchange
connected transactions,
Hantec Investment Holdings
trading and brokering
shareholders’ approval to
Limited) (stock code 111)
services, securities
issue new shares
brokering, commodities
and futures brokering,
corporate and financial
advisory services, fund
management, financial
planning and insurance
brokering, and trading
and brokering of
precious metal contracts
Mean
44.7%
Median
50.8%
Maximum
80.4%
Minimum
10.1%
8.4% N/A
The Remaining Group
Source: Published composite offer and response documents, circulars or announcements relating to the Comparable Transactions.
Notes:
1.
As disclosed in the circular of Paul Y. Engineering Group Limited, the company intended to distribute 49% of the equity
interest in its existing business to its shareholders. Accordingly, we assume that 51% of the total assets would remain in the
listed company.
– 69 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
2.
For reason explained in the paragraph below, comparison of the relative size of the remaining company for the Tai-I case
was considered not meaningful and is therefore excluded from the calculation of the mean, median, maximum and
minimum.
With the exception of the Tai-I precedent case, the proportion of total assets of the
remaining groups compared to the total assets of the listed companies before
distributions were in the range of approximately 10.1% to 80.4%, with a mean and
median proportion of 44.7% and 50.8% respectively. We consider the proportion of
total assets in the remaining Tai-I group of 0.4% may not be meaningful, due to the fact
that (i) the remaining Tai-I group is engaged in development of computer software and
related matters, which is considered an asset-light business, and (ii) more than 95% of
the total assets in the remaining Tai-I group represents cash and cash equivalents, which
is not common in other Comparable Transactions.
As at 31 December 2011, the total assets of the Remaining Group represent
approximately 8.4% of the total assets of the Group on the same date, which is
significantly lower than the mean, median and the minimum proportions as presented
above for the Comparable Transactions. The small size of the Remaining Group relative
to that of the Comparable Transactions clearly shows that the size of the Privateco
Group is unusually large.
The fact that the Privateco Group is much larger in size puts a particular
importance on whether it is reasonable for the Independent Shareholders to consider
remaining as shareholders of the Privateco. From the table above, a majority of the
private companies formed under the Comparable Transactions contain provisions in
their constitutions similar to certain provisions contained in the Listing Rules such as
those relating to notifiable transactions, connected transactions and shareholders’
approval requirements to issue new shares. However, no such shareholders’ protection
mechanism is available in respect of the Privateco.
(ii)
Comparable Companies
The Group is principally engaged in property investment and management,
warehousing and investment holding, and derives most of its revenue from its
investment properties situated in Hong Kong. In order to assess the Combined Cash
Exit, we have identified companies (the ‘‘Comparable Companies’’) (i) which are
engaged in property investment in Hong Kong with over 50% of consolidated revenue
derived from such segment in the latest financial year as set out in their published
annual reports, (ii) have their shares listed on the Stock Exchange, (iii) have a market
capitalisation within a range of 50% to two times the market capitalisation of the
– 70 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Company based on the 90-day average closing price of the Shares up to the Last
Trading Day, which we consider as an ‘‘undisturbed’’ average price of the Shares. We
consider (i) the above selection criteria represent an unbiased approach to identify the
Comparable Companies which are engaged in business that are similar to the Group and
with sizes that are similar to the Group, and (ii) the table below represents an
exhaustive list of companies with the above criteria that we were able to identify from
the Stock Exchange’s website. Set out below is the result of our research:
Fortune Real Estate Investment Trust
(stock code: 778)
Associated International Hotels Ltd.
(stock code: 105)
Sunlight Real Estate Investment Trust
(stock code: 435)
Melbourne Enterprises Limited
(stock code: 158)
Prosperity Real Estate Investment
Trust (stock code: 808)
Market
capitalisation as
at the Latest
Practicable
Date
(Note 1)
HK$ million
Consolidated
net asset value
attributable to
equity holders
(Note 1)
HK$ million
Annual
dividend yield
(Note 2)
%
4.41
7,426.5
13,227.80
6.30%
(43.9)%
16.20
5,832.0
9,954.05
2.78%
(41.4)%
2.50
4,023.0
8,622.77
7.17%
(53.3)%
133.00
3,325.0
4,970.81
3.58%
(33.1)%
1.69
2,317.0
4,452.28
6.92%
(48.0)%
5.35%
6.30%
7.17%
2.78%
(43.9)%
(43.9)%
(53.3)%
(33.1)%
1.94%
(21.4)%
Mean
Median
Maximum
Minimum
Combined Cash Exit
Discount of
market
capitalisation to
net asset value
attributable to
equity holders
Closing share
price on the
Latest
Practicable
Date
(Note 1)
HK$
34.00
8,829.3
(Note 3)
11,234.0
%
Notes:
(1)
The closing share price and market capitalisation of the Comparable Companies as at the Latest Practicable Date are sourced
from Bloomberg. The consolidated net asset values attributable to equity holders are extracted from the latest annual reports
or interim reports of the Comparable Companies.
(2)
The annual dividend yield is calculated based on dividends declared/paid for the latest financial year divided by the 90
trading days average share price of the Comparable Companies up to the Latest Practicable Date. For the Company, the
Combined Cash Exit was used to demonstrate a clearer picture of its annual dividend yield as implied by the Combined
Cash Exit compared to the annual dividend yields of the Comparable Companies.
(3)
The consolidated net asset value attributable to equity holders to the Company as at 31 December 2011 takes into account
the deduction of the Company’s 2011 final dividend and the upward adjustment based on valuation of the investment
properties of the Group as at 30 April 2012.
(4)
To avoid duplication in our analysis, we have excluded the relevant data of Tian Teck Land Limited (stock code: 266) from
the above calculation of mean, median, maximum and minimum discount to NAV and annual dividend yield, as its property
investment business is principally carried out by its subsidiary, Associated International Hotels Ltd. (stock code: 105), the
relevant data of which is included in the above analysis. For the similar reason, the relevant data of Wing Tai was excluded
from the above analysis as majority of its property investment business is carried out by its subsidiary, the Company.
– 71 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As shown in the table above, the discount of market capitalisation to consolidated
net asset value of the Comparable Companies ranged from 33.1% to 53.3%, with mean
and median discounts of approximately 43.9% and 43.9% respectively. The discount of
the Combined Cash Exit to the adjusted NAV of the Company of 21.4% is lower than
the mean, median and minimum discounts to consolidated net asset value of the
Comparable Companies.
The annual dividend yield of the Comparable Companies, calculated based on the
dividend declared/paid for the latest financial year and the 90-day average share price,
ranged from 2.78% to 7.17% with the mean and median yields of 5.35% and 6.30%
respectively, whereas the annual dividend yield of the Company of 1.94%, based on the
Combined Cash Exit, lies below the mean and median yield of the Comparable
Companies.
Conclusion
The substantially lower discount of the Combined Cash Exit to adjusted NAV of
21.4%, and the comparatively low annual dividend yield of 1.94% compared to the
statistics for the Comparable Companies imply that the Combined Cash Exit is fair and
reasonable to the Independent Shareholders. On this basis, we consider the Combined
Cash Exit offers terms which are attractive to Independent Shareholders.
– 72 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
B
THE SPECIALS DEALS AND THE NEW TENANCY AGREEMENTS
As part of the whole exercise, the Special Deals, namely the Winsor Connected Transaction
and the Management Agreement, together with New Tenancy Agreements, constitute special deals
under Rule 25 of the Takeovers Code and require approval from the Independent Shareholders by
way of poll at the EGM. Set out below is a summary of each of the above proposed transactions:
Winsor Connected
Transaction
Acquisition of an approximately 4.76% minority interest in
WPFSL, a company to be included in the Remaining Group,
from Parex
Management Agreement
Certain arrangements with the Privateco Group in relation to
the management and administration of the Property, including
provision of administrative, property management, brokerage,
agency and leasing services by the Privateco Group to the
Remaining Group
New Tenancy Agreements
—
Three renewals of tenancy agreements to be entered into
between the Wing Tai Group as tenant and the Privateco
Group as landlord
—
One renewal of tenancy agreement to be entered into
between a related party as tenant and the Remaining
Group as landlord
—
Two new licence agreements to be entered into between
the Privateco Group as tenant and the Remaining Group
as landlord
Further details of, among other things, the Special Deals and the New Tenancy Agreements
are set out in the Letter from the Board.
1.
The Winsor Connected Transaction
Subject matter
On 18 June 2012, the WPFSL Shares Sale Agreement was entered into between
the Remaining Holdco (a wholly-owned subsidiary of the Company), Parex (a company
wholly-owned by Mr. Cheng Wai Chee, Christopher, Mr. Cheng Wai Keung and Mr.
Cheng Wai Wing, Edmund) and WPFSL, pursuant to which the Remaining Holdco
agreed to acquire the approximately 4.76% interest in WPFSL currently owned by
Parex.
As at the Latest Practicable Date, the Remaining Holdco owned approximately
95.24% interest in WPFSL. Following completion of the WPFSL Shares Sale
Agreement, WPFSL will be a wholly-owned subsidiary of the Remaining Holdco,
which will form part of the Remaining Group. As at the Latest Practicable Date,
WPFSL holds 100% equity interest of Chericourt, and also holds a unit in Regent
Centre for rental income. Chericourt owns certain units in Regent Centre and the
carpark podium in Regent Centre for rental income. According to the valuation reports
– 73 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
prepared by Jones Lang LaSalle Limited, the value of the properties owned by WPFSL
and Chericourt (excluding units B505–510 of Regent Centre which would form part of
the Distributed Businesses) was approximately HK$1,029.6 million as at 30 April 2012.
At the same time of the Remaining Holdco’s acquisition of shares in WPFSL,
WPFSL (a) will repay that part of its outstanding shareholders’ loans that is owed to
Parex by WPFSL (the ‘‘Shareholders’ Loan Repayment’’), (b) will procure that
Chericourt declares and pays dividends to WPFSL, and (c) will declare and pay
dividends, comprising all or substantially all the distributable reserve of WPFSL and
Chericourt, to the shareholders of WPFSL, i.e. the Remaining Holdco and Parex (the
‘‘WPFSL Dividend Payment’’).
As (a) Mr. Cheng Wai Chee, Christopher is a Director and, as at the Latest
Practicable Date, was interested in 27,000 Shares through his wife Ms. Cheng Chan Sau
Ching, Ivy and (b) Mr. Cheng Wai Keung and Mr. Cheng Wai Wing, Edmund are
brothers of Mr. Cheng Wai Chee, Christopher, the acquisition of shares in WPFSL by
the Remaining Holdco, the Shareholders’ Loan Repayment and the WPFSL Dividend
Payment will constitute special deals in relation to the Offers under Rule 25 of the
Takeovers Code.
Consideration
The consideration for the approximately 4.76% interest in WPFSL will be in cash
and equal to approximately 4.76% of the consolidated net asset value of WPFSL on the
completion date of the WPFSL Shares Sale Agreement after the Shareholders’ Loan
Repayment and the WPFSL Dividend Payment. In particular, the relevant property
interest will be based on their valuation as at 31 December 2011 for the purpose of
arriving at such consolidated net asset value of WPFSL. The Shareholders’ Loan
Repayment and the WPFSL Dividend Payment are estimated to be approximately
HK$32.5 million and HK$453.5 million respectively, based on the shareholders’ loan
owed to Parex by WPFSL and the aggregate distributable reserve of Chericourt and
WPFSL as at 31 December 2011.
If requested in writing by either the Parex or the Remaining Holdco by giving
notice to the other parties within 15 Business Days of the completion date of the
WPFSL Shares Sale Agreement, an audit will be conducted on WPFSL and its
subsidiaries for the period from 1 January 2012 to and including the completion date of
the WPFSL Shares Sale Agreement. In case such audited consolidated net asset value of
WPFSL is different from the previous calculation, the consideration under the WPFSL
Shares Sale Agreement shall be adjusted accordingly.
– 74 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Set out below is the extract of the consolidated balance sheet of WPFSL as at 31
December 2011:
HK$’000
Audited consolidated net asset value of WPFSL
as at 31 December 2011
4.76% of the consolidated net value
Adjusted by:
— Shareholders’ loan repayment (Note 1)
— Parex’s share of WPFSL Dividend Payment (Note 2)
Expected consideration under the WPFSL Shares Sale
Agreement
753,930
35,900
—
(21,595)
14,305
Notes:
1.
The Shareholders’ Loan Repayment is not expected to affect the consolidated net asset value of
WPFSL and accordingly no adjustment was made above.
2.
The amount represents approximately 4.76% of the aggregate of the distributable reserve of
Chericourt and WPFSL as at 31 December 2011.
Based on the above and assuming the consolidated net asset value and
distributable reserve of WPFSL as at the date of completing WPFSL Shares Sale
Agreement is the same as the that as at 31 December 2011, the expected consideration
for the 4.76% interest in WPFSL equals to approximately HK$14.3 million. The exact
figure of the consideration will be determined based on the consolidated NAV of
WPFSL on the completion date of the WPFSL Shares Sale Agreement, and therefore
may be different from the above estimated amount.
Conditions precedent and completion
The WPFSL Shares Sale Agreement is conditional upon satisfaction of, among
other things, the passing by the Independent Shareholders at the EGM to approve the
Distribution In Specie, the Special Cash Dividend and the Special Deals, the granting
by the Executive of its consent for the Winsor Connected Transaction, and the passing
by the Wing Tai Shareholders at the Wing Tai SGM to approve the Share Sale
Agreement and the Privateco Offer.
Completion shall take place following fulfilment of the conditions precedent and
immediately prior to completion of the Share Sale Agreement.
Discussion
The underlying assets of WPFSL and its subsidiary Chericourt is essentially
certain units and carparks in the Property, which are classified as investment properties
in the consolidated balance sheet of WPFSL. The acquisition of the approximately
4.76% minority interest in WPFSL, which will be a part of the Remaining Group, is
– 75 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
principally based on the valuation attributed to such units and carparks as at 31
December 2011 in the valuation report prepared by Jones Lang LaSalle Limited. We
consider it reasonable to determine the consideration of acquiring a property holding
company based on the valuation of its underlying properties. We also consider the
Shareholders’ Loan Repayment and the WPFSL Dividend Payment, as part of the Group
Reorganisation, are normal tidy-up exercise before the sale of the 4.76% interest.
According to the latest valuation report as at 30 April 2012, also prepared by
Jones Lang LaSalle Limited, the valuation of such units and carparks held by the
WPFSL group (excluding units B505–510 of Regent Centre which would form part of
the Distributed Businesses) is approximately HK$1,029.6 million, which is the same as
its valuation as at 31 December 2011.
Based on the above, we consider the terms of the Winsor Connected Transaction
to be fair and reasonable.
2.
Management Agreement
Subject matter
The operation and management of the companies and properties within the Group
are centrally organised. Following the completion of the Distribution In Specie, the
Remaining Group will only engage in the business of holding, or relating to the
operation and management of, the Property. The relevant employees involved in
operating and managing the Property are employed by the Privateco Group, which will
cease to be part of the Remaining Group following completion of the Distribution In
Specie.
In order for the Remaining Group to be able to continue operating without
interruption after completion of the Distribution In Specie, the Management Agreement
was entered into between the Remaining Holdco and the Privateco on 18 June 2012,
pursuant to which the existing management and administration arrangements will
continue to be provided by the Privateco Group to the Remaining Group on a basis
consistent with the provision of those services over the preceding 12 months (including
as to pricing).
The Privateco Group will remain part of the Wing Tai Group after completion of
the Distribution In Specie. As the benefits under the terms of the Management
Agreement are not extended to other Shareholders, the Management Agreement will
constitute a special deal in relation to the Offers under Rule 25 of the Takeovers Code.
Principal terms and consideration
The Management Agreement will be effective upon, among other things, (i) the
completion of the Group Reorganisation and the Distribution In Specie; (ii) the passing
by the Independent Shareholders of the Management Agreement at the EGM; and (iii)
consent being given by the Executive for the Management Agreement. The Management
Agreement is terminable by either the Remaining Holdco or the Privateco on giving one
– 76 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
month’s notice. Set out below are the principal terms of the Management Agreement,
pursuant to which the existing management and administration services shall continue
to be provided by the relevant members of the Privateco Group to the Remaining
Group:
Amount
incurred
in 2011
(HK$’000)
Scope of Services
Consideration
A.
Provision of company secretarial,
bookkeeping and other
administrative services
HK$80,200 per month
962
B.
Provision of property management
services to Chericourt in accordance
with the Project Management
Agreement
Monthly fee of 1% of the
gross monthly income
642
C.
Provision of property management
services to WPFSL and Access
Rich in a manner and on terms
consistent with the provision of
such services under the Project
Management Agreement
Monthly fee of 1% of the
gross monthly income
3
D.
Provision of property management
services to Winsor Parking
in accordance with the Pooling
Agreement
Monthly fee of 3% of the
pooled gross monthly
income
86
E.
Provision of staffing relating to car
park podium of the Property to
Chericourt in a manner and on
terms consistent with the provision
of such services over the 12 months
immediately preceding the date of
the Share Sale Agreement
HK$188,000 per month
F.
Provision of brokerage and agency
services to members of the
Remaining Group (other than
Winsor Parking) for the disposal of
units in the Property in a manner
and on terms consistent with the
provision of such services over
the 12 months immediately
preceding the date of
the Share Sale Agreement
1.5% of the consideration
in connection with
disposal of any unit in
the Property
– 77 –
2,253
182
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Amount
incurred
in 2011
(HK$’000)
Scope of Services
Consideration
G.
Provision of brokerage and agency
services to Winsor Parking for the
disposal of units in the Property in
a manner and on terms consistent
with the provision of such services
over the 12 months immediately
preceding the date of the Share Sale
Agreement
1% of the consideration in
connection with disposal
of any unit in the
Property
42
H.
Provision of leasing services to
Winsor Parking in relation to the
procurement of leasing for units in
the Property in accordance with the
Pooling Agreement
One month of rent for the
procurement of a new
lease, tenancy or licence,
and 20% of one month
of rent for the renewal of
an existing lease,
tenancy or licence, in
each case multiplied by a
fraction equal to the
length of the relevant
lease, tenancy or licence
divided by two years
63
I.
Provision of leasing services to
members of the Remaining Group
(other than Winsor Parking) in
relation to the procurement of
leasing for units in the Property in a
manner and on terms consistent
with the provision of such services
to them over the 12 months
immediately preceding the date of
the Share Sale Agreement
1.5 month of rent for the
procurement of a new
lease, tenancy or licence
through Winsor Estate
Agents, 50% of one
month of rent for a new
lease, tenancy or licence
procured through a third
party and 20% of one
month of rent for the
renewal of an existing
lease, tenancy or licence,
in each case multiplied
by a fraction equal to the
length of the relevant
lease, tenancy or licence
divided by two years
1,972
Total amount incurred in 2011:
6,205
As shown in the above table, the total amount incurred in 2011, all in relation to
the Property, payable by the Remaining Group to the Privateco Group regarding the
above arrangements was approximately HK$6.2 million, of which (i) approximately
– 78 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
HK$2.3 million was related to the provision of staffing in the car park; (ii)
approximately HK$2.0 million was related to the provision of leasing procurement
services.
Discussion
As advised by the management of the Group, the services to be provided by the
Privateco Group to the Remaining Group pursuant to the Management Agreement are in
general on cost basis (e.g. E — staffing relating to the car park podium of the Property)
or with reference to general market practice (e.g. I — leasing services). We have
obtained and reviewed the terms of similar services provided to independent third
parties, including those services which are priced on cost basis and those with reference
to market practice (‘‘Comparable Services’’). We noted that the terms under these
Comparable Services are broadly comparable to the specific types of services under the
Management Agreement.
Based on the above, we consider the terms of the Management Agreement to be
fair and reasonable.
3.
The New Tenancy Agreements
On 18 June 2012, six New Tenancy Agreements were entered into for the purpose of (i)
renewing certain Existing Tenancy Agreements between the Group (as landlord) and Wing
Tai Group or a related party of the Company (as tenant) and (ii) granting certain new
tenancies between the Remaining Group (as landlord) and the Privateco Group (as tenant).
Details of the New Tenancy Agreements are set out as follows:
(1)
(2)
(3)
Premises:
27/F, Two Landmark 25/F and Penthouse,
East
W Square
6/F, W Square
Landlord:
Privateco Group
Privateco Group
Privateco Group
Tenant:
Wing Tai Group
Wing Tai Group
Wing Tai Group
Gross floor area:
19,906 square feet
8,091 square feet
5,511 square feet
Term:
Three years from
25 July 2012 to
24 July 2015
The date on which the Nine months and
Executive consent
eight days from
for this tenancy
1 October 2012 to
agreement has been
8 July 2013
given and all
conditions attaching
to such consent
have been fulfilled
to 8 July 2013
Rental:
HK$507,603/month
HK$303,413/month
HK$192,885/month
Rent free period:
Nil
Nil
Nil
Management fee and airconditioning charges:
HK$85,596/month
HK$40,455/month
HK$35,822/month
Remark:
Renewal of an
existing tenancy
agreement
Renewal of an
existing tenancy
agreement
Renewal of an
existing tenancy
agreement
– 79 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(4)
(5)
(6)
Premises:
Unit 701, 7/F,
Tower B,
Regent Centre
Unit 2209, 22/F,
Tower B,
Regent Centre
818–819, Tower A,
Regent Centre
Licensor/Landlord:
Remaining Group
Remaining Group
Remaining Group
Licensee/Tenant:
Privateco Group
Privateco Group
Winsor Health
(Note 1)
Gross floor area:
1,432 square feet
1,348 square feet
2,599 square feet
Term:
1 year from
1 year from
1 September 2012
3 October 2012 to
to 31 August 2013
2 October 2013
10 months from
1 January 2013 to
31 October 2013
Early termination right:
Either party has the
right to early
terminate by
giving 1 month’s
notice
Either party has the
right to early
terminate by giving
1 month’s notice
Nil
Licence fee/rental:
HK$9,752/month
HK$10,528/month
HK$18,453/month
Licence fee/Rent free
period:
1 month from
1 September 2012
to 30 September
2012
1 month from
3 October 2012 to
2 November 2012
Nil
Management fee:
HK$2,578/month
HK$2,426/month
HK$4,678/month
Remark:
New licence
New licence
Renewal of an
existing tenancy
agreement
Note:
1.
Winsor Health is a company in which Mr. Chow Wai Wai, John and Ms. Chen Chou Mei Mei, Vivien,
both being executive Directors, had indirect effective shareholding of approximately 6% and 5%
respectively as at the Latest Practicable Date.
As the New Tenancy Agreements were entered into during the offer periods of the
Offers, and the arrangements under any New Tenancy Agreements are not extended to all
Shareholders, they constitute special deals in relation to the Offers under Rule 25 of the
Takeovers Code. As stated in the Letter from the Board, the entry into the New Tenancy
Agreements is not a condition to the Share Sale Completion, the Distribution In Specie or the
Special Cash Dividend. If any of the above New Tenancy Agreements is not approved by the
Independent Shareholders at the EGM, such New Tenancy Agreement will not become
unconditional and will cease to have effect. However, this will not affect the Share Sale
Completion, the completion of the Distribution In Specie or the payment of the Special Cash
Dividend.
– 80 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
Discussion
As advised by the management of the Group, the six New Tenancy Agreements
were entered into based on prevailing market terms. Jones Lang LaSalle Limited, an
independent property valuer (the ‘‘Independent Valuer’’), considers that the rentals,
licence fees and the management fees for each of the New Tenancy Agreements are in
line with the current market level at the time the relevant tenancy agreements were
concluded. We have discussed with the Independent Valuer the methodology adopted in
arriving the market rates of the premises in the New Tenancy Agreements. The
Independent Valuer considered that the market rates of the New Tenancy Agreements
were comparable to similar property units in the same premises under the New Tenancy
Agreements.
Based on the above, we consider the terms of the New Tenancy Agreement to be
fair and reasonable.
DISCUSSION AND ANALYSIS
(a)
As to the fairness and reasonableness of the Distribution In Specie and the Special Cash
Dividend
Privateco, the name for the public but unlisted company whose shares are proposed to be
distributed, will hold approximately 90% by value (based on valuation) of the properties now held by
the Group. In fact, with the exception of the units in Regent Centre in Kwai Chung which are being
retained in the Remaining Group, the property assets of the Privateco are the same as the Company, and
to that extent the Privateco Shares could be considered substantially equivalent to the Shares as regards
their net asset backing.
The Transactions involve splitting the Company into two parts, the Privateco Group and the
Remaining Group. This technique has a number of precedents for Hong Kong listed companies. It can,
by and large, be said to have delivered value for minority shareholders, particularly where their shares
trade at a steep discount to net asset value. Its main advantage is that it preserves the value of a Hong
Kong listing instead of extinguishing it. A controlling interest in the Remaining Group will be sold to
the Purchaser at NAV plus a premium, in this case, of HK$330 million. The Listco Offer, which will be
made at the same price per Share as that agreed under the Share Sale Agreement, allows Independent
Shareholders to enjoy their share of such premium.
The majority of the Company’s assets will be grouped under the Privateco, the shares of which
will be distributed to existing Shareholders. To provide Independent Shareholders with an exit, Wing
Tai (or wholly-owned subsidiary of Wing Tai) will make an offer for the newly distributed Privateco
Shares. The Privateco will become an unlisted subsidiary of Wing Tai and it is Wing Tai’s intention that
the businesses of the Privateco Group will continue to be operated by the existing management team of
the Company. It is also the intention of Wing Tai that the Privateco Group will not make changes to its
principal businesses nor conduct any business other than the Distributed Businesses.
– 81 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
As explained above, the level of investor protection for shareholders in the Privateco will be
substantially less than that enjoyed by the Shareholders at present, particularly as regards connected
transactions and dilution by issues of new shares. In addition, no dividend policy for the Privateco has
been disclosed and the Privateco Shares will have very limited liquidity.
Due to the above, in our view Independent Shareholders should approach the question of how to
vote on the Distribution In Specie and the Special Cash Dividend from the perspective that they will not
retain the Privateco Shares if the Distribution In Specie is approved.
The Distribution In Specie followed by the Privateco Offer involves, in effect, if the Privateco
Offer is accepted, the sale of approximately 90% of the Company’s properties to its parent group, Wing
Tai, at a discount of 27% to valuation. If a direct sale of properties alone were proposed on these terms,
we believe it would be generally regarded according to Hong Kong practice as not fair or reasonable for
the Company and the Independent Shareholders. However, the Distribution In Specie and the Privateco
Offer are not simply a direct sale of property at a discount, but incorporate a return of attributable
proceeds to the Independent Shareholders.
We wish to highlight the position of any Independent Shareholders who fail to accept the Privateco
Offer if the Distribution In Specie is approved. The Independent Shareholders may have grown
accustomed to holding a listed share which pays regular dividends. However, if the Distribution In
Specie proceeds, the great majority of their investment will in the first instance be converted into an
unlisted share which may not pay dividends. If they do not accept the Privateco Offer, they may have to
hold the Privateco Shares indefinitely. However, we believe the difficulties of this position have been
made clear in this Circular. As explained above, we consider the Transactions are attractive to the
Independent Shareholders provided that they accept the Privateco Offer. Wing Tai has stated that it will
exercise its right of compulsory acquisition of the Privateco minorities provided it reaches the required
holding of 90%, which we consider not an unreasonable expectation given the attractive level of cash
consideration available under the Privateco Offer and the drawbacks for the Independent Shareholders of
retaining the Privateco Shares. On this basis, we consider the terms of the Distribution In Specie and the
Special Cash Dividend, viewed overall, to be fair and reasonable to the Independent Shareholders.
(b)
As to voting on the Distribution In Specie and the Special Cash Dividend
In our view, the main advantage of the Distribution In Specie and the Special Cash Dividend to
Independent Shareholders is the substantial premium of the consideration payable in due course comes
under the Offers over the market price of the Shares prior to the Joint Announcement. To make this
comparison, we believe the fairest basis is to take the ‘‘undisturbed’’ market price as a benchmark, that
is the price prevailing before rumours of a transaction may have affected it. On this basis, we consider it
is fair to compare the aggregate value of HK$34 per Share with the 30-day average price of HK$21.04
per Share and the 90-day average price of HK$17.50 per Share. On this basis, the premiums are
approximately 61.6% and 94.3% respectively, which are substantial amounts. The offers to be made for
the Privateco Group and the Remaining Group in due course will provide Independent Shareholders as a
group with a guaranteed cash exit. This would otherwise be difficult for the Privateco Shares given the
unlisted status of the Privateco. For the Listco Offer, the viable options for the Independent
Shareholders include (i) holding their shares of the Company, as the shareholders will be in possession
of all relevant facts regarding the Company as a public listed company and thus able to make an
– 82 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
informed judgment on the attractiveness or otherwise of holding the Shares, (ii) selling the Shares on the
market at some future date, being able to form a judgment on the advisability of so doing on the same
basis as in (i) above, and (iii) accepting the Listco Offer.
Given present difficult market conditions, we consider it very likely that, if the Distribution In
Specie and the Special Cash Dividend do not go ahead, the price of the Shares will fall back to levels
previously prevailing. While the strong net asset backing and regular dividend payments may put a floor
on the decline, these factors are not new — the Company’s share price has traded substantially below its
net asset backing for a prolonged period. Since the Company is controlled by Wing Tai, a hostile offer
for the Shares is not practicable, and there can be no guarantee that Wing Tai will revise or renew the
Transactions.
On the basis of the Combined Cash Exit, the discount to net assets is decreased from the 27%
mentioned above to 21%, because the terms of the (smaller) offer for the Remaining Group reflect a
premium over (rather than a discount to) net assets.
RECOMMENDATION
(i)
The Distribution In Specie and the Special Cash Dividend
Based on the above principal factors and reasons, we consider the terms of the Distribution In
Specie and the Special Cash Dividend to be fair and reasonable so far as the Independent Shareholders
are concerned. We therefore recommend the Independent Board Committee to advise, and we ourselves
advise, the Independent Shareholders, particularly those who are concerned about liquidity and the
difficult current market conditions to vote in favour of the Distribution In Specie and the Special Cash
Dividend, in view of the financial gain of approximately 60% to 90% which the Distribution In Specie,
the Special Cash Dividend and acceptance of the subsequent Offers would generate. In voting in favour,
they should bear in mind that it is uncertain what the value of a Privateco Share may be to an
Independent Shareholder, but they are still able to realise their investment in the Privateco in cash by
accepting the Privateco Offer. Independent Shareholders may refer to separate letters of advice from the
Independent Board Committee (if any) and the Independent Financial Adviser as contained in the
Privateco Offer Document and the Listco Offer Document, which will be despatched in due course
subject to the Share Sale Completion.
There may be Independent Shareholders who wish to hold their Shares long term based on the net
asset backing of HK$43 per Share and the regular dividend payments, representing a yield at the
Combined Cash Exit of HK$34 per Share of 2%, and who therefore may consider voting against the
Distribution In Specie and the Special Cash Dividend. They should bear in mind however that there is
likely to be a substantial fall in the price of the Shares if the Distribution In Specie and the Special Cash
Dividend do not proceed and there is no assurance that the price of the Shares will recover in the short
term, or at all, or that Wing Tai or any other party would in the future make any similar proposals.
– 83 –
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER
(ii)
The Special Deals and the New Tenancy Agreements
Based on the above principal factors and reasons, we consider the terms of the Special Deals and
the New Tenancy Agreements to be fair and reasonable so far as the Independent Shareholders are
concerned. Accordingly, we recommend the Independent Board Committee to advise, and we ourselves
advise, the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the
EGM in relation to the Special Deals and the New Tenancy Agreements.
Yours faithfully,
for and on behalf of
SOMERLEY LIMITED
M. N. Sabine
Chairman
– 84 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
Information contained in this appendix is reproduced from the Joint Announcement for the purpose
of providing with the Independent Shareholders reference in respect of the key terms of the Listco Offer
and the Privateco Offer. Capitalised terms used in the paragraphs headed ‘‘A. Possible Unconditional
Mandatory Cash Offer for the Shares in Winsor’’, ‘‘B. Possible Unconditional Voluntary Cash Offer for
the Privateco Shares and Major and Connected Transactions for Wing Tai’’ and ‘‘C. Comparison of the
Combined Offer Price with Market Prices of the Shares in Winsor and Equity Attributable to Winsor
Shareholders’’ of this Appendix have the meaning ascribed to them in the ‘‘Definitions’’ section of the
Joint Announcement. Information reproduced from the Joint Announcement reflects the situation as
of the date of the Joint Announcement. Save for (i) the incorporation of the Privateco and the
Remaining Holdco; (ii) the establishment of the board of directors of the Privateco and the Remaining
Holdco; (iii) the transfer of certain Distributed Businesses into the Privateco Group; (iv) the transfer of
the Remaining Group Entities (other than the WPFSL Sale Shares to be transferred to the Remaining
Holdco pursuant to the Winsor Connected Transaction) into the Remaining Holdco and the
consequential changes in relation thereto, to the best of the knowledge and belief of the Directors after
all reasonable enquiries, there is no material change to the information contained in this appendix since
the date of the Joint Announcement. Detailed terms of the Listco Offer and the Privateco Offer were set
out in the Joint Announcement and will be set out in the Listco Offer Document and the Privateco Offer
Document (as the case may be).
The Joint Announcement also contains the following responsibility statements:
‘‘The directors of Winsor jointly and severally accept full responsibility for the accuracy of the
information contained in this announcement (other than that relating to the Offeror and Wing Tai, their
respective associates and parties acting in concert with each of the Offeror and Wing Tai) and confirm,
having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this
announcement have been arrived at after due and careful consideration and there are no other facts not
contained in this announcement, the omission of which would make any statement in this announcement
misleading.’’
‘‘The directors of Wing Tai accept full responsibility for the accuracy of the information contained
in this announcement (other than that relating to the Offeror and Winsor, their respective associates and
parties acting in concert with each of the Offeror and Winsor) and confirm, having made all reasonable
inquiries, that to the best of their knowledge, opinions expressed in this announcement have been
arrived at after due and careful consideration and there are no other facts not contained in this
announcement, the omission of which would make any statement in this announcement misleading.’’
‘‘The directors of the Offeror and Vanke jointly and severally accept full responsibility for the
accuracy of the information contained in this announcement (other than that relating to Wing Tai and
Winsor, their respective associates and parties acting in concert with each of Wing Tai and Winsor) and
confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in
this announcement have been arrived at after due and careful consideration and there are no other facts
not contained in this announcement, the omission of which would make any statement in this
announcement misleading.’’
– 85 –
APPENDIX I
A.
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
POSSIBLE UNCONDITIONAL MANDATORY CASH OFFER FOR THE SHARES IN
WINSOR
Terms of the Listco Offer
Upon the Share Sale Completion (assuming that no Further Shares will be acquired by Wing
Tai subsequent to the date of this announcement and then sold to the Purchaser or the Offeror
pursuant to the Share Sale Agreement up to the Share Sale Completion), the Purchaser or the
Offeror will hold 191,935,845 shares in Winsor, representing approximately 73.91% of the issued
share capital of Winsor as at the date of this announcement. Upon the Share Sale Completion, the
completion of the Distribution in Specie and the payment of the Special Cash Dividend, CITIC
will, on behalf of the Offeror and pursuant to the Takeovers Code, make the Listco Offer, which is
an unconditional mandatory cash offer to acquire all the issued shares in Winsor (other than those
already owned or agreed to be acquired by the Purchaser, the Offeror and parties acting in concert
with any of them) on the following basis:
for each share in Winsor held . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$5.6197 in cash
The making of the Listco Offer is subject to the Share Sale Completion which in turn is
subject to a number of conditions precedent as referred to in the paragraph headed
‘‘Conditions precedent’’ in the section headed ‘‘Major Transaction of Wing Tai: Disposal of
73.91% Interest in Winsor — Share Sale Agreement’’ above and therefore is a possibility
only and it may or may not proceed.
Winsor shareholders are reminded to read the recommendations of the Winsor
Independent Board Committee and the advice of an independent financial adviser in respect
of the Listco Offer that will be included in the relevant offer document(s) (in either composite
or separate form).
In the event that the Listco Offer is made, it will be an unconditional mandatory cash offer.
As at the date of this announcement, there are 259,685,288 shares in Winsor in issue.
As at the date of this announcement, Winsor has no outstanding securities, options, warrants
or derivatives which are convertible into or which confer rights to require the issue of shares in
Winsor and Winsor has no other relevant securities (as defined in Note 4 to Rule 22 of the
Takeovers Code).
As at the date of this announcement, the Offeror has not received any indication or
irrevocable commitment from any Winsor shareholder that he/she/it will accept or reject the Listco
Offer.
Total consideration for the Listco Offer on the basis of the Listco Offer price of HK$5.6197
per share in Winsor and 259,685,288 shares in Winsor in issue as at the date of this
announcement, the entire issued share capital of Winsor is valued at HK$1,459,353,413.
Excluding 191,935,845 shares in Winsor to be held by the Purchaser, the Offeror and parties
acting in concert with any of them upon the Share Sale Completion (on the assumption that no
– 86 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
Further Shares will be acquired by Wing Tai subsequent to the date of this announcement and then
sold to the Purchaser or the Offeror pursuant to the Share Sale Agreement), 67,749,443 shares in
Winsor (at the Listco Offer price of HK$5.6197 per share in Winsor) will be subject to the Listco
Offer and the Listco Offer are valued at an aggregate amount of approximately HK$380,731,545.
The amount was determined after arm’s length negotiations between Wing Tai and the Purchaser in
relation to the Disposal, taking into account the fair value of the Property by reference to the value
used for the purpose of preparing the audited consolidated accounts of Winsor Group for the year
ended 31 December 2011, the listed status of Winsor and the fact that the Offeror can obtain a
controlling interest in Winsor.
By accepting the Listco Offer, Winsor shareholders will sell their shares in Winsor to the
Offeror free from all liens, charges, claims and encumbrances and with all rights attached to them,
including the rights to receive all dividends and distributions declared, made or paid after the date
on which the Listco Offer is made, being the date of posting of the relevant offer document(s),
excluding the Distribution In Specie and the Special Cash Dividend.
Financial resources
The amount of the funds required for the acquisition of the Sale Shares and the full
acceptance of the Listco Offer by the Offeror will be financed from internal resources and a term
loan from CITIC Securities Brokerage (HK) Limited. CITIC is satisfied that there are sufficient
financial resources available to the Purchaser and the Offeror to satisfy the amount of funds
required for the acquisition of the Sale Shares and full acceptance of the Listco Offer.
Payments
Payment in cash in respect of acceptance of the Listco Offer will be made as soon as possible
but in any event within seven Business Days of the date of which the relevant documents of title
are received by the Offeror or its agent acting on its behalf to render each such acceptance
complete and valid.
Stamp duty
The ad valorem stamp duty payable by the accepting Winsor shareholders in connection with
the Listco Offer amounting to 0.1% of the consideration or the then market price of the shares in
Winsor (whichever is higher) will be payable by the accepting Winsor shareholders and will be
deducted by the Offeror from the consideration payable to them on acceptance of the Listco Offer.
The Offeror will then pay the stamp duty on behalf of the accepting Winsor shareholders.
Other arrangements
The Offeror confirms that as at the date of this announcement, save for the Share Sale
Agreement, none of the Purchaser, the Offeror, its ultimate beneficial owners, or parties acting in
concert with any of them owned or had control or direction over any voting rights or rights over
the shares in Winsor or convertible securities, options, warrants or derivatives of Winsor as at the
date of this announcement.
– 87 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
Save for the entering into of the Share Sale Agreement, none of the Purchaser, the Offeror,
its ultimate beneficial owners, or parties acting in concert with it or any of them had dealt in any
shares, convertible securities, options, warrants or derivatives of Winsor during the six-month
period immediately preceding 13 April 2012 (being the date of commencement of the offer period
for the Listco Offer) and up to the date of this announcement. None of the Purchaser, the Offeror,
its ultimate beneficial owners, or parties acting in concert with any of them had entered into any
agreements in relation to the issue of any convertible securities, options, warrants or derivatives of
Winsor.
The Purchaser and the Offeror confirm that, save for the Share Sale Agreement, there are no
other arrangements, whether by way of option, agreements, indemnity or otherwise, in relation to
the shares in Winsor, or the shares in the Purchaser or the Offeror and which may be material to
the Listco Offer.
The Purchaser and the Offeror further confirm that, other than the Share Sale Agreement,
there are no other agreements or arrangements to which the Purchaser or the Offeror is a party and
relate to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or
a condition to the Listco Offer.
As at the date of this announcement, none of the Purchaser, the Offeror, its ultimate
beneficial owners, or parties acting in concert with it or any of them had entered into any contracts
in relation to the outstanding derivatives in respect of the securities in Winsor and have not
borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code)
in Winsor.
Information on the Purchaser and the Offeror
The Offeror is an investment holding company incorporated in the BVI with limited liability
on 27 April 2012 and is wholly-owned by Wkland Limited. Wkland Limited is an investment
holding company incorporated in the BVI with limited liability on 27 April 2012 and is whollyowned by the Purchaser. The Purchaser is an investment holding company incorporated in Hong
Kong with limited liability on 6 June 2007 and is indirectly wholly-owned by Vanke. Vanke, the
ultimate holding company of the Purchaser and the Offeror, is listed on the Shenzhen Stock
Exchange since 1991 and together with its subsidiaries, is primarily engaged in real estate
development and operations in the People’s Republic of China.
As at 11 May 2012, the market capitalisation of Vanke was approximately RMB97.1 billion
(equivalent to HK$119.8 billion). Vanke recorded audited profits attributable to shareholders of
approximately RMB9.6 billion (equivalent to approximately HK$11.9 billion) for the financial year
ended 31 December 2011. Its audited consolidated net asset value as at 31 December 2011 was
approximately RMB67.8 billion (equivalent to approximately HK$83.7 billion). The acquisition of
the shares in Winsor by the Purchaser and the Offeror is part of the globalization strategy of
Vanke in the long run. The Purchaser is an offshore property arm of Vanke, and has completed
property development projects in 7 major cities in the PRC. As at 31 December 2011, the
Purchaser recorded audited total assets of approximately HK$7.0 billion, total liabilities of
approximately HK$6.1 billion and net asset value of approximately HK$0.8 billion. As of the date
– 88 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
of this announcement, other than providing a guarantee of US$82.57 million, the Purchaser has not
provided any other securities or guarantees, is not involved in any litigation and does not have any
other contingent liabilities.
As of 30 April 2012, Vanke had provided guarantees of approximately RMB15.2 billion in
aggregate, representing approximately 28.7% of the audited net assets attributable to the
shareholders of Vanke for the year ended 31 December 2011. Of the RMB15.2 billion of
guarantees that Vanke and its subsidiaries have provided (1) approximately RMB13.5 billion is for
Vanke’s subsidiaries; and (2) approximately RMB1.7 billion is for the associated companies and
joint venture companies of Vanke. Vanke has no overdue guarantees nor is it involved in any
litigation in relation to guarantees. The provision of the guarantee by the Guarantor (which is an
indirectly wholly-owned subsidiary of Vanke) is in compliance with the PRC laws and regulations
applicable to Vanke and the constitutional documents of Vanke.
As at the date of this announcement, none of Vanke, the Purchaser, Wkland Limited and the
Offeror own any shares in Winsor. The Offeror and its ultimate holding company are third parties
independent of Winsor and its connected persons (as defined in the Listing Rules). As at the date
of this announcement, the directors of the Purchaser are Du Jing, Wang Wenjin and Que Dongwu,
and the directors of the Offeror are Du Jing and Que Dongwu.
Intention of the Offeror regarding the Remaining Group
The Offeror intends to continue the principal business of the Remaining Group of (1)
property investment and management; and (2) investment holding. Following the Share Sale
Completion, the Offeror will conduct a review on the business operations and financial position of
the Remaining Group for the purpose of formulating business plans and strategies for the future
business development of the Remaining Group. Subject to the result of the review, and should
suitable investment or business opportunities arise, the Offeror may consider diversifying the
business of the Remaining Group with an objective to broaden its income sources. However, as at
the date of this announcement, no such investment or business opportunities have been identified
nor has the Offeror entered into any agreement, arrangements, understandings, intention or
negotiation in relation to injecting any assets or businesses into the Remaining Group.
Notwithstanding the foregoing, the Offeror has not entered into any agreements, arrangements,
intention or negotiations in relation to the disposal and/or re-deployment of the assets of the
Remaining Group, or termination or scaling-down of any of the Remaining Group’s business, other
than those arrangements set out in the Share Sale Agreement or in its ordinary course of business.
Proposed change of board composition of Winsor
The Winsor Board is currently made up of 8 directors, comprising 3 executive directors, 2
non-executive directors and 3 independent non-executive directors.
Upon Share Sale Completion, the Purchaser intends to nominate new directors of Winsor to
the Winsor Board with effect from the earliest time permitted under the Takeovers Code, but as at
the date of this announcement, the Purchaser has not reached any final decision as to who will be
nominated as new directors of Winsor. Immediately after the first closing of the Listco Offer (or
such other time as permitted by the Takeovers Code or the SFC), it is the Purchaser’s intention that
– 89 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
all the existing directors of Winsor will resign. Any changes to the Winsor Board will be made in
compliance with the Takeovers Code and the Listing Rules and further announcement will be made
accordingly.
Maintaining the listed status of Winsor
The Offeror and the Purchaser intend to maintain the listed status of Winsor and it will
irrevocably undertake that it will be responsible for maintaining the 25% public float requirement
upon the closing of the Listco Offer.
If, at the close of the Listco Offer, less than the minimum prescribed percentage
applicable to Winsor, being 25% of the shares in Winsor, are held by the public, or if the
Stock Exchange believes that:
—
a false market exists or may exist in the trading of the shares in Winsor;
or
—
there are insufficient shares in Winsor in public hands to maintain an orderly
market,
the Stock Exchange will consider exercising its discretion to suspend dealings in the shares in
Winsor.
B.
POSSIBLE UNCONDITIONAL VOLUNTARY CASH OFFER FOR THE PRIVATECO
SHARES AND MAJOR AND CONNECTED TRANSACTIONS FOR WING TAI
Introduction and Reasons for the Privateco Offer
Based on the current shareholding structure of Winsor, Wing Tai together with its associates
and parties acting in concert with it (but excluding those shares in Winsor that are held by its
connected persons whose Privateco Shares may be acquired under the Wing Tai Connected
Transaction) will be interested in a total of 205,835,845 Privateco Shares, representing
approximately 79.26% of the issued share capital of Privateco following the Distribution In Specie.
Given that the Privateco Shares will not be listed on the Stock Exchange or other stock
exchange, it will be difficult, if not impossible, for holders of the Privateco Shares to liquidate
their holdings in the Privateco Shares. Wing Tai considers, in these circumstances, that it is
appropriate to provide the Privateco Shareholders with an opportunity to realise their holdings in
the Privateco Shares by making the Privateco Offer on a voluntary basis pursuant to the Takeovers
Code.
Terms of the Privateco Offer
After the Share Sale Completion and the Distribution In Specie have been made and the
Special Cash Dividend have been paid, SCB will, on behalf of Wing Tai and pursuant to the
Takeovers Code, make the Privateco Offer to the Privateco Shareholders to acquire all the
– 90 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
Privateco Shares (other than those already owned or agreed to be acquired by Wing Tai together
with its associates and parties acting in concert with it (but excluding the Privateco Shares that
may be acquired under the Wing Tai Connected Transaction)) on the following basis:
for each Privateco Share held . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$27.60 in cash
* The number of the Privateco Shares to be in issue will be equal to the total number of the shares in Winsor in
issue on the Record Date. Winsor will announce the Record Date in accordance with Rule 13.66 of the Listing
Rules as and when appropriate.
The making of the Privateco Offer is subject to the Share Sale Completion which in turn
is subject to a number of conditions precedent as referred to in the paragraph headed
‘‘Conditions precedent’’ in the section headed ‘‘Major Transaction of Wing Tai: Disposal of
73.91% Interest in Winsor — Share Sale Agreement’’ and therefore is only a possibility and
may or may not proceed. In the event that the Privateco Offer is made, it will be an
unconditional cash offer.
Winsor shareholders are reminded to read the advice of an independent financial
adviser in respect of the Privateco Offer that will be included in the relevant offer
document(s) (in either composite or separate form).
Assuming that the Winsor shareholders, as at the Record Date, are the same as the date of
this announcement (save for Chow Wai Wai, John, Kwok Ping Luen, Raymond, Chen Chou Mei
Mei, Vivien and Cheng Chan Sau Ching, Ivy and SCB Singapore and their respective associates,
all of whom are assumed to be acting in concert with Wing Tai), to the best knowledge,
information and belief of the directors of Wing Tai having made all reasonable enquiries, each of
the holders of the Privateco Shares immediately after the Distribution In Specie and parties acting
in concert with it is a third party independent of and not connected with Wing Tai and its
connected persons (as defined in the Listing Rules).
The Privateco Shares will be acquired by Wing Tai with the rights to receive all dividends
and distributions declared, paid, or made on or after the date of the issue of the Privateco Shares
and free from all third party rights.
Wing Tai and parties acting in concert with it have not received any indication or irrevocable
commitment from any Privateco Shareholder or Winsor shareholder that it will accept or reject the
Privateco Offer. Wing Tai confirms that there are no other arrangements (whether by way of
option, indemnity or otherwise) in relation to Privateco Shares and which might be material to the
Privateco Offer. Wing Tai further confirms that there are no other agreements or arrangements to
which Wing Tai is a party which relate to the circumstances in which it may or may not invoke or
seek to invoke a precondition or a condition to the Privateco Offer.
Consideration
The Privateco Offer price of HK$27.60 per Privateco Share has been determined after taking
into account factors including (i) the audited consolidated net asset value of the Winsor Group as
at 31 December 2011, taking into consideration the effect of the Group Reorganisation and the
Distribution In Specie; (ii) the Special Cash Dividend; (iii) the Listco Offer price of HK$5.6197
– 91 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
per share in Winsor; (iv) the market prices of shares in Winsor as further described in the section
headed ‘‘Comparison of the combined offer price with market prices of the shares in Winsor and
equity attributable to Winsor shareholders’’ below; and (v) the closing price of HK$26.00 per share
in Winsor as quoted on the Stock Exchange on the Last Trading Day.
Assuming that there is no change in the issued share capital of Winsor up to the Share Sale
Completion, 259,685,288 Privateco Shares will be in issue upon completion of the Distribution In
Specie and based on the Privateco Offer price of HK$27.60 per Privateco Share, the entire issued
share capital of Privateco is valued at approximately HK$7,167.3 million. Assuming the Share Sale
Completion has taken place and completion of the Distribution In Specie and based on
205,835,845 Privateco Shares (representing approximately 79.26% of the share capital of
Privateco expected to be in issue) to be beneficially owned by Wing Tai and its associates and its
parties acting in concert with it (including the Privateco Shares held by SCB Singapore but
excluding the Privateco Shares that may be acquired under the Wing Tai Connected Transaction),
53,849,443 Privateco Shares (representing approximately 20.74% of the share capital of Privateco
expected to be in issue) will be subject to the Privateco Offer and the Privateco Offer is valued at
approximately HK$1,486.2 million.
The amount of funds required for the acquisition of the Privateco Shares pursuant to the
Privateco Offer will be financed from the consideration that Wing Tai and Twin Dragon will
receive for the Sale Shares on Share Sale Completion and the Special Cash Dividend that Wing Tai
and Twin Dragon will receive, a facility provided by SCB, and the internal resources of Wing Tai.
SCB is satisfied that sufficient financial resources are available to Wing Tai to satisfy full
acceptance of the Privateco Offer.
Wing Tai Connected Transaction
As at the date of this announcement, Chow Wai Wai, John, Kwok Ping Luen, Raymond,
Chen Chou Mei Mei, Vivien and Cheng Chan Sau Ching, Ivy hold 2,713,000 shares in Winsor,
500 shares in Winsor, 70,000 shares in Winsor and 27,000 shares in Winsor, respectively. Upon
the Share Sale Completion and completion of Distribution In Specie, they will hold Privateco
Shares. Chow Wai Wai, John and Kwok Ping Luen, Raymond, as directors of Wing Tai, are
connected persons of Wing Tai under the Listing Rules. Chen Chou Mei Mei, Vivien, as a director
of Winsor, and Cheng Chan Sau Ching, Ivy, the wife of Cheng Wai Chee, Christopher who is a
director of both Wing Tai and Winsor, are also connected persons of Wing Tai under the Listing
Rules. The acquisition of Privateco Shares under the Privateco Offer by Wing Tai from Chow Wai
Wai, John, Kwok Ping Luen, Raymond, Chen Chou Mei Mei, Vivien and Cheng Chan Sau Ching,
Ivy and their associates and any other connected persons of Wing Tai under the Privateco Offer
will therefore constitute a connected transaction for Wing Tai under Chapter 14A of the Listing
Rules. The original purchase cost of the Privateco Shares is nil, since they are to be acquired
through the Distribution In Specie.
– 92 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
As each of the applicable percentage ratios is less than 5%, the Wing Tai Connected
Transaction will constitute a connected transaction under Rule 14A.32(1) of the Listing Rules and
will be subject only to the reporting and announcement requirements set out in Chapter 14A of the
Listing Rules but exempt from the requirements of the independent shareholders’ approval under
Chapter 14A of the Listing Rules.
The directors of Wing Tai (including the independent non-executive directors but excluding
Cheng Wai Chee, Christopher and Chow Wai Wai, John who abstained from voting on the relevant
board resolutions approving the Wing Tai Connected Transaction) consider that the Wing Tai
Connected Transaction is on normal commercial terms, fair and reasonable and in the interests of
Wing Tai and its shareholders as a whole. The directors of Wing Tai who had a material interest in
the Wing Tai Connected Transaction, Cheng Wai Chee, Christopher and Chow Wai Wai, John,
abstained from voting on the relevant board resolutions approving the Wing Tai Connected
Transaction.
Compulsory acquisition right
Subject to sufficient Privateco Shares being acquired so that Wing Tai holds not less than
90% of Privateco Shares, Wing Tai intends to exercise its right to direct Privateco to redeem all
the remaining Privateco Shares under the provisions of section 176 of the BVI Business
Companies Act after the close of the Privateco Offer.
If this condition is fulfilled, Wing Tai may, at any time, give notice (the ‘‘Request Notice’’)
to Privateco directing it to redeem the remaining Privateco Shares in accordance with section 176
(and subject to section 179) of the BVI Business Companies Act. Upon receipt of the Request
Notice, Privateco will send a notice of compulsory redemption and cancellation to the holders of
the remaining Privateco Shares containing all relevant information in the manner prescribed by the
BVI Business Companies Act. In addition to the aforesaid requirement, Rule 2.11 of the Takeovers
Code requires that acceptances of the Privateco Offer during the period of 4 months after posting
of the Privateco Offer document total 90% of the disinterested Privateco Shares. Further
announcements will be made about the exercise of such right of compulsory acquisition.
The Privateco Shares will be acquired by Wing Tai with the right to receive all dividends and
distributions declared, paid or made on or after the date of the issue of the Privateco Shares and
free from all third party rights.
As at the date of this announcement, Privateco has not been incorporated and the board of
directors of the Privateco has not been established. Privateco will be incorporated in the BVI with
limited liability pursuant to the Group Reorganisation for the purpose of holding the Distributed
Businesses and as a directly wholly-owned subsidiary of Winsor prior to the Distribution In
Specie. Further announcement(s) will be made as and when appropriate to comply with Rule
3.5(c), (d), (f), (g) and (h) of the Takeovers Code.
Given that Privateco will be a company incorporated in the BVI where its register of
members is located and maintained, no Hong Kong stamp duty will be payable on any transfer of
the Privateco Shares.
– 93 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
For those Privateco Shareholders who wish to retain their investments in the Distributed
Businesses after the Share Sale Completion, they can choose not to accept the Privateco Offer and
continue to hold the Privateco Shares (but subject to the exercise of the right of compulsory
acquisition). They should, however, be aware that there will be no liquid market for the
Privateco Shares as there is no intention to list the Privateco Shares on any stock exchange.
Information about Privateco and the Distributed Businesses
Privateco is a company to be incorporated in the BVI for the purpose of holding the
Distributed Businesses.
The Distributed Businesses to be operated by the Privateco Group will consist of the
businesses of the Winsor Group other than those relating to the Property. These include property
investment and management covering various office and industrial properties, warehousing and
investment holding businesses.
Immediately after the completion of the Group Reorganisation, the Privateco Group will be
engaged in the same business as Winsor as at the date of this announcement (i.e. property
investment and management, warehousing and investment holding) other than those relating to the
Property. Further details of the Distributed Businesses, including independent valuations of each of
the properties included within the Distributed Businesses, will be included in the Winsor Circular,
the Wing Tai Circular and the Privateco Offer Document.
Information about Wing Tai and its intention regarding the Privateco
Wing Tai is an investment holding company the shares of which are listed on the main board
of the Stock Exchange (stock code: 369). The principal subsidiaries of Wing Tai are engaged in
property development, property investment and management, hospitality investment and
management, garment manufacturing and investing activities.
As at the date of this announcement, Wing Tai, its associates and parties acting in concert
with it (but excluding those shares in Winsor that are held by its connected persons whose
Privateco Shares may be acquired under the Wing Tai Connected Transaction) hold 205,835,845
shares in Winsor, representing approximately 79.26% of the entire existing issued share capital of
Winsor. When taken together with the shares in Winsor held by its connected persons that are the
subject of the Wing Tai Connected Transaction, Wing Tai, and its associates and parties acting in
concert with it beneficially own a total of 208,646,345 shares in Winsor (representing
approximately 80.35% of the entire existing issued share capital of Winsor) as at the date of this
announcement.
It is the intention of Wing Tai that the Privateco Group will not make changes to its principal
businesses nor conduct any business other than the Distributed Businesses. It is also the intention
of Wing Tai that the Privateco Group will not hold any assets other than those relating to the
Distributed Businesses, nor be injected any major assets, nor dispose of any major assets, after the
close of the Privateco Offer.
– 94 –
APPENDIX I
INFORMATION ON THE LISTCO OFFER
AND THE PRIVATECO OFFER
None of the independent non-executive directors of Winsor will be appointed as a director of
the Privateco. Following the dispatch of the Privateco Offer Document, the composition of the
board of directors of the Privateco may change. Further announcement(s) will be made in this
regard as and when appropriate.
C.
COMPARISON OF THE COMBINED OFFER PRICE WITH MARKET PRICES OF THE
SHARES IN WINSOR AND EQUITY ATTRIBUTABLE TO WINSOR SHAREHOLDERS
The combined consideration under the Listco Offer, the Privateco Offer and the Special Cash
Dividend is, in aggregate, equivalent to HK$34.00 per share in Winsor, which represents:
—
a premium of approximately 30.8% over the closing price of HK$26.00 per share in Winsor
as quoted on the Stock Exchange on the Last Trading Day;
—
premiums of approximately 51.9%, 52.5%, 61.6% and 94.3% over the average of the closing
prices of approximately HK$22.38, HK$22.29, HK$21.04 and HK$17.50 per share in
Winsor, respectively for the 10, 20, 30 and 90 consecutive trading days up to and including
the Last Trading Day; and
—
a discount of approximately 21.2% over the audited equity attributable to Winsor
shareholders of approximately HK$43.12 per share in Winsor as at 31 December 2011 based
on the annual report of Winsor for the year ended 31 December 2011 after adjustment for the
final dividend for 2011 of HK$0.47 per share in Winsor recommended by the Winsor Board.
– 95 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
The following is the text of a report received from the Company’s reporting accountant,
PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of inclusion in this
circular.
20 June 2012
The Directors
Winsor Properties Holdings Limited
Dear Sirs,
We report on the financial information of Winsor Properties Holdings Limited (the ‘‘Company’’)
and its subsidiaries (together, the ‘‘Group’’), which comprises the consolidated and company balance
sheets as at 31 December 2009, 2010 and 2011, and the consolidated income statements, the
consolidated statements of comprehensive income, the consolidated statements of changes in equity and
the consolidated cash flow statements of the Company for each of the years ended 31 December 2009,
2010 and 2011 (the ‘‘Relevant Periods’’) and a summary of significant accounting policies and other
explanatory information. This financial information has been prepared by the directors of the Company
and is set out in Sections I to III below for inclusion in Appendix II to the circular of the Company
dated 20 June 2012 (the ‘‘Circular’’) in connection with the proposed group reorganisation of the
Company as set out in this Circular.
The Company is a limited liability company incorporated under the laws of Cayman Islands and its
shares are listed on The Stock Exchange of Hong Kong Limited. The Group is principally engaged in
property investment and management, warehousing and investment holding. The Group is also involved
from time to time in property development activities.
As at the date of this report, the Company has indirect interests in the subsidiaries and associated
companies as set out in Note 39 of Section II below.
The consolidated financial statements of the Company for each of the years ended 31 December
2009, 2010 and 2011 were audited by PricewaterhouseCoopers pursuant to separate terms of engagement
with the Company.
The directors of the Company during the Relevant Periods are responsible for the preparation of
the consolidated financial statements of the Company that give a true and fair view in accordance with
Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified
Public Accountants (the ‘‘HKICPA’’) and for such internal control as the directors determine is
necessary to enable the preparation of financial information that is free from material misstatement,
whether due to fraud or error.
– 96 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
The financial information has been prepared based on the audited consolidated financial statements
of the Company, with no adjustment made thereon.
Directors’ Responsibility for the financial information
The directors of the Company are responsible for the preparation of the financial information that
gives a true and fair view in accordance with HKFRSs and the accounting policies adopted by the
Company as set out in the annual report of the Company for the year ended 31 December 2011.
Reporting Accountant’s Responsibility
Our responsibility is to express an opinion on the financial information and to report our opinion
to you. We carried out our procedures in accordance with the Auditing Guideline 3.340 ‘‘Prospectuses
and the Reporting Accountant’’ issued by the HKICPA.
Opinion
In our opinion, the financial information gives, for the purpose of this report, a true and fair view
of the state of affairs of the Company and of the Group as at 31 December 2009, 2010 and 2011 and of
the Group’s results and cash flows for the Relevant Periods then ended.
– 97 –
APPENDIX II
I
ACCOUNTANT’S REPORT OF THE COMPANY
FINANCIAL INFORMATION
Consolidated Income Statements
For the years ended 31 December 2009, 2010 and 2011
Note
Revenue
Cost of sales
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of investment properties
Gains on disposals of investment properties
Other gains, net
Operating profit
Finance income
Finance costs
5
5
17
6
7
7
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
290,332
(103,017)
403,708
(92,334)
478,330
(110,797)
187,315
38,748
(13,215)
(37,992)
339,300
—
72,215
311,374
35,828
(19,161)
(39,246)
1,799,809
147,011
25,167
367,533
46,198
(8,814)
(42,356)
1,958,533
1,312
35,242
586,371
47
(63,617)
2,260,782
520
(73,295)
2,357,648
5,718
(71,603)
522,801
2,188,007
2,291,763
300,288
—
151,221
69,387
Share of profits less losses of
associated companies
Gain on bargain purchase
9
10
(3,098)
—
Profit before taxation
Taxation charge
11
519,703
(30,057)
2,488,295
(23,437)
2,512,371
(39,977)
489,646
2,464,858
2,472,394
484,757
4,889
2,460,044
4,814
2,465,238
7,156
489,646
2,464,858
2,472,394
HK$
HK$
HK$
1.87
9.47
9.49
HK$’000
HK$’000
HK$’000
129,842
410,303
171,392
Profit for the year
Attributable to:
Shareholders of the Company
Non-controlling interests
Earnings per share
Dividends
12
13
14
– 98 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Consolidated Statements of Comprehensive Income
For the years ended 31 December 2009, 2010 and 2011
Note
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released upon repayment
of loans from an associated company
Fair value gains/(losses) on available-for-sale
financial assets
Cash flow hedges
— Fair value losses
— Realised upon settlement
Share of hedging reserve of an
associated company
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
489,646
2,464,858
2,472,394
32
(138)
59,895
(5,627)
32
—
—
(44,122)
32
144,519
82,749
(128,185)
32
32
(56,621)
39,686
(63,789)
44,427
(33,326)
44,105
—
—
(3,174)
Other comprehensive income/(loss)
for the year, net of tax
127,446
123,282
(170,329)
Total comprehensive income for the year
617,092
2,588,140
2,302,065
Attributable to:
Shareholders of the Company
Non-controlling interests
612,203
4,889
2,583,326
4,814
2,294,909
7,156
617,092
2,588,140
2,302,065
32
– 99 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Consolidated Balance Sheets
At 31 December 2009, 2010 and 2011
Non-current assets
Property, plant and equipment
Investment properties
Interests in associated companies
Amounts and loans receivable from
associated companies
Available-for-sale financial assets
Held-to-maturity investments
Deferred tax assets
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Held-to-maturity investments
Tax recoverable
Bank balances and cash
Current liabilities
Trade and other payables and accruals
Short-term bank loans, secured
Derivative financial instruments
Tax payable
Note
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
16
17
19
8,482
9,194,930
180,969
11,249
10,227,930
500,676
9,031
12,167,930
696,144
19
20
21
30
26
350,338
350,182
30,997
7,572
—
357,525
431,094
37,877
13,653
16,000
39,369
319,402
65,835
4,020
179
10,123,470
11,596,004
13,301,910
—
44,074
—
—
172,004
58
55,668
—
—
595,167
362
40,676
29,252
435
647,478
216,078
650,893
718,203
308,503
357,250
40,821
26,252
310,908
136,250
42,865
40,301
215,567
561,682
42,130
26,334
732,826
530,324
845,713
(516,748)
120,569
(127,510)
22
23
21
24
25
27
26
Net current (liabilities)/assets
Total assets less current liabilities
9,606,722
– 100 –
11,716,573
13,174,400
APPENDIX II
Non-current liabilities
Long-term bank loans, secured
Other long-term loans
Amounts and loans payable to associated
companies
Derivative financial instruments
Deferred tax liabilities
ACCOUNTANT’S REPORT OF THE COMPANY
Note
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
28
29
2,275,250
32,498
1,920,600
32,498
1,630,100
32,498
19
26
30
166,789
55,262
50,784
166,789
71,621
51,331
23,552
62,942
68,125
2,580,583
2,242,839
1,817,217
7,026,139
9,473,734
11,357,183
2,596
6,997,191
2,596
9,440,287
2,596
11,316,471
6,999,787
9,442,883
11,319,067
26,352
30,851
38,116
7,026,139
9,473,734
11,357,183
Net assets
Share capital
Reserves
31
32
Equity attributable to shareholders
of the Company
Non-controlling interests
Total equity
– 101 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Balance Sheets
At 31 December 2009, 2010 and 2011
Note
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Non-current liabilities
Subsidiaries
18
3,000,698
3,250,757
3,149,111
Current assets
Other receivables
Bank balances and cash
23
24
622
27
1,044
101
1,623
100
649
1,145
1,723
2,222
—
1,735
—
1,977
2
2,222
1,735
1,979
Current liabilities
Other payables and accruals
Tax payable
25
Net current liabilities
(1,573)
Net assets
Share capital
Reserves
31
32
Total equity
– 102 –
(590)
(256)
2,999,125
3,250,167
3,148,855
2,596
2,996,529
2,596
3,247,571
2,596
3,146,259
2,999,125
3,250,167
3,148,855
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Consolidated Statements of Changes in Equity
For the years ended 31 December 2009, 2010 and 2011
Equity attributable to
the shareholders of the Company
Noncontrolling
interests
Total
HK$’000
HK$’000
Total
equity
HK$’000
88,293
6,507,039
21,688
6,528,727
484,757
—
484,757
4,889
489,646
(138)
—
—
(138)
—
(138)
—
144,519
—
—
144,519
—
144,519
—
(56,621)
—
—
(56,621)
—
(56,621)
—
39,686
—
—
39,686
—
39,686
Total other comprehensive income
—
127,446
—
—
127,446
—
127,446
Total comprehensive income
—
127,446
484,757
—
612,203
4,889
617,092
—
—
—
—
(31,162)
(98,680)
—
—
—
—
(88,293)
98,680
—
(119,455)
—
(225)
—
—
(225)
(119,455)
—
—
(129,842)
—
10,387
(119,455)
(225)
(119,680)
2,596
694,938
6,203,573
98,680
6,999,787
26,352
7,026,139
Note
At 1 January 2009
Comprehensive income
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Fair value gains on available-forsale financial assets
Fair value losses on
cash flow hedges
Realised upon settlement of
interest rate swap contracts
Transactions with owners
Dividends paid to non-controlling
shareholders
Dividends paid
Final dividend proposed
Total transactions with owners
At 31 December 2009
Share
capital
HK$’000
Other
reserves
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
2,596
697,334
5,718,816
—
—
—
32
14
14
– 103 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Equity attributable to
the shareholders of the Company
Noncontrolling
Total
interests
HK$’000
HK$’000
Total
equity
HK$’000
98,680
6,999,787
26,352
7,026,139
2,460,044
—
2,460,044
4,814
2,464,858
59,895
—
—
59,895
—
59,895
—
82,749
—
—
82,749
—
82,749
—
(63,789)
—
—
(63,789)
—
(63,789)
—
44,427
—
—
44,427
—
44,427
Total other comprehensive income
—
123,282
—
—
123,282
—
123,282
Total comprehensive income
—
123,282
2,460,044
—
2,583,326
4,814
2,588,140
—
—
—
—
—
—
—
—
—
(41,550)
(259,685)
(109,068)
—
(98,680)
259,685
109,068
—
(140,230)
—
—
(315)
—
—
—
(315)
(140,230)
—
—
—
—
(410,303)
270,073
(140,230)
(315)
(140,545)
2,596
818,220
8,253,314
368,753
9,442,883
30,851
9,473,734
Note
At 1 January 2010
Comprehensive income
Profit for the year
Other comprehensive income/(loss)
Exchange translation differences
Fair value gains on available-forsale financial assets
Fair value losses on
cash flow hedges
Realised upon settlement of
interest rate swap contracts
Transactions with owners
Dividends paid to non-controlling
shareholders
Dividends paid
Special dividend declared
Final dividend proposed
Total transactions with owners
At 31 December 2010
Share
capital
HK$’000
Other
reserves
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
2,596
694,938
6,203,573
—
—
—
32
14
14
14
– 104 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Equity attributable to
the shareholders of the Company
Noncontrolling
Total
interests
HK$’000
HK$’000
Total
equity
HK$’000
368,753
9,442,883
30,851
9,473,734
2,465,238
—
2,465,238
7,156
2,472,394
(5,627)
—
—
(5,627)
—
(5,627)
—
(44,122)
—
—
(44,122)
—
(44,122)
—
(128,185)
—
—
(128,185)
—
(128,185)
—
(33,326)
—
—
(33,326)
—
(33,326)
—
44,105
—
—
44,105
—
44,105
—
(3,174)
—
—
(3,174)
—
(3,174)
Total other comprehensive loss
—
(170,329)
—
—
(170,329)
—
(170,329)
Total comprehensive (loss)/income
—
(170,329) 2,465,238
—
2,294,909
7,156
2,302,065
Note
At 1 January 2011
Comprehensive income
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released
upon repayment of loans from
an associated company
Fair value losses on availablefor-sale financial assets
Fair value losses on
cash flow hedges
Realised upon settlement of
interest rate swap contracts
Share of hedging reserve of
an associated company
Transactions with owners
Partial disposal of interest
in a subsidiary
Dividends paid to non-controlling
shareholders
Special dividend paid
Final dividend paid
Interim dividend paid
Final dividend proposed
Total transactions with owners
At 31 December 2011
Share
capital
HK$’000
Other
reserves
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
2,596
818,220
8,253,314
—
—
—
32
14
14
14
14
—
(632)
—
—
(632)
632
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(49,340)
(122,052)
—
(259,685)
(109,068)
—
122,052
—
(259,685)
(109,068)
(49,340)
—
(523)
—
—
—
—
(523)
(259,685)
(109,068)
(49,340)
—
—
(632)
(171,392)
(246,701)
(418,725)
109
(418,616)
2,596
647,259 10,547,160
– 105 –
122,052 11,319,067
38,116 11,357,183
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Consolidated Cash Flow Statements
For the years ended 31 December 2009, 2010 and 2011
Note
Operating activities
Net cash from operations
Interest paid
Hong Kong profits tax paid
Overseas tax paid
37(a)
Net cash from operating activities
Investing activities
Purchase of property, plant and equipment
Additions to investment properties
Proceeds from disposals of investment
properties
Proceeds from disposals of property, plant
and equipment
Proceeds from disposal of available-for-sale
financial assets
Income received from held-to-maturity
investments
Bank interest received
Dividends received from available-for-sale
financial assets
Loan contributions to an associated company
Amounts repaid and advanced by associated
companies
Dividends received from associated companies
Acquisitions of available-for-sale
financial assets
Acquisitions of held-to-maturity investments
Acquisition of interests in an associated
company
Amount advanced by an investee company
31/12/2009
HK$’000
233,054
(73,098)
(14,699)
(223)
272,361
(71,434)
(27,145)
(288)
91,622
145,034
173,494
(8,226)
(58,508)
(5,594)
(11,222)
(415)
(32,768)
—
941,430
25,293
9
468
3
12,945
—
—
500
100
500
462
1,117
4,520
27,186
(26,000)
23,776
(2,800)
18,989
—
386
3,096
47,944
—
346,511
76,243
—
10,865
(37,657)
– 106 –
31/12/2011
HK$’000
203,458
(65,463)
(46,286)
(87)
(10)
—
Net cash (used in)/from investing activities
Year ended
31/12/2010
HK$’000
—
—
—
(48,825)
—
1,837
(229,097)
111
996,801
161,682
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Year ended
31/12/2009
31/12/2010
HK$’000
HK$’000
Financing activities
New long-term bank loans
New short-term bank loans
Repayment of long-term bank loans
Repayment of short-term bank loans
Dividends paid
Dividends paid to non-controlling shareholders
Net cash used in financing activities
31/12/2011
HK$’000
560,738
617,000
(58,400)
(1,054,778)
(119,455)
(225)
225,000
450,000
(545,650)
(705,000)
(140,230)
(315)
—
558,825
(143,750)
(280,000)
(418,093)
(523)
(55,120)
(716,195)
(283,541)
(1,155)
425,640
51,635
Net (decrease)/increase in cash and
cash equivalents
Cash and cash equivalents at beginning
of the year
Effect of foreign exchange rate changes
175,548
(2,389)
172,004
(2,477)
595,167
676
Cash and cash equivalents at end of the year
172,004
595,167
647,478
Analysis of cash and cash equivalents
Bank balances and cash
172,004
595,167
647,478
– 107 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
II
NOTES TO THE FINANCIAL INFORMATION
1
GENERAL INFORMATION
The Company is a limited liability company incorporated under the laws of the Cayman Islands and its shares are listed on
The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’). The registered office of the Company is at PO Box 309,
Ugland House, Grand Cayman KY1-1104, Cayman Islands and the address of its principal office in Hong Kong is 8th Floor, AXA
Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong.
2
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial information has been prepared in accordance with HKFRSs. They have been prepared under the
historical cost convention, as modified by the revaluation of investment properties, available-for-sale financial assets and
derivative financial instruments.
The preparation of financial information is in conformity with HKFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to
the financial information, are disclosed in note 4.
(b)
Adoption of new and revised HKFRSs
The financial information of the Group is prepared to reflect how HKFRSs, which are effective for annual period
beginning on 1 January 2011, have been applied consistently throughout the Relevant Periods.
During the year ended 31 December 2010, the Group has early adopted HKAS 12 (Amendment) ‘‘Deferred Tax:
Recovery of Underlying Assets’’ (‘‘HKAS 12 (Amendment)’’), which have been applied retrospectively for the year ended
31 December 2009. The effects of the adoption of HKAS 12 (Amendment) have been stated in the annual report of the
Company for the year ended 31 December 2010.
The Group has not early adopted the following new and revised standards and amendments to existing standards that
have been issued but are not yet effective.
Effective for
accounting period
beginning on or after
HKAS 1 (Amendment)
HKAS 19 (Revised 2011)
HKAS 27 (Revised 2011)
HKAS 28 (Revised 2011)
HKAS 32 (Amendment)
HKFRS 1 (Amendment)
HKFRS 7 (Amendment)
HKFRS 7 (Amendment)
HKFRS 9
HKFRS 7 and HKFRS 9
(Amendments)
HKFRS 10
HKFRS 11
HKFRS 12
HKFRS 13
Presentation of Items of Other Comprehensive Income
Employee Benefits
Separate Financial Statements
Investments in Associates and Joint Ventures
Offsetting Financial Assets and Financial Liabilities
Severe Hyperinflation and Removal of Fixed Dates for Firsttime Adopters
Disclosures — Transfers of Financial Assets
Disclosures — Offsetting Financial Assets and Financial
Liabilities
Financial Instruments
Mandatory Effective Date and Transition Disclosures
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
– 108 –
1
1
1
1
1 July
January
January
January
January
1 July
2012
2013
2013
2013
2014
2011
1 July 2011
1 January 2013
1 January 2015
1 January 2015
1
1
1
1
January
January
January
January
2013
2013
2013
2013
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
The Group is in the process of making an assessment on the impact of these new and revised standards and
amendments to existing standards and is not yet in a position to state whether they would have a significant impact on the
Group’s results and financial position.
(c)
Consolidation
The financial information includes the financial statements of the Company and its subsidiaries made up to 31
December.
(i)
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern
the financial and operating policies generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered
when assessing whether the Group controls another entity. The Group also assesses existence of control where it does
not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of
de-facto control. De-facto control may arise from circumstances such as enhanced minority rights or contractual
terms between shareholders, etc.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions between Group companies are
eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Group.
(I)
Business combinations
The Group applies the acquisition method to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred
to the former owners of the acquiree and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a contingent consideration
arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. The Group recognises any noncontrolling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the noncontrolling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an
asset or liability is recognised in accordance with HKAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the
fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit or loss.
– 109 –
APPENDIX II
(II)
ACCOUNTANT’S REPORT OF THE COMPANY
Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as
equity transactions — that is, as transactions with the owners in their capacity as owners. The difference
between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets
of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also
recorded in equity.
(III)
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair
value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair
value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associated company or a financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the
related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income
are reclassified to profit or loss.
(ii)
Associated companies
Associated companies are entities over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associated companies are
accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in
associated companies includes goodwill identified on acquisition, net of any accumulated impairment losses. The
interests in associated companies also include long-term equity loan which in substance form part of the Group’s net
investments in associated companies.
If the ownership interest in an associated company is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or
loss where appropriate.
The Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the
consolidated income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the
Group’s share of losses in an associated company equals or exceeds its interest in the associated company, including
any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the associated company.
Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent
of the Group’s interest in the associated companies. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of associated companies have been
changed where necessary to ensure consistency with the policies adopted by the Group.
(d)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance
of the operating segments, will make strategic decisions. The identification of operating segments is set out in note 5.
(e)
Foreign currencies translation
(i)
Functional and presentation currency
Items included in the financial information of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (the ‘‘functional currency’’). The financial
information is presented in Hong Kong dollars, which is the Company’s functional and presentation currency.
– 110 –
APPENDIX II
(ii)
ACCOUNTANT’S REPORT OF THE COMPANY
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value
gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in the income statement as part of the fair value gain or loss. Translation
differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are
recognised in other comprehensive income.
(iii)
Group companies
The results and financial positions of all the Group’s entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
(1)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of
that balance sheet;
(2)
income and expenses for each income statement are translated at average exchange rates; and
(3)
all resulting exchange differences are recognised as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in
equity.
(iv)
Disposal of foreign operation and partial disposal
On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation,
or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal involving loss
of significant influence over an associated company that includes a foreign operation), all of the exchange differences
accumulated in equity in respect of that operation attributable to the equity holders of the Company are reclassified
to profit or loss.
In the case of a partial disposal that does not result in the Group losing control over a subsidiary that includes
a foreign operation, the proportionate share of accumulated exchange differences are reattributed to non-controlling
interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the Group’s
ownership interest in associated companies that do not result in the Group losing significant influence) the
proportionate share of the accumulated exchange difference is reclassified to profit or loss.
(f)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition of the asset.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset
can be measured reliably. All other repair and maintenance costs are expensed in the income statement during the financial
period in which they are incurred.
– 111 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their costs or
revalued amounts to their residual values over their estimated useful lives, at the following annual rates:
Plant and machinery
Leasehold improvements, furniture, fixtures and office equipment
Motor vehicles
10% to 20%
10% to 20%
20%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
The gains or losses on disposal of property, plant and equipment are the difference between the net sale proceeds and
the carrying amounts of the relevant assets, and are recognised in the income statement. Any revaluation reserve remaining
attributable to the relevant assets is transferred to retained earnings and is shown as a movement in reserves.
(g)
Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the
companies in the Group, is classified as investment property. Investment property comprises land held under operating
leases and buildings held under finance leases and properties being redeveloped for continued future use as investment
property. Land held under operating leases is classified and accounted for as investment property when the rest of the
definition of investment property is met. The operating lease is accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including related transaction costs. After initial recognition,
investment property is carried at fair value. Fair value is based on valuations carried out by external valuers. Changes in fair
values are recognised in the income statement.
Subsequent expenditure is charged to the carrying amount of the asset only when it is probable that future economic
benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. All other repairs
and maintenance costs are expensed in the income statement during the financial period in which they are incurred.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair
value at the date of reclassification becomes its cost for accounting purposes.
If a property becomes an investment property because its use has changed, any difference resulting between the
carrying amount and the fair value of this property at the date of transfer is recognised in equity as revaluation of property,
plant and equipment. However, if the fair value gives rise to a reversal of a previous impairment, this reversal is recognised
in the income statement.
(h)
Goodwill
Goodwill represents the excess of the cost of an acquisition
identifiable assets of the acquired subsidiary/associated company at
subsidiaries is included in intangible assets. Goodwill on acquisitions
associated companies and is tested annually for impairment as part of
over the fair value of the Group’s share of the net
the date of acquisition. Goodwill on acquisitions of
of associated companies is included in investments in
the overall carrying amount.
Separately recognised goodwill is tested for impairment and carried at cost less accumulated impairment. Impairment
on goodwill is not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which
the goodwill arose. The Group allocates goodwill to each business segment in each country in which it operates.
– 112 –
APPENDIX II
(i)
ACCOUNTANT’S REPORT OF THE COMPANY
Impairment of investments in subsidiaries, associated companies and non-financial assets
Assets that have an indefinite useful life or have not yet been available for use are not subject to amortisation and are
tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at each balance sheet date.
In the Company’s balance sheet, impairment testing of the investments in subsidiaries or associated companies is
required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the
subsidiary or associated company in the period the dividend is declared or if the carrying amount of the investment in the
separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net
assets including goodwill.
(j)
Assets under leases
Leases where substantially all the risks and rewards of ownership of assets remain with the lessors are accounted for
as operating leases. Leases that substantially transfer to the lessees all the risks and rewards of ownership of assets are
accounted for as finance leases.
(i)
Leases — where the Group is the lessee
Payments made under operating leases (net of any incentives received from the lessor) are expensed in the
income statement on a straight-line basis over the lease periods.
(ii)
Leases — where the Group is the lessor
When the Group leases out assets under operating leases, the assets are included in the balance sheet
according to their nature and where applicable, are depreciated in accordance with the Group’s depreciation policies,
as set out in note 2(f) above. Revenue arising from assets leased out under operating leases is recognised in
accordance with the Group’s revenue recognition policies, as set out in note 2(w) below.
(k)
Financial assets
The Group classifies its financial assets in the categories of financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments and available-for-sale financial assets. Management determines the
classification of its financial assets at initial recognition depending on the purpose for which the financial assets were
acquired and re-evaluates this designation at every balance sheet date.
(i)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if it is acquired principally for the purpose of selling in the short term. Derivatives are also
classified as held for trading unless they are designated as hedges. Assets in this category are included under current
assets.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payment terms that are
not quoted in an active market. They are included in current assets, except for maturities greater than twelve months
after the balance sheet date which are classified as non-current assets.
– 113 –
APPENDIX II
(iii)
ACCOUNTANT’S REPORT OF THE COMPANY
Held-to-maturity investments
Financial assets classified as held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Group’s management has both the positive intention and the
ability to hold to maturity. The entire category would be tainted and reclassified as available-for-sale financial assets/
financial assets at fair value through profit or loss if the Group were to sell other than an insignificant amount of
held-to-maturity investments. They are initially recorded at fair value plus any directly attributable transaction costs,
and are subsequently measured at amortised cost using the effective interest method less allowances for impairment
losses. They are included in non-current assets, except for those with maturities less than twelve months of the
balance sheet date which are classified as current assets.
(iv)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within twelve months of the balance sheet date.
Regular purchases and sales of financial assets are recognised on trade-date, which is the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial
assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when
the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at
fair value. Loans and receivables are carried at amortised cost using the effective interest method.
Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are
included in the income statement in the financial period in which they arise. Unrealised gains and losses arising from
changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income. When
available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the income
statement.
Dividend income from financial assets at fair value through profit or loss and available-for-sale financial assets are
recognised in the income statement when the Group’s right to receive payments is established.
The fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active
and for unlisted securities, the Group establishes fair value by using valuation techniques. These include the use of recent
arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and
option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline
in the fair value of the securities below their costs is considered as an indicator that the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the
income statement) is removed from investment revaluation reserve and recognised in the income statement. Impairment
recognised in the income statement on equity instruments is not reversed through the income statement.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-forsale are analysed between translation differences resulting from changes in amortised cost of the securities and other
changes in the carrying amount of the securities. The translation differences on monetary securities are recognised in profit
or loss; translation differences on non-monetary securities are recognised in other comprehensive income. Changes in the
fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive
income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments
previously recognised in investment revaluation reserve are included in the income statement.
– 114 –
APPENDIX II
(l)
ACCOUNTANT’S REPORT OF THE COMPANY
Impairment of financial assets
(i)
Assets carried at amortised cost
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a ‘‘loss event’’) and that loss event (or events) has an impact
on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:
.
Significant financial difficulty of the issuer or obligor;
.
A breach of contract, such as a default or delinquency in interest or principal payments;
.
The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the
borrower a concession that the lender would not otherwise consider;
.
It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
.
The disappearance of an active market for that financial asset because of financial difficulties; or
.
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a
portfolio of financial assets since the initial recognition of those assets, although the decrease cannot
yet be identified with the individual financial assets in the portfolio, including:
(i)
adverse changes in the payment status of borrowers in the portfolio;
(ii)
national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Group first assesses whether objective evidence of impairment exists.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of
the loss is recognised in the income statement. If a loan or held-to-maturity investment has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the
contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value
using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit
rating), the reversal of the previously recognised impairment loss is recognised in the income statement.
(ii)
Assets classified as available-for-sale financial assets
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or a group of financial assets is impaired. For debt securities, the Group uses the criteria refer to (i) above. In
the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of
the investments below its cost is also evidence that the assets are impaired. If any such evidence exists for availablefor-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the
current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is
removed from investment revaluation reserve and recognised in the income statement. Impairment losses recognised
in the income statement on equity instruments are not reversed through the income statement. If, in a subsequent
period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be
objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed through the income statement.
– 115 –
APPENDIX II
(m)
ACCOUNTANT’S REPORT OF THE COMPANY
Inventories
Inventories comprise finished goods and are stated at the lower of cost and net realisable value. Cost is determined
using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
(n)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according to the
original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable is impaired.
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the effective interest rate. The carrying amount of the assets is reduced through the use of an
allowance account, and the amount of the loss is recognised in the income statement. When a receivable is uncollectible, it
is written off against the allowance account for receivables. Subsequent recoveries of amounts previously written off are
credited in the income statement.
(o)
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The Group documents, at the inception
of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives
and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting
changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is classified as a noncurrent asset or liability when the remaining maturity of the hedged item is more than twelve months.
The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges
are recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately
in the income statement.
Amounts accumulated in hedging reserve are recycled in the income statement in the financial periods when the
hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in hedging reserve at that time remains in hedging reserve and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in hedging reserve is immediately transferred to the income statement.
Certain derivative financial instruments do not qualify for hedge accounting. These instruments are classified as
current or non-current asset or liability according to the settlement dates of the financial instruments. Changes in the fair
value of these derivative instruments are recognised immediately in the income statement.
(p)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts.
– 116 –
APPENDIX II
(q)
ACCOUNTANT’S REPORT OF THE COMPANY
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can
be made. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A
provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognised as interest expense.
(r)
Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Payables are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Payables are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(s)
Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
(t)
Financial guarantee contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the
beneficiary of the guarantee for a loss the holder incurs because a specified debtor fails to make payment when due in
accordance with the terms of a debt instrument.
Financial guarantee contracts are initially recognised at their fair value, and subsequently measured at the higher of
(i) the amount initially recognised less accumulated amortisation; and (ii) the amount required to be settled by the guarantor
in respect of the financial guarantee contracts at the balance sheet date.
(u)
Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It
can also be a present obligation arising from past events that is not recognised because it is not probable that outflow of
economic resources will be required or the amount of obligation cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the financial information. When a change in
the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.
A contingent asset is a possible asset that arises from past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group.
Contingent assets are not recognised but are disclosed in the notes to the financial information when an inflow of
economic benefits is probable. When inflow is virtually certain, an asset is recognised.
– 117 –
APPENDIX II
(v)
ACCOUNTANT’S REPORT OF THE COMPANY
Current and deferred taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except
to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Company and its subsidiaries and associated companies operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial information. However, deferred income tax is not
accounted for if it arises from initial recognition of an asset or a liability in a transaction (other than a business
combination) that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the
balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associated
companies except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable
that the temporary difference will not be reversed in the foreseeable future.
(w)
Recognition of revenue and income
Revenue comprises the fair value of the consideration for the sale of goods and rendering of services in the ordinary
course of the Group’s activities. The Group recognises revenue when the amount of revenue can be reliably measured, it is
probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group’s
activities as described below.
Operating lease rental income is recognised on a straight-line basis over the lease period.
Dividend income is recognised when the right to receive payment is established.
Interest income is recognised on a time proportion basis using the effective interest method.
Warehousing income and other income is recognised when the services are rendered.
Revenue from the sale of properties is recognised when the significant risks and rewards of ownership have been
transferred to the buyer.
(x)
Employee benefits
Employee entitlements to annual leave and statutory long service payments are recognised when they accrue to
employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance
sheet date.
Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.
The Group’s contributions to the defined contribution retirement scheme are expensed as incurred and are reduced by
contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. The assets of
the scheme are held separately from those of the Group in independently administered funds.
– 118 –
APPENDIX II
(y)
ACCOUNTANT’S REPORT OF THE COMPANY
Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated
at amortised cost; any difference between the proceeds, net of transaction costs, and the redemption value is recognised in
the income statement over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least twelve months after the balance sheet date.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised
as part of the cost of these assets. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale. Capitalisation of borrowing costs ceases when the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised as expenses in the financial period in which they are incurred.
(z)
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in
the financial period in which the dividends become present legal and constructive obligations of the Company.
3
FINANCIAL RISK MANAGEMENT
(a)
Financial risk factors
The Group’s activities expose it to a variety of financial risks such as foreign exchange risk, price risk, credit risk,
liquidity risk and interest rate risk. The Group’s overall risk management seeks to minimise potential adverse effects on the
Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
(i)
Foreign exchange risk
The majority of the Group’s assets are located and operated in Hong Kong, and the related revenue generated
from these assets is denominated in Hong Kong dollars. At 31 December 2009 and 2010, the Group’s borrowings
were denominated in Hong Kong dollars. At 31 December 2011, the Group’s borrowings were principally
denominated in Hong Kong dollars.
The Group is exposed to changes in foreign exchange rates due to its investment in foreign operations, whose
net assets are exposed to foreign currency transaction risk.
Management monitors exchange rate movements closely to ascertain if any material exposure may arise. The
Group regards the foreign exchange risk from fluctuation of currencies other than Singapore dollars is insignificant.
At 31 December 2009, 2010 and 2011, if Hong Kong dollars had strengthened or weakened by 5% against
Singapore dollars with all other variables held constant, profit after taxation for the years ended 31 December 2009,
2010 and 2011 would have been HK$13,000, HK$728,000 and HK$283,000 lower or higher, mainly as a result of
foreign exchange losses or gains on translation of bank balances denominated in Singapore dollars.
At 31 December 2009, 2010 and 2011, if Hong Kong dollars had strengthened or weakened by 5% against
Singapore dollars with all other variables held constant, equity would have been HK$16,336,000, HK$35,855,000
and HK$32,458,000 lower or higher, mainly as a result of foreign exchange losses or gains on translation of
available-for-sale financial assets, interests in associated companies and amounts and loans receivable from
associated companies denominated in Singapore dollars.
(ii)
Price risk
The Group is exposed to equity securities price risk because the Group holds available-for-sale financial
assets. The Group is not exposed to commodity price risk.
– 119 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
At 31 December 2009, 2010 and 2011, if market value of the Group’s available-for-sale financial assets had
increased or decreased by 10%, with all other variables held constant, equity would have been HK$26,335,000,
HK$31,968,000 and HK$22,525,000 higher or lower.
(iii)
Credit risk
The Group’s credit risks are primarily attributable to bank balances, available-for-sale financial assets, held-tomaturity investments, trade and other receivables and counter-party financial obligations in derivative financial
instruments.
The Group’s cash deposits are placed with banks and financial institutions of high credit ratings and the
Group’s available-for-sale financial assets and held-to-maturity investments are primarily invested in companies with
sound financial conditions. The Group regularly reviews the investments to determine whether there is deterioration
in credit quality.
The Group has no significant concentration of credit risk. For rent receivable from tenants, credit checks are
part of the normal leasing process and stringent monitoring procedures are in place to deal with overdue debts. In
addition, the Group reviews the recoverable amount of each individual trade receivable at each balance sheet date to
ensure that adequate provisions for impairment are made for irrecoverable amounts.
To mitigate counter-party risk, the Group enters into derivative contracts only with financial institutions of
high credit ratings.
(iv)
Liquidity risk
The Group regularly assesses its funding requirements and prepares rolling cashflow forecast to ensure it has
sufficient cash resources and undrawn banking facilities at all times to meet its operating, investing and financing
needs.
The Group regularly reviews the debt covenants of the bank loans to ensure compliance of those covenants
and avoid any interruption to its banking and credit facilities.
– 120 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
The table below analyses the Group’s financial liabilities and net-settled derivative financial liabilities into
relevant maturity groupings based on the remaining period at the balance sheet dates to the contractual maturity date.
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
HK$’000
HK$’000
HK$’000
Over
5 years
HK$’000
At 31 December 2009
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Other long-term loans
385,418
308,503
40,821
—
184,595
—
26,255
—
2,182,892
—
29,007
—
—
—
—
32,498
Total
734,742
210,850
2,211,899
32,498
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Other long-term loans
164,017
310,908
42,865
—
308,928
—
35,121
—
1,681,815
—
36,500
—
—
—
—
32,498
Total
517,790
344,049
1,718,315
32,498
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Other long-term loans
591,366
215,567
42,130
—
1,013,677
—
38,376
—
647,147
—
24,566
—
—
—
—
32,498
Total
849,063
1,052,053
671,713
32,498
At 31 December 2010
At 31 December 2011
The amounts disclosed in the table represent the contractual undiscounted cash flows including interest
payments, if applicable, and may not reconcile to the amounts in the consolidated balance sheets.
(v)
Interest rate risk
As the Group has no significant interest-bearing assets (other than bank balances and certain amounts/loans
receivable from associated companies), the Group’s income and operating cash flows are substantially independent of
changes in market interest rates.
The Group is exposed to changes in interest rates due to its bank borrowings. The Group manages its interest
rate exposure based on interest rate level and outlook as well as potential impact on the Group’s financial position
arising from volatility. Interest rate swap contract is the hedging instrument most commonly used by the Group to
manage the interest rate exposure. The Group enters into debt obligations to support general corporate purposes
including capital expenditure and working capital needs.
(i)
Cash flow interest rate risk
At 31 December 2009, 2010 and 2011, if interest rates on borrowings had been 25 basis points higher
or lower with all other variables held constant, profit after taxation for the years ended 31 December 2009,
2010 and 2011 would have been HK$3,200,000, HK$1,732,000 and HK$2,215,000 lower or higher, mainly as
a result of higher or lower interest expense on floating rate borrowings.
– 121 –
APPENDIX II
(ii)
ACCOUNTANT’S REPORT OF THE COMPANY
Fair value interest rate risk
At 31 December 2009, 2010 and 2011, if the interest yield curve for forward interest rates had been
shifted up or down by 50 basis points with all other variables held constant:
(b)
—
profit after taxation for the years ended 31 December 2009, 2010 and 2011 would have been
HK$1,800,000, HK$853,000 and HK$975,000 higher or HK$800,000, HK$884,000 and
HK$1,001,000 lower, mainly as a result of gain or loss relating to the portion of changes in the
fair value of interest rate swap contracts not qualified for hedge accounting;
—
equity would have been HK$26,200,000, HK$17,515,000 and HK$13,858,000 higher or
HK$14,700,000, HK$16,539,000 and HK$11,522,000 lower, mainly as a result of an increase
or a decrease in the fair value of the effective portion of the cash flow hedges of borrowings as
described above.
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total equity. Net debt is calculated as total bank borrowings (including current and noncurrent bank borrowings) less bank balances and cash.
The gearing ratios at 31 December 2009, 2010 and 2011 were as follows:
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Total bank borrowings
Less: Bank balances and cash
2,632,500
(172,004)
2,056,850
(595,167)
2,191,782
(647,478)
Net debt
2,460,496
1,461,683
1,544,304
Total equity
7,026,139
9,473,734
11,357,183
35.0%
15.4%
13.6%
Gearing ratio
The decrease in the gearing ratios at 31 December 2009 and at 31 December 2010 were mainly due to reduction of
net debt as a result of the disposals of certain investment properties and increase in total equity as a result of the profit
attributable to shareholders of the Company.
(c)
Fair value estimation
The table below analyses financial instruments carried at fair value by valuation method. The different levels have
been defined as follows:
.
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
.
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as price) or indirectly (that is, derived from prices) (level 2).
– 122 –
APPENDIX II
.
ACCOUNTANT’S REPORT OF THE COMPANY
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
The following table presents the Group’s assets and liabilities that were measured at fair value at 31 December 2009,
2010 and 2011.
Level 1
HK$’000
Level 2
HK$’000
Total
HK$’000
263,348
86,834
350,182
—
96,083
96,083
319,677
—
111,417
16,000
431,094
16,000
319,677
127,417
447,094
—
114,486
114,486
225,255
—
94,147
179
319,402
179
225,255
94,326
319,581
—
105,072
105,072
The Group
As at 31 December 2009
Assets
Available-for-sale financial assets
Liabilities
Derivative financial instruments
The Group
As at 31 December 2010
Assets
Available-for-sale financial assets
Derivative financial instruments
Liabilities
Derivative financial instruments
The Group
As at 31 December 2011
Assets
Available-for-sale financial assets
Derivative financial instruments
Liabilities
Derivative financial instruments
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of
reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange,
dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group
is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily equity
investments listed outside Hong Kong classified as available-for-sale financial assets.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2. Instruments included in level 2 comprise primarily
the derivative financial instruments and unlisted available-for-sale financial assets.
– 123 –
APPENDIX II
4
ACCOUNTANT’S REPORT OF THE COMPANY
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.
(i)
Fair value of investment properties
The Group’s investment properties are revalued at the balance sheet date on the open market value basis by
independent professional valuers. Such valuations were based on certain assumptions, which are subject to uncertainty and
might materially differ from the actual results. In marking the judgement on whether such valuations and assumptions made
by the valuers are reasonable, the Group considers information from comparable current prices in an active market for
similar properties, capitalisation rate, terminal yield, rental income from current leases and assumptions about rental from
future leases and the reversionary income potential and uses assumptions that are mainly based on market conditions
existing at each balance sheet date.
(ii)
Fair value of available-for-sale financial assets and derivative financial instruments
If information on current or recent prices of available-for-sale financial assets is not available, the fair values of
available-for-sale financial assets are determined using valuation techniques (including discounted cash flow model or price/
earnings multiple model). The Group uses assumptions that are mainly based on market conditions existing at each balance
sheet date.
The fair value of derivative financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined by using valuation techniques. The Group uses its judgement to select a variety of
methods and make assumptions that are mainly based on market conditions existing at each balance sheet date.
Critical judgement in applying the Group’s accounting policies
(i)
Income tax
The Group is subject to income taxes in several jurisdictions. There are certain transactions and calculations for
which the ultimate tax determination may be uncertain. The Group recognises liabilities for anticipated tax issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the financial
period in which such determination is made.
Under HKAS 12 (Amendment), there is a rebuttable presumption that the carrying amount of investment properties
using fair value model will be recovered through sale. Accordingly, no provision for deferred tax is made on revaluation of
investment properties if there is no capital gain tax. If investment properties would be recovered through use, provision for
deferred tax is made on revaluation of investment properties using income tax rate.
Recognition of deferred tax asset, which principally relates to tax losses of certain subsidiaries, depends on the
management’s expectation of future taxable profit that will be available against which the tax losses can be utilised. The
outcome of their actual utilisation may be different.
(ii)
Classification of investment properties
The Group determines whether a property qualifies as investment property. In making its judgement, the Group
considers whether the property (land or building) is held to earn rental or for capital appreciation rather than for use in the
production or supply of goods and services or sale. The Group considers each property separately in making its judgement.
– 124 –
APPENDIX II
5
ACCOUNTANT’S REPORT OF THE COMPANY
REVENUE, OTHER INCOME AND SEGMENT INFORMATION
Revenue and other income recognised during the Relevant Periods are as follows:
Revenue
Rental and property management
Warehousing
Other income
Dividend income from available-for-sale financial assets
Interest income on loans to associated companies
Others
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
275,849
14,483
390,465
13,243
462,558
15,772
290,332
403,708
478,330
27,186
8,464
3,098
23,776
9,387
2,665
36,010
3,177
7,011
38,748
35,828
46,198
329,080
439,536
524,528
The Group has determined the following operating segments for the purpose of assessing performance and allocating
resources between segments:
—
Rental and property management
—
Warehousing
—
Investment
—
Others
Management assesses the performance of the operating segments primarily based on segment profit. Segment profit
represents the profit earned by each segment and excludes change in fair value of derivative financial instruments, exchange
differences released upon repayment of loans from an associated company, unallocated income less expenses, finance income,
finance costs, share of profits less losses of associated companies, gain on bargain purchase and taxation charge.
– 125 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Operating segments
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2009
Revenue
275,849
14,483
—
—
290,332
Segment results before change in fair value of
investment properties
Increase in fair value of investment properties
171,057
339,300
1,503
—
33,766
—
—
—
206,326
339,300
Segment results
510,357
1,503
33,766
—
545,626
63,078
—
—
—
63,078
(22,333)
46
(63,403)
—
—
1
(214)
—
—
586,371
47
(63,617)
(1)
81
—
(3,178)
522,801
(3,098)
Fair value gains on derivative financial instruments
Unallocated income less expenses
Operating profit
Finance income
Finance costs
Share of profits less losses of associated companies
Profit before taxation
Taxation charge
519,703
(30,057)
Profit for the year
489,646
Capital expenditure
Depreciation
28,088
2,113
838
239
—
—
—
—
28,926
2,352
9,411,081
13,887
11,163
7,268
4,222
22,330
382,320
—
—
—
162,860
316,845
9,800,669
180,969
350,338
7,572
At 31 December 2009
Segment assets
Interests in associated companies
Amounts and loans receivable from associated companies
Other assets
Total assets
Segment liabilities
Amounts and loans payable to associated companies
Other liabilities
10,339,548
331,899
—
Total liabilities
1,795
—
2,864
—
—
166,789
336,558
166,789
2,810,062
3,313,409
– 126 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2010
390,465
13,243
—
—
403,708
Segment results before change in fair value and gains
on disposals of investment properties
Increase in fair value of investment properties
Gains on disposals of investment properties
287,429
1,799,809
147,011
281
—
—
31,156
—
—
—
—
—
318,866
1,799,809
147,011
Segment results
2,234,249
281
31,156
—
2,265,686
959
—
16,000
—
16,959
(21,863)
519
(73,285)
—
—
1
(10)
—
—
2,260,782
520
(73,295)
(419)
(593)
—
301,300
2,188,007
300,288
Revenue
Fair value gains on derivative financial instruments
Unallocated income less expenses
Operating profit
Finance income
Finance costs
Share of profits less losses of associated companies
Profit before taxation
Taxation charge
2,488,295
(23,437)
Profit for the year
2,464,858
Capital expenditure
Depreciation
37,040
1,912
5,135
355
—
—
—
—
42,175
2,267
10,872,247
14,166
11,208
12,103
3,871
22,330
490,693
—
—
—
482,639
323,987
11,375,043
500,676
357,525
13,653
At 31 December 2010
Segment assets
Interests in associated companies
Amounts and loans receivable from associated companies
Other assets
Total assets
Segment liabilities
Amounts and loans payable to associated companies
Other liabilities
12,246,897
343,082
—
Total liabilities
2,533
—
26,822
—
—
166,789
372,437
166,789
2,233,937
2,773,163
– 127 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2011
462,558
15,772
—
—
478,330
Segment results before change in fair value and gains
on disposals of investment properties
Increase in fair value of investment properties
Gains on disposals of investment properties
354,767
1,958,533
1,312
2,544
—
—
45,655
—
—
—
—
—
402,966
1,958,533
1,312
Segment results
2,314,612
2,544
45,655
—
2,362,811
(1,365)
—
(15,821)
—
(17,186)
—
—
—
44,122
44,122
(32,099)
5,718
(71,329)
—
—
—
(274)
—
—
2,357,648
5,718
(71,603)
230
—
(3,199)
—
—
—
154,190
69,387
2,291,763
151,221
69,387
Revenue
Fair value losses on derivative financial instruments
Exchange differences released upon repayment of
loans from an associated company
Unallocated income less expenses
Operating profit
Finance income
Finance costs
Share of profits less losses of associated companies
Gain on bargain purchase
Profit before taxation
Taxation charge
2,512,371
(39,977)
Profit for the year
2,472,394
Capital expenditure
Depreciation
7,810
1,962
14
670
—
—
—
—
7,824
2,632
12,847,600
14,867
11,557
13,902
181
22,355
419,078
—
—
—
681,096
5,457
13,280,580
696,144
39,369
4,020
At 31 December 2011
Segment assets
Interests in associated companies
Amounts and loans receivable from associated companies
Other assets
Total assets
Segment liabilities
Amounts and loans payable to associated companies
Other liabilities
14,020,113
244,219
—
Total liabilities
3,286
—
22,084
—
—
23,552
269,589
23,552
2,369,789
2,662,930
– 128 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Geographical information
The Group primarily operates in Hong Kong. An analysis of the Group’s revenue, segment results and segment assets
by geographical location is as follows:
(i)
Revenue and segment results
Revenue
Year ended
31/12/2009 31/12/2010
HK$’000
HK$’000
Hong Kong
Singapore
(ii)
31/12/2011
HK$’000
Segment results
Year ended
31/12/2009 31/12/2010 31/12/2011
HK$’000
HK$’000
HK$’000
290,332
—
403,708
—
478,330
—
518,987
26,639
2,234,140
31,546
2,327,412
35,399
290,332
403,708
478,330
545,626
2,265,686
2,362,811
Fair value gains/(losses) on
derivative financial instruments
Exchange differences released upon
repayment of loans from an
associated company
Unallocated income less expenses
63,078
16,959
(17,186)
—
(22,333)
—
(21,863)
44,122
(32,099)
Operating profit
Finance income
Finance costs
586,371
47
(63,617)
2,260,782
520
(73,295)
2,357,648
5,718
(71,603)
522,801
2,188,007
2,291,763
Segment assets
Non-current assets other than
financial instruments and
deferred tax assets
Total assets
Capital expenditure
Year ended
31/12/2009 31/12/2010 31/12/2011 31/12/2009 31/12/2010 31/12/2011 31/12/2009 31/12/2010 31/12/2011
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
Hong Kong
Singapore
Mainland China
28,926
—
—
42,175
—
—
7,824
—
—
9,489,846 10,496,735 12,540,752
198,120
553,417
327,484
46,753
47,228
44,238
28,926
42,175
7,824
9,734,719 11,097,380 12,912,474 10,339,548 12,246,897 14,020,113
– 129 –
9,744,074 11,215,158 13,328,989
548,721
984,511
646,886
46,753
47,228
44,238
APPENDIX II
6
ACCOUNTANT’S REPORT OF THE COMPANY
OPERATING PROFIT
Operating profit has been arrived at after (charging)/crediting the following:
31/12/2009
HK$’000
Amortised income from held-to-maturity investments (Note 21)
Auditor’s remuneration
Depreciation of property, plant and equipment
Direct operating expenses arising from investment properties generating
rental income
Direct operating expenses for generating warehousing income
Exchange differences released upon repayment of loans from
an associated company
Fair value gains/(losses) on derivative financial instruments
Gains/(losses) on disposals of property, plant and equipment
Interest income from held-to-maturity investments
Operating lease rentals in respect of land and buildings
Other exchange gain/(loss), net
Staff costs included in leasing, marketing and administrative expenses
(including Directors’ emoluments) (Note 8)
Realised gains on available-for-sale financial assets
7
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
6,052
(1,986)
(2,352)
7,380
(1,489)
(2,267)
9,028
(1,768)
(2,632)
(94,329)
(4,365)
(82,656)
(5,619)
(100,633)
(5,789)
—
63,078
2
—
(3,939)
1,497
—
16,959
(101)
—
(3,698)
929
44,122
(17,186)
11
617
(3,571)
(1,350)
(27,814)
610
(28,691)
—
(32,999)
—
FINANCE INCOME AND COSTS
Finance income
Interest income on bank deposits and bank balances
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
47
520
5,718
Finance costs
Interest expenses on bank loans and overdrafts
(63,617)
(73,295)
(71,603)
Finance costs, net
(63,570)
(72,775)
(65,885)
– 130 –
APPENDIX II
8
ACCOUNTANT’S REPORT OF THE COMPANY
STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
31,432
1,493
33,639
1,412
53,482
2,086
32,925
35,051
55,568
5,111
27,814
6,360
28,691
22,569
32,999
32,925
35,051
55,568
Salaries, wages and other benefits
Retirement benefits, net of negligible forfeited contributions (Note a)
Included in:
Cost of sales
Leasing, marketing and administrative expenses (Note 6)
(a)
Retirement benefits — defined contribution plans
The Group contributes to a defined contribution mandatory provident fund scheme for those employees in Hong
Kong under the age of 65. Two subsidiaries operate in a country which has a central government administrated retirement
scheme. Contributions are made by the Group as a percentage of employees’ relevant salaries. The retirement benefit costs
charged to the consolidated income statements represent contributions by the Group in respect of the above retirement
schemes.
Contributions totalling HK$115,000, HK$340,000 and HK$370,000 as at 31 December 2009, 2010 and 2011 were
payable to the schemes at the respective balance sheet dates, and are included in trade and other payables and accruals.
(b)
Directors’ emoluments
Fees
HK$’000
Salaries and Discretionary
allowances
bonuses
HK$’000
HK$’000
Retirement
benefits
HK$’000
Total
HK$’000
Year ended 31 December 2009
Executive Directors
Mr. Chow Wai Wai, John
Mrs. Chen Chou Mei Mei, Vivien
Mr. Chung Hon Sing, John
Mr. Au Hing Lun, Dennis
Non-Executive Directors
Mr. Cheng Wai Chee, Christopher
Mr. Cheng Wai Sun, Edward
40
40
40
40
2,465
410
690
—
986
—
50
—
248
22
—
2
3,739
472
780
42
160
3,565
1,036
272
5,033
1,800
40
—
—
—
—
—
—
1,800
40
1,840
—
—
—
1,840
40
250
110
225
—
—
—
—
—
—
—
—
—
—
—
—
40
250
110
225
625
—
—
—
625
2,625
3,565
1,036
272
7,498
Independent Non-Executive Directors
Lord Sandberg
Mr. Christopher Patrick Langley
Dr. Lo Ka Shui
Mr. Haider Hatam Tyebjee Barma
Total
– 131 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Fees
HK$’000
Salaries and Discretionary
allowances
bonuses
HK$’000
HK$’000
Retirement
benefits
HK$’000
Total
HK$’000
Year ended 31 December 2010
Executive Directors
Mr. Chow Wai Wai, John
Mrs. Chen Chou Mei Mei, Vivien
Mr. Chung Hon Sing, John
Mr. Au Hing Lun, Dennis
Non-Executive Directors
Mr. Cheng Wai Chee, Christopher
Mr. Cheng Wai Sun, Edward
40
40
40
40
2,687
410
697
—
1,343
—
50
—
271
22
—
2
4,341
472
787
42
160
3,794
1,393
295
5,642
1,800
40
—
—
—
—
—
—
1,800
40
1,840
—
—
—
1,840
40
215
100
215
—
—
—
—
—
—
—
—
—
—
—
—
40
215
100
215
570
—
—
—
570
2,570
3,794
1,393
295
8,052
Salaries and Discretionary
allowances
bonuses
HK$’000
HK$’000
Retirement
benefits
HK$’000
Total
HK$’000
Independent Non-Executive Directors
Lord Sandberg
Mr. Christopher Patrick Langley
Dr. Lo Ka Shui
Mr. Haider Hatam Tyebjee Barma
Total
Fees
HK$’000
Year ended 31 December 2011
Executive Directors
Mr. Chow Wai Wai, John
Mrs. Chen Chou Mei Mei, Vivien
Mr. Chung Hon Sing, John
(retired on 24 May 2011)
Mr. Au Hing Lun, Dennis
Non-Executive Directors
Mr. Cheng Wai Chee, Christopher
Mr. Cheng Wai Sun, Edward
40
40
2,829
410
1,273
—
285
22
4,427
472
16
40
272
—
—
—
—
2
288
42
136
3,511
1,273
309
5,229
1,800
40
—
—
—
—
—
—
1,800
40
1,840
—
—
—
1,840
24
310
130
275
—
—
—
—
—
—
—
—
—
—
—
—
24
310
130
275
739
—
—
—
739
2,715
3,511
1,273
309
7,808
Independent Non-Executive Directors
Lord Sandberg (retired on 24 May 2011)
Mr. Christopher Patrick Langley
Dr. Lo Ka Shui
Mr. Haider Hatam Tyebjee Barma
Total
– 132 –
APPENDIX II
(c)
ACCOUNTANT’S REPORT OF THE COMPANY
Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the years ended 31 December 2009, 2010
and 2011 include two, two and two Directors whose emoluments are reflected in note 8(b). The emoluments payable to the
remaining three, three and three individuals during the Relevant Periods are as follows:
Salaries and allowances
Discretionary bonuses
Retirement benefits
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
4,663
1,085
226
4,848
1,885
234
5,074
1,330
250
5,974
6,967
6,654
The number of non-director, highest paid individuals whose remuneration fell within the following bands is as
follows:
Number of individuals
Year ended
31/12/2009
31/12/2010
31/12/2011
HK$1,500,001 – HK$2,000,000
HK$2,000,001 – HK$2,500,000
HK$2,500,001 – HK$3,000,000
9
1
2
—
1
1
1
1
2
—
3
3
3
SHARE OF PROFITS LESS LOSSES OF ASSOCIATED COMPANIES
Included the Group’s share of increase in fair value of an investment property held by an associated company of
HK$38,890,000 during the year ended 31 December 2011 as the associated company was acquired by the Group during the year
ended 31 December 2011.
10
GAIN ON BARGAIN PURCHASE
On 30 June 2011, the Group completed the acquisition of the entire issued share capital of Dragon Eye Holding Ltd.
(‘‘Dragon Eye’’) at a consideration of HK$229,097,000. Dragon Eye holds 40% of equity interest in Fore Prosper Limited, which is
the owner of a boutique hotel property situated in Hong Kong. Details of the net assets of Dragon Eye acquired by the Group and
the gain on bargain purchase were as follows:
Year ended
31/12/2011
HK$’000
Purchase consideration in cash
Less: Fair value of net assets acquired (Note 19)
229,097
298,484
Gain on bargain purchase
69,387
– 133 –
APPENDIX II
11
ACCOUNTANT’S REPORT OF THE COMPANY
TAXATION CHARGE
31/12/2009
HK$’000
Current taxation
Hong Kong profits tax
Overseas taxation
Over/(under) provision in prior years
Deferred taxation (Note 30)
Temporary differences
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
(15,005)
(198)
688
(24,492)
(312)
(4,167)
(15,699)
(120)
2,269
(14,515)
(28,971)
(13,550)
(15,542)
5,534
(26,427)
(30,057)
(23,437)
(39,977)
Hong Kong profits tax has been provided at the rate of 16.5%, 16.5% and 16.5% on the estimated assessable profits for the
years ended 31 December 2009, 2010 and 2011. Overseas taxation has been provided on the estimated assessable profits for the
Relevant Periods at rates prevailing in the countries in which the subsidiaries operate.
The Group’s share of taxation credit of associated companies for the year ended 31 December 2009 of HK$372,000 and
taxation charge of associated companies for the years ended 31 December 2010 and 2011 of HK$62,184,000 and HK$21,934,000
respectively, have been netted off against the Group’s share of profits less losses of associated companies as presented in the
income statements.
The taxation on the Group’s operating profit after finance income and finance costs differs from the theoretical amount that
would arise using the Hong Kong taxation rate as follows:
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
Operating profit after finance income and finance costs
522,801
2,188,007
2,291,763
Calculated at a taxation rate of 16.5%
Effect of different taxation rates in other countries
Income not subject to taxation
Expenses not deductible for taxation purposes
Recognition of previously unrecognised tax losses
Tax loss and other temporary differences not recognised
Over/(under) provision in prior years
Others
(86,262)
102
62,258
(3)
5,335
(11,413)
688
(762)
(361,021)
(122)
329,958
(80)
11,413
—
(4,167)
582
(378,141)
(346)
339,290
(2,757)
—
—
2,269
(292)
Taxation charge
(30,057)
(23,437)
(39,977)
No taxation charge is in relation to components of other comprehensive income for the Relevant Periods.
12
PROFIT ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
The profit attributable to shareholders of the Company is dealt with in the financial statements of the Company to the extent
of a profit of HK$291,533,000, HK$391,272,000 and HK$316,781,000 for the years ended 31 December 2009, 2010 and 2011
respectively (Note 32).
– 134 –
APPENDIX II
13
ACCOUNTANT’S REPORT OF THE COMPANY
EARNINGS PER SHARE
The calculation of earnings per share is based on profit attributable to shareholders of the Company for the years ended 31
December 2009, 2010 and 2011 of HK$484,757,000, HK$2,460,044,000 and HK$2,465,238,000 and 259,685,288 shares,
259,685,288 shares and 259,685,288 shares respectively.
14
DIVIDENDS
Interim dividend, paid of HK$0.12 per share, HK$0.16 per share and
HK$0.19 per share for the years ended 31 December 2009, 2010
and 2011
Special dividend, paid of HK$1.00 per share for the year ended
31 December 2010
Final dividend, proposed, of HK$0.38 per share, HK$0.42 per share and
HK$0.47 per share for the years ended 31 December 2009, 2010 and
2011
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
31,162
41,550
49,340
—
259,685
—
98,680
109,068
122,052
129,842
410,303
171,392
The Directors recommended a final dividend of HK$0.38 per share, HK$0.42 per share and HK$0.47 per share for the years
ended 31 December 2009, 2010 and 2011 respectively. These dividends are not reflected as dividend payables in the Group’s
financial information until they have been approved by the shareholders of the Company and will be reflected as an appropriation
of reserves in the years 2009, 2010 and 2011.
15
SIGNIFICANT RELATED PARTY TRANSACTIONS
In addition to the transactions disclosed elsewhere in this financial information, the Group had the following significant
transactions with related parties during the Relevant Periods.
Interest income from associated companies (Note i)
Key management compensation (Note ii)
Rental and management fee income from related companies (Note iii)
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
8,464
7,498
17,193
9,387
8,052
18,412
3,177
7,808
13,457
(i)
Except for an aggregate amount due from associated companies of HK$149,397,000, HK$104,682,000 and
HK$32,502,000 as at 31 December 2009, 2010 and 2011 respectively which was interest-free, interest was charged
on amounts and loans receivable from associated companies at rates as agreed between the mutual parties.
(ii)
Key management personnel represents the directors of the Company and their remuneration are set out in note 8(b).
(iii)
The rental and management fee was charged at rates pursuant to the agreements entered into between the Group and
the related companies.
– 135 –
APPENDIX II
16
ACCOUNTANT’S REPORT OF THE COMPANY
PROPERTY, PLANT AND EQUIPMENT
Plant and
machinery
HK$’000
At cost
At 1 January 2009
Translation differences
Additions
Disposals
1,038
—
—
—
At 31 December 2009
1,038
Accumulated depreciation
At 1 January 2009
Translation differences
Charge for the year
Disposals
Group
Leasehold
improvements,
furniture,
fixtures and
office
equipment
HK$’000
4,617
6
8,226
(848)
12,001
Motor
vehicles
HK$’000
2,273
31
—
—
2,304
Total
HK$’000
7,928
37
8,226
(848)
15,343
886
—
38
—
3,323
6
1,887
(841)
1,111
24
427
—
5,320
30
2,352
(841)
At 31 December 2009
924
4,375
1,562
6,861
Net book value
At 31 December 2009
114
7,626
742
8,482
Motor
vehicles
HK$’000
Total
HK$’000
Plant and
machinery
HK$’000
Group
Leasehold
improvements,
furniture,
fixtures and
office
equipment
HK$’000
At cost
At 1 January 2010
Translation differences
Additions
Disposals
1,038
—
—
—
12,001
—
5,594
(365)
2,304
36
—
(1,000)
15,343
36
5,594
(1,365)
At 31 December 2010
1,038
17,230
1,340
19,608
Accumulated depreciation
At 1 January 2010
Translation differences
Charge for the year
Disposals
924
—
35
—
4,375
—
2,007
(46)
1,562
27
225
(750)
6,861
27
2,267
(796)
At 31 December 2010
959
6,336
1,064
8,359
Net book value
At 31 December 2010
79
10,894
276
11,249
– 136 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Plant and
machinery
HK$’000
At cost
At 1 January 2011
Additions
Disposals
At 31 December 2011
Motor
vehicles
HK$’000
Total
HK$’000
1,038
—
—
17,230
415
(30)
1,340
—
(102)
19,608
415
(132)
1,038
17,615
1,238
19,891
Accumulated depreciation
At 1 January 2011
Charge for the year
Disposals
17
Group
Leasehold
improvements,
furniture,
fixtures and
office
equipment
HK$’000
959
18
—
6,336
2,393
(29)
1,064
221
(102)
8,359
2,632
(131)
At 31 December 2011
977
8,700
1,183
10,860
Net book value
At 31 December 2011
61
8,915
55
9,031
INVESTMENT PROPERTIES
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
9,194,930
36,581
(803,390)
—
1,799,809
31/12/2011
HK$’000
Beginning of the year
Additions
Disposals
Overprovision of construction costs
Fair value gain
8,834,930
20,700
—
—
339,300
10,227,930
7,409
(15,010)
(10,932)
1,958,533
End of the year
9,194,930
10,227,930
12,167,930
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
994,000
8,200,930
1,100,000
9,127,930
1,270,000
10,897,930
9,194,930
10,227,930
12,167,930
The carrying amount of investment properties shown above comprises:
Leasehold land in Hong Kong
Long-term lease
Medium-term lease
(a)
Investment properties (other than agricultural lots) held in Hong Kong were revalued at 31 December 2009, 2010 and
2011 by Jones Lang LaSalle Limited. The agricultural lots held in Hong Kong were revalued at 31 December 2009,
2010 and 2011 by B.I. Appraisals Limited. All valuers are independent and their valuations were carried out on the
open market value basis. The valuations have made reference to current prices in an active market.
(b)
As at 31 December 2009, 2010 and 2011, certain investment properties with a carrying amount of
HK$9,169,670,000, HK$10,089,100,000 and HK$12,022,180,000 have been pledged to secure the Group’s banking
facilities.
– 137 –
APPENDIX II
18
ACCOUNTANT’S REPORT OF THE COMPANY
SUBSIDIARIES
31/12/2009
HK$’000
Unlisted shares — at cost
Loans and amounts receivable
Less: Provision
19
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
1
3,392,195
(391,498)
1
3,547,058
(296,302)
229,098
3,204,642
(284,629)
3,000,698
3,250,757
3,149,111
(a)
The loans and amounts receivable are unsecured, interest-free and have no fixed terms of repayment.
(b)
Particulars of the subsidiaries are set out in note 39.
ASSOCIATED COMPANIES
31/12/2009
HK$’000
Share of net assets
Amounts and loans receivable (Note a)
Amounts and loans payable (Note b)
Investments at cost — unlisted shares
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
180,969
350,338
(166,789)
500,676
357,525
(166,789)
696,144
39,369
(23,552)
364,518
691,412
711,961
11,308
11,308
11,348
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
The movements of interests in associated companies are as follows:
Beginning of the year
Translation differences
Share of profits less losses of associated companies
Share of hedging reserve
Acquisition of an associated company (Note 10)
Dividends from associated companies
Interest income on loans to associated companies
Repayment and loans to associated companies
Repayment and advances from associated companies
334,313
2,321
(3,098)
—
—
(3,096)
8,464
26,000
(386)
364,518
62,363
300,288
—
—
—
9,387
2,800
(47,944)
691,412
(6,405)
151,221
(3,174)
298,484
(269,977)
3,177
193,734
(346,511)
End of the year
364,518
691,412
711,961
– 138 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
The share of assets, liabilities and results of the associated companies attributable to the Group is summarised as follows:
31/12/2009
HK$’000
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Revenue
Profits less losses after taxation
(a)
31/12/2010
HK$’000
31/12/2011
HK$’000
1,452,965
135,873
(648,016)
(759,853)
220,762
779,718
(113,500)
(386,304)
560,371
512,726
(114,165)
(262,788)
180,969
500,676
696,144
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
1,090,401
300,288
343,534
151,221
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
194,608
129,120
26,610
246,548
84,306
26,671
718
11,605
27,046
350,338
357,525
39,369
10,031
(3,098)
The amounts and loans receivable are denominated in the following currencies:
Singapore dollars
Hong Kong dollars
Renminbi
The amounts and loans receivable are unsecured, and have no fixed terms of repayment. Except for an aggregate
amount of HK$149,397,000, HK$104,682,000 and HK$32,502,000 as at 31 December 2009, 2010 and 2011
respectively which is interest-free, the amounts and loans receivable carry interests at agreed rates between the
parties.
20
(b)
The amounts and loans payable are unsecured, denominated in Hong Kong dollars, interest-free and have no fixed
terms of repayment.
(c)
Particulars of the associated companies are set out in note 39.
AVAILABLE-FOR-SALE FINANCIAL ASSETS
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
263,348
86,834
319,677
111,417
225,255
94,147
350,182
431,094
319,402
Available-for-sale financial assets comprise:
Real estate investment trust listed outside Hong Kong
Unlisted equity investments
(a)
Available-for-sale financial assets are denominated in Singapore dollars and carried at fair value.
(b)
Certain real estate investment trust units with a carrying amount of HK$176,531,000, HK$265,398,000 and
HK$187,008,000 as at 31 December 2009, 2010 and 2011 respectively were pledged to secure the Group’s banking
facilities.
– 139 –
APPENDIX II
21
ACCOUNTANT’S REPORT OF THE COMPANY
(c)
An amount due to an investee company of HK$13,464,000 and HK$16,646,000 was included in unlisted equity
investments as at 31 December 2009 and 2010 respectively. The amount was fully settled during the year ended 31
December 2011.
(d)
The maximum exposure to credit risk at the balance sheet dates is the carrying value of the available-for-sale
financial assets.
HELD-TO-MATURITY INVESTMENTS
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
30,997
37,877
95,087
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Held-to-maturity investments comprise:
Unlisted debt and other investments
The movements of held-to-maturity investments are as follows:
Beginning of the year
Translation differences
Additions
Amortised to the income statements (Note 6)
Coupon received
25,445
—
—
6,052
(500)
30,997
—
—
7,380
(500)
37,877
(143)
48,825
9,028
(500)
End of the year
30,997
37,877
95,087
Analysed as:
Current
Non-current
—
30,997
—
37,877
29,252
65,835
30,997
37,877
95,087
(a)
The carrying amounts of held-to-maturity investments are denominated in the following currencies:
Hong Kong dollars
United States dollars
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
30,997
—
37,877
—
46,405
48,682
30,997
37,877
95,087
(b)
Held-to-maturity investments were not pledged to secure the Group’s banking facilities as at 31 December 2009 and
2010. As at 31 December 2011, certain held-to-maturity investments with a carrying amount of HK$48,682,000 have
been pledged to secure the Group’s banking facilities.
(c)
The maximum exposure to credit risk at the balance sheet dates is the carrying value of the held-to-maturity
investments.
– 140 –
APPENDIX II
22
ACCOUNTANT’S REPORT OF THE COMPANY
INVENTORIES
Finished goods, at cost
23
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
—
58
362
TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Provision for impairment of
receivables (Note c)
Trade receivables, net of provisions
(Note a)
Amortised rent receivables
Other receivables
Deposits
Prepayments
(a)
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
10,215
8,688
6,975
—
—
—
—
—
—
—
—
—
10,215
7,964
8,976
10,373
6,546
8,688
18,627
13,877
9,162
5,314
6,975
15,568
4,351
9,100
4,682
—
—
321
37
264
—
—
781
34
229
—
—
1,206
34
383
44,074
55,668
40,676
622
1,044
1,623
Trade receivables represent mainly rent receivables from tenants of the Group’s properties. The Group maintains a
defined policy in respect of rent collection. The credit quality of a new lease or customer is assessed based on a
defined policy set by the Group. Reminders are issued half-monthly when rents are overdue for 15 days, and legal
actions will be taken when rents are overdue for two months. The ageing analysis of trade receivables (net of
provisions) is as follows:
Current to 30 days
31 to 90 days
Over 90 days
(b)
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
1,747
7,570
898
2,480
5,416
792
1,650
5,033
292
10,215
8,688
6,975
The trade receivables of HK$10,215,000, HK$8,688,000 and HK$6,975,000 as at 31 December 2009, 2010 and 2011
respectively, were past due but not impaired. These relate to a number of independent customers having good track
records and there is no recent history of default, and the majority of the debts are covered by the rental deposits
received as set out in note 25.
– 141 –
APPENDIX II
(c)
ACCOUNTANT’S REPORT OF THE COMPANY
The movements of the provision for impairment of trade receivables are as follows:
31/12/2009
HK$’000
Beginning of the year
Provision
Receivables written off
End of the year
(d)
24
31/12/2011
HK$’000
145
40
(185)
—
22
(22)
—
—
—
—
—
—
The carrying amounts of trade and other receivables are denominated in the following currencies:
Hong Kong dollars
Singapore dollars
(e)
Group
31/12/2010
HK$’000
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
44,056
18
55,643
25
40,619
57
622
—
1,044
—
1,623
—
44,074
55,668
40,676
622
1,044
1,623
The maximum exposure to credit risk at the balance sheet dates is the carrying value of each class of receivables
mentioned above.
BANK BALANCES AND CASH
Cash at bank and in hand
Short-term bank deposits
Maximum exposure to credit risk
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
34,244
137,760
30,007
565,160
36,285
611,193
27
—
101
—
100
—
172,004
595,167
647,478
27
101
100
171,825
595,000
647,198
27
101
100
Short-term bank deposits for the years ended 31 December 2009, 2010 and 2011 have an average effective interest rate of
0.1%, 0.76% and 2.05% per annum respectively, and an average maturity of 9 days, 22 days and 24 days respectively.
The bank balances and cash are denominated in the following currencies:
Hong Kong dollars
Singapore dollars
United States dollars
– 142 –
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
170,520
672
812
576,524
17,280
1,363
638,032
7,719
1,727
172,004
595,167
647,478
APPENDIX II
25
ACCOUNTANT’S REPORT OF THE COMPANY
TRADE AND OTHER PAYABLES AND ACCRUALS
Trade payables
Other payables
Deposits received
Accruals
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
7,449
189,178
73,160
38,716
7,957
169,433
109,123
24,395
8,570
71,392
123,380
12,225
—
623
—
1,599
—
1,038
—
697
—
1,420
—
557
308,503
310,908
215,567
2,222
1,735
1,977
The ageing analysis of trade payables is as follows:
Current to 30 days
31 to 90 days
Over 90 days
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
4,980
1,834
635
4,016
3,620
321
6,181
1,070
1,319
7,449
7,957
8,570
The carrying amounts of trade and other payables and accruals are denominated in the following currencies:
Hong Kong dollars
Singapore dollars
– 143 –
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
305,564
2,939
306,779
4,129
215,495
72
308,503
310,908
215,567
APPENDIX II
26
ACCOUNTANT’S REPORT OF THE COMPANY
DERIVATIVE FINANCIAL INSTRUMENTS
Group
31/12/2009
HK$’000
Assets
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Liabilities
31/12/2010
HK$’000
31/12/2011
HK$’000
—
—
—
—
—
—
89,195
6,888
108,557
5,929
97,778
7,294
—
—
—
96,083
114,486
105,072
—
16,000
179
—
—
—
—
16,000
179
96,083
114,486
105,072
—
—
—
16,000
—
179
40,821
55,262
42,865
71,621
42,130
62,942
—
16,000
179
96,083
114,486
105,072
Interest rate swap contracts (Note a)
— cash flow hedges
— not qualifying as hedges
Derivative component in convertible
bonds (Note b)
Analysed as:
Current
Non-current
(a)
Interest rate swap contracts
The aggregate notional principal amount of the interest rate swap contracts is HK$1,000,000,000, HK$1,000,000,000,
and HK$1,000,000,000 as at 31 December 2009, 2010 and 2011 respectively. The portion of changes in the fair value of
interest rate swap contracts not qualifying as hedges are recognised in the income statements and amounted to a gain of
HK$63,078,000, a gain of HK$959,000 and a loss of HK$1,365,000 for the years ended 31 December 2009, 2010 and 2011
respectively.
(b)
Derivative component in convertible bonds
The convertible bonds held as held-to-maturity investments contained conversion and issuer redemption features and
the fair value of HK$16,000,000 and HK$179,000 as at 31 December 2010 and 2011 respectively, were valued by Savills
Valuation and Professional Services Limited, an independent professionally qualified valuer. The changes in fair value of
the derivative component have resulted in a profit of HK$16,000,000 and a loss of HK$15,821,000 being recognised in the
income statements for the years ended 31 December 2010 and 2011 respectively.
The fair values of the convertible option were estimated as at 31 December 2010 and 2011 using a binomial model,
taking into account the relevant terms and conditions upon which the option was granted and the key assumptions as below.
Expected
Expected
Expected
Risk free
volatility
dividend yield
life of the option
rate
2010
2011
35%
4.5%
2.42 years
0.8%
26%
7%
1.42 years
0.3%
The fair value of the issuer redemption option was estimated as at 31 December 2011, based on underlying
convertible bonds with quoted market price available.
– 144 –
APPENDIX II
27
ACCOUNTANT’S REPORT OF THE COMPANY
SHORT-TERM BANK LOANS, SECURED
Bank loans repayable on demand or within one year, secured
Current portion of long-term bank loans (Note 28)
28
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
255,000
102,250
—
136,250
278,682
283,000
357,250
136,250
561,682
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
2,377,500
2,056,850
1,913,100
LONG-TERM BANK LOANS, SECURED
Bank loans, secured
Less: Amount repayable within one year included under
current liabilities (Note 27)
The bank loans are repayable as follows:
Within one year
In the second year
In the third to fifth years inclusive
(102,250)
(136,250)
(283,000)
2,275,250
1,920,600
1,630,100
102,250
160,250
2,115,000
136,250
283,000
1,637,600
283,000
991,600
638,500
2,377,500
2,056,850
1,913,100
The bank loans are denominated in Hong Kong dollars as at 31 December 2009 and 2010. The bank loans are denominated
in Hong Kong dollars except for an amount of HK$48,682,000 which is denominated in United States dollars as at 31 December
2011. As at 31 December 2009 and 2010, the Group’s bank loans are secured by certain investment properties and available-forsale financial assets with a carrying amount of HK$9,169,670,000 and HK$10,089,100,000, HK$176,531,000 and
HK$265,398,000, respectively. As at 31 December 2011, the Group’s bank loans are secured by certain investment properties,
available-for-sale financial assets and held-to-maturity investments of HK$12,022,180,000, HK$187,008,000 and HK$48,682,000,
respectively.
The bank loans have an average effective interest rate of 1.07%, 1.35% and 1.35% per annum as at 31 December 2009,
2010 and 2011. The carrying amounts of bank loans approximate their fair values. The exposure of the Group’s bank loans to
interest-rate changes and the average contractual repricing dates is 6 months or less, 6 months or less and 6 months or less for the
years ended 31 December 2009, 2010 and 2011 respectively.
29
OTHER LONG-TERM LOANS
Amounts due to non-controlling shareholders of subsidiaries
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
32,498
32,498
32,498
The loans are denominated in Hong Kong dollars, unsecured, interest-free and expected not to be repaid within one year
from the balance sheet dates.
The carrying amounts of the other long-term loans approximate their fair values.
– 145 –
APPENDIX II
30
ACCOUNTANT’S REPORT OF THE COMPANY
DEFERRED TAXATION
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
Beginning of the year
Charged/(credited) to the income statements (Note 11)
27,670
15,542
43,212
(5,534)
37,678
26,427
End of the year
43,212
37,678
64,105
Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of
16.5%, 16.5% and 16.5% for the years ended 31 December 2009, 2010 and 2011 respectively.
Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefits
through the future taxable profits are probable. The Group has unrecognised tax losses of HK$69,171,000 for the year ended 31
December 2009 to carry forward against future taxable income. The Group does not have unrecognised tax losses for the years
ended 31 December 2010 and 2011 to carry forward against future taxable income.
The movements in deferred tax assets and liabilities (prior to offsetting of balances within the same taxation jurisdiction)
during the Relevant Periods are as follows:
Deferred tax assets
31/12/2009
HK$’000
Group
Tax losses
31/12/2010
HK$’000
Beginning of the year
Credited/(charged) to the income statements
30,442
59,943
90,385
12,750
103,135
(11,695)
End of the year
90,385
103,135
91,440
31/12/2011
HK$’000
Deferred tax liabilities
Group
Accelerated depreciation
31/12/2009
31/12/2010
HK$’000
HK$’000
Beginning of the year
Charged to the income statements
End of the year
31/12/2011
HK$’000
58,112
75,485
133,597
7,216
140,813
14,732
133,597
140,813
155,545
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same fiscal authority. The following amounts, determined after
appropriate offsetting, are shown in the balance sheets:
31/12/2009
HK$’000
Deferred tax assets
Deferred tax liabilities
– 146 –
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
(7,572)
50,784
(13,653)
51,331
(4,020)
68,125
43,212
37,678
64,105
APPENDIX II
31
ACCOUNTANT’S REPORT OF THE COMPANY
SHARE CAPITAL
Ordinary shares of
HK$0.01 each
No. of shares
HK$’000
32
Authorised:
At 31 December 2009, 2010 and 2011
750,000,000
7,500
Issued and fully paid:
At 31 December 2009, 2010 and 2011
259,685,288
2,596
RESERVES
Group
Contributed
Surplus
HK$’000
Investment
revaluation
reserve
HK$’000
Exchange
fluctuation
account
HK$’000
Hedging
reserve
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
Total
HK$’000
649,625
112,348
7,621
(72,260)
5,718,816
88,293
6,504,443
—
—
(138)
—
—
—
(138)
—
—
144,519
—
—
—
—
(56,621)
—
—
—
—
144,519
(56,621)
—
—
—
(31,162)
(98,680)
—
—
—
—
—
—
—
—
—
—
39,686
—
—
—
—
—
484,757
—
—
—
—
—
(88,293)
—
98,680
39,686
484,757
(88,293)
(31,162)
—
(129,842)
144,519
(138)
(16,935)
484,757
10,387
492,748
At 31 December 2009
519,783
256,867
7,483
(89,195)
6,203,573
98,680
6,997,191
Representing:
Final dividend proposed (Note 14)
Others
—
519,783
—
256,867
—
7,483
—
(89,195)
—
6,203,573
98,680
—
98,680
6,898,511
As at 31 December 2009
519,783
256,867
7,483
(89,195)
6,203,573
98,680
6,997,191
At 1 January 2009
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of interest
rate swap contracts
Profit for the year
Prior year final dividend paid
Interim dividend paid (Note 14)
Final dividend proposed (Note 14)
– 147 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Group
At 1 January 2010
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of interest
rate swap contracts
Profit for the year
Prior year final dividend paid
Interim dividend paid (Note 14)
Special dividend declared (Note 14)
Final dividend proposed (Note 14)
At 31 December 2010
Contributed
Surplus
HK$’000
Investment
revaluation
reserve
HK$’000
Exchange
fluctuation
account
HK$’000
Hedging
reserve
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
Total
HK$’000
519,783
256,867
7,483
(89,195)
6,203,573
98,680
6,997,191
—
—
59,895
—
—
—
59,895
—
—
82,749
—
—
—
—
(63,789)
—
—
—
—
82,749
(63,789)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
44,427
—
—
—
—
—
—
2,460,044
—
(41,550)
(259,685)
(109,068)
—
—
(98,680)
—
259,685
109,068
44,427
2,460,044
(98,680)
(41,550)
—
—
—
82,749
59,895
(19,362)
2,049,741
270,073
2,443,096
519,783
339,616
67,378
(108,557)
8,253,314
368,753
9,440,287
Representing:
Special dividend declared
(Note 14)
Final dividend proposed
(Note 14)
Others
—
—
—
—
—
259,685
259,685
—
519,783
—
339,616
—
67,378
—
(108,557)
—
8,253,314
109,068
—
109,068
9,071,534
As at 31 December 2010
519,783
339,616
67,378
(108,557)
8,253,314
368,753
9,440,287
– 148 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Group
Contributed
Surplus
HK$’000
Investment
revaluation
reserve
HK$’000
Exchange
fluctuation
account
HK$’000
Hedging
reserve
HK$’000
Retained
earnings
HK$’000
Dividends
HK$’000
Total
HK$’000
519,783
339,616
67,378
(108,557)
8,253,314
368,753
9,440,287
—
—
(5,627)
—
—
—
(5,627)
—
—
(44,122)
—
—
—
(44,122)
—
—
(128,185)
—
—
—
—
(33,326)
—
—
—
—
(128,185)
(33,326)
—
—
—
44,105
—
—
44,105
—
—
—
—
—
—
(3,174)
—
—
2,465,238
—
—
(3,174)
2,465,238
(632)
—
—
—
—
—
(632)
—
—
—
—
—
(259,685)
(259,685)
—
—
—
—
—
—
—
—
—
—
—
—
—
(49,340)
(122,052)
(109,068)
—
122,052
(109,068)
(49,340)
—
(632)
(128,185)
(49,749)
7,605
2,293,846
(246,701)
1,876,184
At 31 December 2011
519,151
211,431
17,629
(100,952) 10,547,160
122,052
11,316,471
Representing:
Final dividend proposed (Note 14)
Others
—
519,151
—
211,431
—
17,629
—
—
(100,952) 10,547,160
122,052
—
122,052
11,194,419
As at 31 December 2011
519,151
211,431
17,629
(100,952) 10,547,160
122,052
11,316,471
At 1 January 2011
Exchange translation differences
Exchange differences released upon
repayment of loans from
an associated company
Fair value losses on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of interest
rate swap contracts
Share of hedging reserve of
an associated company
Profit for the year
Partial disposal of interest in
a subsidiary
Prior year special dividend paid
(Note 14)
Prior year final dividend paid
(Note 14)
Interim dividend paid (Note 14)
Final dividend proposed (Note 14)
– 149 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Contributed
surplus
HK$’000
Company
Retained
earnings
HK$’000
Dividends
HK$’000
Total
HK$’000
At 1 January 2009
Profit for the year (Note 12)
Prior year final dividend paid
Interim dividend paid (Note 14)
Final dividend proposed (Note 14)
2,721,111
—
—
(31,162)
(98,680)
15,047
291,533
—
—
—
88,293
—
(88,293)
—
98,680
2,824,451
291,533
(88,293)
(31,162)
—
At 31 December 2009
2,591,269
306,580
98,680
2,996,529
Representing:
Final dividend proposed (Note 14)
Others
—
2,591,269
—
306,580
98,680
—
98,680
2,897,849
At 31 December 2009
2,591,269
306,580
98,680
2,996,529
Dividends
HK$’000
Total
HK$’000
Contributed
surplus
HK$’000
Company
Retained
earnings
HK$’000
At 1 January 2010
Profit for the year (Note 12)
Prior year final dividend paid
Interim dividend paid (Note 14)
Special dividend declared (Note 14)
Final dividend proposed (Note 14)
2,591,269
—
—
—
—
—
306,580
391,272
—
(41,550)
(259,685)
(109,068)
98,680
—
(98,680)
—
259,685
109,068
2,996,529
391,272
(98,680)
(41,550)
—
—
At 31 December 2010
2,591,269
287,549
368,753
3,247,571
Representing:
Special dividend declared (Note 14)
Final dividend proposed (Note 14)
Others
—
—
2,591,269
—
—
287,549
259,685
109,068
—
259,685
109,068
2,878,818
At 31 December 2010
2,591,269
287,549
368,753
3,247,571
– 150 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Contributed
surplus
HK$’000
Company
Retained
earnings
HK$’000
Dividends
HK$’000
Total
HK$’000
At 1 January 2011
Profit for the year (Note 12)
Prior year special dividend paid
Prior year final dividend paid
Interim dividend paid (Note 14)
Final dividend proposed (Note 14)
2,591,269
—
—
—
—
—
287,549
316,781
—
—
(49,340)
(122,052)
368,753
—
(259,685)
(109,068)
—
122,052
3,247,571
316,781
(259,685)
(109,068)
(49,340)
—
At 31 December 2011
2,591,269
432,938
122,052
3,146,259
Representing:
Final dividend proposed (Note 14)
Others
—
2,591,269
—
432,938
122,052
—
122,052
3,024,207
At 31 December 2011
2,591,269
432,938
122,052
3,146,259
Pursuant to the Companies Law of the Cayman Islands and the Company’s Articles of Association, the contributed surplus
of the Company is available for distribution to shareholders in addition to retained earnings, provided that the Company will be
able to pay its debts as they fall due in the ordinary course of business immediately following the date on which any such
distribution proposed to be paid.
33
FUTURE LEASE RECEIPTS
Future minimum lease receipts under non-cancellable operating leases are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
34
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
292,747
326,537
—
392,298
631,799
—
443,820
627,710
9,374
619,284
1,024,097
1,080,904
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
484,425
—
—
CAPITAL COMMITMENTS
Investments in associated companies
Contracted but not provided for
– 151 –
APPENDIX II
35
ACCOUNTANT’S REPORT OF THE COMPANY
LEASE COMMITMENTS
The Group had future aggregate minimum lease payments under non-cancellable operating leases for land and buildings as
follows:
Not later than one year
Later than one year and not later than five years
36
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
1,969
—
3,510
1,755
1,755
—
1,969
5,265
1,755
FINANCIAL GUARANTEE CONTRACTS
The face value of the financial guarantees issued by the Group and the Company is analysed as follows:
Guarantees given in respect of banking
facilities granted to subsidiaries (Note ii)
Guarantees/completion undertakings given
severally in respect of banking facilities
granted to associated companies in
proportion to the Group’s respective
equity interests (Note iii)
Guarantees given severally and in proportion
to the Group’s equity interest in respect
of banking facilities granted to
an associated company (Note iv)
31/12/2009
HK$’000
Group
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Company
31/12/2010
HK$’000
31/12/2011
HK$’000
—
—
—
4,214,738
3,795,452
3,795,452
551,336
—
—
551,336
—
—
—
—
228,000
—
—
228,000
551,336
—
228,000
4,766,074
3,795,452
4,023,452
(i)
The Directors of the Company consider that it is not probable for a claim to be made against the Group and the
Company under any of these guarantees as at the balance sheet dates. All of the financial guarantee contracts as
disclosed above have not been recognised in the financial information of the Group and the Company as the
Directors of the Company consider that the fair values of these contracts are not significant to the Group.
(ii)
The Company has executed guarantees in favour of banks in respect of facilities granted to subsidiaries amounting to
HK$4,214,738,000, HK$3,795,452,000 and HK$3,795,452,000 of which HK$2,632,500,000, HK$2,056,850,000 and
HK$2,143,100,000 have been utilised by the subsidiaries at year ends.
(iii)
The Company has executed guarantees/completion undertakings in favour of banks in respect of facilities granted to
associated companies of HK$551,336,000 as at 31 December 2009. The amount of facilities utilised by the associated
companies amounted to HK$408,017,000. There was no outstanding obligation in respect of guarantees/completion
undertakings executed in favour of banks in respect of facilities granted to associated companies as at 31 December
2010 and 2011.
(iv)
The Company has executed a guarantee in favour of a bank in respect of facilities granted to an associated company
amounting to HK$228,000,000 as at 31 December 2011, of which HK$226,000,000 have been utilised by the
associated company at year ended 31 December 2011.
– 152 –
APPENDIX II
37
ACCOUNTANT’S REPORT OF THE COMPANY
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENTS
(a)
Reconciliation of profit before taxation to net cash from operations
31/12/2009
HK$’000
Profit before taxation
Gain on bargain purchase
Share of profits less losses of associated companies
Finance costs
Finance income
Amortised income from held-to-maturity investments
Depreciation of property, plant and equipment
Dividend income from available-for-sale financial
assets
Exchange differences released upon repayment of
loans from an associated company
Fair value (gains)/losses on derivative financial
instruments
Gains on disposals of investment properties
(Gains)/losses on disposals of property, plant and
equipment
Increase in fair value of investment properties
Interest income from held-to-maturity investments
Interest income on loans to associated companies
Realised gain on available-for-sale financial assets
(b)
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
519,703
—
3,098
63,617
(47)
(6,052)
2,352
2,488,295
—
(300,288)
73,295
(520)
(7,380)
2,267
2,512,371
(69,387)
(151,221)
71,603
(5,718)
(9,028)
2,632
(27,186)
(23,776)
(36,010)
—
—
(44,122)
(63,078)
—
(16,959)
(147,011)
17,186
(1,312)
(2)
(339,300)
—
(8,464)
(610)
101
(1,799,809)
—
(9,387)
—
(11)
(1,958,533)
(617)
(3,177)
—
Operating profit before working capital changes
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase/(decrease) in trade and other payables and
accruals
144,031
3,588
—
258,828
(2,565)
(58)
324,656
7,219
(304)
55,839
(23,151)
(59,210)
Net cash from operations
203,458
233,054
272,361
Major non-cash transactions
(i)
During the year ended 31 December 2010, the Group acquired an investment property for a cash consideration
of HK$31,699,000, of which HK$25,359,000 was included in trade and other payables and accruals at year
ended 31 December 2010.
(ii)
During the year ended 31 December 2010, the Group disposed of certain investment properties for an
aggregate cash consideration of HK$958,968,000, of which HK$8,971,000 was included in trade and other
receivables at year ended 31 December 2010.
(iii)
During the year ended 31 December 2011, the Group’s amounts due to associated companies of
HK$193,734,000 were settled by dividends distributed by the associated companies.
(iv)
During the year ended 31 December 2011, the Group’s amount due to an investee company of HK$16,646,000
was settled by dividend distributed by the investee company.
– 153 –
APPENDIX II
38
ACCOUNTANT’S REPORT OF THE COMPANY
EVENT AFTER REPORTING DATE
(a)
In preparation for the distribution in specie of the Privateco by the Company, the Group underwent the reorganisation
(the ‘‘Group Reorganisation’’) as follows:
.
On 19 April 2012, Future Best Developments Limited (the ‘‘Remaining Holdco’’) was incorporated in the
British Virgin Islands (‘‘BVI’’) with an authorised share capital of US$50,000 divided into 50,000 shares of
US$1 each, with 1 share issued and allotted to the Company at par.
.
On 29 May 2012, Cherrytime Investments Limited (the ‘‘Privateco’’) was incorporated in the BVI with an
authorised share capital of HK$3,000,000 divided into 300,000,000 shares of HK$0.01 each, with 1 share
issued and allotted to the Company at par.
.
On 15 June 2012, Winsor Properties (China) Limited, Winsor Properties (Hong Kong) Limited and Winsor
Properties (Overseas) Limited issued new shares in favour of the Company as consideration for acquiring the
inter-company receivables of HK$2,663,973,000 due by Winsor Properties Finance Limited to the Company.
.
On 18 June 2012, the Company transferred all its equity interests in Dragon Eye Holding Ltd., Winsor
Properties (China) Limited, Winsor Properties (Hong Kong) Limited, Winsor Properties (Overseas) Limited
and Winsor Properties Finance Limited, which together with their respective subsidiaries and associated
companies are principally engaged in property development, investment and management, warehousing and
investment holding (collectively, known as ‘‘Distributed Businesses’’) to the Privateco at a consideration of
HK$2,893,072,000, which represented the carrying amount of the Company’s investment in these subsidiaries
and associated companies. The Privateco and the Distributed Businesses are known as the ‘‘Privateco Group’’.
.
On 18 June 2012, Winsor Properties (Hong Kong) Limited transferred all its equity interests in Access Rich
Limited, Winsor Parking Limited and Winsor Properties Financial Services Limited (‘‘WPFSL’’), which
together with Chericourt Company Limited, a wholly-owned subsidiary of WPFSL are principally engaged in
dissimilar business to the Distributed Businesses (collectively, known as the ‘‘Retained Businesses’’) to the
Remaining Holdco at a consideration of HK$20,117,000, which represented the carrying amount of Winsor
Properties (Hong Kong) Limited’s investment in these subsidiaries. The Company, the Remaining Holdco and
the Retained Businesses are known as the ‘‘Remaining Group’’.
Subsequent to the date of this report, the Company will distribute all of its shares in the Privateco in specie to the
Company’s shareholders on the basis of one share in the Privateco for every share in the Company and the special
cash dividend of HK$0.7803 per share. The distribution of the Privateco’s shares in specie and the special cash
dividend are subject to the approval of the independent shareholders of the Company.
The combined results of the Privateco Group have been prepared using the financial information of the Distributed
Businesses, under the common control of the Company as if the current group structure had been in existence
throughout the Relevant Periods. The combined financial positions of the Privateco Group have been prepared to
present the assets and liabilities of the Distributed Businesses as if the current group structure had been in existence
as at these dates.
The combined results of the Remaining Group Entities have been prepared using the financial information of the
Retained Businesses, under the common control of the Company as if the current group structure had been in
existence throughout each of the Relevant Periods. The combined financial positions of the Remaining Group Entities
have been prepared to present the assets and liabilities of the Retained Businesses as if the current group structure
had been in existence as at these dates.
– 154 –
APPENDIX II
(b)
ACCOUNTANT’S REPORT OF THE COMPANY
The reconciliation of the results/combined results and assets and liabilities/combined financial positions of the Group
to the Company, the Privateco Group and Remaining Group Entities are as follows:
Company
HK$’000
Privateco
Group
HK$’000
Remaining
Group
Entities
HK$’000
87,560
228,405
64,014
(89,647)
290,332
291,533
390,248
99,274
(291,409)
489,646
3,001,347
9,591,899
962,265
(3,215,963)
10,339,548
2,222
6,483,789
414,726
(3,587,328)
3,313,409
2,999,125
3,108,110
547,539
371,365
Revenue
302,240
341,459
64,407
(304,398)
403,708
Profit for the year
391,272
2,351,947
112,835
(391,196)
2,464,858
3,251,902
11,392,727
1,226,778
(3,624,510)
12,246,897
1,735
6,105,703
566,404
(3,900,679)
2,773,163
3,250,167
5,287,024
660,374
276,169
Revenue
311,960
414,824
67,242
(315,696)
478,330
Profit for the year
316,781
2,326,727
145,559
(316,673)
2,472,394
3,150,834
13,053,330
1,147,017
(3,331,068)
14,020,113
1,979
5,915,431
341,084
(3,595,564)
2,662,930
3,148,855
7,137,899
805,933
Eliminations
(Note)
HK$’000
Group
HK$’000
For the year ended 31 December 2009:
Revenue
Profit for the year
At 31 December 2009:
Total assets
Total liabilities
Net assets
7,026,139
For the year ended 31 December 2010:
At 31 December 2010:
Total assets
Total liabilities
Net assets
9,473,734
For the year ended 31 December 2011:
At 31 December 2011:
Total assets
Total liabilities
Net assets
264,496
11,357,183
Notes:
(i)
The elimination adjustments for revenue for the year mainly represent (1) dividends declared by a subsidiary
of the Privateco Group to the Company with an amount of HK$80,000,000, HK$296,000,000 and
HK$305,000,000 and (2) management fee income received by the Company from a subsidiary of the
Privateco with an amount of HK$7,560,000, HK$6,240,000 and HK$6,960,000 for the years ended 31
December 2009, 2010 and 2011, respectively.
(ii)
The elimination adjustments for profit for the year mainly represent (1) dividends declared by the subsidiaries
of the Privateco Group to the Company with an amount of HK$80,000,000, HK$296,000,000 and
HK$305,000,000, and (2) provision on the amount receivable from a subsidiary of the Privateco by the
Company with an amount of HK$211,409,000, HK$95,196,000 and HK$11,673,000, for the years ended 31
December 2009, 2010 and 2011 respectively.
(iii)
The elimination adjustments for total assets and total liabilities mainly represent intercompany balance
between the Remaining Group and the Privateco Group with an aggregate amount of HK$3,156,828,000,
HK$3,153,203,000 and HK$3,231,680,000 as at 31 December 2009, 2010 and 2011, respectively.
(iv)
The elimination adjustment for net assets mainly represents the balance of the provision for the amount
receivable from a subsidiary of the Privateco by the Company with an amount of HK$391,498,000,
HK$296,302,000 and HK$284,629,000 as at 31 December 2009, 2010 and 2011, respectively.
– 155 –
APPENDIX II
(c)
ACCOUNTANT’S REPORT OF THE COMPANY
The combined financial information of the Privateco Group for the Relevant Periods is disclosed as follows:
Combined statements of comprehensive income for the Relevant Periods
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
Revenue
Cost of sales
228,405
(87,869)
341,459
(76,033)
414,824
(94,062)
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of investment properties
Gains on disposals of investment properties
Other gains, net
140,536
39,589
(13,167)
(38,215)
279,300
—
71,285
265,426
35,563
(19,183)
(39,398)
1,727,118
146,462
25,167
320,762
45,755
(8,768)
(42,420)
1,855,219
—
35,242
Operating profit
Finance income
Finance costs
479,328
45
(63,770)
2,141,155
406
(73,605)
2,205,790
5,671
(72,388)
415,603
2,067,956
2,139,073
300,288
—
151,221
69,387
Share of profits less losses of associated companies
Gain on bargain purchase
(3,098)
—
Profit before taxation
Taxation charge
412,505
(22,257)
2,368,244
(16,297)
2,359,681
(32,954)
Profit for the year
390,248
2,351,947
2,326,727
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released upon repayment of
loans from an associated company
Fair value gains/(losses) on available-for-sale
financial assets
Cash flows hedges
— Fair value losses
— Realised upon settlement
Share of hedging reserve of an associated company
59,895
(5,627)
—
—
(44,122)
144,519
82,749
(128,185)
(56,621)
39,686
—
(63,789)
44,427
—
(33,326)
44,105
(3,174)
Other comprehensive income/(loss) for the year,
net of tax
127,446
123,282
(170,329)
Total comprehensive income for the year
517,694
2,475,229
2,156,398
Attributable to:
The Company
Non-controlling interests
517,315
379
2,475,157
72
2,155,744
654
517,694
2,475,229
2,156,398
– 156 –
(138)
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Combined balance sheets at 31 December 2009, 2010 and 2011
Non-current assets
Property, plant and equipment
Investment properties
Interests in associated companies
Amounts and loans receivable from
associated companies
Available-for-sale financial assets
Held-to-maturity investments
Deferred tax assets
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Amounts receivable from Remaining Group Entities
Held-to-maturity investments
Tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables and accruals
Short-term bank loans, secured
Derivative financial instruments
Tax payable
Net current (liabilities)/assets
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
8,456
8,239,830
180,969
11,238
9,177,830
500,676
8,930
11,027,830
696,144
350,338
350,182
30,997
4,503
—
357,525
431,094
37,877
10,740
16,000
39,369
319,402
65,835
1,597
179
9,165,275
10,542,980
12,159,286
—
39,769
215,250
—
—
171,605
58
42,028
373,738
—
—
433,923
362
35,561
181,942
29,252
435
646,492
426,624
849,747
894,044
292,862
322,250
40,821
25,521
269,537
126,250
42,865
38,738
196,642
546,682
42,130
25,982
681,454
477,390
811,436
(254,830)
372,357
82,608
Total assets less current liabilities
8,910,445
10,915,337
12,241,894
Non-current liabilities
Long-term bank loans, secured
Amounts payable to the Company
Amounts and loans payable to associated companies
Derivative financial instruments
Deferred tax liabilities
2,180,250
3,372,078
166,789
55,262
27,956
1,835,600
3,526,941
166,789
71,621
27,362
1,560,100
3,413,622
23,552
62,942
43,779
5,802,335
5,628,313
5,103,995
Net assets
3,108,110
5,287,024
7,137,899
Combined capital
Reserves
1
3,106,412
1
5,285,569
1
7,135,681
Equity attributable to the Company
3,106,413
5,285,570
7,135,682
1,697
1,454
2,217
3,108,110
5,287,024
7,137,899
Non-controlling interests
Total equity
– 157 –
APPENDIX II
(d)
ACCOUNTANT’S REPORT OF THE COMPANY
The combined financial information of the Remaining Group Entities for the Relevant Periods is disclosed as follows:
Combined statements of comprehensive income for the Relevant Periods
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
64,014
(14,894)
64,407
(15,941)
67,242
(18,183)
49,120
318
(1,358)
(1,254)
60,000
—
48,466
108
(1,093)
(1,087)
72,691
403
49,059
1,457
(2,035)
(1,140)
103,314
1,088
Operating profit
Finance income
Finance costs
106,826
2,519
(2,309)
119,488
2,025
(1,567)
151,743
2,100
(1,268)
Profit before taxation
Taxation charge
107,036
(7,762)
119,946
(7,111)
152,575
(7,016)
Profit for the year and other comprehensive income
for the year, net of tax
99,274
112,835
145,559
Attributable to:
The Remaining Holdco
Non-controlling interests
94,764
4,510
108,093
4,742
139,057
6,502
99,274
112,835
145,559
Revenue
Cost of sales
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of investment properties
Gains on disposals of investment properties
– 158 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Combined balance sheets at 31 December 2009, 2010 and 2011
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
41
955,100
3,069
26
1,050,100
2,913
116
1,140,100
2,423
958,210
1,053,039
1,142,639
3,683
372
12,596
161,143
3,492
886
4,055
173,739
4,378
13,419
215,250
35,000
731
39,636
373,738
10,000
1,563
16,948
181,942
15,000
350
264,400
424,937
214,240
(260,345)
(251,198)
(209,862)
697,865
801,841
932,777
95,000
32,498
22,828
85,000
32,498
23,969
70,000
32,498
24,346
150,326
141,467
126,844
Net assets
547,539
660,374
805,933
Combined capital
Reserves
20,117
502,767
20,117
610,860
20,117
749,917
Equity attributable to the Remaining Holdco
522,884
630,977
770,034
24,655
29,397
35,899
547,539
660,374
805,933
Non-current assets
Property, plant and equipment
Investment properties
Deferred tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables and accruals
Amount payable to the Privateco Group
Short-term bank loans, secured
Tax payable
Net current liabilities
Total assets less current liabilities
Non-current liabilities
Long-term bank loans, secured
Other long-term loans
Deferred tax liabilities
Non-controlling interests
Total equity
– 159 –
APPENDIX II
39
ACCOUNTANT’S REPORT OF THE COMPANY
PARTICULARS OF SUBSIDIARIES AND ASSOCIATED COMPANIES
(a)
Subsidiaries
The Group had direct/indirect interests in the following subsidiaries:
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of subsidiary
Issued share capital
Place of
incorporation
Access Rich Ltd.
Ordinary: HK$1
Hong Kong
—
100
100 Property investment
1
Adam Knitters Ltd.
Ordinary: HK$1,000
Deferred: HK$200,000
Hong Kong
100
—
100
—
100 Property investment
—
1
Allied Effort Ltd.
Ordinary: US$1
British Virgin
Islands (‘‘BVI’’)
100
100
100 Investment holding
4
Baudinet Investment Ltd.
Ordinary: HK$18
Deferred: HK$2
Hong Kong
100
—
100
—
100 Property investment
—
1
Begin Land Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Property investment
—
1
Chericourt Company Ltd.
Ordinary: HK$1,000,000
Hong Kong
95.24
95.24
95.24 Property investment
1
Note
Congenial Investments Ltd. Ordinary: US$1
BVI
100
100
100 Investment
5
Curlew International Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5
Dhandia Ltd.
Ordinary: HK$1,000
Hong Kong
100
100
100 Investment holding
1
Dragon Eye Holding Ltd.
Ordinary: US$100
Cayman Islands
—
—
100 Investment holding
5, 10
East Sun Estate
Management Company
Ltd.
Ordinary: HK$200
Hong Kong
100
100
100 Property management
1
East Sun Textile Company, Ordinary: HK$20
Hong Kong
Ltd.
Deferred: HK$15,000,000
100
—
100
—
100 Dormant
—
1
Grandeur Investments Ltd.
Ordinary: US$1
BVI
100
100
100 Property investment
4
Hilwin Properties Ltd.
Ordinary: HK$450,000
Deferred: HK$50,000
Hong Kong
100
—
100
—
100 Investment holding
—
and treasury
investment
1
Honest Bond Ltd.
Ordinary: HK$1
Hong Kong
—
—
100 Dormant
9
Libro Estates Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Dormant
—
1
Tat Yeung Properties
Investment Ltd.
Ordinary: US$1,000
BVI
100
100
100 Investment holding
5
Unimix Properties Ltd.
Ordinary: HK$200
Hong Kong
100
100
100 Dormant
1
Winner Godown Ltd.
Ordinary: HK$1,500,000
Hong Kong
70
70
70 Godown operation
1
Winnion Ltd.
Ordinary: HK$100
Hong Kong
100
100
100 Property investment
1
Winprop Pte. Ltd.
Ordinary: SG$2
Singapore
100
100
100 Investment holding
3
– 160 –
APPENDIX II
(b)
ACCOUNTANT’S REPORT OF THE COMPANY
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of subsidiary
Issued share capital
Place of
incorporation
Winsor Air Cargo Centre
Ltd.
Ordinary: HK$20
Hong Kong
100
100
Winsor Billion Management Ordinary: HK$10
Ltd.
Hong Kong
100
100
Winsor Estate Agents Ltd.
Ordinary: HK$20
Hong Kong
100
100
100 Property agent
1
Winsor Estate Management
Ltd.
Ordinary: HK$2
Hong Kong
100
100
100 Property management
1
Winsor Parking Ltd.
Ordinary: HK$18,000,000 Hong Kong
Deferred: HK$2,000,000
100
—
100
—
100 Property investment
—
1
Winsor Properties (China)
Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5, 10
Winsor Properties
Finance Ltd.
Ordinary: HK$2
Hong Kong
100
100
100 Group finance
company
1, 10
Winsor Properties Financial Ordinary: HK$840
Services Ltd.
Hong Kong
95.24
95.24
95.24 Investment holding
and property
investment
Winsor Properties (Hong
Kong) Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
4, 10
Winsor Properties
(Overseas) Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5, 10
Winsor Storage Ltd.
Ordinary: HK$10,000
Hong Kong
100
100
100 Wine storage
1
Winwin Investment Pte.
Ltd.
Ordinary: SG$2
Singapore
100
100
100 Dormant
3
Zak Holdings Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5
Zofka Properties Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Property investment
—
1
100 Dormant
80 Property management
Note
1
1
1
Associated companies
Name of associated
company
Issued share capital
Place of
incorporation
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Note
China Merchants Cold Chain Ordinary: US$1,000
Logistics (China)
Co., Ltd.
BVI
30
30
30 Investment holding
5
China Merchants Cold Chain Ordinary: HK$1
Logistics (Hong Kong)
Co. Ltd.
Hong Kong
30
30
30 Investment holding
1
China Merchants
International Cold Chain
(Shenzhen) Co. Ltd.
(foreign wholly-owned
enterprise)
Mainland China
30
30
30 Cold storage
2
Ordinary: US$5,000,000
– 161 –
APPENDIX II
ACCOUNTANT’S REPORT OF THE COMPANY
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of associated
company
Issued share capital
Place of
incorporation
Fore Prosper Ltd.
Ordinary: HK$100
Hong Kong
—
—
40 Property investment
1
Javary Ltd.
Ordinary: HK$300
Hong Kong
33.3
33.3
33.3 Property investment
6
Pangold Development Ltd.
Ordinary: HK$100
Hong Kong
20
20
Suzhou World Trade Centre
Ordinary: US$6,500,000
Mainland China
24.8
24.8
24.8 Property investment
7
20 Property development
Note
1
Tat Yeung Trading Company Ordinary: US$2
Ltd.
BVI
50
50
50 Investment holding
5
Universal Plus Ltd.
Ordinary: US$100
BVI
20
20
20 Investment holding
4
Winquest Investment Pte.
Ltd.
Ordinary: SG$1,000,000
Singapore
30
30
30 Property development
8
Winwill Investment Pte Ltd.
Ordinary: SG$10
Singapore
20
20
20 Investment holding
8
Notes:
1.
The statutory financial statements of these subsidiaries/associated companies for the years ended 31 December
2009, 2010 and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards and audited
by PricewaterhouseCoopers, Hong Kong.
2.
The statutory financial statements of this associated company for the years ended 31 December 2009, 2010
and 2011 were audited by PricewaterhouseCoopers Zhong Tian CPAs Company Limited. All these audited
financial statements were prepared in accordance with the relevant accounting principles and financial
regulations applicable to enterprises in the PRC.
3.
The statutory financial statements of these subsidiaries/associated companies for the years ended 31 December
2009, 2010 and 2011 were audited by MGI Singapore PAC. All these audited financial statements were
prepared in accordance with the relevant accounting principles and financial regulations applicable to
enterprises in Singapore.
4.
The non-statutory financial statements of these subsidiaries/associated companies for the years ended 31
December 2009, 2010 and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards
and audited by PricewaterhouseCoopers, Hong Kong.
5.
No audited financial statements were issued for these subsidiaries/associated companies as they are not
required under the statutory requirements of their places of incorporation.
6.
The statutory financial statements of this associated company for the years ended 31 December 2009, 2010
and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards and audited by
Shinewing (HK) CPA Limited.
7.
The statutory financial statements of this associated company was audited by Shu Lun Pan Certified Public
Accountants Co., Ltd. for the year ended 31 December 2009 and BDO China Shu Lun Pan CPAs LLP Jiangsu
Jiangnan Branch for the years ended 31 December 2010 and 2011. All these audited financial statements were
prepared in accordance with the relevant accounting principles and financial regulations applicable to
enterprises in the PRC.
8.
The statutory financial statements of these associated companies for the years ended 31 December 2009, 2010
and 2011 were audited by PricewaterhouseCoopers LLP. All these financial statements were prepared in
accordance with the relevant accounting principles and financial regulations applicable to enterprises in
Singapore.
9.
The statutory financial statements of this subsidiary was not yet issued as it was incorporated on 25 February
2011.
10.
These subsidiaries were directly held by the Company.
– 162 –
APPENDIX II
III
ACCOUNTANT’S REPORT OF THE COMPANY
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of its subsidiaries in
respect of any period subsequent to 31 December 2011 up to the date of this report. No dividend or
distribution has been declared or made by the Company or any of its subsidiaries in respect of any
period subsequent to 31 December 2011.
Yours faithfully,
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
– 163 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The following is the text of a report received from the Company’s reporting accountant,
PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, for the purpose of inclusion in this
circular.
20 June 2012
The Directors
Winsor Properties Holdings Limited
Dear Sirs,
We report on the financial information of Cherrytime Investments Limited (the ‘‘Privateco’’) and
its subsidiaries (together, the ‘‘Privateco Group’’), which comprises the combined balance sheets of the
Privateco as at 31 December 2009, 2010 and 2011, and the combined income statements, the combined
statements of comprehensive income, the combined statements of changes in equity and the combined
cash flow statements of the Privateco Group for each of the years ended 31 December 2009, 2010 and
2011 (the ‘‘Relevant Periods’’) and a summary of significant accounting policies and other explanatory
information (the ‘‘Financial Information’’). This Financial Information has been prepared by the
directors of Winsor Properties Holdings Limited (the ‘‘Company’’) and is set out in Sections I to III
below for inclusion in Appendix III to the circular of the Company dated 20 June 2012 (the ‘‘Circular’’)
in connection with the proposed group reorganisation of the Company as set out in this Circular.
The Privateco was incorporated in the British Virgin Islands on 29 May 2012 with limited liability.
Pursuant to the proposed group reorganisation as described in Note 1(b) of Section II headed ‘‘Group
Reorganisation’’ below, the Privateco became the holding company of the subsidiaries now comprising
the Privateco Group.
As at the date of this report, the Privateco has direct and indirect interests in the subsidiaries and
associated companies set out in Note 35 of section II below.
No audited financial statements have been prepared by the Privateco as it is newly incorporated
and has not involved in any significant business transactions since its date of incorporation, other than
the Group Reorganisation. The audited financial statements of the other companies now comprising the
Privateco Group for which there are statutory audit requirements have been prepared in accordance with
the relevant accounting principles generally accepted in their place of incorporation. The details of the
statutory auditors of these companies are set out in Note 35 of Section II below.
The directors of the Company have prepared the combined financial statements of the Privateco
and its subsidiaries now comprising the Privateco Group for the Relevant Periods, in accordance with
Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified
– 164 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Public Accountants (the ‘‘HKICPA’’) (the ‘‘Underlying Financial Statements’’). We have audited the
Underlying Financial Statements in accordance with Hong Kong Standards on Auditing (the ‘‘HKSA’’)
issued by the HKICPA pursuant to separate terms of engagement with the Company.
The Financial Information has been prepared based on the Underlying Financial Statements, with
no adjustment made thereon, and on the basis set out in Note 2(a) of Section II below.
Directors’ Responsibility for the Financial Information
The directors of the Company are responsible for the preparation of the Financial Information that
gives a true and fair view in accordance with the basis of preparation set out in Note 1(c) of Section II
below and in accordance with HKFRSs and accounting policies adopted by the Company as set out in
the annual report of the Company for the year ended 31 December 2011.
Reporting Accountant’s Responsibility
Our responsibility is to express an opinion on the Financial Information and to report our opinion
to you. We carried out our procedures in accordance with the Auditing Guideline 3.340 ‘‘Prospectuses
and the Reporting Accountant’’ issued by the HKICPA.
Opinion
In our opinion, the Financial Information gives, for the purpose of this report and presented on the
basis set out in Note 1(c) of Section II below, a true and fair view of the combined state of affairs of the
Privateco Group as at 31 December 2009, 2010 and 2011 and of the Privateco Group’s combined results
and cash flows for the Relevant Periods then ended.
– 165 –
APPENDIX III
I
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
FINANCIAL INFORMATION
Combined Income Statements
For the years ended 31 December 2009, 2010 and 2011
Note
Revenue
Cost of sales
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of investment properties
Gains on disposals of investment properties
Other gains, net
Operating profit
Finance income
Finance costs
5
5
15
6
7
7
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
228,405
(87,869)
341,459
(76,033)
414,824
(94,062)
140,536
39,589
(13,167)
(38,215)
279,300
—
71,285
265,426
35,563
(19,183)
(39,398)
1,727,118
146,462
25,167
320,762
45,755
(8,768)
(42,420)
1,855,219
—
35,242
479,328
45
(63,770)
2,141,155
406
(73,605)
2,205,790
5,671
(72,388)
415,603
2,067,956
2,139,073
300,288
—
151,221
69,387
Share of profits less losses of associated
companies
Gain on bargain purchase
9
10
(3,098)
—
Profit before taxation
Taxation charge
11
412,505
(22,257)
2,368,244
(16,297)
2,359,681
(32,954)
Profit for the year
390,248
2,351,947
2,326,727
Attributable to:
Shareholders of the Privateco
Non-controlling interests
389,869
379
2,351,875
72
2,326,073
654
390,248
2,351,947
2,326,727
– 166 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Combined Statements of Comprehensive Income
For the years ended 31 December 2009, 2010 and 2011
Note
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released upon repayment
of loans from an associated company
Fair value gains/(losses)
on available-for-sale financial assets
Cash flow hedges
— Fair value losses
— Realised upon settlement
Share of hedging reserve of
an associated company
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
390,248
2,351,947
2,326,727
29
(138)
59,895
(5,627)
29
—
—
(44,122)
29
144,519
82,749
(128,185)
29
29
(56,621)
39,686
(63,789)
44,427
(33,326)
44,105
—
—
(3,174)
Other comprehensive income/(loss)
for the year, net of tax
127,446
123,282
(170,329)
Total comprehensive income for the year
517,694
2,475,229
2,156,398
Attributable to:
Shareholders of the Privateco
Non-controlling interests
517,315
379
2,475,157
72
2,155,744
654
517,694
2,475,229
2,156,398
29
– 167 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Combined Balance Sheets
At 31 December 2009, 2010 and 2011
Non-current assets
Property, plant and equipment
Investment properties
Interests in associated companies
Amounts and loans receivable from associated
companies
Available-for-sale financial assets
Held-to-maturity investments
Deferred tax assets
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Amounts receivable from Remaining Group
Entities
Held-to-maturity investments
Tax recoverable
Cash and cash equivalents
Current liabilities
Trade and other payables and accruals
Short-term bank loans, secured
Derivative financial instruments
Tax payable
Note
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
14
15
16
8,456
8,239,830
180,969
11,238
9,177,830
500,676
8,930
11,027,830
696,144
16
17
18
27
23
350,338
350,182
30,997
4,503
—
357,525
431,094
37,877
10,740
16,000
39,369
319,402
65,835
1,597
179
9,165,275
10,542,980
12,159,286
19
20
—
39,769
58
42,028
362
35,561
26
18
215,250
—
—
171,605
373,738
—
—
433,923
181,942
29,252
435
646,492
426,624
849,747
894,044
292,862
322,250
40,821
25,521
269,537
126,250
42,865
38,738
196,642
546,682
42,130
25,982
681,454
477,390
811,436
(254,830)
372,357
82,608
10,915,337
12,241,894
21
22
24
23
Net current (liabilities)/assets
Total assets less current liabilities
8,910,445
– 168 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Non-current liabilities
Long-term bank loans, secured
Amounts payable to the Company
Amounts and loans payable to
associated companies
Derivative financial instruments
Deferred tax liabilities
Note
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
25
26
2,180,250
3,372,078
1,835,600
3,526,941
1,560,100
3,413,622
16
23
27
166,789
55,262
27,956
166,789
71,621
27,362
23,552
62,942
43,779
5,802,335
5,628,313
5,103,995
3,108,110
5,287,024
7,137,899
1
3,106,412
1
5,285,569
1
7,135,681
3,106,413
5,285,570
7,135,682
1,697
1,454
2,217
3,108,110
5,287,024
7,137,899
Net assets
Combined capital
Reserves
28
29
Equity attributable to shareholders
of the Privateco
Non-controlling interests
Total equity
– 169 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Combined Statements of Changes in Equity
For the years ended 31 December 2009, 2010 and 2011
Equity attributable to shareholders
of the Privateco
NonCombined
Other
Retained
controlling
Total
capital
reserves
earnings
Total
interests
equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
1
(1,763,028)
4,432,125
2,669,098
1,543
2,670,641
—
—
389,869
389,869
379
390,248
—
(138)
—
(138)
—
(138)
—
144,519
—
144,519
—
144,519
—
(56,621)
—
(56,621)
—
(56,621)
—
39,686
—
39,686
—
39,686
Total other comprehensive income
—
127,446
—
127,446
—
127,446
Total comprehensive income
—
127,446
389,869
517,315
379
517,694
—
—
—
—
(225)
(225)
—
—
(80,000)
(80,000)
—
(80,000)
—
—
(80,000)
(80,000)
(225)
(80,225)
1
(1,635,582)
4,741,994
3,106,413
1,697
3,108,110
Note
At 1 January 2009
Comprehensive income
Profit for the year
Other comprehensive (loss)/income
29
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of
interest rate swap contracts
Transactions with owners
Dividends paid to non-controlling
shareholders
Dividends paid
Total transactions with owners
At 31 December 2009
12
– 170 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Equity attributable to shareholders
of the Privateco
NonCombined
Other
Retained
controlling
Total
capital
reserves
earnings
Total
interests
equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
1
(1,635,582)
4,741,994
3,106,413
1,697
3,108,110
—
—
2,351,875
2,351,875
72
2,351,947
—
59,895
—
59,895
—
59,895
—
82,749
—
82,749
—
82,749
—
(63,789)
—
(63,789)
—
(63,789)
—
44,427
—
44,427
—
44,427
Total other comprehensive income
—
123,282
—
123,282
—
123,282
Total comprehensive income
—
123,282
2,351,875
2,475,157
72
2,475,229
—
—
—
—
(315)
(315)
—
—
(296,000)
(296,000)
—
(296,000)
—
—
(296,000)
(296,000)
(315)
(296,315)
1
(1,512,300)
6,797,869
5,285,570
1,454
5,287,024
Note
At 1 January 2010
Comprehensive income
Profit for the year
Other comprehensive income/(loss)
29
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of
interest rate swap contracts
Transactions with owners
Dividends paid to non-controlling
shareholders
Dividends paid
Total transactions with owners
At 31 December 2010
12
– 171 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Equity attributable to shareholders
of the Privateco
NonCombined
Other
Retained
controlling
Total
capital
reserves
earnings
Total
interests
equity
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
1
(1,512,300)
6,797,869
5,285,570
1,454
5,287,024
—
—
2,326,073
2,326,073
654
2,326,727
—
(5,627)
—
(5,627)
—
(5,627)
—
(44,122)
—
(44,122)
—
(44,122)
—
(128,185)
—
(128,185)
—
(128,185)
—
(33,326)
—
(33,326)
—
(33,326)
—
44,105
—
44,105
—
44,105
—
(3,174)
—
(3,174)
—
(3,174)
Total other comprehensive loss
—
(170,329)
—
(170,329)
—
(170,329)
Total comprehensive (loss)/income
—
(170,329)
2,326,073
2,155,744
654
2,156,398
—
(632)
—
(632)
632
—
—
—
—
—
(523)
(523)
—
—
(305,000)
(305,000)
—
(305,000)
—
(632)
(305,000)
(305,632)
109
(305,523)
1
(1,683,261)
8,818,942
7,135,682
2,217
7,137,899
Note
At 1 January 2011
Comprehensive income
Profit for the year
Other comprehensive (loss)/income
29
Exchange translation differences
Exchange differences released
upon repayment of loans from
an associated company
Fair value losses on available-for-sale
financial assets
Fair value losses on cash flow hedges
Realised upon settlement of
interest rate swap contracts
Share of hedging reserve of
an associated company
Transactions with owners
Partial disposal of interest in a subsidiary
Dividends paid to non-controlling
shareholders
Dividends paid
Total transactions with owners
At 31 December 2011
12
– 172 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Combined Cash Flow Statements
For the years ended 31 December 2009, 2010 and 2011
Note
Operating activities
Net cash from operations
Interest paid
Hong Kong profits tax paid
Overseas tax paid
34(a)
Net cash (used in)/from operating activities
31/12/2009
HK$’000
31/12/2011
HK$’000
30,261
(63,588)
(38,590)
(87)
28,139
(73,405)
(9,688)
(223)
414,434
(72,219)
(19,778)
(288)
(72,004)
(55,177)
322,149
(8,226)
(58,508)
100
(5,594)
(4,882)
940,462
Investing activities
Purchase of property, plant and equipment
Additions to investment properties
Proceeds from disposals of investment properties
Proceeds from disposals of property,
plant and equipment
Proceeds from disposal of available-for-sale
financial assets
Income received from held-to-maturity investments
Bank interest received
Dividends received from available-for-sale
financial assets
Loan contributions to an associated company
Amounts repaid by associated companies
Amounts advanced by associated companies
Dividends received from associated companies
Acquisitions of available-for-sale financial assets
Acquisitions of held-to-maturity investments
Acquisition of interests in an associated company
Amount advanced by an investee company
27,186
(26,000)
386
—
3,096
(10)
—
—
10,865
Net cash (used in)/from investing activities
(37,560)
– 173 –
Year ended
31/12/2010
HK$’000
(286)
(5,713)
—
9
468
3
12,945
500
97
—
500
363
—
1,117
4,458
23,776
(2,800)
47,944
—
—
—
—
—
1,837
1,002,074
18,989
—
325,408
21,103
76,243
—
(48,825)
(229,097)
111
163,511
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
31/12/2009
HK$’000
Financing activities
New long-term bank loans
New short-term bank loans
Repayment of long-term bank loans
Repayment of short-term bank loans
Amounts repaid to the Company
Dividends paid to non-controlling shareholders
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
460,739
321,000
(58,400)
(496,778)
(117,895)
(225)
225,000
385,000
(540,650)
(610,000)
(141,137)
(315)
—
513,825
(133,750)
(235,000)
(418,319)
(523)
Net cash from/(used in) financing activities
108,441
(682,102)
(273,767)
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
(1,123)
175,117
(2,389)
264,795
171,605
(2,477)
211,893
433,923
676
Cash and cash equivalents at end of the year
171,605
433,923
646,492
Analysis of cash and cash equivalents
Bank balances and cash
171,605
433,923
646,492
– 174 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
II
NOTES TO THE FINANCIAL INFORMATION
1
GENERAL INFORMATION, GROUP REORGANISATION AND BASIS OF PRESENTATION
(a)
General information
Cherrytime Investments Limited (the ‘‘Privateco’’) is a limited liability company incorporated in the British Virgin
Islands (‘‘BVI’’) on 29 May 2012 and is wholly-owned by Winsor Properties Holdings Limited (the ‘‘Company’’). The
registered office of the Privateco is Kingston Chambers, PO Box 173, Road Town, Tortola, BVI and the address of its
principal office in Hong Kong is 8th Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon,
Hong Kong.
The Privateco and its subsidiaries and associated companies are collectively referred to as the ‘‘Privateco Group’’.
The Privateco’s principal activity is investment holding. The principal activities of the companies which now comprise the
Privateco Group are property investment and management, warehousing and investment holding (the ‘‘Distributed
Businesses’’).
The Board of Directors of the Privateco considers that the Privateco’s ultimate holding company is Wing Tai
Properties Limited (‘‘Wing Tai’’), a company incorporated in Bermuda with limited liability, the shares of which are listed
on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’).
(b)
Group Reorganisation
For the purpose of distribution in specie of the Privateco by the Company, the Group underwent the reorganisation
(the ‘‘Group Reorganisation’’). The Privateco was incorporated for the purpose of holding Distributed Businesses. The
Distributed Businesses are primarily carried out by Dragon Eye Holding Ltd., Winsor Properties (China) Limited, Winsor
Properties (Hong Kong) Limited, Winsor Properties (Overseas) Limited and Winsor Properties Finance Limited and their
subsidiaries and associated companies. Details of the Group Reorganisation are as follows:
.
On 19 April 2012, Future Best Developments Limited (the ‘‘Remaining Holdco’’) was incorporated in the BVI
with an authorised share capital of US$50,000 divided into 50,000 shares of US$1 each, with 1 share issued
and allotted to the Company at par.
.
On 29 May 2012, Cherrytime Investments Limited (the ‘‘Privateco’’) was incorporated in the BVI with an
authorised share capital of HK$3,000,000 divided into 300,000,000 shares of HK$0.01 each, with 1 share
issued and allotted to the Company at par.
.
On 15 June 2012, Winsor Properties (China) Limited, Winsor Properties (Hong Kong) Limited and Winsor
Properties (Overseas) Limited issued new shares in favour of the Company as consideration for acquiring the
inter-company receivables of HK$2,663,973,000 due by Winsor Properties Finance Limited to the Company.
.
On 18 June 2012, the Company transferred all its equity interests in Dragon Eye Holding Ltd., Winsor
Properties (China) Limited, Winsor Properties (Hong Kong) Limited, Winsor Properties (Overseas) Limited
and Winsor Properties Finance Limited, which together with their respective subsidiaries and associated
companies are principally engaged in property development, investment and management, warehousing and
investment holding (collectively, known as ‘‘Distributed Businesses’’) to the Privateco at a consideration of
HK$2,893,072,000, which represented the carrying amount of the Company’s investment in these subsidiaries
and associated companies. The Privateco and the Distributed Businesses are known as the ‘‘Privateco Group’’.
.
On 18 June 2012, Winsor Properties (Hong Kong) Limited transferred all its equity interests in Access Rich
Limited, Winsor Parking Limited and Winsor Properties Financial Services Limited (‘‘WPFSL’’), which
together with Chericourt Company Limited, a wholly-owned subsidiary of WPFSL are principally engaged in
dissimilar business to the Distributed Businesses (collectively, known as the ‘‘Retained Businesses’’) to the
Remaining Holdco at a consideration of HK$20,117,000, which represented the carrying amount of Winsor
Properties (Hong Kong) Limited’s investment in these subsidiaries. The Company, the Remaining Holdco and
the Retained Businesses are known as the ‘‘Remaining Group’’.
– 175 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
As at the date of this report, the above reorganisation steps had been completed. The legal structure of the Privateco
Group is formed and certain of the Distributed Businesses had been transferred to the Privateco. For the purpose of the
Group Reorganisation, the directors of the Company have prepared the Financial Information of the Privateco Group for the
years ended 31 December 2009, 2010 and 2011 (the ‘‘Relevant Periods’’) in accordance with Hong Kong Financial
Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).
The Financial Information is presented in thousands of Hong Kong dollars, unless otherwise stated, which is also the
functional currency and presentation currency of the Privateco Group.
(c)
Basis of presentation
For the purpose of this report, the combined financial statements of the Privateco Group have been prepared on the
basis as if the Group Reorganisation had been completed and in accordance with the principles of the Auditing Guideline
3.340 ‘‘Prospectus and the Reporting Accountant’’ issued by the HKICPA. The combined income statements, combined
statements of comprehensive income, combined statements of changes in equity and combined cash flow statements of the
Privateco Group for each of the years ended 31 December 2009, 2010 and 2011 have been prepared using the financial
information of the companies engaged in the Distributed Businesses, under the common control of the Privateco and now
comprising the Privateco Group as if the current group structure had been in existence throughout each of the years ended
31 December 2009, 2010 and 2011, or since the respective dates of incorporation/establishment of the combining
companies, or since the date when the combining companies first came under the control of the Privateco, whichever is a
shorter period. The combined balance sheets of the Privateco Group as at 31 December 2009, 2010 and 2011 have been
prepared to present the assets and liabilities of the companies now comprising the Privateco Group at these dates, as if the
current group structure had been in existence as at these dates. The net assets and results of the Privateco Group were
combined using the existing book values from the Privateco’s perspective.
The Financial Information includes the assets, liabilities and results of operations of the entities that were historically
associated with the Distributed Businesses. The assets, liabilities and results of operations relating to Units 505–510, 5/F,
Tower B of Regent Centre and a car parking space in Landmark East, under the common control of the Privateco during
each of the years ended 31 December 2009, 2010 and 2011 have not been included.
The Financial Information excludes the assets, liabilities and results of operations of the Remaining Group Entities
and pursuant to the Group Reorganisation, such Remaining Group Entities do not and have never formed part of the
Privateco Group.
Inter-company transactions, balances and unrealised gains/losses on transactions between Privateco Group companies
are eliminated on combination.
2
BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of the Financial Information are set out below. These policies
have been consistently applied to the Relevant Periods presented, unless otherwise stated.
(a)
Basis of preparation
The Financial Information of the Privateco Group has been prepared in accordance with the accounting policies
adopted by the Company as set out in the annual report of the Company for the year ended 31 December 2011.
The Financial Information has been prepared in accordance with HKFRSs issued by the HKICPA. They have been
prepared under the historical cost convention, as modified by the revaluation of investment properties, available-for-sale
financial assets and derivative financial instruments.
The preparation of Financial Information is in conformity with HKFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Privateco Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the Financial Information, are disclosed in note 4.
– 176 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Business combination under common control
Wing Tai owned and controlled the companies comprising the Privateco Group before the Group
Reorganisation and continue to control these companies after the Group Reorganisation. For the purpose of
preparation of the Financial Information of the Privateco Group, the Group Reorganisation is considered as a
business combination under common control in a manner similar to pooling of interests. The Financial Information
incorporates the financial statement items of the combining entities or businesses in which the common control
combination occurs as if they had been combined from the date when the combining entities or businesses first came
under the control of the controlling party.
The net assets of the combining entities or businesses are combined using the predecessor existing book
values. No amount is recognised with respect to goodwill or any excess of an acquirer’s interest in the net fair value
of the acquiree’s identifiable assets, liabilities and contingent liabilities over its cost at the time of common control
combination, to the extent of the contribution of the controlling party’s interest.
All differences between the cost of acquisition (fair value of consideration paid) and the amounts at which the
assets and liabilities are recorded have been recognised directly in equity as part of the capital reserve.
The combined income statements include the results of each of the combining entities or businesses from the
earliest date presented or since the date when combining entities or businesses first came under common control,
where this is a shorter period, regardless of the date of the common control combination.
The comparative amounts in the Financial Information are presented as if the entities or businesses had been
combined at the earliest date presented or when they first came under common control, whichever is the later.
Intra-group transactions, balances and unrealised gains on transactions between the combining entities or
businesses are eliminated. Unrealised losses are also eliminated but considered as an impairment indicator of the
asset transferred.
(b)
Adoption of new and revised HKFRSs
The Privateco Group has early adopted HKAS 12 (Amendment) ‘‘Deferred Tax: Recovery of Underlying Assets’’
(‘‘HKAS 12 (Amendment)’’) which has been applied retrospectively. The Privateco Group has not early adopted the
following new and revised standards and amendments to existing standards that have been issued but are not yet effective.
Effective for
accounting period
beginning on or after
HKAS 1 (Amendment)
HKAS 19 (Revised 2011)
HKAS 27 (Revised 2011)
HKAS 28 (Revised 2011)
HKAS 32 (Amendment)
HKFRS 1 (Amendment)
HKFRS 1 (Amendment)
HKFRS 7 (Amendment)
HKFRS 7 (Amendment)
HKFRS 9
HKFRS 7 and HKFRS 9
(Amendments)
HKFRS 10
HKFRS 11
HKFRS 12
HKFRS 13
HKFRSs
HK(IFRIC)-Int 20
Presentation of Items of Other Comprehensive Income
Employee Benefits
Separate Financial Statements
Investments in Associates and Joint Ventures
Offsetting Financial Assets and Financial Liabilities
Severe Hyperinflation and Removal of Fixed Dates for
First-time Adopters
Government Loans
Disclosures — Transfers of Financial Assets
Disclosures — Offsetting Financial Assets and Financial
Liabilities
Financial Instruments
Mandatory Effective Date and Transition Disclosures
Consolidated Financial Statements
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Fourth 2011 Annual Improvements Project
Stripping Costs in the Production of a Surface Mine
– 177 –
1
1
1
1
1 July
January
January
January
January
1 July
2012
2013
2013
2013
2014
2011
1 January 2013
1 July 2011
1 January 2013
1 January 2015
1 January 2015
1
1
1
1
1
1
January
January
January
January
January
January
2013
2013
2013
2013
2013
2013
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The Privateco Group is in the process of making an assessment on the impact of these new and revised standards and
amendments to existing standards and is not yet in a position to state whether they would have a significant impact on the
Privateco Group’s results and financial position.
(c)
Consolidation/combination
The Financial Information includes the financial statements of the Privateco and its subsidiaries made up to 31
December.
(i)
Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Privateco Group has the power
to govern the financial and operating policies generally accompanying a shareholding of more than one half of the
voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Privateco Group controls another entity. The Privateco Group also assesses
existence of control where it does not have more than 50% of the voting power but is able to govern the financial
and operating policies by virtue of de-facto control. De-facto control may arise from circumstances such as enhanced
minority rights or contractual terms between shareholders, etc.
Subsidiaries are fully consolidated from the date on which control is transferred to the Privateco Group. They
are de-consolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions between Privateco Group
companies are eliminated. Profits and losses resulting from inter-company transactions that are recognised in assets
are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Privateco Group.
(I)
Business combinations
The Privateco Group applies the acquisition method to account for business combinations other than
the business combination under common control as stated in note 2(a). The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Privateco Group. The consideration transferred
includes the fair value of any asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Privateco Group recognises any noncontrolling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the noncontrolling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquirer’s previously held equity interest in the
acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Privateco Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an
asset or liability is recognised in accordance with HKAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the
fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit or loss.
– 178 –
APPENDIX III
(II)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as
equity transactions — that is, as transactions with the owners in their capacity as owners. The difference
between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets
of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also
recorded in equity.
(III)
Disposal of subsidiaries
When the Privateco Group ceases to have control, any retained interest in the entity is remeasured to its
fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The
fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as
an associated company or a financial asset. In addition, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as if the Privateco Group had directly
disposed of the related assets or liabilities. This may mean that amounts previously recognised in other
comprehensive income are reclassified to profit or loss.
(ii)
Associated companies
Associated companies are entities over which the Privateco Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associated
companies are accounted for using the equity method of accounting and are initially recognised at cost. The Privateco
Group’s investment in associated companies includes goodwill identified on acquisition, net of any accumulated
impairment losses. The interests in associated companies also include long-term equity loan which in substance form
part of the Privateco Group’s net investments in associated companies.
If the ownership interest in an associated company is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or
loss where appropriate.
The Privateco Group’s share of its associated companies’ post-acquisition profits or losses is recognised in the
combined income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The
cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the
Privateco Group’s share of losses in an associated company equals or exceeds its interest in the associated company,
including any other unsecured receivables, the Privateco Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associated company.
Unrealised gains on transactions between the Privateco Group and its associated companies are eliminated to
the extent of the Privateco Group’s interest in the associated companies. Unrealised losses are also eliminated unless
the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associated
companies have been changed where necessary to ensure consistency with the policies adopted by the Privateco
Group.
(d)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is the executive director of the Company, is responsible for
allocating resources and assessing performance of the operating segments, will make strategic decisions. The identification
of operating segments is set out in note 5.
– 179 –
APPENDIX III
(e)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Foreign currencies translation
(i)
Functional and presentation currency
Items included in the Financial Information of each of the Privateco Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the ‘‘functional currency’’). The
Financial Information is presented in Hong Kong dollars, which is the Privateco’s functional and presentation
currency.
(ii)
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges.
Translation differences on non-monetary financial assets and liabilities are reported as part of the fair value
gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in the income statement as part of the fair value gain or loss. Translation
differences on non-monetary financial assets such as equities classified as available-for-sale financial assets are
recognised in other comprehensive income.
(iii)
Privateco Group companies
The results and financial positions of all the Privateco Group’s entities (none of which has the currency of a
hyper-inflationary economy) that have a functional currency different from the presentation currency are translated
into the presentation currency as follows:
(1)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of
that balance sheet;
(2)
income and expenses for each income statement are translated at average exchange rates; and
(3)
all resulting exchange differences are recognised as a separate component of equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in
equity.
(iv)
Disposal of foreign operation and partial disposal
On the disposal of a foreign operation (that is, a disposal of the Privateco Group’s entire interest in a foreign
operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, or a disposal
involving loss of significant influence over an associated company that includes a foreign operation), all of the
exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the
Privateco are reclassified to profit or loss.
In the case of a partial disposal that does not result in the Privateco Group losing control over a subsidiary
that includes a foreign operation, the proportionate share of accumulated exchange differences are reattributed to noncontrolling interests and are not recognised in profit or loss. For all other partial disposals (that is, reductions in the
Privateco Group’s ownership interest in associated companies that do not result in the Privateco Group losing
significant influence) the proportionate share of the accumulated exchange difference is reclassified to profit or loss.
(f)
Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition of the asset.
– 180 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the asset will flow to the Privateco Group and the cost of
the asset can be measured reliably. All other repair and maintenance costs are expensed in the income statement during the
financial period in which they are incurred.
Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their costs or
revalued amounts to their residual values over their estimated useful lives, at the following annual rates:
Plant and machinery
Leasehold improvements, furniture, fixtures and office equipment
Motor vehicles
10% to 20%
10% to 20%
20%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
The gains or losses on disposal of property, plant and equipment are the difference between the net sale proceeds and
the carrying amounts of the relevant assets, and are recognised in the income statement. Any revaluation reserve remaining
attributable to the relevant assets is transferred to retained earnings and is shown as a movement in reserves.
(g)
Investment properties
Property that is held for long-term rental yields or for capital appreciation or both, and that is not occupied by the
companies in the Privateco Group, is classified as investment property. Investment property comprises land held under
operating leases and buildings held under finance leases and properties being redeveloped for continued future use as
investment property. Land held under operating leases is classified and accounted for as investment property when the rest
of the definition of investment property is met. The operating lease is accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including related transaction costs. After initial recognition,
investment property is carried at fair value. Fair value is based on valuations carried out by external valuers. Changes in fair
values are recognised in the income statement.
Subsequent expenditure is charged to the carrying amount of the asset only when it is probable that future economic
benefits associated with the asset will flow to the Privateco Group and the cost of the asset can be measured reliably. All
other repairs and maintenance costs are expensed in the income statement during the financial period in which they are
incurred.
If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair
value at the date of reclassification becomes its cost for accounting purposes.
If a property becomes an investment property because its use has changed, any difference resulting between the
carrying amount and the fair value of this property at the date of transfer is recognised in equity as revaluation of property,
plant and equipment. However, if the fair value gives rise to a reversal of a previous impairment, this reversal is recognised
in the income statement.
(h)
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Privateco Group’s share of the
net identifiable assets of the acquired subsidiary/associated company at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in intangible assets. Goodwill on acquisitions of associated companies is included in investments in
associated companies and is tested annually for impairment as part of the overall carrying amount.
Separately recognised goodwill is tested for impairment and carried at cost less accumulated impairment. Impairment
on goodwill is not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating
to the entity sold.
– 181 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which
the goodwill arose. The Privateco Group allocates goodwill to each business segment in each country in which it operates.
(i)
Impairment of investments in subsidiaries, associated companies and non-financial assets
Assets that have an indefinite useful life or have not yet been available for use are not subject to amortisation and are
tested annually for impairment. Assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment is recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at each balance sheet date.
In the Privateco’s balance sheet, impairment testing of the investments in subsidiaries or associated companies is
required upon receiving dividends from these investments if the dividend exceeds the total comprehensive income of the
subsidiary or associated company in the period the dividend is declared or if the carrying amount of the investment in the
separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net
assets including goodwill.
(j)
Assets under leases
Leases where substantially all the risks and rewards of ownership of assets remain with the lessors are accounted for
as operating leases. Leases that substantially transfer to the lessees all the risks and rewards of ownership of assets are
accounted for as finance leases.
(i)
Leases — where the Privateco Group is the lessee
Payments made under operating leases (net of any incentives received from the lessor) are expensed in the
income statement on a straight-line basis over the lease periods.
(ii)
Leases — where the Privateco Group is the lessor
When the Privateco Group leases out assets under operating leases, the assets are included in the balance sheet
according to their nature and where applicable, are depreciated in accordance with the Privateco Group’s depreciation
policies, as set out in note 2(f) above. Revenue arising from assets leased out under operating leases is recognised in
accordance with the Privateco Group’s revenue recognition policies, as set out in note 2(w) below.
(k)
Financial assets
The Privateco Group classifies its financial assets in the categories of financial assets at fair value through profit or
loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. Management determines the
classification of its financial assets at initial recognition depending on the purpose for which the financial assets were
acquired and re-evaluates this designation at every balance sheet date.
(i)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if it is acquired principally for the purpose of selling in the short term. Derivatives are also
classified as held for trading unless they are designated as hedges. Assets in this category are included under current
assets.
(ii)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payment terms that are
not quoted in an active market. They are included in current assets, except for maturities greater than twelve months
after the balance sheet date which are classified as non-current assets.
– 182 –
APPENDIX III
(iii)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Held-to-maturity investments
Financial assets classified as held-to-maturity investments are non-derivative financial assets with fixed or
determinable payments and fixed maturities that the Privateco Group’s management has both the positive intention
and the ability to hold to maturity. The entire category would be tainted and reclassified as available-for-sale
financial assets/financial assets at fair value through profit or loss if the Privateco Group were to sell other than an
insignificant amount of held-to-maturity investments. They are initially recorded at fair value plus any directly
attributable transaction costs, and are subsequently measured at amortised cost using the effective interest method
less allowances for impairment losses. They are included in non-current assets, except for those with maturities less
than twelve months of the balance sheet date which are classified as current assets.
(iv)
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not
classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within twelve months of the balance sheet date.
Regular purchases and sales of financial assets are recognised on trade-date, which is the date on which the Privateco
Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are
initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the
Privateco Group has transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at
fair value. Loans and receivables are carried at amortised cost using the effective interest method.
Gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss are
included in the income statement in the financial period in which they arise. Unrealised gains and losses arising from
changes in the fair value of available-for-sale financial assets are recognised in other comprehensive income. When
available-for-sale financial assets are sold or impaired, the accumulated fair value adjustments are included in the income
statement.
Dividend income from financial assets at fair value through profit or loss and available-for-sale financial assets are
recognised in the income statement when the Privateco Group’s right to receive payments is established.
The fair value of quoted investments is based on current bid prices. If the market for a financial asset is not active
and for unlisted securities, the Privateco Group establishes fair value by using valuation techniques. These include the use
of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow
analysis, and option pricing models, making maximum use of market inputs and relying as little as possible on entityspecific inputs.
The Privateco Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a
group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or
prolonged decline in the fair value of the securities below their costs is considered as an indicator that the securities are
impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss (measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously
recognised in the income statement) is removed from investment revaluation reserve and recognised in the income
statement. Impairment recognised in the income statement on equity instruments is not reversed through the income
statement.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-forsale are analysed between translation differences resulting from changes in amortised cost of the securities and other
changes in the carrying amount of the securities. The translation differences on monetary securities are recognised in profit
or loss; translation differences on non-monetary securities are recognised in other comprehensive income. Changes in the
fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive
income.
– 183 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments
previously recognised in investment revaluation reserve are included in the income statement.
(l)
Impairment of financial assets
(i)
Assets carried at amortised cost
The Privateco Group assesses at the end of each reporting period whether there is objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset (a ‘‘loss event’’) and that loss event (or events) has an impact
on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Privateco Group uses to determine that there is objective evidence of an impairment loss
include:
.
Significant financial difficulty of the issuer or obligor;
.
A breach of contract, such as a default or delinquency in interest or principal payments;
.
The Privateco Group, for economic or legal reasons relating to the borrower’s financial difficulty,
granting to the borrower a concession that the lender would not otherwise consider;
.
It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
.
The disappearance of an active market for that financial asset because of financial difficulties; or
.
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a
portfolio of financial assets since the initial recognition of those assets, although the decrease cannot
yet be identified with the individual financial assets in the portfolio, including:
(i)
adverse changes in the payment status of borrowers in the portfolio;
(ii)
national or local economic conditions that correlate with defaults on the assets in the portfolio.
The Privateco Group first assesses whether objective evidence of impairment exists.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of
the loss is recognised in the income statement. If a loan or held-to-maturity investment has a variable interest rate,
the discount rate for measuring any impairment loss is the current effective interest rate determined under the
contract. As a practical expedient, the Privateco Group may measure impairment on the basis of an instrument’s fair
value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit
rating), the reversal of the previously recognised impairment loss is recognised in the income statement.
(ii)
Assets classified as available-for-sale financial assets
The Privateco Group assesses at the end of each reporting period whether there is objective evidence that a
financial asset or a group of financial assets is impaired. For debt securities, the Privateco Group uses the criteria
refer to (i) above. In the case of equity investments classified as available-for-sale, a significant or prolonged decline
in the fair value of the investments below its cost is also evidence that the assets are impaired. If any such evidence
exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the
acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in
profit or loss — is removed from investment revaluation reserve and recognised in the income statement. Impairment
– 184 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
losses recognised in the income statement on equity instruments are not reversed through the income statement. If, in
a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can
be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the impairment
loss is reversed through the income statement.
(m)
Inventories
Inventories comprise finished goods and are stated at the lower of cost and net realisable value. Cost is determined
using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
(n)
Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using
the effective interest method, less provision for impairment. A provision for impairment of trade and other receivables is
established when there is objective evidence that the Privateco Group will not be able to collect all amounts due according
to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the receivable
is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the effective interest rate. The carrying amount of the assets is reduced through
the use of an allowance account, and the amount of the loss is recognised in the income statement. When a receivable is
uncollectible, it is written off against the allowance account for receivables. Subsequent recoveries of amounts previously
written off are credited in the income statement.
(o)
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The Privateco Group documents, at the
inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management
objectives and strategy for undertaking various hedge transactions. The Privateco Group also documents its assessment, both
at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly
effective in offsetting changes in fair values or cash flows of hedged items. The full fair value of a hedging derivative is
classified as a non-current asset or liability when the remaining maturity of the hedged item is more than twelve months.
The effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges
are recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately
in the income statement.
Amounts accumulated in hedging reserve are recycled in the income statement in the financial periods when the
hedged item affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in hedging reserve at that time remains in hedging reserve and is recognised when the
forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that was reported in hedging reserve is immediately transferred to the income statement.
Certain non-trade derivative financial instruments do not qualify for hedge accounting. These instruments are
classified as current or non-current asset or liability according to the settlement dates of the financial instruments. Changes
in the fair value of these derivative instruments are recognised immediately in the income statement.
(p)
Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts.
– 185 –
APPENDIX III
(q)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Provisions
Provisions are recognised when the Privateco Group has a present legal or constructive obligation as a result of past
events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the
amount can be made. Provisions are not recognised for future operating losses. Where there are a number of similar
obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of
obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included
in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognised as interest expense.
(r)
Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Payables are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Payables are
recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(s)
Combined capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds.
(t)
Financial guarantee contracts
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the
beneficiary of the guarantee for a loss the holder incurs because a specified debtor fails to make payment when due in
accordance with the terms of a debt instrument.
Financial guarantee contracts are initially recognised at their fair value, and subsequently measured at the higher of
(i) the amount initially recognised less accumulated amortisation; and (ii) the amount required to be settled by the guarantor
in respect of the financial guarantee contracts at the balance sheet date.
(u)
Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed
by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Privateco
Group. It can also be a present obligation arising from past events that is not recognised because it is not probable that
outflow of economic resources will be required or the amount of obligation cannot be measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the Financial Information. When a change in
the probability of an outflow occurs so that outflow is probable, it will then be recognised as a provision.
A contingent asset is a possible asset that arises from past events and whose existence will only be confirmed by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Privateco Group.
Contingent assets are not recognised but are disclosed in the notes to the Financial Information when an inflow of
economic benefits is probable. When inflow is virtually certain, an asset is recognised.
(v)
Current and deferred taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement, except
to the extent that it relates to items recognised directly in equity. In this case, the tax is also recognised in equity.
– 186 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Privateco and its subsidiaries and associated companies operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the Financial Information. However, deferred income tax is not
accounted for if it arises from initial recognition of an asset or a liability in a transaction (other than a business
combination) that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted at the
balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associated
companies except where the timing of the reversal of the temporary difference is controlled by the Privateco Group and it is
probable that the temporary difference will not be reversed in the foreseeable future.
(w)
Recognition of revenue and income
Revenue comprises the fair value of the consideration for the sale of goods and rendering of services in the ordinary
course of the Privateco Group’s activities. The Privateco Group recognises revenue when the amount of revenue can be
reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for
each of the Privateco Group’s activities as described below.
Operating lease rental income from investment properties is recognised on a straight-line basis over the lease period.
Dividend income is recognised when the right to receive payment is established.
Interest income is recognised on a time proportion basis using the effective interest method.
Warehousing income and other income is recognised when the services are rendered.
Revenue from the sale of properties is recognised when the significant risks and rewards of ownership have been
transferred to the buyer.
(x)
Employee benefits
Employee entitlements to annual leave and statutory long service payments are recognised when they accrue to
employees. A provision is made for the estimated liability as a result of services rendered by employees up to the balance
sheet date.
Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.
The Privateco Group’s contributions to the defined contribution retirement scheme are expensed as incurred and are
reduced by voluntary contributions forfeited by those employees who leave the scheme prior to vesting fully in the
contributions. The assets of the scheme are held separately from those of the Privateco Group in independently administered
funds.
(y)
Borrowings and borrowing costs
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated
at amortised cost; any difference between the proceeds, net of transaction costs, and the redemption value is recognised in
the income statement over the period of the borrowings using the effective interest method.
– 187 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Borrowings are classified as current liabilities unless the Privateco Group has an unconditional right to defer
settlement of the liability for at least twelve months after the balance sheet date.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are capitalised
as part of the cost of these assets. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale. Capitalisation of borrowing costs ceases when the assets are substantially ready for their
intended use or sale. All other borrowing costs are recognised as expenses in the financial period in which they are incurred.
(z)
Dividend distribution
Dividend distribution to the Privateco’s shareholders is recognised as a liability in the Privateco Group’s financial
statements in the financial period in which the dividends become present legal and constructive obligations of the Privateco.
3
FINANCIAL RISK MANAGEMENT
(a)
Financial risk factors
The Privateco Group’s activities expose it to a variety of financial risks such as foreign exchange risk, price risk,
credit risk, liquidity risk and interest rate risk. The Privateco Group’s overall risk management seeks to minimise potential
adverse effects on the Privateco Group’s financial performance. The Privateco Group uses derivative financial instruments to
hedge certain risk exposures.
(i)
Foreign exchange risk
The majority of the Privateco Group’s assets are located and operated in Hong Kong, and the related revenue
generated from these assets is denominated in Hong Kong dollars. At 31 December 2009 and 2010, the Privateco
Group’s borrowings were denominated in Hong Kong dollars. At 31 December 2011, the Privateco Group’s
borrowings were principally denominated in Hong Kong dollars.
The Privateco Group is exposed to changes in foreign exchange rates due to its investment in foreign
operations, whose net assets are exposed to foreign currency transaction risk.
Management monitors exchange rate movements closely to ascertain if any material exposure may arise. The
Privateco Group regards the foreign exchange risk from fluctuation of currencies other than Singapore dollars is
insignificant.
At 31 December 2009, 2010 and 2011, if Hong Kong dollars had strengthened or weakened by 5% against
Singapore dollars with all other variables held constant, profit after taxation for the years ended 31 December 2009,
2010 and 2011 would have been HK$13,000, HK$728,000 and HK$283,000 lower or higher, mainly as a result of
foreign exchange losses or gains on translation of bank balances denominated in Singapore dollars.
At 31 December 2009, 2010 and 2011, if Hong Kong dollars had strengthened or weakened by 5% against
Singapore dollars with all other variables held constant, equity would have been HK$16,336,000, HK$35,855,000
and HK$32,458,000 lower or higher, mainly as a result of foreign exchange losses or gains on translation of
available-for-sale financial assets and interests in associated companies and amounts and loans receivable from
associated companies denominated in Singapore dollars.
(ii)
Price risk
The Privateco Group is exposed to equity securities price risk because the Privateco Group holds availablefor-sale financial assets. The Privateco Group is not exposed to commodity price risk.
At 31 December 2009, 2010 and 2011, if market value of the Privateco Group’s available-for-sale financial
assets had increased or decreased by 10%, with all other variables held constant, equity would have been
HK$26,335,000, HK$31,968,000 and HK$22,525,000 higher or lower.
– 188 –
APPENDIX III
(iii)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Credit risk
The Privateco Group’s credit risks are primarily attributable to bank balances, available-for-sale financial
assets, held-to-maturity investments, amounts receivable from Remaining Group Entities, trade and other receivables
and counter-party financial obligations in derivative financial instruments.
The Privateco Group’s cash deposits are placed with banks and financial institutions of high credit ratings and
the Privateco Group’s available-for-sale financial assets and held-to-maturity investments are primarily invested in
companies with sound financial conditions. The Privateco Group regularly reviews the investments to determine
whether there is deterioration in credit quality.
The Privateco Group has no significant concentration of credit risk. For rent receivable from tenants, credit
checks are part of the normal leasing process and stringent monitoring procedures are in place to deal with overdue
debts. In addition, the Privateco Group reviews the recoverable amount of each individual trade receivable at each
balance sheet date to ensure that adequate provisions for impairment are made for irrecoverable amounts.
To mitigate counter-party risk, the Privateco Group enters into derivative contracts only with financial
institutions of high credit ratings.
(iv)
Liquidity risk
The Privateco Group regularly assesses its funding requirements and prepares rolling cashflow forecast to
ensure it has sufficient cash resources and undrawn banking facilities at all times to meet its operating, investing and
financing needs.
The Privateco Group regularly reviews the debt covenants of the bank loans to ensure compliance of those
covenants and avoid any interruption to its banking and credit facilities.
– 189 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The table below analyses the Privateco Group’s financial liabilities and net-settled derivative financial
liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual
maturity date.
Less than
Between
Between
1 year 1 and 2 years 2 and 5 years
HK$’000
HK$’000
HK$’000
At 31 December 2009
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Amounts payable to the Company
349,227
292,862
40,821
—
173,753
—
26,255
3,372,078
2,095,650
—
29,007
—
Total
682,910
3,572,086
2,124,657
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Amounts payable to the Company
152,654
269,537
42,865
—
292,705
—
35,121
3,526,941
1,609,797
—
36,500
—
Total
465,056
3,854,767
1,646,297
Bank borrowings
Trade and other payables and accruals
Derivative financial instruments
Amounts payable to the Company
575,155
196,642
42,130
—
992,684
—
38,376
3,413,622
596,453
—
24,566
—
Total
813,927
4,444,682
621,019
At 31 December 2010
At 31 December 2011
The amounts disclosed in the table represent the contractual undiscounted cash flows including interest
payments, if applicable, and may not reconcile to the amounts in the combined balance sheets.
(v)
Interest rate risk
As the Privateco Group has no significant interest-bearing assets (other than bank balances and certain
amounts/loans receivable from associated companies), the Privateco Group’s income and operating cash flows are
substantially independent of changes in market interest rates.
The Privateco Group is exposed to changes in interest rates due to its bank borrowings. The Privateco Group
manages its interest rate exposure based on interest rate level and outlook as well as potential impact on the
Privateco Group’s financial position arising from volatility. Interest rate swap contract is the hedging instrument most
commonly used by the Privateco Group to manage the interest rate exposure. The Privateco Group enters into debt
obligations to support general corporate purposes including capital expenditure and working capital needs.
(i)
Cash flow interest rate risk
At 31 December 2009, 2010 and 2011, if interest rates on borrowings had been 25 basis points higher
or lower with all other variables held constant, profit after taxation for the years ended 31 December 2009,
2010 and 2011 would have been HK$2,873,000, HK$3,069,000 and HK$2,038,000 lower or higher, mainly as
a result of higher or lower interest expense on floating rate borrowings.
– 190 –
APPENDIX III
(ii)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Fair value interest rate risk
At 31 December 2009, 2010 and 2011, if the interest yield curve for forward interest rates had been
shifted up or down by 50 basis points with all other variables held constant:
(b)
—
profit after taxation for the years ended 31 December 2009, 2010 and 2011 would have been
HK$1,800,000, HK$853,000 and HK$975,000 higher or HK$800,000, HK$884,000 and
HK$1,001,000 lower, mainly as a result of gain or loss relating to the portion of changes in the
fair value of interest rate swap contracts not qualified for hedge accounting;
—
equity would have been HK$26,200,000, HK$17,515,000 and HK$13,858,000 higher or
HK$14,700,000, HK$16,539,000 and HK$11,522,000 lower, mainly as a result of an increase
or a decrease in the fair value of the effective portion of the cash flow hedges of borrowings as
described above.
Capital management
The Privateco Group’s objectives when managing capital are to safeguard the Privateco Group’s ability to continue as
a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Privateco Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
Consistent with others in the industry, the Privateco Group monitors capital on the basis of the gearing ratio. This
ratio is calculated as net debt divided by total equity. Net debt is calculated as total bank borrowings (including current and
non-current bank borrowings) less bank balances and cash.
The gearing ratios at 31 December 2009, 2010 and 2011 were as follows:
31/12/2009
HK$’000
31/12/2011
HK$’000
Total bank borrowings
Less: Bank balances and cash
2,502,500
(171,605)
1,961,850
(433,923)
2,106,782
(646,492)
Net debt
2,330,895
1,527,927
1,460,290
Total equity
3,108,110
5,287,024
7,137,899
75.0%
28.9%
20.5%
Gearing ratio
(c)
31/12/2010
HK$’000
Fair value estimation
The table below analyses financial instruments carried at fair value by valuation method. The different levels have
been defined as follows:
.
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
.
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as price) or indirectly (that is, derived from prices) (level 2).
.
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(level 3).
– 191 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The following table presents the Privateco Group’s assets and liabilities that were measured at fair value at 31
December 2009, 2010 and 2011.
Level 1
HK$’000
Level 2
HK$’000
Total
HK$’000
263,348
86,834
350,182
—
96,083
96,083
319,677
—
111,417
16,000
431,094
16,000
319,677
127,417
447,094
—
114,486
114,486
225,255
—
94,147
179
319,402
179
225,255
94,326
319,581
—
105,072
105,072
As at 31 December 2009
Assets
Available-for-sale financial assets
Liabilities
Derivative financial instruments
As at 31 December 2010
Assets
Available-for-sale financial assets
Derivative financial instruments
Liabilities
Derivative financial instruments
As at 31 December 2011
Assets
Available-for-sale financial assets
Derivative financial instruments
Liabilities
Derivative financial instruments
The fair value of financial instruments traded in active markets is based on quoted market prices at the end of
reporting period. A market is regarded as active if quoted prices are readily and regularly available from an exchange,
dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly
occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the
Privateco Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise
primarily equity investments listed outside Hong Kong classified as available-for-sale financial assets.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market
data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level 2. Instruments included in level 2 comprise primarily
the derivative financial instruments and unlisted available-for-sale financial assets, which represent unlisted equity
investments with certain underlying assets comprising equity investments listed outside Hong Kong.
– 192 –
APPENDIX III
4
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Privateco Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.
(i)
Fair value of investment properties
The Privateco Group’s investment properties are revalued at the balance sheet date on the open market value basis by
independent professional valuers. Such valuations were based on certain assumptions, which are subject to uncertainty and
might materially differ from the actual results. In marking the judgement on whether such valuations and assumptions made
by the valuers are reasonable, the Privateco Group considers information from comparable current prices in an active market
for similar properties, capitalisation rate, terminal yield, rental income from current leases and assumptions about rental
from future leases and the reversionary income potential and uses assumptions that are mainly based on market conditions
existing at each balance sheet date.
(ii)
Fair value of available-for-sale financial assets and derivative financial instruments
If information on current or recent prices of available-for-sale financial assets is not available, the fair values of
available-for-sale financial assets are determined using valuation techniques (including discounted cash flow model or price/
earnings multiple model). The Privateco Group uses assumptions that are mainly based on market conditions existing at
each balance sheet date.
The fair value of derivative financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined by using valuation techniques. The Privateco Group uses its judgement to select a variety
of methods and make assumptions that are mainly based on market conditions existing at each balance sheet date.
Critical judgement in applying the Privateco Group’s accounting policies
(i)
Income tax
The Privateco Group is subject to income taxes in several jurisdictions. There are certain transactions and
calculations for which the ultimate tax determination may be uncertain. The Privateco Group recognises liabilities for
anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax
provisions in the financial period in which such determination is made.
Under HKAS 12 (Amendment), there is a rebuttable presumption that the carrying amount of investment properties
using fair value model will be recovered through sale. Accordingly, no provision for deferred tax is made on revaluation of
investment properties if there is no capital gain tax. If investment properties would be recovered through use, provision for
deferred tax is made on revaluation of investment properties using income tax rate. The Privateco Group has reassessed the
measurement of deferred taxation by applying the rebuttable presumption that the carrying amount of investment properties
will be recovered through sale.
Recognition of deferred tax asset, which principally relates to tax losses of certain subsidiaries, depends on the
management’s expectation of future taxable profit that will be available against which the tax losses can be utilised. The
outcome of their actual utilisation may be different.
– 193 –
APPENDIX III
(ii)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Classification of investment properties
The Privateco Group determines whether a property qualifies as investment property. In making its judgement, the
Privateco Group considers whether the property (land or building) is held to earn rental or for capital appreciation rather
than for use in the production or supply of goods and services or sale. The Privateco Group considers each property
separately in making its judgement.
5
REVENUE, OTHER INCOME AND SEGMENT INFORMATION
Revenue and other income recognised during the Relevant Periods are as follows:
Revenue
Rental and property management
Warehousing
Other income
Dividend income from available-for-sale financial assets
Interest income on loans to associated companies
Others
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
213,922
14,483
328,216
13,243
399,052
15,772
228,405
341,459
414,824
27,186
8,464
3,939
23,776
9,387
2,400
36,010
3,177
6,568
39,589
35,563
45,755
267,994
377,022
460,579
The Privateco Group has determined the following operating segments for the purpose of assessing performance and
allocating resources between segments:
—
Rental and property management
—
Warehousing
—
Investment
—
Others
Management assesses the performance of the operating segments primarily based on segment profit. Segment profit
represents the profit earned by each segment and excludes change in fair value of derivative financial instruments, exchange
differences released upon repayment of loans from an associated company, unallocated income less expenses, finance income,
finance costs, share of profits less losses of associated companies, gain on bargain purchase and taxation charge.
– 194 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Operating segments
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2009
Revenue
213,922
14,483
—
—
228,405
Segment results before change in fair value of
investment properties
Increase in fair value of investment properties
124,222
279,300
1,503
—
33,766
—
—
—
159,491
279,300
Segment results
403,522
1,503
33,766
—
438,791
63,078
—
—
—
63,078
(22,541)
44
(63,556)
—
—
1
(214)
—
—
Fair value gains on derivative financial instruments
Unallocated income less expenses
Operating profit
Finance income
Finance costs
479,328
45
(63,770)
415,603
Share of profits less losses of associated companies (Note)
(1)
81
—
(3,178)
(3,098)
Profit before taxation
Taxation charge
412,505
(22,257)
Profit for the year
390,248
Capital expenditure
Depreciation
28,088
2,099
838
239
—
—
—
—
28,926
2,338
8,451,251
13,887
7,268
4,222
382,320
—
—
162,860
8,840,839
180,969
11,163
22,330
—
316,845
350,338
219,753
At 31 December 2009
Segment assets
Interests in associated companies (Note)
Amounts and loans receivable from associated
companies (Note)
Other assets
Total assets
9,591,899
Segment liabilities
Amounts and loans payable to associated companies (Note)
Other liabilities
309,328
—
Total liabilities
1,795
—
2,864
—
—
166,789
313,987
166,789
6,003,013
6,483,789
Note: The associated company, which is principally engaged in property development, contributed share of losses of
associated companies of HK$3,178,000, interests in associated companies of HK$162,860,000, amounts and loans
receivable from associated companies of HK$316,845,000 and amounts and loans payable to associated companies
of HK$166,789,000.
– 195 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2010
328,216
13,243
—
—
341,459
Segment results before change in fair value and gains on
disposals of investment properties
Increase in fair value of investment properties
Gains on disposals of investment properties
241,315
1,727,118
146,462
147
—
—
31,156
—
—
—
—
—
272,618
1,727,118
146,462
Segment results
2,114,895
147
31,156
—
2,146,198
959
—
16,000
—
16,959
(22,002)
405
(73,595)
—
—
1
(10)
—
—
Revenue
Fair value gains on derivative financial instruments
Unallocated income less expenses
Operating profit
Finance income
Finance costs
2,141,155
406
(73,605)
2,067,956
Share of profits less losses of associated companies (Note)
(419)
(593)
—
301,300
300,288
Profit before taxation
Taxation charge
2,368,244
(16,297)
Profit for the year
2,351,947
Capital expenditure
Depreciation
5,341
1,897
5,135
355
—
—
—
—
10,476
2,252
9,647,252
14,166
12,103
3,871
490,693
—
—
482,639
10,150,048
500,676
11,208
22,330
—
323,987
357,525
384,478
At 31 December 2010
Segment assets
Interests in associated companies (Note)
Amounts and loans receivable from associated
companies (Note)
Other assets
Total assets
11,392,727
Segment liabilities
Amounts and loans payable to associated companies (Note)
Other liabilities
274,324
—
Total liabilities
2,533
—
26,822
—
—
166,789
303,679
166,789
5,635,235
6,105,703
Note: The associated company, which is principally engaged in property development, contributed share of profits of
associated companies of HK$301,300,000, interests in associated companies of HK$482,639,000 and amounts and
loans receivable from associated companies of HK$323,987,000 and amounts and loans payable to associated
companies of HK$166,789,000.
– 196 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Rental and
property
management Warehousing
HK$’000
HK$’000
Investment
HK$’000
Others
HK$’000
Total
HK$’000
Year ended 31 December 2011
399,052
15,772
—
—
414,824
Segment results before change in fair value of
investment properties
Increase in fair value of investment properties
308,456
1,855,219
1,858
—
45,655
—
—
—
355,969
1,855,219
Segment results
2,163,675
1,858
45,655
—
2,211,188
(1,365)
—
(15,821)
—
(17,186)
—
—
—
44,122
44,122
(32,334)
5,671
(72,114)
—
—
—
(274)
—
—
Revenue
Fair value losses on derivative financial instruments
Exchange differences released upon repayment of loans
from an associated company
Unallocated income less expenses
Operating profit
Finance income
Finance costs
2,205,790
5,671
(72,388)
2,139,073
Share of profits less losses of associated companies (Note)
Gain on bargain purchase
230
—
(3,199)
—
—
—
154,190
69,387
151,221
69,387
Profit before taxation
Taxation charge
2,359,681
(32,954)
Profit for the year
2,326,727
Capital expenditure
Depreciation
5,985
1,923
14
670
—
—
—
—
5,999
2,593
11,701,298
14,867
13,902
181
419,078
—
—
681,096
12,134,278
696,144
11,557
22,355
—
5,457
39,369
183,539
At 31 December 2011
Segment assets
Interests in associated companies (Note)
Amounts and loans receivable from associated companies
(Note)
Other assets
Total assets
13,053,330
Segment liabilities
Amounts and loans payable to associated companies (Note)
Other liabilities
192,489
—
Total liabilities
3,286
—
22,084
—
—
23,552
217,859
23,552
5,674,020
5,915,431
Note: The associated company, which is principally engaged in property development, contributed share of profits of
associated companies of HK$108,501,000, interests in associated companies of HK$366,083,000 and amounts and
loans receivable from associated companies of HK$5,457,000 and amounts and loans payable to associated
companies of HK$23,552,000.
– 197 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Geographical information
The Privateco Group primarily operates in Hong Kong. An analysis of the Privateco Group’s revenue, segment results
and segment assets by geographical location is as follows:
(i)
Revenue and segment results
Revenue
Year ended
31/12/2009 31/12/2010
HK$’000
HK$’000
Hong Kong
Singapore
(ii)
31/12/2011
HK$’000
Segment results
Year ended
31/12/2009 31/12/2010 31/12/2011
HK$’000
HK$’000
HK$’000
228,405
—
341,459
—
414,824
—
412,152
26,639
2,114,652
31,546
2,175,789
35,399
228,405
341,459
414,824
438,791
2,146,198
2,211,188
63,078
16,959
—
—
Fair value gains/(losses)
on derivative financial
instruments
Exchange differences
released upon
repayment of loans from
an associated company
Unallocated income less
expenses
(22,541)
(22,002)
(32,334)
Operating profit
Finance income
Finance costs
479,328
45
(63,770)
2,141,155
406
(73,605)
2,205,790
5,671
(72,388)
415,603
2,067,956
2,139,073
(17,186)
44,122
Segment assets
Non-current assets other than
financial instruments and
deferred tax assets
Capital expenditure
Year ended
Total assets
31/12/2009 31/12/2010 31/12/2011 31/12/2009 31/12/2010 31/12/2011 31/12/2009 31/12/2010 31/12/2011
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
HK$’000
Hong Kong
Singapore
Mainland China
28,926
—
—
10,476
—
—
5,999
—
—
8,534,720
198,120
46,753
9,446,624 11,400,551
553,417
327,484
47,228
44,238
8,996,425 10,360,988 12,362,206
548,721
984,511
646,886
46,753
47,228
44,238
28,926
10,476
5,999
8,779,593 10,047,269 11,772,273
9,591,899 11,392,727 13,053,330
– 198 –
APPENDIX III
6
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
OPERATING PROFIT
Operating profit has been arrived at after (charging)/crediting the following:
31/12/2009
HK$’000
Amortised income from held-to-maturity investments (Note 18)
Auditor’s remuneration
Depreciation of property, plant and equipment
Direct operating expenses arising from investment properties
generating rental income
Direct operating expenses for generating warehousing income
Exchange differences released upon repayment of loans from
an associated company
Fair value gains/(losses) on derivative financial instruments
Gains/(losses) on disposals of property, plant and equipment
Interest income from held-to-maturity investments
Operating lease rentals in respect of land and buildings
Other exchange gain/(loss), net
Staff costs included in leasing, marketing and administrative expenses
(including Directors’ emoluments) (Note 8)
Realised gain on available-for-sale financial assets
7
31/12/2011
HK$’000
6,052
(706)
(2,338)
7,380
(609)
(2,252)
9,028
(812)
(2,593)
(74,108)
(4,365)
(59,877)
(5,687)
(83,250)
(5,944)
—
63,078
2
—
(3,939)
1,497
—
16,959
(101)
—
(4,028)
929
44,122
(17,186)
11
617
(4,118)
(1,350)
(25,183)
610
(26,115)
—
(30,209)
—
FINANCE INCOME AND COSTS
Finance income
Interest income on bank deposits and bank balances
8
Year ended
31/12/2010
HK$’000
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
45
406
5,671
Finance costs
Interest expenses on bank loans and overdrafts
(63,770)
(73,605)
(72,388)
Finance costs, net
(63,725)
(73,199)
(66,717)
STAFF COSTS (INCLUDING DIRECTORS’ EMOLUMENTS)
Salaries, wages and other benefits
Retirement benefits, net of negligible forfeited contributions (Note a)
Included in:
Cost of sales
Leasing, marketing and administrative expenses (Note 6)
– 199 –
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
28,807
1,487
31,070
1,406
49,256
2,028
30,294
32,476
51,284
5,111
25,183
6,361
26,115
21,075
30,209
30,294
32,476
51,284
APPENDIX III
(a)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Retirement benefits — defined contribution plans
The Privateco Group contributes to a defined contribution mandatory provident fund scheme for those employees in
Hong Kong under the age of 65. Two subsidiaries operate in a country which has a central government administrated
retirement scheme. Contributions are made by the Privateco Group as a percentage of employees’ relevant salaries. The
retirement benefit costs charged to the combined income statements represent contributions by the Privateco Group in
respect of the above retirement schemes.
Contributions totalling HK$109,000, HK$340,000 and HK$364,000 as at 31 December 2009, 2010 and 2011
respectively were payable to the schemes at the respective balance sheet dates, and are included in trade and other payables
and accruals.
(b)
Directors’ emoluments
During the Relevant Periods, the directors of the Privateco received directors’ emoluments from the Privateco Group
and the Company totalling HK$3,781,000, HK$4,383,000 and HK$4,469,000 for the years ended 31 December 2009, 2010
and 2011 respectively. No apportionment has been made as the directors of the Privateco consider that it is impracticable to
apportion this amount between their services to the Privateco Group and their services to the Company and the Remaining
Group Entities.
During the Relevant Periods, no directors or senior management of the Company waived any emoluments and no
emoluments were paid by the Company to any of the directors or senior management as an inducement to join or upon
joining the Privateco Group or as compensation for loss of office.
9
SHARE OF PROFITS LESS LOSSES OF ASSOCIATED COMPANIES
Included the Privateco Group’s share of increase in fair value of an investment property held by an associated company of
HK$38,890,000 during the year ended 31 December 2011 as the associated company was acquired by the Group during the year
ended 31 December 2011.
10
GAIN ON BARGAIN PURCHASE
On 30 June 2011, the Privateco Group completed the acquisition of the entire issued share capital of Dragon Eye Holding
Ltd. (‘‘Dragon Eye’’) at a consideration of HK$229,097,000. Dragon Eye holds 40% of equity interest in Fore Prosper Limited,
which is the owner of a boutique hotel property situated in Hong Kong. Details of the net assets of Dragon Eye acquired by the
Privateco Group and the gain on bargain purchase were as follows:
Year ended
31/12/2011
HK$’000
Purchase consideration in cash
Less: Fair value of net assets acquired (Note 16)
229,097
298,484
Gain on bargain purchase
69,387
– 200 –
APPENDIX III
11
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
TAXATION CHARGE
31/12/2009
HK$’000
Current taxation
Hong Kong profits tax
Overseas taxation
Over/(under) provision in prior years
(9,322)
(198)
186
Deferred taxation (Note 27)
Temporary differences
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
(18,640)
(312)
(4,176)
(9,523)
(120)
2,249
(9,334)
(23,128)
(7,394)
(12,923)
6,831
(25,560)
(16,297)
(32,954)
(22,257)
Hong Kong profits tax has been provided at the rate of 16.5%, 16.5% and 16.5% on the estimated assessable profits for the
years ended 31 December 2009, 2010 and 2011 respectively. Overseas taxation has been provided on the estimated assessable
profits for the Relevant Periods at rates prevailing in the countries in which the subsidiaries operate.
The Privateco Group’s share of taxation credit of associated companies for the year ended 31 December 2009 of
HK$372,000 and taxation charge of associated companies for the years ended 31 December 2010 and 2011 of HK$62,184,000 and
HK$21,934,000 respectively, have been netted off against the Privateco Group’s share of profits less losses of associated
companies as presented in the combined income statements.
The taxation on the Privateco Group’s operating profit after finance income and finance costs differs from the theoretical
amount that would arise using the Hong Kong taxation rate as follows:
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
Operating profit after finance income and finance costs
415,603
2,067,956
2,139,073
Calculated at a taxation rate of 16.5%
Effect of different taxation rates in other countries
Income not subject to taxation
Expenses not deductible for taxation purposes
Recognition of previously unrecognised tax losses
Tax loss and other temporary differences not recognised
Over/(under) provision in prior years
Others
(68,574)
102
52,359
(3)
5,335
(11,413)
186
(249)
(341,213)
(122)
317,939
—
11,413
—
(4,176)
(138)
(352,947)
(346)
322,056
(2,757)
—
—
2,249
(1,209)
Taxation charge
(22,257)
(16,297)
(32,954)
No taxation charge is in relation to components of other comprehensive income for the Relevant Periods.
– 201 –
APPENDIX III
12
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
DIVIDENDS
Interim dividend, paid
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
80,000
296,000
305,000
During the years ended 31 December 2009, 2010 and 2011, an interim dividend of HK$80,000,000, HK$296,000,000 and
HK$305,000,000 respectively were paid by one of the combined group companies to the Company.
13
SIGNIFICANT RELATED PARTY TRANSACTIONS
In addition to the transactions disclosed elsewhere in this Financial Information, the Privateco Group had the following
significant transactions with related parties during the Relevant Periods.
31/12/2009
HK$’000
Dividend paid to the Company
Interest income from associated companies
Rental and management fee income from related companies
Leasing and selling agency fee income received from the Remaining Group
Entities
Property manager’s remuneration fee income from the Remaining
Group Entities
Recovery of staff costs from the Remaining Group Entities
Management fee income from the Remaining Group Entities
Key management compensation
Rental and management fee paid to the Remaining Group Entities
Interest expense paid to a Remaining Group Entity
Management fee paid to the Company
Year ended
31/12/2010
HK$’000
(80,000)
8,464
17,193
(296,000)
9,387
18,412
31/12/2011
HK$’000
(305,000)
3,177
13,457
1,358
1,238
2,260
693
1,338
1,090
(3,781)
(182)
(2,519)
(7,560)
705
1,437
920
(4,383)
(442)
(1,912)
(6,240)
762
2,254
930
(4,469)
(745)
(2,053)
(6,960)
Notes:
(1)
These transactions were carried out on terms mutually agreed between the parties involved.
(2)
Key management personnel represents the directors of the Company and their remuneration are set out in note 8(b).
– 202 –
APPENDIX III
14
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
PROPERTY, PLANT AND EQUIPMENT
Plant and
machinery
HK$’000
At cost
At 1 January 2009
Translation differences
Additions
Disposals
887
—
—
—
At 31 December 2009
887
Accumulated depreciation
At 1 January 2009
Translation differences
Charge for the year
Disposals
Leasehold
improvements,
furniture,
fixtures
and office
equipment
HK$’000
3,629
6
8,226
(848)
11,013
Motor
vehicles
HK$’000
2,273
31
—
—
2,304
Total
HK$’000
6,789
37
8,226
(848)
14,204
736
—
38
—
2,374
6
1,873
(841)
1,111
24
427
—
4,221
30
2,338
(841)
At 31 December 2009
774
3,412
1,562
5,748
Net book value
At 31 December 2009
113
7,601
742
8,456
Plant and
machinery
HK$’000
Leasehold
improvements,
furniture,
fixtures
and office
equipment
HK$’000
Motor
vehicles
HK$’000
Total
HK$’000
At cost
At 1 January 2010
Translation differences
Additions
Disposals
887
—
—
—
11,013
—
5,594
(365)
2,304
36
—
(1,000)
14,204
36
5,594
(1,365)
At 31 December 2010
887
16,242
1,340
18,469
Accumulated depreciation
At 1 January 2010
Translation differences
Charge for the year
Disposals
774
—
35
—
3,412
—
1,992
(46)
1,562
27
225
(750)
5,748
27
2,252
(796)
At 31 December 2010
809
5,358
1,064
7,231
Net book value
At 31 December 2010
78
10,884
276
11,238
– 203 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Plant and
machinery
HK$’000
At cost
At 1 January 2011
Additions
Disposals
At 31 December 2011
Accumulated depreciation
At 1 January 2011
Charge for the year
Disposals
15
Leasehold
improvements,
furniture,
fixtures
and office
equipment
HK$’000
Motor
vehicles
HK$’000
Total
HK$’000
887
—
—
16,242
286
(30)
1,340
—
(102)
18,469
286
(132)
887
16,498
1,238
18,623
809
18
—
5,358
2,354
(29)
1,064
221
(102)
7,231
2,593
(131)
At 31 December 2011
827
7,683
1,183
9,693
Net book value
At 31 December 2011
60
8,815
55
8,930
INVESTMENT PROPERTIES
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Beginning of the year
Additions
Disposals
Overprovision of construction costs
Fair value gain
7,939,930
20,700
(100)
—
279,300
8,239,830
4,882
(794,000)
—
1,727,118
9,177,830
5,713
—
(10,932)
1,855,219
End of the year
8,239,830
9,177,830
11,027,830
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
994,000
7,245,830
1,100,000
8,077,830
1,270,000
9,757,830
8,239,830
9,177,830
11,027,830
The carrying amount of investment properties shown above comprises:
Leasehold land in Hong Kong
Long-term lease
Medium-term lease
(a)
Investment properties (other than agricultural lots) held in Hong Kong were revalued at 31 December 2009, 2010 and
2011 by Jones Lang LaSalle Limited. The agricultural lots held in Hong Kong were revalued at 31 December 2009,
2010 and 2011 by B. I. Appraisals Limited. All valuers are independent and their valuations were carried out on the
open market value basis. The valuations have made reference to current prices in an active market.
(b)
As at 31 December 2009, 2010 and 2011, certain investment properties with a carrying amount of
HK$8,232,000,000, HK$9,152,000,000 and HK$11,001,000,000 respectively have been pledged to secure the
Privateco Group’s banking facilities.
– 204 –
APPENDIX III
16
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
ASSOCIATED COMPANIES
31/12/2009
HK$’000
Share of net assets
Amounts and loans receivable (Note a)
Amounts and loans payable (Note b)
Investments at cost — unlisted shares
31/12/2010
HK$’000
31/12/2011
HK$’000
180,969
350,338
(166,789)
500,676
357,525
(166,789)
696,144
39,369
(23,552)
364,518
691,412
711,961
11,308
11,308
11,348
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
The movements of interests in associated companies are as follows:
Beginning of the year
Translation differences
Share of profits less losses of associated companies
Share of hedging reserve
Acquisition of an associated company (Note 10)
Dividends from associated companies
Interest income on loans to associated companies
Repayment and loans to associated companies
Repayment and advances from associated companies
334,313
2,321
(3,098)
—
—
(3,096)
8,464
26,000
(386)
364,518
62,363
300,288
—
—
—
9,387
2,800
(47,944)
691,412
(6,405)
151,221
(3,174)
298,484
(269,977)
3,177
193,734
(346,511)
End of the year
364,518
691,412
711,961
The share of assets, liabilities and results of the associated companies attributable to the Privateco Group is summarised as
follows:
31/12/2009
HK$’000
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Revenue
Profits less losses after taxation
31/12/2011
HK$’000
1,452,965
135,873
(648,016)
(759,853)
220,762
779,718
(113,500)
(386,304)
560,371
512,726
(114,165)
(262,788)
180,969
500,676
696,144
31/12/2009
HK$’000
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
1,090,401
300,288
343,534
151,221
10,031
(3,098)
– 205 –
31/12/2010
HK$’000
APPENDIX III
(a)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The amounts and loans receivable are denominated in the following currencies:
Singapore dollars
Hong Kong dollars
Renminbi
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
194,608
129,120
26,610
246,548
84,306
26,671
718
11,605
27,046
350,338
357,525
39,369
The amounts and loans receivable are unsecured, and have no fixed terms of repayment. Except for an aggregate
amount of HK$149,397,000, HK$104,682,000 and HK$32,502,000 as at 31 December 2009, 2010 and 2011
respectively which is interest-free, the amounts and loans receivable carry interests at agreed rates between the
parties.
17
(b)
The amounts and loans payable are unsecured, denominated in Hong Kong dollars, interest-free and have no fixed
terms of repayment.
(c)
Particulars of the associated companies are set out in note 35(b).
AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets comprise:
Real estate investment trust listed outside Hong Kong
Unlisted equity investments
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
263,348
86,834
319,677
111,417
225,255
94,147
350,182
431,094
319,402
(a)
Available-for-sale financial assets are denominated in Singapore dollars and carried at fair value.
(b)
Certain real estate investment trust units with a carrying amount of HK$176,531,000, HK$265,398,000 and
HK$187,008,000 as at 31 December 2009, 2010 and 2011 respectively were pledged to secure the Privateco Group’s
banking facilities.
(c)
An amount due to an investee company of HK$13,464,000 and HK$16,646,000 was included in unlisted equity
investments as at 31 December 2009 and 2010 respectively. The amount was fully settled during the year ended 31
December 2011.
(d)
The maximum exposure to credit risk at the balance sheet date is the carrying value of the available-for-sale financial
assets.
– 206 –
APPENDIX III
18
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
HELD-TO-MATURITY INVESTMENTS
Held-to-maturity investments comprise:
Unlisted debt and other investments
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
30,997
37,877
95,087
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
The movements of held-to-maturity investments are as follows:
Beginning of the year
Translation differences
Additions
Amortised to the combined income statements (Note 6)
Coupon received
25,445
—
—
6,052
(500)
30,997
—
—
7,380
(500)
37,877
(143)
48,825
9,028
(500)
End of the year
30,997
37,877
95,087
Analysed as:
Current
Non-current
—
30,997
—
37,877
29,252
65,835
30,997
37,877
95,087
(a)
The carrying amounts of held-to-maturity investments are denominated in the following currencies:
Hong Kong dollars
United States dollars
19
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
30,997
—
37,877
—
46,405
48,682
30,997
37,877
95,087
(b)
Held-to-maturity investments were not pledged to secure the Privateco Group’s banking facilities as at 31 December
2009 and 2010. As at 31 December 2011, certain held-to-maturity investments with a carrying amount of
HK$48,682,000 have been pledged to secure the Privateco Group’s banking facilities.
(c)
The maximum exposure to credit risk at the balance sheet dates is the carrying value of the held-to-maturity
investments.
INVENTORIES
Finished goods, at cost
– 207 –
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
—
58
362
APPENDIX III
20
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
TRADE AND OTHER RECEIVABLES
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Trade receivables
Less: Provision for impairment of receivables (Note c)
9,295
—
7,881
—
6,397
—
Trade receivables, net of provisions (Note a)
Amortised rent receivables
Other receivables
Deposits
Prepayments
9,295
7,964
8,635
7,872
6,003
7,881
18,497
4,110
6,663
4,877
6,397
15,333
3,135
6,557
4,139
39,769
42,028
35,561
(a)
Trade receivables represent mainly rent receivables from tenants of the Privateco Group’s properties. The Privateco
Group maintains a defined policy in respect of rent collection. The credit quality of a new lease or customer is
assessed based on a defined policy set by the Privateco Group. Reminders are issued half-monthly when rents are
overdue for 15 days, and legal actions will be taken when rents are overdue for two months. The ageing analysis of
trade receivables by due date (net of provisions) is as follows:
Current to 30 days
31 to 90 days
Over 90 days
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
1,717
6,801
777
1,886
5,299
696
1,630
4,516
251
9,295
7,881
6,397
(b)
The trade receivables of HK$9,295,000, HK$7,881,000 and HK$6,397,000 as at 31 December 2009, 2010 and 2011,
respectively, were past due but not impaired. These relate to a number of independent customers having good track
records and there is no recent history of default, and the majority of the debts are covered by the rental deposits
received as set out in note 22.
(c)
The movements of the provision for impairment of trade receivables are as follows:
31/12/2009
HK$’000
Beginning of the year
Provision
Receivables written off
End of the year
(d)
31/12/2010
HK$’000
31/12/2011
HK$’000
145
40
(185)
—
6
(6)
—
—
—
—
—
—
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
39,751
18
42,003
25
35,504
57
39,769
42,028
35,561
The carrying amounts of trade and other receivables are denominated in the following currencies:
Hong Kong dollars
Singapore dollars
– 208 –
APPENDIX III
(e)
21
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The maximum exposure to credit risk at the balance sheet date is the carrying value of each class of receivables
mentioned above.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term bank deposits
Maximum exposure to credit risk
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
33,845
137,760
28,763
405,160
35,299
611,193
171,605
433,923
646,492
171,419
433,773
646,232
Short-term bank deposits for the years ended 31 December 2009, 2010 and 2011 have an average effective interest rate of
0.09%, 0.8% and 2.05% per annum, respectively, and an average maturity of 9 days, 24 days and 24 days, respectively.
The bank balances and cash are denominated in the following currencies:
Hong Kong dollars
Singapore dollars
United States dollars
22
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
170,121
672
812
415,280
17,280
1,363
637,046
7,719
1,727
171,605
433,923
646,492
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
7,449
188,146
60,247
37,020
7,939
142,157
95,851
23,590
8,561
69,238
107,588
11,255
292,862
269,537
196,642
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
4,980
1,834
635
3,998
3,620
321
6,172
1,070
1,319
7,449
7,939
8,561
TRADE AND OTHER PAYABLES AND ACCRUALS
Trade payables
Other payables
Deposits received
Accruals
The ageing analysis of trade payables is as follows:
Current to 30 days
31 to 90 days
Over 90 days
– 209 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The carrying amounts of trade and other payables and accruals are denominated in the following currencies:
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
289,923
2,939
265,408
4,129
196,570
72
292,862
269,537
196,642
Hong Kong dollars
Singapore dollars
23
DERIVATIVE FINANCIAL INSTRUMENTS
31/12/2009
HK$’000
Assets
31/12/2010
HK$’000
31/12/2011
HK$’000
31/12/2009
HK$’000
Liabilities
31/12/2010
HK$’000
31/12/2011
HK$’000
—
—
—
—
—
—
89,195
6,888
108,557
5,929
97,778
7,294
—
—
—
96,083
114,486
105,072
—
16,000
179
—
—
—
—
16,000
179
96,083
114,486
105,072
—
—
—
16,000
—
179
40,821
55,262
42,865
71,621
42,130
62,942
—
16,000
179
96,083
114,486
105,072
Interest rate swap contracts (Note a)
— cash flow hedges
— not qualifying as hedges
Derivative component in convertible
bonds (Note b)
Analysed as:
Current
Non-current
(a)
Interest rate swap contracts
The aggregate notional principal amount of the interest rate swap contracts is HK$1,000,000,000, HK$1,000,000,000,
and HK$1,000,000,000 as at 31 December 2009, 2010 and 2011 respectively. The portion of changes in the fair value of
interest rate swap contracts not qualifying as hedges are recognised in the combined income statements and amounted to a
gain of HK$63,078,000, a gain of HK$959,000 and a loss of HK$1,365,000 for the years ended 31 December 2009, 2010
and 2011 respectively.
(b)
Derivative component in convertible bonds
The convertible bonds held as held-to-maturity investments contained conversion and issuer redemption features and
the fair value of HK$16,000,000 and HK$179,000 as at 31 December 2010 and 2011 respectively were valued by Savills
Valuation and Professional Services Limited, an independent professionally qualified valuer. The changes in fair value of
the derivative component have resulted in a profit of HK$16,000,000 and a loss of HK$15,821,000 being recognised in the
combined income statements for the years ended 31 December 2010 and 2011, respectively.
The fair values of the convertible option were estimated as at 31 December 2010 and 2011 using a binomial model,
taking into account the relevant terms and conditions upon which the option was granted and the key assumptions as below.
Expected
Expected
Expected
Risk free
volatility
dividend yield
life of the option
rate
– 210 –
2010
2011
35%
4.5%
2.42 years
0.8%
26%
7%
1.42 years
0.3%
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
The fair value of the issuer redemption option was estimated as at 31 December 2011, based on underlying convertible
bonds with quoted market price available.
24
SHORT-TERM BANK LOANS, SECURED
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
225,000
97,250
—
126,250
278,682
268,000
322,250
126,250
546,682
Bank loans repayable on demand or within one year, secured
Current portion of long-term bank loans (Note 25)
The bank loans are denominated in Hong Kong dollars as at 31 December 2009 and 2010. The bank loans are denominated
in Hong Kong dollars except for an amount of HK$48,682,000 which is denominated in United States dollars as at 31 December
2011. As at 31 December 2009 and 2010, the Privateco Group’s bank loans are secured by certain investment properties and
available-for-sale financial assets with a carrying amount of HK$8,232,000,000 and HK$9,152,000,000, HK$176,531,000 and
HK$265,398,000, respectively. As at 31 December 2011, the Privateco Group’s bank loans are secured by certain investment
properties, available-for-sale financial assets and held-to-maturity investments of HK$11,001,000,000, HK$187,008,000 and
HK$48,682,000, respectively.
The short-term bank loans have an average effective interest rate of 1.3%, nil% and 1.0% per annum as at 31 December
2009, 2010 and 2011. The carrying amounts of bank loans approximate their fair values. The exposure of the Privateco Group’s
bank loans to interest-rate changes and the average contractual repricing dates is 6 months or less, 6 months or less and 6 months
or less for the years ended 31 December 2009, 2010 and 2011.
25
LONG-TERM BANK LOANS, SECURED
Bank loans, secured
Less: Amount repayable within one year included
under current liabilities (Note 24)
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
2,277,500
1,961,850
1,828,100
(97,250)
The bank loans are repayable as follows:
Within one year
In the second year
In the third to fifth years inclusive
(126,250)
(268,000)
2,180,250
1,835,600
1,560,100
97,250
150,250
2,030,000
126,250
268,000
1,567,600
268,000
971,600
588,500
2,277,500
1,961,850
1,828,100
The bank loans are denominated in Hong Kong dollars as at 31 December 2009, 2010 and 2011. As at 31 December 2009,
2010 and 2011, the Privateco Group’s bank loans are secured by certain investment properties with a carrying amount of
HK$8,232,000,000, HK$9,152,000,000 and HK$11,001,000,000 respectively.
The long-term bank loans have an average effective interest rate of 1.1%, 1.4% and 1.4% per annum as at 31 December
2009, 2010 and 2011 respectively. The carrying amounts of bank loans approximate their fair values. The exposure of the
Privateco Group’s bank loans to interest-rate changes and the average contractual repricing dates is 6 months or less, 6 months or
less and 6 months or less for the years ended 31 December 2009, 2010 and 2011.
26
BALANCES WITH REMAINING GROUP ENTITIES AND THE COMPANY
Amounts receivable from Remaining Group Entities and amounts payable to the Company are denominated in Hong Kong
dollars, unsecured, interest-free and not repayable within 12 months from the balance sheet dates. The carrying amounts of the
balances approximate their fair values.
– 211 –
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
These balances with Remaining Group Entities and the Company will be settled upon completion of the Group
Reorganisation.
27
DEFERRED TAXATION
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
Beginning of the year
Charged/(credited) to the combined income statements (Note 11)
10,530
12,923
23,453
(6,831)
16,622
25,560
End of the year
23,453
16,622
42,182
Deferred taxation is calculated in full on temporary differences under the liability method using a principal taxation rate of
16.5%, 16.5% and 16.5% for the years ended 31 December 2009, 2010 and 2011.
Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related tax benefits
through the future taxable profits are probable. The Privateco Group has unrecognised tax losses of HK$69,171,000 for the year
ended 31 December 2009 to carry forward against future taxable income. The Privateco Group does not have unrecognised tax
losses for the years ended 31 December 2010 and 2011 to carry forward against future taxable income.
The movement in deferred tax assets and liabilities (prior to offsetting of balances within the same taxation jurisdiction)
during the Relevant Periods is as follows:
Deferred tax assets
31/12/2009
HK$’000
Tax losses
31/12/2010
HK$’000
Beginning of the year
Credited/(charged) to the combined income statements
26,653
60,146
86,799
12,753
99,552
(11,360)
End of the year
86,799
99,552
88,192
31/12/2011
HK$’000
Deferred tax liabilities
Accelerated depreciation
31/12/2009
31/12/2010
31/12/2011
HK$’000
HK$’000
HK$’000
Beginning of the year
Charged to the combined income statements
End of the year
37,183
73,069
110,252
5,922
116,174
14,200
110,252
116,174
130,374
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same fiscal authority. The following amounts, determined after
appropriate offsetting, are shown in the combined balance sheets:
31/12/2009
HK$’000
Deferred tax assets
Deferred tax liabilities
– 212 –
31/12/2010
HK$’000
31/12/2011
HK$’000
(4,503)
27,956
(10,740)
27,362
(1,597)
43,779
23,453
16,622
42,182
APPENDIX III
28
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
COMBINED CAPITAL
The combined capital presented in the combined balance sheets as at 31 December 2009, 2010 and 2011 represented the
combined share capital of companies directly held by the Privateco, details of which are analysed as follows:
Dragon
Winsor
Winsor
Winsor
Winsor
29
31/12/2009
HK$
31/12/2010
HK$
31/12/2011
HK$
—
8
8
8
2
—
8
8
8
2
780
8
8
8
2
26
26
806
Eye Holding Ltd.
Properties (China) Ltd.
Properties (Hong Kong) Ltd.
Properties (Overseas) Ltd.
Properties Finance Ltd.
RESERVES
Contributed
surplus
(Note a)
HK$’000
At 1 January 2009
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow
hedges
Realised upon settlement of interest
rate swap contracts
Profit for the year
Interim dividend paid (Note 12)
At 31 December 2009
(1,810,737)
Exchange translation differences
Fair value gains on available-for-sale
financial assets
Fair value losses on cash flow
hedges
Realised upon settlement of interest
rate swap contracts
Profit for the year
Interim dividend paid (Note 12)
At 31 December 2010
Exchange
fluctuation
account
HK$’000
112,348
7,621
—
—
—
Hedging
reserve
HK$’000
(72,260)
Retained
earnings
HK$’000
Total
HK$’000
4,432,125
2,669,097
(138)
—
—
144,519
—
—
—
144,519
—
—
—
(56,621)
—
(56,621)
—
—
—
—
—
—
—
—
—
39,686
—
—
—
389,869
(80,000)
39,686
389,869
(80,000)
—
144,519
(138)
(16,935)
309,869
437,315
(89,195)
4,741,994
3,106,412
Retained
earnings
HK$’000
Total
HK$’000
4,741,994
3,106,412
(1,810,737)
(138)
256,867
7,483
Investment
revaluation
reserve
HK$’000
Exchange
fluctuation
account
HK$’000
256,867
7,483
—
—
59,895
—
—
59,895
—
82,749
—
—
—
82,749
—
—
—
(63,789)
—
(63,789)
—
—
—
—
—
—
—
—
—
44,427
—
—
—
2,351,875
(296,000)
44,427
2,351,875
(296,000)
—
82,749
59,895
(19,362)
2,055,875
2,179,157
339,616
67,378
(108,557)
6,797,869
5,285,569
Contributed
surplus
(Note a)
HK$’000
At 1 January 2010
Investment
revaluation
reserve
HK$’000
(1,810,737)
(1,810,737)
– 213 –
Hedging
reserve
HK$’000
(89,195)
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Contributed
surplus
(Note a)
HK$’000
At 1 January 2011
Exchange translation differences
Exchange differences released upon
repayment of loans from an
associated company
Fair value losses on available-forsale financial assets
Fair value losses on cash flow
hedges
Realised upon settlement of interest
rate swap contracts
Share of hedging reserve of an
associated company
Profit for the year
Partial disposal of interest in a
subsidiary (Note b)
Interim dividend paid (Note 12)
(1,810,737)
Exchange
fluctuation
account
HK$’000
339,616
67,378
Hedging
reserve
HK$’000
Retained
earnings
HK$’000
Total
HK$’000
(108,557)
6,797,869
5,285,569
—
—
(5,627)
—
—
(5,627)
—
—
(44,122)
—
—
(44,122)
—
—
(128,185)
—
(128,185)
—
—
—
—
(33,326)
—
(33,326)
—
—
—
44,105
—
44,105
—
—
—
—
—
—
(3,174)
—
(632)
—
—
—
—
—
(632)
At 31 December 2011
Investment
revaluation
reserve
HK$’000
(1,811,369)
(128,185)
(49,749)
211,431
17,629
—
—
7,605
(100,952)
—
2,326,073
—
(305,000)
(3,174)
2,326,073
(632)
(305,000)
2,021,073
1,850,112
8,818,942
7,135,681
Note a: Contributed surplus represented the difference between interests in subsidiaries in the books of intermediate
holding companies including Winsor Properties (Hong Kong) Limited, Winsor Properties (China) Limited and
Winsor Properties (Overseas) Limited (note 35) and the share capital of their respective subsidiaries arising from
the preparation of the combined financial statements. During the Relevant Periods, interest in subsidiaries were
financed by intercompany loan from the Company. As part of the Group Reorganisation, the intercompany loan
together with the contributed surplus will be settled upon the completion of the Group Reorganisation (note 1(b)).
Note b: Reserve arose from the partial disposal of interest in a subsidiary that do not result in a loss of control by the
Privateco Group, and represented the difference between the amount by which the non-controlling interest was
adjusted (to reflect the changes in the interest in the subsidiary) and the fair value of the consideration received.
30
FUTURE LEASE RECEIPTS
Future minimum lease receipts under non-cancellable operating leases are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
– 214 –
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
244,782
306,842
—
342,856
606,563
—
387,796
593,154
9,374
551,624
949,419
990,324
APPENDIX III
31
32
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
CAPITAL COMMITMENTS
Investments in associated companies
Contracted but not provided for
LEASE COMMITMENTS
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
484,425
—
—
The Privateco Group had future aggregate minimum lease payments under non-cancellable operating leases for land and
buildings as follows:
Not later than one year
Later than one year and not later than five years
33
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
1,969
—
3,510
1,755
1,755
—
1,969
5,265
1,755
31/12/2009
HK$’000
31/12/2010
HK$’000
31/12/2011
HK$’000
125,000
125,000
125,000
FINANCIAL GUARANTEE CONTRACTS
The face value of the financial guarantees issued by the Privateco Group is analysed as follows:
Guarantees given in respect of banking
facilities granted to Remaining Group Entities
(i)
The Directors consider that it is not probable for a claim to be made against the Privateco Group under any of these
guarantees as at the balance sheet dates. All of the financial guarantee contracts as disclosed above have not been
recognised in the Financial Information of the Privateco Group as the Directors consider that the fair values of these
contracts are not significant to the Privateco Group.
(ii)
The Privateco Group has executed guarantees in favour of banks in respect of facilities granted to Remaining Group
Entities amounting to HK$125,000,000, HK$125,000,000 and HK$125,000,000, of which no amount was utilised by
Remaining Group Entities during the Relevant Periods.
– 215 –
APPENDIX III
34
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
NOTES TO THE COMBINED CASH FLOW STATEMENTS
(a)
Reconciliation of profit before taxation to net cash from operations
31/12/2009
HK$’000
Profit before taxation
Gain on bargain purchase
Share of profits less losses of associated companies
Finance costs
Finance income
Amortised income from held-to-maturity investments
Depreciation of property, plant and equipment
Dividend income from available-for-sale financial assets
Exchange differences released upon repayment of loans
from an associated company
Fair value (gains)/losses on derivative financial instruments
Gains on disposals of investment properties
(Gains)/losses on disposals of property, plant and equipment
Increase in fair value of investment properties
Interest income from held-to-maturity investments
Interest income on loans to associated companies
Realised gain on available-for-sale financial assets
Operating profit before working capital changes
Decrease/(increase) in trade and other receivables
Increase in inventories
(Increase)/decrease in amounts receivable from Remaining Group
Entities
Increase/(decrease) in trade and other payables and accruals
Net cash from operations
(b)
Year ended
31/12/2010
HK$’000
31/12/2011
HK$’000
412,505
—
3,098
63,770
(45)
(6,052)
2,338
(27,186)
2,368,244
—
(300,288)
73,605
(406)
(7,380)
2,252
(23,776)
2,359,681
(69,387)
(151,221)
72,388
(5,671)
(9,028)
2,593
(36,010)
—
(63,078)
—
(2)
(279,300)
—
(8,464)
(610)
—
(16,959)
(146,462)
101
(1,727,118)
—
(9,387)
—
(44,122)
17,186
—
(11)
(1,855,219)
(617)
(3,177)
—
96,974
4,970
—
212,426
(2,216)
(58)
277,385
7,680
(304)
(123,863)
52,180
(158,488)
(23,525)
191,796
(62,123)
30,261
28,139
414,434
Major non-cash transactions
(i)
During the years ended 31 December 2009, 2010 and 2011, the Privateco Group’s dividend payable to the
Company of HK$80,000,000, HK$296,000,000 and HK$305,000,000 respectively were settled by amounts
payable to the Company.
(ii)
During the year ended 31 December 2011, the Privateco Group’s amounts due to associated companies of
HK$193,734,000 were settled by dividends distributed by the associated companies.
(iii)
During the year ended 31 December 2011, the Privateco Group’s amount due to an investee company of
HK$16,646,000 was settled by dividend distributed by the investee company.
– 216 –
APPENDIX III
35
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
PARTICULARS OF SUBSIDIARIES AND ASSOCIATED COMPANIES
(a)
Subsidiaries
The Group had direct/indirect interests in the following subsidiaries:
Place of
incorporation
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of subsidiary
Issued share capital
Adam Knitters Ltd.
Ordinary: HK$1,000
Deferred: HK$200,000
Hong Kong
100
—
100
—
100 Property investment
—
1
Allied Effort Ltd.
Ordinary: US$1
British Virgin
Islands (‘‘BVI’’)
100
100
100 Investment holding
4
Baudinet Investment Ltd.
Ordinary: HK$18
Deferred: HK$2
Hong Kong
100
—
100
—
100 Property investment
—
1
Begin Land Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Property investment
—
1
Congenial Investments Ltd. Ordinary: US$1
BVI
100
100
100 Investment
5
Curlew International Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5
Dhandia Ltd.
Ordinary: HK$1,000
Hong Kong
100
100
100 Investment holding
1
Dragon Eye Holding Ltd.
Ordinary: US$100
Cayman Islands
—
—
100 Investment holding
5, 10
East Sun Estate
Management Company
Ltd.
Ordinary: HK$200
Hong Kong
100
100
100 Property management
1
East Sun Textile Company, Ordinary: HK$20
Hong Kong
Ltd.
Deferred: HK$15,000,000
100
—
100
—
100 Dormant
—
1
Grandeur Investments Ltd.
Ordinary: US$1
BVI
100
100
100 Property investment
4
Hilwin Properties Ltd.
Ordinary: HK$450,000
Deferred: HK$50,000
Hong Kong
100
—
100
—
100 Investment holding
—
and treasury
investment
1
Honest Bond Ltd.
Ordinary: HK$1
Hong Kong
—
—
100 Dormant
9
Libro Estates Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Dormant
—
1
Tat Yeung Properties
Investment Ltd.
Ordinary: US$1,000
BVI
100
100
100 Investment holding
5
Unimix Properties Ltd.
Ordinary: HK$200
Hong Kong
100
100
100 Dormant
1
Winner Godown Ltd.
Ordinary: HK$1,500,000
Hong Kong
70
70
70 Godown operation
1
Winnion Ltd.
Ordinary: HK$100
Hong Kong
100
100
100 Property investment
1
Winprop Pte. Ltd.
Ordinary: SG$2
Singapore
100
100
100 Investment holding
3
– 217 –
Note
APPENDIX III
(b)
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of subsidiary
Issued share capital
Place of
incorporation
Winsor Air Cargo Centre
Ltd.
Ordinary: HK$20
Hong Kong
100
100
Winsor Billion Management Ordinary: HK$10
Ltd.
Hong Kong
100
100
Winsor Estate Agents Ltd.
Ordinary: HK$20
Hong Kong
100
100
100 Property agent
1
Winsor Estate Management
Ltd.
Ordinary: HK$2
Hong Kong
100
100
100 Property management
1
Winsor Properties (China)
Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5, 10
Winsor Properties
Finance Ltd.
Ordinary: HK$2
Hong Kong
100
100
100 Group finance
company
1, 10
Winsor Properties (Hong
Kong) Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
4, 10
Winsor Properties
(Overseas) Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5, 10
Winsor Storage Ltd.
Ordinary: HK$10,000
Hong Kong
100
100
100 Wine storage
1
Winwin Investment Pte.
Ltd.
Ordinary: SG$2
Singapore
100
100
100 Dormant
3
Zak Holdings Ltd.
Ordinary: US$1
BVI
100
100
100 Investment holding
5
Zofka Properties Ltd.
Ordinary: HK$90,000
Deferred: HK$10,000
Hong Kong
100
—
100
—
100 Property investment
—
1
100 Dormant
80 Property management
Note
1
1
Associated companies
Name of associated
company
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Issued share capital
Place of
incorporation
China Merchants Cold
Chain Logistics (China)
Co., Ltd.
Ordinary: US$1,000
BVI
30
30
30 Investment holding
5
China Merchants Cold
Chain Logistics (Hong
Kong) Co. Ltd.
Ordinary: HK$1
Hong Kong
30
30
30 Investment holding
1
Mainland China
30
30
30 Cold storage
2
Ordinary: US$5,000,000
China Merchants
International Cold Chain
(Shenzhen) Co. Ltd.
(foreign wholly-owned
enterprise)
– 218 –
Note
APPENDIX III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
Percentage of shareholding
held at 31 December
by the Group
Principal activities
2009
2010
2011
Name of associated
company
Issued share capital
Place of
incorporation
Fore Prosper Ltd.
Ordinary: HK$100
Hong Kong
—
—
40 Property investment
1
Javary Ltd.
Ordinary: HK$300
Hong Kong
33.3
33.3
33.3 Property investment
6
Pangold Development Ltd.
Ordinary: HK$100
Hong Kong
20
20
24.8
24.8
24.8 Property investment
7
20 Property development
Note
1
Suzhou World Trade Centre Ordinary: US$6,500,000
Mainland China
Tat Yeung Trading
Company Ltd.
Ordinary: US$2
BVI
50
50
50 Investment holding
5
Universal Plus Ltd.
Ordinary: US$100
BVI
20
20
20 Investment holding
4
Winquest Investment Pte.
Ltd.
Ordinary: SG$1,000,000
Singapore
30
30
30 Property development
8
Winwill Investment Pte
Ltd.
Ordinary: SG$10
Singapore
20
20
20 Investment holding
8
Notes:
1.
The statutory financial statements of these subsidiaries/associated companies for the years ended 31 December
2009, 2010 and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards and audited
by PricewaterhouseCoopers, Hong Kong.
2.
The statutory financial statements of this associated company for the years ended 31 December 2009, 2010
and 2011 were audited by PricewaterhouseCoopers Zhong Tian CPAs Company Limited. All these audited
financial statements were prepared in accordance with the relevant accounting principles and financial
regulations applicable to enterprises in the PRC.
3.
The statutory financial statements of these subsidiaries/associated companies for the years ended 31 December
2009, 2010 and 2011 were audited by MGI Singapore PAC. All these audited financial statements were
prepared in accordance with the relevant accounting principles and financial regulations applicable to
enterprises in Singapore.
4.
The non-statutory financial statements of these subsidiaries/associated companies for the years ended 31
December 2009, 2010 and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards
and audited by PricewaterhouseCoopers, Hong Kong.
5.
No audited financial statements were issued for these subsidiaries/associated companies as they are not
required under the statutory requirements of their places of incorporation.
6.
The statutory financial statements of this associated company for the years ended 31 December 2009, 2010
and 2011 were prepared in accordance with Hong Kong Financial Reporting Standards and audited by
Shinewing (HK) CPA Limited.
7.
The statutory financial statements of this associated company was audited by Shu Lun Pan Certified Public
Accountants Co., Ltd. for the year ended 31 December 2009 and BDO China Shu Lun Pan CPAs LLP Jiangsu
Jiangnan Branch for the years ended 31 December 2010 and 2011. All these audited financial statements were
prepared in accordance with the relevant accounting principles and financial regulations applicable to
enterprises in the PRC.
– 219 –
APPENDIX III
III
ACCOUNTANT’S REPORT OF THE PRIVATECO GROUP
8.
The statutory financial statements of these associated companies for the years ended 31 December 2009, 2010
and 2011 were audited by PricewaterhouseCoopers LLP. All these financial statements were prepared in
accordance with the relevant accounting principles and financial regulations applicable to enterprises in
Singapore.
9.
The statutory financial statements of the subsidiary was not yet issued as it was incorporated on 25 February
2011.
10.
These subsidiaries were directly held by the Company.
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Privateco or any of its subsidiaries in
respect of any period subsequent to 31 December 2011 up to the date of this report. No dividend or
distribution has been declared or made by the Privateco or any of its subsidiaries in respect of any
period subsequent to 31 December 2011.
Yours faithfully,
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
– 220 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
(A) MANAGEMENT DISCUSSION AND ANALYSIS ON THE BUSINESS OF THE
REMAINING GROUP ENTITIES
The Remaining Group Entities will be engaged solely in the business of holding, and the operation
and management of, the Property.
The Property (which does not include Units 505–510, 5/F, Tower B of Regent Centre and other
units in Regent Centre not owned by the Group) is situated at 63 Wo Yi Hop Road and 70 Ta Chuen
Ping Street, the remaining portion of Lot no. 299 in D.D No. 444, Kwai Chung, New Territories, Hong
Kong. The Property is an investment property held by the Group for rental income and has a total gross
floor area of approximately 657,000 square feet.
Set out below is the management discussion and analysis of the Remaining Group Entities for the
three financial years ended 31 December 2009, 2010 and 2011, which is prepared based on the financial
information of the Remaining Group Entities as set out in note 38(d) to the Accountant’s Report of the
Company in Appendix II to this circular.
Business review for the year ended 31 December 2009
Operating Results
For the year ended 31 December 2009, the Remaining Group Entities recorded revenue of
approximately HK$64.0 million and recorded profit after tax attributable to the Remaining Holdco
of approximately HK$94.8 million. Excluding the change in fair value of investment properties,
the profit attributable to the Remaining Holdco amounted to approximately HK$37.5 million. The
profits comprised mainly the rental income from the investment property held by the Remaining
Group Entities.
Liquidity and Financial Resources
As at 31 December 2009, the Remaining Group Entities’ net current liabilities and current
ratio were approximately HK$260.3 million and 0.02, respectively. Net gearing ratio (total interest
bearing borrowings net of cash and cash equivalents as a percentage of total equity) was
approximately 0.25 as at 31 December 2009.
As at 31 December 2009, the Remaining Group Entities’ cash and cash equivalents amounted
to approximately HK$0.4 million.
Charge on Assets
As at 31 December 2009, certain of the Remaining Group Entities’ investment properties
with a carrying amount of approximately HK$937.7 million were pledged to secure banking
facilities of the Remaining Group and the Privateco Group.
– 221 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Capital Structure
For the year ended 31 December 2009, the Remaining Group financed its liquidity
requirements mainly through cash flows generated from operation, intercompany advances from the
Privateco Group and banking facilities granted to the Remaining Group.
Capital Commitment and Contingent Liabilities
As at 31 December 2009, the Remaining Group had no capital commitments and operating
lease commitments.
As at 31 December 2009, the Remaining Group had executed guarantees in favour of banks
in respect of facilities granted to subsidiaries of the Privateco Group amounting to approximately
HK$3,979.5 million and had executed guarantees/completion undertakings in favour of banks in
respect of facilities granted to associated companies of the Privateco Group of approximately
HK$551.3 million.
Significant Investments, Material Acquisitions and Disposals
During the year ended 31 December 2009, the Remaining Group did not make any significant
investments, material acquisitions or disposals.
Staff and Remuneration Policy
During the year ended 31 December 2009, the Remaining Group did not employ any staff.
The directors of the Company received fees of approximately HK$2.6 million for the year ended
31 December 2009.
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2009, the Remaining Group operated principally in
Hong Kong and was not exposed to foreign exchange risk. Foreign exchange risk arose from future
commercial transactions and recognised assets and liabilities.
During the year ended 31 December 2009, the Remaining Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2009.
– 222 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Business review for the year ended 31 December 2010
Operating Results
For the year ended 31 December 2010, the Remaining Group Entities recorded revenue of
approximately HK$64.4 million and recorded profit after tax attributable to the Remaining Holdco
of approximately HK$108.1 million. Excluding the change in fair value of investment properties,
the profit attributable to the Remaining Holdco amounted to approximately HK$38.3 million.
Liquidity and Financial Resources
As at 31 December 2010, the Remaining Group Entities’ net current liabilities and current
ratio were approximately HK$251.2 million and 0.4, respectively. Net gearing ratio (total interest
bearing borrowings net of cash and cash equivalents as a percentage of total equity) was nil as at
31 December 2010 as the Remaining Group had net cash and cash equivalents at year end.
As at 31 December 2010, the Remaining Group Entities’ cash and cash equivalents at year
end amounted to approximately HK$161.1 million.
Charge on Assets
As at 31 December 2010, certain of the Remaining Group Entities’ investment properties
with a carrying amount of approximately HK$937.1 million were pledged to secure banking
facilities of the Remaining Group and the Privateco Group.
Capital Structure
For the year ended 31 December 2010, the Remaining Group financed its liquidity
requirements mainly through cash flows generated from operation, intercompany advances from the
Privateco Group and banking facilities granted to the Remaining Group.
Capital Commitment and Contingent Liabilities
As at 31 December 2010, the Remaining Group had no capital commitments and operating
lease commitments.
As at 31 December 2010, the Remaining Group had executed guarantees in favour of banks
in respect of facilities granted to subsidiaries of the Privateco Group amounting to approximately
HK$3,614.5 million.
Significant Investments, Material Acquisitions and Disposals
During the year ended 31 December 2010, the Remaining Group entered into an agreement to
acquire a whole floor in Regent Centre for a cash consideration of approximately HK$31.7 million,
completion had taken place in September 2011. The Remaining Group disposed of certain units in
Regent Centre on already strata-titled floors. Other than above, the Remaining Group did not make
any significant investments, material acquisitions or disposals.
– 223 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Staff and Remuneration Policy
During the year ended 31 December 2010, the Remaining Group did not employ any staff.
The directors of the Company received fees of approximately HK$2.6 million for the year ended
31 December 2010.
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2010, the Remaining Group operated principally in
Hong Kong and was not exposed to foreign exchange risk. Foreign exchange risk arose from future
commercial transactions and recognised assets and liabilities.
During the year ended 31 December 2010, the Remaining Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2010.
Business review for the year ended 31 December 2011
Operating Results
For the year ended 31 December 2011, the Remaining Group Entities recorded revenue of
approximately HK$67.2 million and recorded profit after tax attributable to the Remaining Holdco
of approximately HK$139.1 million. Excluding the change in fair value of investment properties,
the profit attributable to the Remaining Holdco amounted to approximately HK$40.4 million.
Liquidity and Financial Resources
As at 31 December 2011, the Remaining Group Entities’ net current liabilities and current
ratio were approximately HK$209.9 million and 0.02, respectively. Net gearing ratio (total interest
bearing borrowings net of cash at banks and in hand as a percentage of total equity) was
approximately 0.1 as at 31 December 2011.
As at 31 December 2011, the Remaining Group Entities’ cash and cash equivalents amounted
to approximately HK$0.9 million.
Charge on Assets
As at 31 December 2011, the Remaining Group Entities’ investment properties with a
carrying amount of approximately HK$1,021.2 million were pledged to secure banking facilities of
the Remaining Group and Privateco Group.
– 224 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Capital Structure
For the year ended 31 December 2011, the Remaining Group financed its liquidity
requirements through cash flows generated from operation, intercompany advances from the
Privateco Group and banking facilities granted to the Remaining Group.
Capital Commitment and Contingent Liabilities
As at 31 December 2011, the Remaining Group had no capital commitments and operating
lease commitments.
As at 31 December 2011, the Remaining Group had executed guarantees in favour of banks
in respect of facilities granted to subsidiaries of the Privateco Group amounting to approximately
HK$3,614.5 million and had executed a guarantee in favour of a bank in respect of facilities
granted to an associated company of the Privateco Group of approximately HK$228.0 million.
Significant Investments, Material Acquisitions and Disposals
During the year ended 31 December 2011, the Remaining Group disposed of certain units in
Regent Centre on already strata-titled floors. Other than above, the Remaining Group did not make
any significant investments, material acquisitions or disposals.
Staff and Remuneration Policy
During the year ended 31 December 2011, the Remaining Group did not employ any staff.
The directors of the Company received fees of approximately HK$2.7 million for the year ended
31 December 2011.
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2011, the Remaining Group operated principally in
Hong Kong and was not exposed to foreign exchange risk. Foreign exchange risk arose from future
commercial transactions and recognised assets and liabilities.
During the year ended 31 December 2011, the Remaining Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2011.
(B)
MANAGEMENT DISCUSSION AND ANALYSIS ON THE DISTRIBUTED BUSINESSES
The Distributed Businesses to be operated by the Privateco Group will consist of the businesses of
the Group other than those relating to the Property. These include rental, property management and
warehousing businesses covering various office and industrial properties. Pursuant to the Group
Reorganisation, members of the Group, other than the Company, the Remaining Holdco and the
Remaining Group Entities, will be transferred to the Privateco Group which will continue their existing
business operations.
– 225 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Set out below is the management discussion and analysis of the Privateco Group for the three
financial years ended 31 December 2009, 2010 and 2011, which is prepared based on the Accountant’s
Report of the Privateco Group as set out in Appendix III to this circular.
Business review for the year ended 31 December 2009
Operating Results
For the year ended 31 December 2009, the Privateco Group recorded revenue of
approximately HK$228.4 million, gross profit of approximately HK$140.5 million (representing a
gross profit margin of approximately 61.5%) and profit after tax attributable to the Privateco
Shareholders of approximately HK$389.9 million. Segment profits before change in fair value of
investment properties for rental and property management, warehousing and investment were
approximately HK$124.2 million, HK$1.5 million and HK$33.8 million respectively.
Excluding the change in fair value of investment properties and change in fair value of
derivative financial instruments, the profit attributable to the Privateco Shareholders amounted to
approximately HK$47.5 million.
The Privateco Group’s revenue principally consisted of rental income, income from property
management and income from warehousing. The increase in revenue compared to the previous year
was primarily due to new lettings in Landmark East and full-year rental contribution from W
Square.
Liquidity and Financial Resources
As at 31 December 2009, the Privateco Group’s net current liabilities and current ratio were
approximately HK$254.8 million and 0.6, respectively. Net gearing ratio (total interest bearing
borrowings net of cash and cash equivalents as a percentage of total equity) was approximately 0.8
as at 31 December 2009.
As at 31 December 2009, the Privateco Group’s cash and cash equivalents amounted to
approximately HK$171.6 million.
Charge on Assets
As at 31 December 2009, the Privateco Group’s bank borrowings were secured by certain
investment properties and available-for-sale financial assets with a carrying amount of
approximately HK$8,232.0 million and HK$176.5 million, respectively.
Capital Structure
For the year ended 31 December 2009, the Privateco Group financed its liquidity
requirements mainly through cash flows generated from operation and cash inflows from financing
activities which principally came from banking facilities granted to the Privateco Group.
– 226 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
During the year, the Privateco Group extended the repayment schedule of a term loan in the
principal amount of HK$1,000 million and arranged additional banking facilities of approximately
HK$1,100 million to ensure that the Privateco Group had sufficient facilities for its working
capital and expansion needs. As at 31 December 2009, total bank loans outstanding amounted to
approximately HK$2,503 million. The maturity profile of the loans was approximately HK$322
million (representing approximately 13% of total bank loans) due within one year, approximately
HK$150 million (representing approximately 6% of total bank loans) due within the second year,
and approximately HK$2,030 million (representing approximately 81% of total bank loans) due
within the third to fifth years. As at 31 December 2009, the bank loans were subject to interest
rates ranging from approximately 0.44% to 1.84% and, as a result, the bank loans had a weighted
average interest rate of approximately 1.08%.
Since the majority of the Privateco Group’s assets were located and operated in Hong Kong,
all borrowings were denominated in Hong Kong dollars. To manage the volatility from the floating
interest rate, interest rate swap contracts were the most commonly used hedging instruments to
manage the interest rate exposure.
Capital Commitment and Contingent Liabilities
As at 31 December 2009, the Privateco Group had approximately HK$484.4 million of
capital commitments and approximately HK$2.0 million of operating lease commitments.
As at 31 December 2009, the Privateco Group had executed guarantees in favour of banks in
respect of facilities granted to the Remaining Group of approximately HK$125.0 million.
Significant Investments, Material Acquisitions and Disposals
Significant investments of the Privateco Group comprised interests in associated companies,
certain available-for-sale financial assets and held-to-maturity investments. As the projects, Forfar
and Belle Vue Residences in which the Privateco Group has a respective interest of 20% and 30%,
were still under development, there was no significant contribution from associated companies
during the year. Profits from investment were mainly the dividend income from available-for-sale
financial assets and income from the held-to-maturity investments.
During the year ended 31 December 2009, the Privateco Group did not make any significant
investments, material acquisitions or disposals.
Staff and Remuneration Policy
As at 31 December 2009, the Privateco Group had a total of 191 employees. Staff cost for
the year ended 31 December 2009 was approximately HK$30.3 million. The Privateco Group
aligned its remuneration and benefit packages with pay levels and practices prevailing in the
market and recognised individual responsibility and performances. All eligible employees in Hong
Kong were enrolled to a defined contribution mandatory provident fund scheme. Other benefits
were awarded at the discretion of the Privateco Group. Staff training was provided as and when
required.
– 227 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2009, the Privateco Group operated principally in Hong
Kong and had minimal exposure to exchange rate fluctuations. The Privateco Group was exposed
to changes in foreign exchange rates due to its investment in foreign operations, whose net assets
were exposed to foreign currency transaction risks.
During the year ended 31 December 2009, the Privateco Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2009.
Business review for the year ended 31 December 2010
Operating Results
For the year ended 31 December 2010, the Privateco Group recorded revenue of
approximately HK$341.5 million, gross profit of approximately HK$265.4 million (representing a
gross profit margin of approximately 77.7%) and profit after tax attributable to the Privateco
Shareholders of approximately HK$2,351.9 million. Segment profits before change in fair value
and gains on disposal of investment properties for rental and property management, warehousing
and investment were approximately HK$241.3 million, HK$0.1 million and HK$31.2 million
respectively.
Excluding the change in fair value of investment properties and change in fair value of
derivative financial instruments, the profit attributable to the Privateco Shareholders amounted to
approximately HK$607.8 million.
The increase in revenue compared to the previous year was primarily due to new lettings in
Landmark East and the increase in net profit compared to the previous year was primarily due to
the gains on disposals of investment properties and share of profits in associated companies during
the year.
Liquidity and Financial Resources
As at 31 December 2010, the Privateco Group’s net current assets and current ratio were
approximately HK$372.4 million and 1.8, respectively. Net gearing ratio (total interest bearing
borrowings net of cash at banks and in hand as a percentage of total equity) was approximately 0.3
as at 31 December 2010.
As at 31 December 2010, the Privateco Group’s cash and cash equivalents amounted to
approximately HK$433.9 million.
– 228 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Charge on Assets
As at 31 December 2010, the Privateco Group’s bank borrowings were secured by certain
investment properties and available-for-sale financial assets with a carrying amount of
approximately HK$9,152.0 million and HK$265.4 million, respectively.
Capital Structure
For the year ended 31 December 2010, the Privateco Group financed its liquidity
requirements mainly through cash flows from operation and cash inflows from financing activities
which principally came from banking facilities granted to the Privateco Group.
As at 31 December 2010, total bank loans outstanding amounted to approximately HK$1,962
million. The maturity profile of the loans was approximately HK$126 million (representing
approximately 6% of total bank loans) due within one year, approximately HK$268 million
(representing approximately 14% of total bank loans) due within the second year and
approximately HK$1,568 million (representing approximately 80% of total bank loans) due within
the third to fifth years. As at 31 December 2010, the bank loans were subject to interest rates
ranging from approximately 0.60% to 2.02% and, as a result, the bank loans had a weighted
average interest rate of approximately 1.35%.
Since the majority of the Privateco Group’s assets were located and operated in Hong Kong,
all borrowings were denominated in Hong Kong dollars. To manage the volatility from the floating
interest rate, interest rate swap contracts were the most commonly used hedging instruments to
manage the interest rate exposure.
Capital Commitment and Contingent Liabilities
As at 31 December 2010, the Privateco Group did not have material capital commitments. As
at 31 December 2010, the Privateco Group had approximately HK$5.3 million operating lease
commitments.
As at 31 December 2010, the Privateco Group had executed guarantees in favour of banks in
respect of facilities granted to the Remaining Group of approximately HK$125.0 million.
Significant Investments, Material Acquisitions and Disposals
Significant investments of the Privateco Group comprised interests in associated companies,
certain available-for-sale financial assets and held-to-maturity investments. The development of
Forfar and Belle Vue Residences in which the Privateco Group has a respective interest of 20%
and 30% were completed with the issue of occupation permit in the year. The Privateco Group’s
share of profit in these two associated companies amounted to approximately HK$301 million.
Profits from investment were mainly the dividend income from available-for-sale financial assets
and income from the held-to-maturity investments.
– 229 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
During the year ended 31 December 2010, the Privateco Group entered into agreements to
dispose of two industrial buildings, namely Unimix Industrial Centre and Lucky Industrial
Building for an aggregate consideration of approximately HK$949 million. The disposals resulted
in net gains of approximately HK$146 million and generated net cash inflows to the Privateco
Group of approximately HK$596 million after repayment of bank loans and expenses. The
disposals represented opportunities for the Privateco Group to realise its long term investments at
attractive return. The Privateco Group also intended to apply the cash proceeds for replenishment
of the property portfolio with high grade investment properties. Other than above, the Privateco
Group did not make any significant investments, material acquisitions or disposals.
Staff and Remuneration Policy
As at 31 December 2010, the Privateco Group had a total of 241 employees. Staff cost for
the year ended 31 December 2010 was approximately HK$32.5 million. The Privateco Group
aligned its remuneration and benefit packages with pay levels and practices prevailing in the
market and recognised individual responsibility and performances. All eligible employees in Hong
Kong were enrolled to a defined contribution mandatory provident fund scheme. Other benefits
were awarded at the discretion of the Privateco Group. Staff training was provided as and when
required.
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2010, the Privateco Group operated principally in Hong
Kong and had minimal exposure to exchange rate fluctuations. The Privateco Group was exposed
to changes in foreign exchange rates due to its investment in foreign operations, whose net assets
were exposed to foreign currency transaction risks.
During the year ended 31 December 2010, the Privateco Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2010.
Business review for the year ended 31 December 2011
Operating Results
For the year ended 31 December 2011, the Privateco Group recorded revenue of
approximately HK$414.8 million, gross profit of approximately HK$320.8 million (representing
gross profit margin of approximately 77.3%) and profit after tax attributable to the Privateco
Shareholders of approximately HK$2,326.1 million. Segment profits before change in fair value of
investment property for rental and properties management, warehousing and investment were
approximately HK$308.5 million, HK$1.9 million and HK$45.7 million respectively.
– 230 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Excluding the change in fair value of investment properties, change in fair value of derivative
financial instruments and gain on acquisition of an associated company, the profit attributable to
the Privateco Shareholders amounted to approximately HK$418.6 million.
The increase in revenue compared to the previous year was primarily due to the increase in
average occupancy of Landmark East to approximately 91% during the year. The decrease in net
profit compared to the previous year was primarily due to the decrease in gain on disposals of
investment properties and decrease in share of profit in associated companies.
Liquidity and Financial Resources
As at 31 December 2011, the Privateco Group’s net current assets and current ratio were
approximately HK$82.6 million and 1.1, respectively. Net gearing ratio (total interest bearing
borrowings net of cash and cash equivalents as a percentage of total equity) was approximately 0.2
as at 31 December 2011.
As at 31 December 2011, the Privateco Group’s cash and cash equivalents amounted to
approximately HK$646.5 million.
Charge on Assets
As at 31 December 2011, the Privateco Group’s bank borrowings were secured by certain
investment properties, available-for-sale financial assets and held-to-maturity investments with a
carrying amount of approximately HK$11,001.0 million, HK$187.0 million and HK$48.7 million,
respectively.
Capital Structure
For the year ended 31 December 2011, the Privateco Group financed its liquidity
requirements mainly through cash flows from operation and cash inflows from financing activities
which principally came from banking facilities granted to the Privateco Group.
As at 31 December 2011, total bank loans outstanding amounted to approximately HK$2,107
million. The maturity profile of the loans was approximately HK$547 million (representing
approximately 26% of total bank loans) due within one year, approximately HK$972 million
(representing approximately 46% of total bank loans) due within the second year and
approximately HK$588 million (representing approximately 28% of total bank loans) due within
the third to fifth years. As at the year ended 31 December 2011, the bank loans were subject to
interest rates ranging from approximately 0.64% to 2.07% and, as a result, the bank loans had a
weighted average interest rate of approximately 1.35%.
Since the majority of the Privateco Group’s assets were located and operated in Hong Kong,
the borrowings were principally denominated in Hong Kong dollars. To manage the volatility from
the floating interest rate, interest rate swap contracts were the most commonly used hedging
instruments to manage the interest rate exposure.
– 231 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
Capital Commitment and Contingent Liabilities
As at 31 December 2011, the Privateco Group did not have material capital commitments. As
at 31 December 2011, the Privateco Group had approximately HK$1.8 million operating lease
commitments.
As at 31 December 2011, the Privateco Group had executed guarantees in favour of banks in
respect of facilities granted to the Remaining Group of approximately HK$125.0 million.
Significant Investments, Material Acquisitions and Disposals
Significant investments of the Privateco Group comprised interests in associated companies,
certain available-for-sale financial assets and held-to-maturity investments. The development of
Forfar and Belle Vue Residences, in which the Privateco Group has a respective interest of 20%
and 30%, were completed with the issue of occupation permit in the prior year. The Privateco
Group’s share of profit in the two associated companies dropped as a majority of the units in the
projects had been sold in the prior year. During the year, the Privateco Group made further
investment in certain treasury products. Profits from investment were mainly the dividend income
from available-for-sale financial assets and income from the held-to-maturity investments.
During the year ended 31 December 2011, the Privateco Group completed the acquisition of
the entire issued share capital of Dragon Eye Holding Ltd. at a consideration of approximately
HK$229.1 million. Dragon Eye holds 40% of equity interest in Fore Prosper Limited, which is the
owner of a boutique hotel property situated in Hong Kong. The acquisition represented an
opportunity for the Privateco Group to diversify its investment in an established property in the
hospitality business, which provided a diversified income base to the Privateco Group in the long
term while being income accretive immediately.
Other than above, the Privateco Group did not make any significant investments, material
acquisitions or disposals.
Staff and Remuneration Policy
As at 31 December 2011, the Privateco Group had a total of 259 employees. Staff cost for
the year ended 31 December 2011 was approximately HK$51.3 million. The Privateco Group
aligned its remuneration and benefit packages with pay levels and practices prevailing in the
market and recognised individual responsibility and performances. All eligible employees in Hong
Kong were enrolled to a defined contribution mandatory provident fund scheme. Other benefits
were awarded at the discretion of the Privateco Group. Staff training was provided as and when
required.
Foreign Exchange Fluctuation and Hedge
During the year ended 31 December 2011, the Privateco Group operated principally in Hong
Kong and had minimal exposure to exchange rate fluctuation. The Privateco Group was exposed to
changes in foreign exchange rates due to its investment in foreign operations, whose net assets
were exposed to foreign currency transaction risks.
– 232 –
APPENDIX IV
MANAGEMENT DISCUSSION AND ANALYSIS ON EACH OF THE BUSINESSES
UNDER THE REMAINING GROUP ENTITIES AND THE DISTRIBUTED BUSINESSES
During the year ended 31 December 2011, the Privateco Group did not enter into any
forward foreign currency contracts.
Future Plans for Material Investments and Acquisition of Capital Assets
There was no specific plan for material investments and acquisition of material capital assets
as at 31 December 2011.
– 233 –
APPENDIX V
A.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE REMAINING GROUP
The following is illustrative and unaudited pro forma financial information of the Remaining
Group (the ‘‘Unaudited Pro Forma Financial Information’’), comprising the unaudited pro forma
consolidated balance sheet, the unaudited pro forma consolidated income statement, the unaudited pro
forma consolidated statement of comprehensive income and the unaudited pro forma consolidated cash
flow statement of the Remaining Group, which have been prepared to illustrate the effect of the
proposed Group Reorganisation, Distribution in Specie and the Payment of Special Cash Dividend
(together, the ‘‘Transactions’’) as if they had taken place on 31 December 2011 for the unaudited pro
forma consolidated balance sheet and on 1 January 2011 for the unaudited pro forma consolidated
income statement, the unaudited pro forma consolidated statement of comprehensive income and the
unaudited pro forma consolidated cash flow statement.
The Unaudited Pro Forma Financial Information has been prepared by the Directors for illustrative
purposes only and because of its hypothetical nature, it may not give a true picture of the financial
position, results of operations and cash flow of the Remaining Group had the Transactions been
completed as at 31 December 2011 or 1 January 2011 where applicable, or any future dates.
– 234 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Unaudited pro forma consolidated balance sheet of the Remaining Group
Audited
consolidated
balance sheet
of the Group
as at
31 December
2011
HK$’000
Note 1
Non-current assets
Property, plant and equipment
Investment properties
Interests in associated
companies
Amounts and loans receivable
from associated
companies
Available-for-sale financial
assets
Held-to-maturity investments
Deferred tax assets
Derivative financial
instruments
HK$’000
Note 2
HK$’000
Note 3
9,031
(8,930)
12,167,930 (11,027,830)
(116)
(10,750)
HK$’000
Note 4(i)
HK$’000
Note 4(ii)
Pro forma adjustments
HK$’000
HK$’000
Note 4(iii)
Note 5
HK$’000
Note 6
HK$’000
Note 7(i)
15
(696,144)
—
39,369
(39,369)
—
319,402
65,835
4,020
(319,402)
(65,835)
(1,597)
—
—
2,425
179
(179)
2
—
1,131,775
362
40,676
(362)
(35,561)
—
29,252
435
647,478
(181,942)
(29,252)
(435)
(646,492)
—
5,115
10,750
(24,675)
195,867
35,099
718,203
Current liabilities
Trade and other payables and
accruals
Short term bank loans,
secured
Derivative financial
instruments
Tax payable
Net current (liabilities)/assets
Total assets less current
liabilities
—
1,129,350
696,144
13,301,910
Currents assets
Inventories
Trade and other receivables
Amounts receivable from the
Privateco Group
Held-to-maturity investments
Tax recoverable
Bank balances and cash
HK$’000
Note 7(ii)
Unaudited
pro forma
consolidated
balance
sheet of the
Remaining
Group
HK$’000
HK$’000
Note 8
—
—
—
36,085
41,200
215,567
(196,642)
561,682
(546,682)
42,130
26,334
(42,130)
(25,982)
18,925
(15,000)
—
—
636
284
845,713
19,561
(127,510)
21,639
13,174,400
1,153,414
– 235 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Audited
consolidated
balance sheet
of the Group
as at
31 December
2011
HK$’000
Note 1
Non-current liabilities
Long-term bank loans, secured
Other long term loans
Amounts payable to the
Company
Amounts and loans payable to
associated companies
Derivative financial
instruments
Deferred tax liabilities
HK$’000
Note 2
1,630,100
32,498
(1,560,100)
—
(3,413,622)
23,552
(23,552)
62,942
68,125
(62,942)
(43,779)
HK$’000
Note 3
HK$’000
Note 4(i)
HK$’000
Note 4(ii)
Pro forma adjustments
HK$’000
HK$’000
Note 4(iii)
Note 5
HK$’000
Note 6
HK$’000
Note 7(i)
HK$’000
Note 7(ii)
Unaudited
pro forma
consolidated
balance
sheet of the
Remaining
Group
HK$’000
HK$’000
Note 8
—
—
(70,000)
(32,498)
324,684
195,867
2,893,072
(1)
—
—
—
24,064
(282)
1,817,217
24,064
Net assets
11,357,183
1,129,350
Share capital
Reserves
2,596
11,316,471
Equity attributable to
shareholders
of the Company
11,319,067
Non-controlling interests
Total equity
38,116
(1)
(7,135,681)
34,983
7,823
21,594
14,305
85,000
(324,684)
(2,893,072)
1
15
2,596
1,126,754
1,129,350
(2,217)
(21,594)
(14,305)
11,357,183
—
1,129,350
Notes:
1.
The amounts are extracted from the audited consolidated balance sheet of the Group as at 31 December 2011 as set
out in the published annual report of the Company for the year ended 31 December 2011.
2.
Pursuant to the Distribution In Specie, the adjustment represents the exclusion of the assets and liabilities of the
Privateco Group as at 31 December 2011, which is extracted from the Financial Information of the Privateco Group
as at 31 December 2011 as set out in section I of Appendix III.
3.
Pursuant to the Group Reorganisation, the adjustment represents
(i)
the exclusion of properties comprising the fair value of units 505–510, 5/F., Tower B, Regent Centre (‘‘Regent
Centre Units’’) amounted to HK$10,650,000 and the fair value of one car parking space located at Landmark
East amounted to HK$100,000, that will form part of the Privateco Group and the respective recognition of
tax payable of HK$282,000 and HK$2,000 and release of deferred tax liabilities of HK$282,000 and deferred
tax assets of HK$2,000 in relation to the exclusion of Regent Centre Units and one car parking space
respectively;
(ii)
written off of property, plant and equipment in the Remaining Group with the carrying value of HK$116,000
as at 31 December 2011; and
(iii)
declaration and payment of cash dividend by the Privateco’s subsidiaries to the Company amounted to
HK$35,099,000.
– 236 –
APPENDIX V
4.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Pursuant to the Group Reorganisation, the adjustments represent
(i)
repayment of the outstanding shareholder’s loans by WPFSL that are owed to Parex International Limited
(‘‘Parex’’) of HK$32,498,000 of which the amount of HK$24,675,000 will be settled by cash received from
the Privateco Group for settlement of the intercompany balance of the same amount whereas the amount of
HK$7,823,000 will be paid in cash by WPFSL, which will be advanced by the Company to WPFSL as the
Company will receive the cash dividend declared and paid from the Privateco Group of the same amount. The
intercompany balance between WPFSL and the Company is eliminated within the Remaining Group.
(ii)
declaration and payment of dividend by Chericourt to WPFSL of HK$452,383,000, and declaration and
payment of dividend by WPFSL to the shareholders of WPFSL, the Remaining Holdco and Parex, of
HK$431,892,000 and HK$21,594,000, respectively. The amount of HK$431,892,000 will be settled by an
intercompany transfer and eliminated within the Remaining Group whereas the amount of HK$21,594,000 will
be paid in cash by WPFSL, which will be advanced by the Company to WPFSL as the Company will receive
cash dividend declared and paid from the Privateco Group of the same amount. The intercompany balance
between WPFSL and the Company will be eliminated within the Remaining Group.
(iii)
acquisition of the outstanding 4.76% minority interest in WPFSL by the Remaining Holdco from Parex with
an amount of HK$14,305,000, which represents 4.76% of the consolidated net assets value of WPFSL and
Chericourt of HK$753,930,000 as at 31 December 2011 minus the distribution of dividend of
HK$453,486,000 that were brought up in pro forma adjustment Note 4(ii) above. The amount will be paid in
cash by the Remaining Holdco, which will be advanced by the Company as the Company will receive cash
dividend declared and paid by the Privateco Group of the same amount. The intercompany balance between
the Remaining Holdco and the Company will be eliminated within the Remaining Group.
Since the consolidated net assets value of WPFSL and Chericourt upon completion of the Group Reorganisation may
be different from its respective value used in the Unaudited Pro Forma Financial Information, the final amount of the
consideration may be different from the amount presented above.
5.
The adjustment represents full repayment of bank loans entered into by the subsidiaries of the Remaining Holdco of
HK$85,000,000, which will be paid by cash advanced by the Company as the Company will receive the cash
dividend declared and paid from the Privateco Group of the same amount. The intercompany balance between
subsidiaries of the Remaining Holdco and the Company will be eliminated within the Remaining Group.
6.
The adjustment represents the payments of the final dividend of HK$122,052,000 for the year ended 31 December
2011 and the Special Cash Dividend of HK$202,632,000, which represents HK$0.7803 per share as part of the
Group Reorganisation by the Company to the Company’s shareholders. The total dividend payments of
HK$324,684,000 will be advanced by the Privateco Group to the Company.
7.
The adjustment represents
(i)
the transfer of the amounts payable to the Privateco Group by the Remaining Group Entities of
HK$195,867,000 to the Company.
(ii)
The outstanding amount payable to the Company by the subsidiaries of the Privateco Group amounted to
HK$3,413,622,000 as of 31 December 2011 which is further reduced by the pro forma adjustments 6 and 7(i)
of HK$324,684,000 and HK$195,867,000 respectively and resulted in balance HK$2,893,071,000 before pro
forma adjustments 7(ii) and 8.
The amount payable to the Company with an aggregate
settled by Winsor Properties (Hong Kong) Limited,
Properties (China) Limited, which are subsidiaries of
shares to the Company and partly include investment in
amount of HK$2,893,071,000 is partly assumed to be
Winsor Properties (Overseas) Limited and Winsor
the Privateco Group, through issuing their ordinary
Dragon Eye Holding Ltd. held by the Company.
The Company will then transfer all its equity interests in these subsidiaries at a consideration of
HK$2,893,072,000 to the Privateco, which represents carrying amounts of the Company’s investment in these
subsidiaries and associated companies including the cost for existing share capital of HK$1,000 in these
subsidiaries.
The Company will distribute the Privateco shares with the carrying amount of HK$2,893,072,000 to the
shareholders of the Company. Such distribution will debit to the contributed surplus and the retained earnings
in the reserves of the Company of the same amount. The contributed surplus arose from the reorganisation of
Winsor Industrial Corporation Limited (‘‘WICL’’) when the Company acquired businesses from WICL in 1996
by issuing ordinary shares. The difference between the consolidated net assets of the businesses acquired and
the nominal value of the Company’s shares issued was recorded as a receivable from the subsidiaries of the
Privateco Group and credited to the contributed surplus at the same time.
– 237 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
8.
The adjustment represents (i) carrying value of property, plant and equipment of HK$15,000 reflecting the
intercompany transaction between the Remaining Group and the Privateco Group, which should not be eliminated
after the completion of the Transactions; and (ii) as referred to the pro forma adjustment 2, the combined capital of
the subsidiaries of the Privateco Group has not been eliminated and the adjustment of HK$1,000 represents the
elimination of such combined capital after the completion of the Transactions.
9.
No other adjustment has been made to reflect any trading result or other transaction of the Remaining Group entered
into subsequent to 31 December 2011.
Unaudited pro forma consolidated income statement of the Remaining Group
Audited
consolidated
income
statement of
the Group for
the year ended
31 December
2011
HK$’000
Note 1
HK$’000
Note 2
Revenue
Cost of sales
478,330
(110,797)
(414,824)
94,062
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of
investment properties
Gains on disposals of
investment properties
Other gains, net
367,533
46,198
(8,814)
(42,356)
(45,755)
8,768
42,420
1,958,533
(1,855,219)
(1,000)
1,312
35,242
(35,242)
(26)
2,357,648
5,718
(71,603)
(5,671)
72,388
Operating profit
Finance income
Finance costs
Pro forma adjustments
HK$’000
HK$’000
HK$’000
Note 3
Note 4
Note 5
(559)
194
HK$’000
Note 6
10,696
(1,448)
73,643
(17,989)
1,014
(1,989)
(8,049)
55,654
1,457
(2,035)
(7,985)
102,314
1,268
(224)
11,673
1,088
11,647
2,053
(2,053)
162,140
2,100
—
2,291,763
Share of profits less losses of
associated companies
Gain on bargain purchase
Unaudited
pro forma
consolidated
income
statement of
the
Remaining
Group
HK$’000
164,240
151,221
69,387
(151,221)
(69,387)
Profit before taxation
Taxation charge
2,512,371
(39,977)
32,954
Profit for the year
2,472,394
Attributable to:
Shareholders of the Company
Non-controlling interests
2,465,238
7,156
—
—
67
164,240
(7,165)
(209)
157,075
(2,326,073)
(654)
2,472,394
(1,324)
6,502
(6,502)
1,059
11,673
157,075
—
157,075
– 238 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Unaudited pro forma consolidated statement of comprehensive income of the Remaining
Group
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released upon
repayment of loans from
an associated company
Fair value losses on available-for-sale
financial assets
Cash flow hedges
— Fair value losses
— Realised upon settlement
Share of hedging reserve of
an associated company
Other comprehensive loss for the year,
net of tax
Unaudited
pro forma
consolidated
statement of
comprehensive
income of the
Remaining
Group
HK$’000
HK$’000
Note 6
Audited
consolidated
statement of
comprehensive
income of the
Group for the
year ended 31
December 2011
HK$’000
Note 1
HK$’000
Note 2
2,472,394
(2,326,727)
(5,627)
5,627
—
(44,122)
44,122
—
(128,185)
128,185
—
(33,326)
44,105
33,326
(44,105)
—
—
(3,174)
3,174
—
Pro forma adjustments
HK$’000
HK$’000
HK$’000
Note 3
Note 4
Note 5
(1,324)
1,059
11,673
157,075
—
(170,329)
Total comprehensive income
for the year
2,302,065
(2,156,398)
(1,324)
Attributable to:
Shareholders of the Company
Non-controlling interests
2,294,909
7,156
(2,155,744)
(654)
(1,324)
2,302,065
6,502
(6,502)
1,059
11,673
157,075
1,059
11,673
157,075
—
157,075
– 239 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Unaudited pro forma consolidated cash flow statement of the Remaining Group
Profit before taxation
Gain on bargain purchase
Share of profits less losses of
associated companies
Finance costs
Finance income
Amortised income from held-to-maturity investments
Depreciation of property, plant and equipment
Dividend income from available-for-sale
financial assets
Exchange differences released upon repayment
of loans from an associated company
Fair value losses on derivative financial instruments
Gain on disposals of investment properties
Gain on disposals of property, plant and equipment
Increase in fair value of investment properties
Interest income from held-to-maturity investments
Interest income on loans to associated companies
Write off of property, plant and equipment
Write back of provision for an amount receivable
from a subsidiary
Audited
consolidated
cash flow
statement of
the Group for
the year ended
31 December
2011
HK$’000
Note 1
HK$’000
Note 2
2,512,371
(69,387)
(2,359,681)
69,387
(151,221)
71,603
(5,718)
(9,028)
2,632
151,221
(72,388)
5,671
9,028
(2,593)
(36,010)
36,010
—
(44,122)
17,186
(1,312)
(11)
(1,958,533)
(617)
(3,177)
—
44,122
(17,186)
—
—
(1,088)
—
(102,314)
—
—
26
(1,391)
1,268
11,673
(1,268)
2,053
(2,053)
(39)
224
11
1,855,219
617
3,177
1,000
26
—
(11,673)
Operating profit before working capital changes
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase in amounts receivable from the
Privateco Group
(Decrease)/increase in trade and other payables
and accruals
324,656
7,219
(304)
(7,680)
304
—
(191,796)
(59,210)
62,123
Net cash from/(used in) operations
272,361
– 240 –
Pro forma adjustments
HK$’000
HK$’000
Note 3
Note 5
Unaudited
pro forma
consolidated
cash flow
statement of
the Remaining
Group
HK$’000
HK$’000
Note 6
164,240
—
—
—
(2,100)
—
—
(11,673)
47,091
(461)
—
1,829
(189,967)
2,913
(140,424)
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Audited
consolidated
cash flow
statement of
the Group for
the year ended
31 December
2011
HK$’000
Note 1
HK$’000
Note 2
Net cash from/(used in) operations
Interest paid
Hong Kong profits tax paid
Overseas tax paid
272,361
(71,434)
(27,145)
(288)
72,219
19,778
288
Net cash from/(used in) operating activities
173,494
Investing activities
Purchase of property, plant and equipment
Additions to investment properties
Proceeds from disposals of investment properties
Proceeds from disposals of property, plant and
equipment
Income received from held-to-maturity investments
Bank interest received
Dividends received from available-for-sale
financial assets
Dividends received from the Privateco Group
Amounts repaid and advanced by associated companies
Dividends received from associated companies
Acquisitions of held-to-maturity investments
Acquisition of interests in an associated company
Amount advanced by an investee company
Net cash from investing activities
161,682
Pro forma adjustments
HK$’000
HK$’000
Note 3
Note 5
(217)
1,268
(209)
Unaudited
pro forma
consolidated
cash flow
statement of
the Remaining
Group
HK$’000
HK$’000
Note 6
(2,053)
(140,424)
—
(7,793)
—
(148,217)
(415)
(32,768)
25,293
286
5,713
(129)
(27,055)
25,293
3
1,117
4,520
(3)
(1,117)
(4,458)
—
—
62
18,989
—
346,511
76,243
(48,825)
(229,097)
111
(18,989)
– 241 –
35,099
(346,511)
(76,243)
48,825
229,097
(111)
—
35,099
—
—
—
—
—
33,270
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Audited
consolidated
cash flow
statement of
the Group for
the year ended
31 December
2011
HK$’000
Note 1
Financing activities
New short-term bank loans
Repayment of long-term bank loans
Repayment of short-term bank loans
Amounts advanced from the Privateco Group
Dividends paid
Dividends paid to non-controlling shareholders
558,825
(143,750)
(280,000)
—
(418,093)
(523)
Net cash used in financing activities
(283,541)
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of foreign exchange rate changes
51,635
595,167
676
Cash and cash equivalents at end of the year
647,478
Analysis of cash and cash equivalents
Bank balances and cash
647,478
HK$’000
Note 2
Pro forma adjustments
HK$’000
HK$’000
Note 3
Note 5
Unaudited
pro forma
consolidated
cash flow
statement of
the Remaining
Group
HK$’000
HK$’000
Note 6
(513,825)
133,750
235,000
418,319
45,000
(10,000)
(45,000)
418,319
(418,093)
—
523
(9,774)
(124,721)
161,244
—
(433,923)
(676)
36,523
(646,492)
34,478
1,059
—
36,523
Notes:
1.
The amounts are extracted from the audited consolidated income statement, audited consolidated statement of
comprehensive income and audited consolidated cash flow statement of the Group for the year ended 31 December
2011 as set out in the published annual report of the Company for the year ended 31 December 2011.
2.
Pursuant to the Distribution In Specie, the adjustment represents the exclusion of the income and expenses of the
Privateco Group for the year ended 31 December 2011, which is extracted from the Financial Information of the
Privateco Group for the year ended 31 December 2011 as set out in section I of Appendix III.
3.
Pursuant to the Group Reorganisation, the adjustment represents
4.
(i)
the exclusion of income and expenses and the income tax expenses in relation to Regent Centre Units for the
year ended 31 December 2011;
(ii)
the written off of property, plant and equipment in the Remaining Group with the carrying value of
HK$26,000 as at 1 January 2011;
(iii)
add-back of depreciation of the property, plant and equipment in the Remaining Group for the year ended 31
December 2011; and
(iv)
declaration and payment of cash dividend by the Privateco’s subsidiaries to the Company amounted to
HK$35,099,000.
The adjustment represents an add-back of profit attributable to non-controlling shareholders as if the Remaining
Holdco had acquired the outstanding 4.76% non-controlling interests of WPFSL from Parex as at 1 January 2011.
– 242 –
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
5.
The adjustment represents a reduction of finance costs for the year ended 31 December 2011 as if the outstanding
bank borrowings had been fully settled as at 1 January 2011.
6.
The adjustment reflects the reinstatement of the intercompany transactions between the Remaining Group and the
Privateco Group for the year ended 31 December 2011 and the reinstatement of the provision for amount receivable
from a subsidiary of the Company of HK$11,673,000, which should not be eliminated after the completion of the
Transactions. These intercompany transactions mainly comprise (1) management fee received by the Company from
the Privateco Group; (2) rental and management fee income and interest income received by the Remaining Group
from the Privateco Group; and (3) leasing and selling commission and manager fee received by the Privateco Group
from the Remaining Group.
7.
No other adjustment has been made to reflect any trading result or other transaction of the Remaining Group entered
into subsequent to 31 December 2011.
– 243 –
APPENDIX V
B.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
LETTER FROM THE REPORTING ACCOUNTANT ON UNAUDITED PRO FORMA
FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this circular.
ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION TO
THE DIRECTORS OF WINSOR PROPERTIES HOLDINGS LIMITED
We report on the unaudited pro forma financial information set out on pages 234 to 243 under the
heading of ‘‘Unaudited Pro Forma Financial Information of the Remaining Group’’ (the ‘‘Unaudited Pro
Forma Financial Information’’) in Appendix V of the circular dated 20 June 2012 (the ‘‘Circular’’) of
Winsor Properties Holdings Limited (the ‘‘Company’’), in connection with, among others, the proposed
group reorganisation, proposed distribution in specie and proposed payment of special cash dividend
(together, the ‘‘Proposed Transactions’’) by the Company. The Unaudited Pro Forma Financial
Information has been prepared by the directors of the Company, for illustrative purposes only, to
provide information about how the Proposed Transactions might have affected the relevant financial
information of the Company and its subsidiaries (hereinafter collectively referred to as the ‘‘Group’’).
The basis of preparation of the Unaudited Pro Forma Financial Information is set out on pages 234 to
243 of the Circular.
Respective Responsibilities of Directors of the Company and the Reporting Accountant
It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma
Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and Accounting
Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’
issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).
It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing
on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not
any responsibility for any reports previously given by us on any financial information used
compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to
those reports were addressed by us at the dates of their issue.
– 244 –
Rules,
accept
in the
whom
APPENDIX V
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE REMAINING GROUP
Basis of Opinion
We conducted our engagement in accordance with Hong Kong Standard on Investment Circular
Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment
Circulars’’ issued by the HKICPA. Our work, which involved no independent examination of any of the
underlying financial information, consisted primarily of comparing the audited consolidated balance
sheet of the Company as at 31 December 2011, the audited consolidated income statement, the audited
consolidated statement of comprehensive income and the audited consolidated cash flow statement of the
Company for the year ended 31 December 2011 as set out in the ‘‘Unaudited Pro forma Financial
Information of the Remaining Group’’ section of the Circular with the audited financial statements of the
Company for the year ended 31 December 2011 as set out in the 2011 annual report of the Company,
considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial
Information with the directors of the Company.
We planned and performed our work so as to obtain the information and explanations we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that
the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the
Company on the basis stated, that such basis is consistent with the accounting policies of the Group and
that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information
as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the
judgements and assumptions of the directors of the Company, and, because of its hypothetical nature,
does not provide any assurance or indication that any event will take place in the future and may not be
indicative of:
—
the financial position of the Group as at 31 December 2011 or any future date, or
—
the results and cash flows of the Group for the year ended 31 December 2011 or any future
periods.
Opinion
In our opinion:
(a)
the Unaudited Pro Forma Financial Information has been properly compiled by the directors
of the Company on the basis stated;
(b)
such basis is consistent with the accounting policies of the Group; and
(c)
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 20 June 2012
– 245 –
APPENDIX VI
A.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE PRIVATECO GROUP
The following is illustrative and unaudited pro forma financial information of the Privateco Group
(the ‘‘Unaudited Pro Forma Financial Information’’), comprising the unaudited pro forma combined
balance sheet, the unaudited pro forma combined income statement, the unaudited pro forma combined
statement of comprehensive income and the unaudited pro forma combined cash flow statement of the
Privateco Group, which have been prepared to illustrate the effect of the proposed Group
Reorganisation, Distribution in Specie and the Payment of Special Cash Dividend (together, the
‘‘Transactions’’) as if they had taken place on 31 December 2011 for the unaudited pro forma combined
balance sheet and on 1 January 2011 for the unaudited pro forma combined income statement, the
unaudited pro forma combined statement of comprehensive income and the unaudited pro forma
combined cash flow statement.
The Unaudited Pro Forma Financial Information has been prepared by the Directors for illustrative
purposes only and because of its hypothetical nature, it may not give a true picture of the financial
position, results of operations and cash flow of the Privateco Group had the Transactions been
completed as at 31 December 2011 or 1 January 2011 where applicable, or any future dates.
– 246 –
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Unaudited pro forma combined balance sheet of the Privateco Group
Audited
combined
balance
sheet of the
Privateco
Group as at
31 December
2011
HK$’000
Note 1
Non-current assets
Property, plant and equipment
Investment properties
Interests in associated companies
Amounts and loans receivable from
associated companies
Available-for-sale financial assets
Held-to-maturity investments
Deferred tax assets
Derivative financial instruments
Currents assets
Inventories
Trade and other receivables
Amounts receivable from the
Remaining Group Entities
Held-to-maturity investments
Tax recoverable
Bank balances and cash
8,930
11,027,830
696,144
HK$’000
Note 2
Pro forma adjustments
HK$’000 HK$’000 HK$’000 HK$’000
Note 3(ii) Note 3(iii)
Note 4
Note 5
HK$’000
Note 3(i)
8,930
11,038,580
696,144
10,750
39,369
319,402
65,835
1,597
179
39,369
319,402
65,835
1,597
179
12,159,286
12,170,036
362
35,561
362
35,561
181,942
29,252
435
646,492
(10,750)
24,675
(195,867)
(35,099)
(32,498)
(21,594)
(14,305)
(115,000)
894,044
Current liabilities
Trade and other payables and
accruals
Short-term bank loans, secured
Derivative financial instruments
Tax payable
Net current assets/(liabilities)
Total assets less current liabilities
HK$’000
Note 6(i)
Unaudited
pro forma
combined
balance
sheet of the
Privateco
Group
HK$’000 HK$’000
HK$’000
Note 6(ii) Note 6(iii)
(324,684)
—
29,252
435
103,312
168,922
196,642
546,682
42,130
25,982
(30,000)
196,642
516,682
42,130
25,982
811,436
781,436
82,608
(612,514)
12,241,894
11,557,522
– 247 –
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Audited
combined
balance
sheet of the
Privateco
Group as at
31 December
2011
HK$’000
Note 1
Non-current liabilities
Long-term bank loans, secured
Amounts payable to the Company
Amounts and loans payable to
associated companies
Derivative financial instruments
Deferred tax liabilities
HK$’000
Note 2
Pro forma adjustments
HK$’000 HK$’000 HK$’000 HK$’000
Note 3(ii) Note 3(iii)
Note 4
Note 5
HK$’000
Note 3(i)
1,560,100
3,413,622
(324,684)
HK$’000
Note 6(i)
Unaudited
pro forma
combined
balance
sheet of the
Privateco
Group
HK$’000 HK$’000
HK$’000
Note 6(ii) Note 6(iii)
(195,867) (2,893,072)
1
1,560,100
—
23,552
62,942
43,779
23,552
62,942
43,779
5,103,995
1,690,373
Net assets
7,137,899
9,867,149
Combined capital/Share capital
Reserves
1
7,135,681
Equity attributable to the
Company/the Privateco
7,135,682
9,864,932
2,217
2,217
7,137,899
9,867,149
Non-controlling interests
Total equity
(35,099)
(7,823)
(21,594)
(14,305)
(85,000)
2,596
2,890,476
(1)
2,596
9,862,336
Notes:
1.
The amounts are extracted from the audited combined balance sheet set out in the Accountant’s Report of the
Privateco Group as at 31 December 2011 as set out in section I of the Appendix III of this circular.
2.
Pursuant to the Group Reorganisation, the adjustments represent:
3.
(i)
the transfer of properties at fair values comprising (i) units 505–510, 5/F, Tower B, Regent Centre (‘‘Regent
Centre Units’’) amounted to HK$10,650,000 and (ii) one car parking space located at Landmark East
amounted to HK$100,000, from the Remaining Group Entities to the Privateco Group.
(ii)
the declaration and cash dividend of HK$35,099,000 by the Privateco Group to the Company.
Pursuant to the Group Reorganisation, the adjustments represent:
(i)
settlement of the amount payable to WPFSL of HK$24,675,000 which will finance WPFSL to repay its
shareholder loan to Parex, the non-controlling interest in WPFSL, and the declaration and payment of cash
dividend to the Company of HK$7,823,000, which will be advanced by the Company to WPFSL for its
settlement of its shareholder loan to Parex.
(ii)
the declaration and payment of cash dividend by the Privateco Group to the Company of HK$21,594,000,
which will be advanced by the Company to WPFSL for its payment of dividend to Parex.
– 248 –
APPENDIX VI
(iii)
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
the declaration and payment of cash dividend by the Privateco Group to the Company of HK$14,305,000,
which will be advanced by the Company to the Remaining Holdco for the acquisition of the outstanding
4.76% minority interest in WPFSL from Parex.
The consideration of HK$14,305,000 is calculated by 4.76% of the consolidated net asset value of WPFSL and
Chericourt of HK$753,930,000 at 31 December 2011 minus the distribution of dividends of HK$453,486,000 from
WPFSL to shareholders. Since the consolidated net assets value of WPFSL and Chericourt upon completion of the
Group Reorganisation may be different from its respective value used in the Unaudited Pro Forma Financial
Information, the final amount of the consideration may be different from the amount presented above.
4.
The adjustment represents repayment of bank loans entered into by the subsidiaries of the Privateco Group of
HK$30,000,000, which were secured by the assets of the Remaining Group Entities and the declaration and cash
dividend by the Privateco Group to the Company of HK$85,000,000, which will finance the Remaining Group for
the full repayment of bank loans entered into by the subsidiaries of the Remaining Holdco.
5.
The adjustment represents the cash advance to the Company for the payments of the final dividend of the Company
of HK$122,052,000 for the year ended 31 December 2011 and the Special Cash Dividend of HK$202,632,000 to the
Company’s shareholders, which is calculated on the basis of HK$0.7803 per share and 259,685,288 shares of the
Company in issue.
6.
Pursuant to the Group Reorganisation, the adjustments represent:
(i)
the transfer of amounts receivable from the Remaining Group Entities by the Privateco Group of
HK$195,867,000 to the Company.
(ii)
The outstanding payable to the Company by the Privateco Group of HK$2,663,973,000 is assumed by the
Privateco Group comprising Winsor Properties (Hong Kong) Limited, Winsor Properties (Overseas) Limited
and Winsor Properties (China) Limited to the Company by issuing ordinary shares.
The Privateco thereafter acquires the Distributed Businesses at a consideration of HK$2,893,072,000 which
represents the carrying value of the Distributed Business as of the date of transfer by issuing ordinary shares
of 259,685,287 of HK$0.01 each totaling HK$2,596,000. The share premium of HK$2,890,476,000 is
recognised in the reserves of the Privateco Group.
(iii)
7.
the elimination of the combined share capital of HK$1,000 of the subsidiaries directly held by the Privateco.
No other adjustment has been made to reflect any trading result or other transaction of the Privateco Group entered
into subsequent to 31 December 2011.
– 249 –
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Unaudited pro forma combined income statement of the Privateco Group
Audited combined
income statement of
the Privateco Group
for the year ended
31 December 2011
HK$’000
Note 1
Revenue
Cost of sales
414,824
(94,062)
Gross profit
Other income
Leasing and marketing expenses
Administrative expenses
Increase in fair value of investment
properties
Other gains, net
320,762
45,755
(8,768)
(42,420)
1,855,219
35,242
Operating profit
Finance income
Finance costs
2,205,790
5,671
(72,388)
Share of profits less losses of
associated companies
Gain on bargain purchase
Unaudited pro
forma combined
income statement of
Pro forma adjustments
the Privateco Group
HK$’000
HK$’000
HK$’000
Note 2(i)
Note 4(ii)
559
(155)
415,383
(94,217)
321,166
45,755
(8,768)
(42,420)
1,000
1,856,219
35,242
194
2,207,194
5,671
(72,194)
2,139,073
2,140,671
151,221
69,387
151,221
69,387
Profit before taxation
Taxation charge
2,359,681
(32,954)
Profit for the year
2,326,727
Attributable to:
The Company
Non-controlling interests
2,326,073
654
2,326,727
– 250 –
(88)
(32)
2,361,279
(33,074)
2,328,205
1,316
162
2,327,551
654
2,328,205
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Unaudited pro forma combined statement of comprehensive income of the Privateco Group
Audited combined
statement of
comprehensive
income of the
Privateco Group for
the year ended
31 December 2011
HK$’000
Note 1
Profit for the year
Other comprehensive (loss)/income
Exchange translation differences
Exchange differences released
upon repayment of loans from
an associated company
Fair value losses on available-for-sale
financial assets
Cash flow hedges
— Fair value losses
— Realised upon settlement
Share of hedging reserve of
an associated company
Other comprehensive loss for the year,
net of tax
2,326,727
Unaudited
pro forma combined
statement of
comprehensive
income of
Pro forma adjustments
the Privateco Group
HK$’000
HK$’000
HK$’000
Note 2(i)
Note 4(ii)
1,316
162
2,328,205
(5,627)
(5,627)
(44,122)
(44,122)
(128,185)
(128,185)
(33,326)
44,105
(33,326)
44,105
(3,174)
(3,174)
(170,329)
(170,329)
Total comprehensive income
for the year
2,156,398
1,316
162
2,157,876
Attributable to:
The Privateco
Non-controlling interests
2,155,744
654
1,316
162
2,157,222
654
2,156,398
– 251 –
2,157,876
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Unaudited pro forma combined cash flow statement of the Privateco Group
Audited
combined cash
flow statement
of the Privateco
Group for the
year ended
31 December
2011
HK$’000
Note 1
Profit before taxation
Gain on bargain purchase
Share of profits less losses of associated companies
Finance costs
Finance income
Amortised income from held-to-maturity investments
Depreciation of property, plant and equipment
Dividend income from available-for-sale
financial assets
Exchange differences released upon repayment of loans
from an associated company
Fair value losses on derivative financial instruments
Gain on disposal of property, plant and equipment
Increase in fair value of investment properties
Interest income from held-to-maturity investments
Interest income on loans to associated companies
2,359,681
(69,387)
(151,221)
72,388
(5,671)
(9,028)
2,593
Pro forma adjustments
HK$’000
HK$’000
HK$’000
Note 2(i)
Note 3(i)
Note 4(ii)
1,404
194
(194)
Unaudited
pro forma
combined cash
flow statement
of the Privateco
Group
HK$’000
2,361,279
(69,387)
(151,221)
72,194
(5,671)
(9,028)
2,593
(36,010)
(36,010)
(44,122)
17,186
(11)
(1,855,219)
(617)
(3,177)
(44,122)
17,186
(11)
(1,856,219)
(617)
(3,177)
Operating profit before working capital changes
Decrease in trade and other receivables
Increase in inventories
Decrease in amounts receivable from the Remaining
Group Entities
Decrease in trade and other payables and accruals
191,796
(62,123)
Net cash from operations
414,434
(1,000)
277,385
7,680
(304)
– 252 –
277,789
7,680
(304)
(24,675)
167,121
(62,123)
390,163
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Audited
combined cash
flow statement
of the Privateco
Group for the
year ended
31 December
2011
HK$’000
Note 1
Pro forma adjustments
HK$’000
HK$’000
Note 2(i)
Note 4(ii)
Unaudited
pro forma
combined cash
flow statement
of the Privateco
Group
HK$’000
Net cash from operations
Interest paid
Hong Kong profits tax paid
Overseas tax paid
414,434
(72,219)
(19,778)
(288)
Net cash from operating activities
322,149
297,973
(286)
(5,713)
(286)
(5,713)
3
1,117
4,458
18,989
325,408
21,103
76,243
(48,825)
(229,097)
111
3
1,117
4,458
18,989
325,408
21,103
76,243
(48,825)
(229,097)
111
163,511
163,511
Investing activities
Purchase of property, plant and equipment
Additions to investment properties
Proceeds from disposals of property,
plant and equipment
Income received from held-to-maturity investments
Bank interest received
Dividends received from available-for-sale financial assets
Amounts repaid by associated companies
Amounts advanced by associated companies
Dividends received from associated companies
Acquisitions of held-to-maturity investments
Acquisition of interests in an associated company
Amount advanced by an investee company
Net cash from investing activities
– 253 –
(67)
194
(32)
390,163
(72,025)
(19,877)
(288)
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Audited
combined cash
flow statement
of the Privateco
Group for the
year ended
31 December
2011
HK$’000
Note 1
Financing activities
New short-term bank loans
Repayment of long-term
bank loans
Repayment of short-term
bank loans
Amounts advanced to
the Remaining Group
Dividends paid
Dividends paid to
non-controlling
shareholders
HK$’000
Note 2(ii)
HK$’000
Note 3(i)
Pro forma adjustments
HK$’000
HK$’000
HK$’000
Note 3(ii) Note 3(iii) Note 4(i)
HK$’000
Note 4(ii)
Unaudited
pro forma
combined cash
flow statement
of the Privateco
Group
HK$’000
HK$’000
Note 5
513,825
513,825
(133,750)
(133,750)
(235,000)
(418,319)
—
(30,000)
(265,000)
(324,684)
(35,099)
(7,823)
(21,594)
(14,305)
(85,000)
(743,003)
(163,821)
(523)
(523)
(273,767)
(792,272)
211,893
(330,788)
433,923
433,923
676
676
Cash and cash equivalents
at end of the year
646,492
103,811
Analysis of cash and cash
equivalents
Ban balances and cash
646,492
Net cash used in
financing activities
Net increase/(decrease) in
cash and cash
equivalents
Cash and cash equivalents
at beginning of the
year
Effect of foreign exchange
rate changes
(34,762)
(68,397)
(114,838)
(324,684)
103,811
Notes:
1.
The amounts are extracted from the audited combined income statement, audited combined statement of
comprehensive income and combined cash flow statement of the Privateco Group set out in the accountant’s Report
of the Privateco Group for the year ended 31 December 2011 as set out in the Appendix III of this circular.
2.
Pursuant to the Group Reorganisation, the adjustments represent:
(i)
the inclusion of income and expenses and the income tax and deferred tax expenses in relation to Regent
Centre Units and one car parking space in Landmark East for the year ended 31 December 2011 upon transfer
of such properties to the Privateco Group.
(ii)
the declaration of cash dividend of HK$35,099,000 by the Privateco Group to the Company.
– 254 –
APPENDIX VI
3.
4.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
The adjustments represent:
(i)
settlement of the amount payable to WPFSL of HK$24,675,000 which will finance WPFSL to repay its
shareholder loan to Parex, the non-controlling interest in WPFSL; and the declaration and payment of cash
dividend to the Company of HK$7,823,000, which will be advanced by the Company to WPFSL for its
settlement of its shareholder loan to Parex.
(ii)
the declaration and payment of cash dividend by the Privateco Group to the Company of HK$21,594,000,
which will be advanced by the Company to WPFSL for its payment of dividend to Parex.
(iii)
the declaration and payment of cash dividend by the Privateco Group to the Company of HK$14,305,000,
which will be advanced by the Company to the Remaining Holdco for the acquisition of the outstanding
4.76% minority interest in WPFSL from Parex. Since the consolidated net assets value of WPFSL and
Chericourt on the completion of the Reorganisation may be different from its respective value used in the
Unaudited Pro Forma Financial Information, the final amount of the consideration may be different from the
amount presented above.
Pursuant to the Group Reorganisation, the adjustment represents:
(i)
The adjustment represents repayment of bank loans entered into by the subsidiaries of the Privateco Group of
HK$30,000,000 and the declaration and cash dividend by the Privateco Group to the Company of
HK$85,000,000, which will finance the Remaining Group for the repayment of all the bank loans entered into
by the subsidiaries of the Remaining Holdco.
(ii)
The corresponding finance costs of the aforementioned bank loan would have been reduced by HK$194,000
for the year ended 31 December 2011 as if the outstanding bank borrowings had been fully settled as at 1
January 2011 and the related tax expense would be increased by HK$32,000.
5.
The adjustment represents the cash advance to the Company for the payments of the final dividend of the Company
of HK$122,052,000 for the year ended 31 December 2011 and the Special Cash Dividend of HK$202,632,000 to the
Company’s shareholders calculated on the basis of HK$0.7803 per share and 259,685,288 shares of the Company in
issue.
6.
No other adjustment has been made to reflect any trading result or other transaction of the Privateco Group entered
into subsequent to 31 December 2011.
– 255 –
APPENDIX VI
B.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
LETTER FROM THE REPORTING ACCOUNTANT ON UNAUDITED PRO FORMA
FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified Public
Accountants, Hong Kong, for the purpose of incorporation in this circular.
ACCOUNTANT’S REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION TO
THE DIRECTORS OF WINSOR PROPERTIES HOLDINGS LIMITED
We report on the unaudited pro forma financial information set out on pages 246 to 255 under the
heading of ‘‘Unaudited Pro Forma Financial Information of the Privateco Group’’ (the ‘‘Unaudited Pro
Forma Financial Information’’) in Appendix VI of the circular dated 20 June 2012 (the ‘‘Circular’’) of
Winsor Properties Holdings Limited (the ‘‘Company’’), in connection with, among others, the proposed
group reorganisation, proposed distribution in specie and proposed payment of special cash dividend
(together, the ‘‘Proposed Transactions’’) by the Company. The Unaudited Pro Forma Financial
Information has been prepared by the Company, for illustrative purposes only, to provide information
about how the Proposed Transactions might have affected the relevant financial information of the
Privateco and its subsidiaries (hereinafter collectively referred to as the ‘‘Privateco Group’’). The basis
of preparation of the Unaudited Pro Forma Financial Information is set out on pages 246 to 255 of the
Circular.
Respective Responsibilities of Directors of the Company and the Reporting Accountant
It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma
Financial Information in accordance with paragraph 4.29 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and Accounting
Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’
issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’).
It is our responsibility to form an opinion, as required by paragraph 4.29(7) of the Listing
on the Unaudited Pro Forma Financial Information and to report our opinion to you. We do not
any responsibility for any reports previously given by us on any financial information used
compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to
those reports were addressed by us at the dates of their issue.
– 256 –
Rules,
accept
in the
whom
APPENDIX VI
UNAUDITED PRO FORMA FINANCIAL INFORMATION
OF THE PRIVATECO GROUP
Basis of Opinion
We conducted our engagement in accordance with Hong Kong Standard on Investment Circular
Reporting Engagements 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment
Circulars’’ issued by the HKICPA. Our work, which involved no independent examination of any of the
underlying financial information, consisted primarily of comparing the pro forma combined balance
sheet of the Privateco Group as at 31 December 2011, the pro forma combined income statement, the
pro forma combined statement of comprehensive income and the pro forma combined cash flow
statement of the Privateco Group for the year ended 31 December 2011 as set out in the ‘‘Unaudited Pro
forma Financial Information of the Privateco Group’’ section of the Circular with the audited combined
financial statements of the Privateco Group for the year ended 31 December 2011 as set out in the
accountant’s report of the Privateco Group, considering the evidence supporting the adjustments and
discussing the Unaudited Pro Forma Financial Information with the directors of the Company.
We planned and performed our work so as to obtain the information and explanations we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that
the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the
Company on the basis stated, that such basis is consistent with the accounting policies of the Privateco
Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the
judgements and assumptions of the directors of the Company, and, because of its hypothetical nature,
does not provide any assurance or indication that any event will take place in the future and may not be
indicative of:
—
the financial position of the Privateco Group as at 31 December 2011 or any future date, or
—
the results and cash flows of the Privateco Group for the year ended 31 December 2011 or
any future periods.
Opinion
In our opinion:
(a)
the Unaudited Pro Forma Financial Information has been properly compiled by the directors
of the Company on the basis stated;
(b)
such basis is consistent with the accounting policies of the Privateco Group; and
(c)
the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Yours faithfully,
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 20 June 2012
– 257 –
APPENDIX VII
PROPERTY VALUATION
SCHEDULE OF PROPERTIES
Part I — The Remaining Group Entities
The following is the list of all the property interests of the Remaining Group Entities (excluding
Units 505–510, 5/F, Tower B of Regent Centre), with reference to the valuation report prepared by
Jones Lang LaSalle Limited (‘‘JLL’’), an independent valuer, in connection with the valuation of the
market value of the Property as at 30 April 2012 for the purpose of incorporation in this circular:
1.
Location
Valuer
Reference to the
valuation report as
contained in this appendix
Various Portions of Regent Centre,
63 Wo Yi Hop Road and
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
JLL
Section A
– 258 –
APPENDIX VII
PROPERTY VALUATION
Part II — The Privateco Group
The following is the list of property interests of the Privateco Group (including Units 505–510,
5/F, Tower B of Regent Centre which form part of the Distributed Businesses) which are
(a)
held through subsidiaries, and
(b)
held through associates (within the meaning ascribed thereto under the Listing Rules),
with reference to the valuation reports prepared by JLL, B.I. Appraisals Limited (‘‘B.I.’’), Savills
Valuation and Professional Services Limited (‘‘Savills’’) and CBRE Pte. Ltd. (‘‘CBRE’’), the
independent valuers, in connection with the valuation of the market value of the property interest
as at 30 April 2012 for the purpose of incorporation in this circular:
(a)
Property interests of the Privateco Group (including Units 505–510, 5/F, Tower B of
Regent Centre which form part of the Distributed Businesses) which are held through
subsidiaries
Location
Valuer
Reference to the
valuation report as
contained in this appendix
1.
Landmark East,
100 How Ming Street,
Kwun Tong,
Kowloon,
Hong Kong
JLL
Section B
2.
Units 505–510,
on 5th Floor of Tower B,
Regent Centre,
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
JLL
Section B
3.
Shui Hing Centre,
13 Sheung Yuet Road,
Kowloon Bay,
Kowloon,
Hong Kong
JLL
Section B
4.
W Square,
314–324 Hennessy Road,
Wan Chai
Hong Kong
JLL
Section B
– 259 –
APPENDIX VII
PROPERTY VALUATION
Location
Valuer
Reference to the
valuation report as
contained in this appendix
5.
Winner Godown Building,
503–515 Castle Peak Road
Tsuen Wan Section and
1–9 Sha Tsui Road,
Tsuen Wan,
New Territories,
Hong Kong
JLL
Section B
6.
161 agricultural lots,
Lantau and Peng Chau,
New Territories,
Hong Kong
B.I.
Section C
– 260 –
APPENDIX VII
(b)
PROPERTY VALUATION
Property interests of the Privateco Group which are held through associates (within the
meaning ascribed thereto under the Listing Rules)
Location
Valuer
Reference to the
valuation report as
contained in this appendix
1.
Lanson Place Hotel,
133 Leighton Road,
Causeway Bay,
Hong Kong
Savills
Section D
2.
24 unsold units within
Belle Vue Residences, Oxley Walk,
Singapore
CBRE
Section E
3.
Shop A on Ground Floor,
The Whole Basement and One Toilet on
Ground Floor, Minden House,
Nos. 13–15 Minden Avenue and
No. 3 Blenheim Avenue,
Tsimshatsui, Kowloon,
Hong Kong
Not
applicable
Note 1
4.
Flats 402 and 403 of Block A, #1,
Huaguoshan Mansion,
Gongyuen Road and Gongye
7th Road, Shekou,
Shenzhen City, the PRC
JLL
Section B
5.
A land parcel to the North of Zhenhai
Road and to the East of Tonghai Road,
Qianhaiwan Logistics Park, Nanshan
District, Shenzhen City, the PRC
JLL
Section B
6.
A cold storage development
located at No. 3 Nan Gang Road,
Shekou Industrial Zone,
Nanshan District,
Shenzhen City, the PRC
JLL
Section B
7.
Warehouse No. 105–108,
located at 53 Linhai Avenue,
Qianhaiwan Free Trade
Port Area, Nanshan District,
Shenzhen City, the PRC
JLL
Section B
Note:
1.
The Group has an attributable interest of 33.33% in the property through its investment in Javary Limited. On
16 March 2012, Javary Limited entered into agreements to dispose of the property at an aggregate
consideration of HK$43,380,000. Completion is scheduled to take place on 29 June 2012. As such, no
valuation is done for the said property.
– 261 –
APPENDIX VII
PROPERTY VALUATION
PROPERTY INTERESTS OF THE REMAINING GROUP ENTITIES
The property interests held by the Remaining Group Entities were revalued by Jones Lang LaSalle
Limited, an independent property valuer, as at 30 April 2012. The relevant property valuation report is
set out in Section A in this appendix.
The table below shows the change in carrying value of the property interests held by the
Remaining Group Entities from 31 December 2011 to 30 April 2012, on the assumption that the Group
Reorganisation had been taken place on 30 April 2012.
HK$’million
Carrying value as at 31 December 2011
Disposals (Note)
1,140.1
(10.8)
Carrying value as at 30 April 2012
1,129.3
Valuation as of 30 April 2012 per Section A of this appendix
1,129.3
Note: Disposals of HK$10.8 million represent assets to be transferred from the Remaining Group Entities to the Privateco
Group pursuant to the Group Reorganisation, comprising Units 505–510, 5/F. Tower B, Regent Centre and one car
parking space located at Landmark East.
– 262 –
APPENDIX VII
PROPERTY VALUATION
PROPERTY INTERESTS OF THE PRIVATECO GROUP
The property interests held by subsidiaries and associates (within the meaning ascribed thereto
under the Listing Rules) of the Privateco Group were revalued by Jones Lang LaSalle Limited, Savills
Valuation and Professional Services Limited, B.I. Appraisals Limited and CBRE Pte. Ltd., independent
property valuers, as at 30 April 2012. The relevant property valuation reports are set out in Section B to
E in this appendix.
The table below shows the change in carrying value of the property interests held by subsidiaries
and associates (within the meaning ascribed thereto under the Listing Rules) of the Privateco Group
from 31 December 2011 to 30 April 2012, on the assumption that the Group Reorganisation had been
taken place on 30 April 2012 and the property interests held by associates (within the meaning ascribed
thereto under the Listing Rules) had been fair valued as at 30 April 2012.
Carrying value as at 31 December 2011
Additions (Note 1)
Property
interests
held by
subsidiaries
of the
Privateco
Group
(Note 4)
Property
interests
held by
associates
(within the
meaning
ascribed
thereto
under the
Listing
Rules) of the
Privateco
Group
(Note 5)
Total
HK$ million
HK$ million
HK$ million
11,027.8
720.3
11,748.1
10.8
—
10.8
—
Disposal (Note 2)
Carrying value as at 30 April 2012
Gain arising from fair value change for the
four months ended 30 April 2012 (Note 3)
Valuation of property interests
as at 30 April 2012
– 263 –
(35.2)
(35.2)
11,038.6
685.1
11,723.7
37.0
128.2
165.2
11,075.6
813.3
11,888.9
APPENDIX VII
PROPERTY VALUATION
Notes:
(1)
Additions of HK$10.8 million represent assets to be transferred from the Remaining Group Entities to the Privateco
Group pursuant to the Group Reorganisation, comprising Units 505–510, 5/F, Tower B, Regent Centre and one car
parking space located at Landmark East.
(2)
Disposals of HK$35.2 million represent carrying value of the property interests being realised to cost of sales upon
disposal of properties during the four months ended 30 April 2012.
(3)
The gain arising from fair value change represents the excess of market value of the revalued property interests as at
30 April 2012 over their carrying values as at 31 December 2011 after adjustments of additions and disposals of as
explained in notes (1) and (2) above.
(4)
Properties interests held by subsidiaries of the Privateco Group comprise (i) Peng Chau Lot No. 1 and various lots in
Demarcation District Nos.6, 310, 311 and 326, Lantau Island, which were valued at HK$7.9 million as at 30 April
2012 as shown in the valuation report in Section C of this appendix; and (ii) properties held as investments in Hong
Kong, which were valued at HK$11,067.7 million as at 30 April 2012 as shown in the valuation report in Group I in
Section B of this appendix.
(5)
Properties interests held by associates (within the meaning ascribed thereto under the Listing Rules) of the Privateco
Group comprise (i) a 40% interest in Lanson Place Hotel in Causeway Bay, Hong Kong, which capital value
attributable to the Group was HK$516.0 million as at 30 April 2012 as shown in the valuation report in Section D of
this appendix; (ii) a 30% interest in Flats 402 and 403 of Block A, #1 Huaguoshan Mansion in Shekou, Shenzhen
City, the PRC, which capital value attributable to the Group was HK$1.14 million as at 30 April 2012 as shown in
the valuation report in Group II in Section B of this appendix; (iii) a 30% interest in certain residential units in Belle
Vue Residences in Singapore, which capital value attributable to the Group on a ‘‘unit by unit’’ basis was S$47.2
million as at 30 April 2012 as shown in the valuation report in Section E of this appendix and translated into
HK$296.2 million at the rate of exchange prevailing at the date of valuation at S$1 to HK$6.276; and (iv) a land
parcel held by a 30% associate of the Group in the PRC, which were of no commercial value as at 30 April 2012 as
shown in the valuation report in Group II in Section B of this appendix. The Group has an attributable interest of
33.33% in the property through its investment in Javary Limited. On 16 March 2012, Javary Limited entered into
agreements to dispose of the property at an aggregate consideration of HK$43,380,000. Completion is scheduled to
take place on 29 June 2012. As such, no valuation is done for the said property and therefore the value of this
property has been excluded from this reconciliation.
– 264 –
APPENDIX VII
PROPERTY VALUATION
SECTION A
The following is the text of a report prepared for the purpose of incorporation in this circular
received by the Group from Jones Lang LaSalle Limited, an independent valuer, in connection with its
valuation as at 30 April 2012 of the market value of the Property of the Remaining Group Entities.
20 June 2012
The Directors
Wing Tai Properties Limited
27th Floor, Two Landmark East
100 How Ming Street
Kwun Tong
Kowloon, Hong Kong
And
The Directors
Winsor Properties Holdings Limited
8th Floor, AXA Tower, Landmark East
100 How Ming Street
Kwun Tong
Kowloon, Hong Kong
Dear Sirs
Re: Property Valuation for Winsor Properties Holdings Limited
INSTRUCTION AND DATE OF VALUATION
In accordance with the joint instructions received from Wing Tai Properties Limited and Winsor
Properties Holdings Limited (‘‘Winsor’’ and, together with its subsidiaries, the ‘‘Winsor Group’’) for us
to carry out valuation for Various Portions of Regent Centre, 63 Wo Yi Hop Road and 70 Ta Chuen
Ping Street, Kwai Chung, New Territories, Hong Kong (the ‘‘Property’’) held by Access Rich Limited,
Chericourt Company Limited, Winsor Parking Limited and Winsor Properties Financial Services Limited
(collectively known as ‘‘Remaining Group Entities’’), we confirm that we have carried out inspection,
made relevant enquiries and obtained such further information as we consider necessary for the purpose
of providing you with our opinion of the market value of the Property as at 30 April 2012 (‘‘the date of
valuation’’).
– 265 –
APPENDIX VII
PROPERTY VALUATION
BASIS OF VALUATION
Our valuation for the Property is made on the basis of the market value adopted by the Hong Kong
Institute of Surveyors as ‘‘the estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’’.
Our valuation is prepared in compliance with the requirements set out in Chapter 5 and Practice
Note 12 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited, Rule 11 of The Codes on Takeovers and Mergers and Share Repurchases (the ‘‘Takeovers
Code’’) published by Securities and Futures Commission, and in accordance with the HKIS Valuation
Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors.
VALUATION ASSUMPTIONS
Our valuation has been made on the assumption that the owner sells the Property on the market
without any special arrangement such as deferred terms contracts, leasebacks, joint venture, management
agreements which could serve to affect the value of the Property. The market value of a property is also
estimated without regard to costs of sale and purchase and without offset for any associated taxes.
No allowance has been made in our valuation for any charges, mortgages or amounts owing on the
property interest nor for any expenses or taxation that may be incurred in effecting a sale. Unless
otherwise stated, it is assumed that the Property is free from encumbrances, restrictions and outgoings of
an onerous nature that could affect its value.
VALUATION METHODOLOGY
We have valued the Property on the basis of market value by the direct comparison approach and
income capitalisation approach of valuation.
The direct comparison method is based on comparing the property to be valued directly with other
comparable properties, which have recently transferred its legal ownership. However, given the
heterogeneous nature of real estate properties, appropriate adjustments are usually required to allow for
any qualitative differences that may affect the price likely to be achieved by the property under
consideration.
The income capitalisation approach is based on the capitalisation of the existing and reversionary
rental income potential from the date of valuation at appropriate investment yield to arrive at the capital
value. The rental value and capitalisation rate to be adopted for the valuation are derived from an
analysis of market transactions and our interpretation of prevailing investor requirements or
expectations.
TITLE INVESTIGATION
We have conducted Land Registry searches for the Property. We have not examined the original
documents to verify ownership or to ascertain the existence of any amendments that may not appear on
the copies obtained by us. However, we have not searched and examined the original documents to
– 266 –
APPENDIX VII
PROPERTY VALUATION
verify ownership or to ascertain the existence of any lease amendments that may not appear on the
copies provided to us. No responsibility is assumed for any matters concerning the legal title of the
subject property interest.
SOURCE OF INFORMATION
In the course of our valuation, we have relied to a very considerable extent on the information
provided to us by Winsor Group and have accepted advice given to us on such matters as planning
approvals, statutory notices, easements, tenure, occupancy status, rent roll, ownership details,
identification of property interest, site and floor areas and all other relevant matters. All documents and
leases have been used for reference only and all dimensions, measurements and areas are deemed
approximate. No on-site measurements have been taken. We have not seen original planning and
occupation consents for the Property and have assumed that the Property has been erected and is being
occupied and used in accordance with such consents and that there are no outstanding statutory notices.
We have no reason to doubt the truth and accuracy of the information provided to us. Winsor
Group also advised that no material facts have been omitted from the information supplied and we have
no reason to suspect that material information has been withheld.
We have not been instructed to independently verify the information provided to us, e.g. to verify
the existence or accuracy of tenancies of the Property. Our valuation is totally dependent on the
adequacy and accuracy of the information supplied. Should these prove to be incorrect or inadequate,
the accuracy of our valuation may be affected.
PROPERTY INSPECTION
We inspected the exterior and where possible the representative parts of the interior of the Property
on 5 June 2012 by Mr. Alex Mo, MHKIS, MRICS. We have not conducted formal site and structural
surveys and, as such, we cannot report that the Property is free from rot, infestation or any other
structural defects. We have not carried out building surveys, nor have we inspected those parts of the
Property, which are covered, unexposed or inaccessible and such parts have been assumed to be in good
repair and condition. We cannot express an opinion about or advise upon the condition of uninspected
parts and this report should not be taken as making any implied representation or statement about such
parts. No tests have been carried out to any of the building services.
We were not instructed to arrange for any investigation to be carried out to determine whether or
not any deleterious or hazardous material has been used in the construction of the Property, or has since
been incorporated, and therefore unable to report that the Property is free from risk in this respect.
PLANT AND MACHINERY
Our valuation normally includes all plant and machinery that form part of the building services
installations. However, process plant, machinery and equipment which may have been installed wholly
in connection with the occupiers’ industrial or commercial processes, together with furniture and
furnishings, tenants’ fixtures and fittings are excluded.
– 267 –
APPENDIX VII
PROPERTY VALUATION
POTENTIAL TAX LIABILITY
There are potential tax liability which might arise on the disposal of the Property, including but
not limited to profit tax and any other relevant taxes prevailing at the time in the respective jurisdiction.
The basis and definition of market value do not allow for any taxation that may be incurred in effecting
a sale and therefore we have not considered such tax liability in the valuation.
We enclose herewith the summary of value and valuation certificate.
Yours faithfully
For and on behalf of
Jones Lang LaSalle Limited
Au Kin Keung, Alkan
BA (Hons), MHKIS, MRICS, RPS (GP), MCIREA
National Director
Licence No. E-181955
Mr. Au is a Registered Professional Surveyor in Hong Kong, a member of the Royal Institution of Chartered Surveyors and the
Hong Kong Institute of Surveyors. He has over 18 years and 10 years experience in valuation of properties in Hong Kong and the
PRC respectively.
– 268 –
APPENDIX VII
PROPERTY VALUATION
SUMMARY OF VALUE
PROPERTY HELD AS INVESTMENT IN HONG KONG
Property
Various Portions of Regent Centre,
63 Wo Yi Hop Road and
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
Capital value as at
30 April 2012
(HK$)
1,129,350,000
– 269 –
Interest
attributable to
Winsor Group
95.66%
Capital value
attributable to
Winsor Group
as at
30 April 2012
(HK$)
1,080,322,380
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description, age and tenure
Particulars of occupancy
Various Portions
of Regent Centre,
63 Wo Yi Hop Road and
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
Regent Centre is an industrial
complex comprising two industrial
blocks. Tower A comprises 23
storeys and Tower B comprises 22
storeys, erected on top of a 3-storey
podium completed in 1996.
The property was let to
various tenants with an
occupancy rate of
approximately 95% as at
the date of valuation.
Aggregate of 47,620/71,750
equal and undivided shares of
and in the Remaining Portion
of Lot No. 299
in Demarcation District
No. 444
The car park podium comprises 1
container, 51 lorry and 50 van
parking spaces, whilst the upper
floors provide industrial workshops
and ancillary offices. Unit G01 on
the Ground Floor of Tower A can
be used for ‘‘non-residential’’
purposes.
The subject property comprises
various portions of Regent Centre
(see details in Note (1) below) and
has a total gross floor area of
approximately 657,177ft²
(61,053.23m²).
Lot No. 299 in Demarcation District
No. 444 is held from the
Government under New Grant
No. 4260 for a term of 99 years less
the last 3 days from 1 July 1898.
The lease has been extended until
30 June 2047 by virtue of Section 6
of the New Territories Leases
(Extension) Ordinance. The current
government rent payable is an
amount equal to 3% of the
prevailing rateable value of the
property.
The majority of the lease
terms are for 2 years with
the latest term due to
expire on 15 April 2015.
Capital value as at
30 April 2012
HK$1,129,350,000
(95.66% attributable to
the Winsor Group:
HK$1,080,322,380)
(note (7))
The aggregate monthly
passing income excluding
carpark licence fee as at the
date of valuation was about
HK$4.9 million, exclusive
of government rates,
government rents and
management fees.
Car parking spaces are
licensed on monthly and
hourly basis. The average
monthly carpark licence fee
was approximately
HK$570,507, inclusive of
government rates,
government rents and
management fees, for the
period from October 2011
to March 2012.
(note (5))
Notes:
(1)
The property comprises the whole of Regent Centre except Unit G02 on Ground Floor, all units on 1st, 2nd, 3rd and 6th
Floors, Units 1001 to 1003, 1005 to 1010, 1013 and 1015 to 1020 on 10th Floor, Units 1201 to 1203, 1205 to 1213, 1215
to 1217 on 12th Floor, all units on 13th Floor, Units 1511, 1512 and 1518 on 15th Floor, all units on 16th Floor, Units
1701 to 1703, 1705 to 1710, 1713, 1715, 1716 and 1720 on 17th Floor, Units 1817 to 1819 on 18th Floor, Units 2105 to
2113 and 2115 to 2117 on 21st Floor and Units 2501 to 2503, 2505 and 2518 to 2520 on 25th Floor of Tower A together
with Units LG01 and LG02 on Lower Ground Floor, Units 301 to 303, 305 to 309 and Unit 320 on 3rd Floor, Units 505 to
510 on 5th Floor and all units on 6th, 8th, 9th, 11th, 12th and 15th Floors of Tower B.
(2)
As per our searches at the Land Registry in respect of the property and as confirmed by Winsor Group, the registered
owners of the property are either Chericourt Company Limited (95.24% owned subsidiary of Winsor Group) or Winsor
Parking Limited (100% owned subsidiary of Winsor Group) save and except Unit G01 on Ground Floor of Tower A,
registered under Winsor Properties Financial Services Limited (95.24% owned subsidiary of Winsor Group) and 26th Floor
of Tower A, registered under Access Rich Limited (100% owned subsidiary of Winsor Group).
– 270 –
APPENDIX VII
PROPERTY VALUATION
(3)
According to the No Objection Letter dated 21 March 2007 issued by The Hong Kong Special Administrative Region by the
District Lands Office/Tsuen Wan and Kwai Tsing registered vide Memorial No. 07032802020015, Unit G01 on Ground
Floor of Tower A may be used for non-residential purposes (excluding hotel, petrol filling station and residential care home)
for the lifetime of the existing building.
(4)
As per our searches at the Land Registry in respect of the property and as confirmed by Winsor Group, certain portions in
both Towers A and B of the property have been mortgaged to Chong Hing Bank Limited by Mortgage dated 28 January
2000 vide Memorial No. TW1333609; the Bank of Tokyo-Mitsubishi UFJ, Ltd., Hong Kong Branch by Mortgage dated 27
March 1997 vide Memorial No.TW1129536, CITIC Bank International Limited by Mortgage and Rent Assignment both
dated 30 November 2001 vide Memorial Nos. TW1444139 and TW1444140; Industrial and Commercial Bank of China
(Asia) Limited by Mortgage and Rent Assignment both dated 5 October 2007 vide Memorial Nos. 07101500720272 and
07101500720287 respectively and DBS Bank Ltd. by Mortgage dated 15 March 2012 vide Memorial No. 12032700840012.
(5)
The aggregate monthly passing income includes those rents and licence fees of the Units 818 and 819 occupied by a related
party of Winsor Group or Wing Tai and its subsidiaries. The tenancy of Units 818 and 819 of Tower A was agreed to renew
for a term of 10 months from 1 January 2013 to 31 October 2013 at a monthly rent of HK$18,452.9, exclusive of
management fee, government rent and rates; such renewal constitutes a special deal under the Takeovers Code.
Members within the Winsor Group have entered into two new licences (which constitute special deals under the Takeovers
Code) on Units 701 and 2209 of Tower B both for one year term commencing on 1 September 2012 and 3 October 2012
respectively at a total monthly licence fee of HK$20,279.8, exclusive of management fee, government rent and rates.
(6)
Lot No. 299 in Demarcation District No. 444 falls within zone ‘‘Other Specified Uses (Business)’’ under draft Kwai Chung
Outline Zoning Plan No. S/KC/26 dated 20 April 2012. The height restriction on the Lot No. 299 in Demarcation District
No. 444 is 130m above Principal Datum or the height of the existing building, whichever is the greater.
(7)
The notional breakdown of the capital value of the property in accordance with the ownership is summarised as follows:
Registered Owner
(8)
Capital value as at
30 April 2012
(HK$)
Interest attributable
to Winsor Group
Capital value
attributable to
Winsor Group as at
30 April 2012
(HK$)
Access Rich Limited
Winsor Parking Limited
Winsor Properties Financial Services
Limited
Chericourt Company Limited
44,290,000
55,480,000
100%
100%
44,290,000
55,480,000
7,430,000
1,022,150,000
95.24%
95.24%
7,076,190
973,476,190
Total
1,129,350,000
95.66%
1,080,322,380
The potential tax liability which might arise on the disposal of the property as at the date of valuation in Hong Kong is
profit tax at 16.5% on assessable profits from the sales of the property. Nevertheless, the registered owners of the property
as mentioned in note (2) above confirm that the property is held as long term investment for rental income and there is no
plan or intention to dispose of the property. Hence, the likelihood of such tax liability being crystallised is slim.
– 271 –
APPENDIX VII
PROPERTY VALUATION
SECTION B
The following is the text of a report prepared for the purpose of incorporation in this circular
received by the Group from Jones Lang LaSalle Limited, an independent valuer, in connection with its
valuation as at 30 April 2012 of the market value of a portfolio of property interests of the Privateco
Group.
20 June 2012
The Directors
Wing Tai Properties Limited
27th Floor, Two Landmark East
100 How Ming Street
Kwun Tong
Kowloon, Hong Kong
And
The Directors
Winsor Properties Holdings Limited
8th Floor, AXA Tower, Landmark East
100 How Ming Street
Kwun Tong
Kowloon, Hong Kong
Dear Sirs
Re:
Portfolio Asset Valuation for Winsor Properties Holdings Limited
INSTRUCTION AND DATE OF VALUATION
In accordance with the joint instructions received from Wing Tai Properties Limited (‘‘Wing Tai’’)
and Winsor Properties Holdings Limited (‘‘Winsor’’) for us to carry out valuation for a property
portfolio (‘‘the Properties’’) held or leased by Winsor and its subsidiaries (collectively known as
‘‘Winsor Group’’) located in Hong Kong and The People’s Republic of China (‘‘the PRC’’), we confirm
that we have carried out inspections, made relevant enquiries and obtained such further information as
we consider necessary for the purpose of providing you with our opinion of the market values of the
Properties as at 30 April 2012 (‘‘the date of valuation’’).
The Properties comprises a total of 10 property interests, 6 located in Hong Kong and 4 in the
PRC.
– 272 –
APPENDIX VII
PROPERTY VALUATION
BASIS OF VALUATION
Our valuation for each of the Properties is made on the basis of the market value adopted by the
Hong Kong Institute of Surveyors as ‘‘the estimated amount for which a property should exchange on
the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently and without
compulsion’’.
Our valuations are prepared in compliance with the requirements set out in Chapter 5 and Practice
Note 12 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited, Rule 11 of The Codes on Takeovers and Mergers and Share Repurchases (the ‘‘Takeovers
Code’’) published by Securities and Futures Commission, and in accordance with the HKIS Valuation
Standards on Properties (First Edition 2005) published by The Hong Kong Institute of Surveyors.
The definition of market value has been applied to each property interest independently.
VALUATION ASSUMPTIONS
Our valuations have been made on the assumption that the owner sells the Properties individually
on the market without any special arrangement such as deferred terms contracts, leasebacks, joint
venture, management agreements which could serve to affect the values of the Properties. The market
values of the Properties are also estimated without regard to costs of sale and purchase and without
offset for any associated taxes.
No allowance has been made in our valuations for any charges, mortgages or amounts owing on
the property interests nor for any expenses or taxation that may be incurred in effecting sales. Unless
otherwise stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings
of an onerous nature that could affect their values.
VALUATION METHODOLOGY
For property interests in Group I — properties held as investments in Hong Kong, we have valued
the property interests on the basis of market value by the direct comparison approach and income
capitalisation approach with reference to sales evidences in the relevant markets.
For property interests in Group II — properties held as investments in the PRC, we have valued
the property interests on the basis of market value by the direct comparison approach.
For property interest in Group III — property rented by Winsor Group in Hong Kong, we have
assigned no commercial value to the property mainly due to the short term tenure of the tenancy,
prohibition against assignment or subletting and/or lack of substantial profit rent.
For property interests in Group IV — properties rented by China Merchants International Cold
Chain (Shenzhen) Company Limited (‘‘CMIC’’), a 30% associated company of Winsor Group, we have
assigned no commercial value to the properties mainly due to the short term tenure of the tenancies,
prohibition against assignment or subletting and/or lack of substantial profit rent.
– 273 –
APPENDIX VII
PROPERTY VALUATION
The direct comparison method is based on comparing the property to be valued directly with other
comparable properties, which have recently transferred its legal ownership. However, given the
heterogeneous nature of real estate properties, appropriate adjustments are usually required to allow for
any qualitative differences that may affect the price likely to be achieved by the property under
consideration.
The income capitalisation approach is based on the capitalisation of the existing and reversionary
rental income potential from the date of valuation at appropriate investment yield to arrive at the capital
value. The rental value and capitalisation rate to be adopted for the valuation are derived from an
analysis of market transactions and our interpretation of prevailing investor requirements or
expectations.
TITLE INVESTIGATION
We have conducted Land Registry searches for the property interests located in Hong Kong. For
the property interests in the PRC, we have relied on the information provided by CMIC and the PRC
legal advisor of Winsor Group, J. Yin Law Office (廣東佳因律師事務所) (‘‘PRC Legal Advisor’’),
regarding the title to the properties. We have not examined the original documents to verify ownership
or to ascertain the existence of any amendments that may not appear on the copies obtained by us.
However, we have not searched and examined the original documents to verify ownership or to ascertain
the existence of any lease amendments that may not appear on the copies provided to us. No
responsibility is assumed for any matters concerning the legal title of the Properties.
SOURCE OF INFORMATION
In the course of our valuation, we have relied to a very considerable extent on the information
provided to us by Winsor Group and CMIC, and have accepted advice given to us on such matters as
planning approvals, statutory notices, easements, tenure, occupancy status, rent rolls, ownership details,
identification of property interests, site and floor areas and all other relevant matters. All documents and
leases have been used for reference only and all dimensions, measurements and areas are deemed
approximate. No on-site measurements have been taken. We have not seen original planning,
development schemes and occupation consents for the Properties and have assumed that they have been
erected and are being occupied and used in accordance with such consents and that there are no
outstanding statutory notices.
We have no reason to doubt the truth and accuracy of the information provided to us. Winsor
Group and CMIC also advised that no material facts have been omitted from the information supplied
and we have no reason to suspect that material information has been withheld.
We have not been instructed to independently verify the information provided to us, e.g. to verify
the existence or accuracy of each tenancy within the Properties. Our valuations are totally dependent on
the adequacy and accuracy of the information supplied. Should these prove to be incorrect or
inadequate, the accuracy of our valuations may be affected.
– 274 –
APPENDIX VII
PROPERTY VALUATION
PROPERTY INSPECTION
We inspected the exterior and where possible the representative parts of the interior of the
Properties in late May and early June by the undersigned for properties in the PRC and by Mr. Alex Mo,
MHKIS, MRICS for properties in Hong Kong. We have not conducted formal site and structural surveys
and, as such, we cannot report that the Properties are free from rot, infestation or any other structural
defects. We have not carried out building surveys, nor have we inspected those parts of the Properties,
which are covered, unexposed or inaccessible and such parts have been assumed to be in good repair
and conditions. We cannot express an opinion about or advise upon the condition of uninspected parts
and this report should not be taken as making any implied representation or statement about such parts.
No tests have been carried out to any of the building services.
We were not instructed to arrange for any investigation to be carried out to determine whether or
not any deleterious or hazardous material has been used in the construction of the Properties, or has
since been incorporated, and therefore unable to report that the Properties are free from risk in this
respect.
SITE INVESTIGATION
We have not carried out site measurements to verify the correctness of the site area of each of the
Properties. We were not instructed to carry out investigations on site to determine the suitability of the
ground conditions and the services, etc. for any future development, nor did we undertake
archaeological, ecological or environmental surveys. Our valuations are on the basis that these aspects
are satisfactory and that where development is contemplated, no extraordinary expenses or delays will
be incurred during the construction period due to these, or to archaeological or ecological matters.
PLANT AND MACHINERY
Our valuations normally include all plant and machinery that form part of the building services
installations. However, process plant, machinery and equipment which may have been installed wholly
in connection with the occupiers’ industrial or commercial processes, together with furniture and
furnishings, tenants’ fixtures and fittings are excluded.
POTENTIAL TAX LIABILITY
There are potential tax liability which might arise on the disposal of each of the Properties in the
respective locations, including but not limited to profit tax, business tax, land appreciation tax, capital
gain tax and any other relevant taxes prevailing at the time in the respective jurisdiction. The basis and
definition of market value do not allow for any taxation that may be incurred in effecting sales and
therefore we have not considered such tax liability in the valuations.
EXCHANGE RATE
All currency stated herein this report is in Hong Kong dollars (HK$). The property interests in the
PRC have been valued in Renminbi (‘‘RMB’’) and such valuations have been translated into Hong Kong
dollars at the rate of exchange prevailing on the date of valuation at RMB1 to HK$1.2356.
– 275 –
APPENDIX VII
PROPERTY VALUATION
We enclose herewith the summary of values and valuation certificates.
Yours faithfully
For and on behalf of
Jones Lang LaSalle Limited
Au Kin Keung, Alkan
BA(Hons), MHKIS, MRICS, RPS (GP), MCIREA
National Director
Licence No. E-181955
Mr. Au is a Registered Professional Surveyor in Hong Kong, a member of the Royal Institution of Chartered Surveyors and the
Hong Kong Institute of Surveyors. He has over 18 years and 10 years experience in valuation of properties in Hong Kong and the
PRC respectively.
– 276 –
APPENDIX VII
PROPERTY VALUATION
SUMMARY OF VALUES
Group I — Properties held as investments in Hong Kong
No.
Property
1.
Landmark East,
100 How Ming Street,
Kwun Tong,
Kowloon,
Hong Kong
2.
Units 505–510 on 5th Floor of Tower B,
Regent Centre,
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
3.
Shui Hing Centre,
13 Sheung Yuet Road,
Kowloon Bay,
Kowloon,
Hong Kong
4.
W Square,
314–324 Hennessy Road,
Wan Chai,
Hong Kong
5.
Winner Godown Building,
503–515 Castle Peak Road Tsuen Wan
Section and 1–9 Sha Tsui Road,
Tsuen Wan,
New Territories,
Hong Kong
Sub-total
Capital value as at
30 April 2012
Interest
attributable
to Winsor
Group
Capital value
attributable
to Winsor
Group as at
30 April 2012
HK$8,500,000,000
100%
HK$8,500,000,000
HK$10,650,000
95.24%
HK$10,142,857
HK$510,000,000
100%
HK$510,000,000
HK$1,270,000,000
100%
HK$1,270,000,000
HK$777,000,000
100%
HK$777,000,000
HK$11,067,650,000
– 277 –
HK$11,067,142,857
APPENDIX VII
PROPERTY VALUATION
SUMMARY OF VALUES
Group II — Properties held as investments in the PRC
No.
Property
6.
Flats 402 and 403 of Block A, #1,
Huaguoshan Mansion,
Gongyuan Road and Gongye 7th Road,
Shekou,
Shenzhen City,
The PRC
7.
A land parcel to the North of
Zhenhai Road and to the East
of Tonghai Road,
Qianhaiwan Logistics Park,
Nanshan District,
Shenzhen City,
The PRC
Sub-total
Capital value as at
30 April 2012
Interest
attributable
to Winsor
Group
Capital value
attributable
to Winsor
Group as at
30 April 2012
HK$3,800,000
30%
HK$1,140,000
No commercial value
30% No commercial value
HK$3,800,000
HK$1,140,000
– 278 –
APPENDIX VII
PROPERTY VALUATION
SUMMARY OF VALUES
Group III — Property rented by Winsor Group in Hong Kong
No.
Property
8.
8th Floor of
Tai Sang Container & Godown Centre,
Nos. 2–10 Cheung Fai Road,
Tsing Yi,
New Territories,
Hong Kong
Sub-total
Capital value as at
30 April 2012
Interest
attributable
to Winsor
Group
Capital value
attributable
to Winsor
Group as at
30 April 2012
No commercial value
100%
No commercial value
No commercial value
No commercial value
Group IV — Properties rented by CMIC in the PRC
Capital value as at
30 April 2012
Interest
attributable
to Winsor
Group
Capital value
attributable
to Winsor
Group as at
30 April 2012
No.
Property
9.
A cold storage development
located at No. 3 Nan Gang Road,
Shekou Industrial Zone,
Nanshan District,
Shenzhen City,
The PRC
No commercial value
30%
No commercial value
10.
Warehouse Nos. 105–108
located at 53 Linhai Avenue,
Qianhaiwan Free Trade Port Area,
Nanshan District,
Shenzhen City,
The PRC
No commercial value
30%
No commercial value
Sub-total
Grand Total
No commercial value
No commercial value
HK$11,071,450,000
HK$11,068,282,857
– 279 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Group I — Properties held as investments in Hong Kong
Particulars of
occupancy
No.
Property
Description, age and tenure
1.
Landmark East,
100 How Ming Street,
Kwun Tong,
Kowloon,
Hong Kong
The property is an office development
known as ‘‘Landmark East’’ completed in
2008, comprising two high-rise office
towers, namely AXA Tower and Tower 2
of 40 and 43 storeys respectively plus a
common 2-level basement.
The Remaining Portion of
Kwun Tong Inland Lot
No. 242 (the ‘‘Lot’’)
(See Note 2)
The property has a total gross floor area
of approximately 1,335,823ft 2
(124,100.98m2 ). Breakdown of the gross
floor area (‘‘GFA’’) is as follows:
Tower
GFA
(ft 2)
1
2
Total
533,094
802,729
1,335,823
According to the information provided
by Winsor Group, the property
accommodates a total of 454 private car
parking spaces, 47 heavy goods vehicle
parking spaces and 24 motorcycle
parking spaces.
The registered site area of the property
(is approximately 85,585ft2 (7,951m2 )
(See Note 2).
The Lot is held from the Government
under a Government Lease for a term of
21 years from 1 July 1961, renewed for a
further term of 15 years, less the last 3
days. The lease has been extended until
30 June 2047. The current government
rent payable is an amount equal to 3% of
the prevailing rateable value of the
property.
The property was let to
various tenants with an
occupancy rate of
approximately 98% as
at the date of valuation.
Capital value as at
30 April 2012
HK$8,500,000,000
(100% attributable to
Winsor Group:
HK$8,500,000,000)
The majority of the
lease terms are for 3
years with the latest
term due to expire on
30 June 2016.
The aggregate monthly
passing rent excluding
carpark licence fee as at
the date of valuation
was approximately
HK$23.2 million,
exclusive of
government rates,
government rent and
management fees.
Car parking spaces are
licensed on monthly
and hourly basis. The
average monthly
carpark licence fee was
approximately
HK$1,032,780,
inclusive of government
rates, government rent
and management fees,
for the period from
October 2011 to March
2012.
(See Note 3)
Notes:
(1)
The registered owner of the property is Begin Land Limited (a wholly owned subsidiary of Winsor Group) save and except
Motorcycle Parking Space No. M1 on Basement 2 of the Car Park registered under Winsor Parking Limited (a wholly
owned subsidiary of Winsor Group) and Development Common Areas and Facilities and Car Park Common Areas and
Facilities registered under Winsor Estate Management Limited (a wholly owned subsidiary of Winsor Group).
(2)
According to our recent Land Registry searches, Landmark East comprises Section A, Section B and the Remaining Portion
of Kwun Tong Inland Lot No. 242. As advised by Winsor Group, Section A and Section B of Kwun Tong Inland Lot No.
242 with a total site area of about 10,355ft2 (962m 2 ) will be surrendered to the Government for road widening.
– 280 –
APPENDIX VII
(3)
PROPERTY VALUATION
According to our recent Land Registry searches, the following encumbrances and instruments were registered against the
Property:
.
Deed of Undertaking to the Government of the Hong Kong Special Administrative Region and the Director of Lands
dated 11 May 2009 regarding the Remaining Portion of Kwun Tong Inland Lot No. 242 vide Memorial
No. 09060401340025.
.
Mortgage in favour of The Hongkong and Shanghai Banking Corporation Limited to secure all moneys in respect of
general banking facilities (including but not limited to a term loan facility of up to HK$1,000,000,000) dated 30
September 2009 vide Memorial No. 09102303520566.
.
Mortgage in favour of Bank of China (Hong Kong) Limited dated 13 October 2009 vide Memorial
No. 09102901060012.
.
Deed of Mutual Covenant and Management Agreement with Plans registered on 23 October 2009 vide Memorial
No. 09102303520551.
.
Waiver Letter dated 7 October 2010 vide Memorial No. 10101402340162 to permit the use of ‘Shop 1’ of AXA
Tower for restaurant purpose for a term of one year certain commencing on 18 November 2009 and thereafter
quarterly at a waiver fee of HK$29,980 per quarter, subject to revision, with either party having the right to terminate
the waiver at the expiry of the first year in accordance with the provisions therein.
.
Waiver Letter with Plan dated 26 April 2011 vide Memorial No. 11042901180282 to permit the use of ‘Shop 3’ of
Two Landmark East for restaurant purpose for a term of one year certain commencing on 20 December 2010 and
thereafter quarterly at a waiver fee of HK$111,930 per quarter, subject to revision, with either party having the right
to terminate the waiver at the expiry of the first year in accordance with the provisions therein.
.
Waiver Letter with Plan dated 26 April 2011 vide Memorial No. 11042901180292 to permit the use of ‘Shop 2’ of
Two Landmark East for restaurant purpose for a term of one year certain commencing on 20 December 2010 and
thereafter quarterly at a waiver fee of HK$24,190 per quarter, subject to revision, with either party having the right
to terminate the waiver at the expiry of the first year in accordance with the provisions therein.
.
Memorandum of Change of Name of Building dated 19 May 2011 vide Memorial No. 11080300560015.
.
Various tenancy agreements were registered against the property.
(4)
The aggregate monthly passing rent includes the rent of 27/F Two Landmark East occupied by a subsidiary of Wing Tai.
The tenancy of 27/F Two Landmark East was conditionally agreed to be renewed for a further term of 3 years from 25 July
2012 to 24 July 2015 at a monthly rent of HK$507,603, exclusive of government rates, management fees and all other
tenant’s outgoings; such renewal constitutes a special deal under the Takeovers Code.
(5)
The property falls within zone ‘‘Other Specified Uses (Business)’’ under draft Kwun Tong (South) Outline Zoning Plan
No. S/K14S/17 dated 23 March 2012.
(6)
The potential tax liability which might arise on the disposal of the property as at the date of valuation in Hong Kong is
profit tax at 16.5% on assessable profits from the sales of the property. The car parking space owned by Winsor Parking
Limited is to be transferred at carrying value to another subsidiary of Winsor Group pursuant to the Group Reorganisation.
Nevertheless, the registered owners as mentioned in note (1) above confirm that the property is held as long term investment
for rental income and there is no plan or intention to dispose of the property. Hence, the likelihood of such tax liability
being crystallised is slim.
– 281 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
2.
Units 505–510 on 5th Floor
of Tower B,
Regent Centre,
70 Ta Chuen Ping Street,
Kwai Chung,
New Territories,
Hong Kong
The property comprises 6 units on the
5th Floor of Tower B of Regent
Centre.
Aggregate of 493/71,750
equal and undivided shares
of and in the Remaining
Portion of Lot No. 299 in
Demarcation District
No. 444
Regent Centre is an industrial complex
comprising two industrial blocks.
Tower A comprises 23 storeys and
Tower B comprises 22 storeys, erected
on top of a 3-storey podium completed
in 1996.
The property has a total gross floor
area of approximately 8,096ft2
(752.14m2 ).
Lot No. 299 in Demarcation District
No. 444 is held from the Government
under New Grant No. 4260 for a term
of 99 years less the last 3 days from 1
July 1898. The lease has been extended
until 30 June 2047 by virtue of Section
6 of the New Territories Leases
(Extension) Ordinance. The current
government rent payable is an amount
equal to 3% of the prevailing rateable
value of the property.
Particulars of
occupancy
The property was
occupied by a wholly
owned subsidiary of
Winsor Group under a
licence agreement at a
monthly licence fee of
HK$40,480 for an
initial term of 2 years
commencing on 15 July
2010 to 14 July 2012
and shall thereafter be
renewed automatically
on a yearly basis unless
and until terminated by
either party in
accordance with the
provisions therein.
Capital value as at
30 April 2012
HK$10,650,000
(95.24% attributable
to Winsor Group:
HK$10,142,857)
Notes:
(1)
The registered owner of the property is Chericourt Company Limited, a 95.24% owned subsidiary of Winsor Group.
(2)
According to our recent Land Registry search, the following encumbrance was registered against the property:
.
Mortgage dated 28 January 2000 vide Memorial No. TW1333609 in favour of Chong Hing Bank Limited.
(3)
Lot No. 299 in Demarcation District No. 444 falls within zone ‘‘Other Specified Uses (Business)’’ under draft Kwai Chung
Outline Zoning Plan No. S/KC/26 dated 20 April 2012. The height restriction on the Lot No. 299 in Demarcation District
No. 444 is 130m above Principal Datum or the height of the existing building, whichever is the greater.
(4)
The potential tax liability to Winsor Group which might arise on this disposal of the property as at the date of valuation in
Hong Kong is profit tax at 16.5% on assessable profits from the sales of the property. Nevertheless, the registered owner of
the property confirms that the property has been held for long term investment. Hence, the likelihood of such tax liability
being crystallised is slim.
– 282 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
3.
Shui Hing Centre,
13 Sheung Yuet Road,
Kowloon Bay,
Kowloon,
Hong Kong
The property comprises a 12-storey
industrial building (including a
mezzanine and a basement) completed
in 1986.
New Kowloon Inland Lot
No. 5890 (the ‘‘Lot’’)
The Basement and the Ground Floor
provide 1 container parking space, 9
lorry and 10 private car parking spaces
together with loading/unloading areas,
whilst the upper levels provide
workshop space.
The property has a total gross floor
area of approximately 186,827ft2
(17,356.65m2 ).
The registered site area of the
property is approximately 18,256ft2
(1,696.00m 2 ).
The Lot is held from the Government
under Conditions of Sale No. 11538 for
a term of 99 years less the last 3 days
from 1 July 1898. The lease has been
extended until 30 June 2047 by virtue
of Section 6 of the New Territories
Leases (Extension) Ordinance. The
current government rent payable for the
property is an amount equal to 3% of
the prevailing rateable value.
Particulars of
occupancy
The property was let to
various tenants with an
occupancy rate of
approximately 90% as
at the date of valuation.
Capital value as at
30 April 2012
HK$510,000,000
(100% attributable to
Winsor Group:
HK$510,000,000)
The majority of the
lease terms are from 1
to 3 years with the
latest tenancy due to
expire on 20 September
2014.
The aggregate monthly
passing income
excluding carpark
licence fee as at the
date of valuation was
approximately HK$1.6
million, exclusive of
government rates,
government rent and
management fees.
Car parking spaces are
licensed on monthly
and hourly basis. The
average monthly
carpark licence fee was
approximately
HK$59,088, inclusive
of government rates,
government rent and
management fees, for
the period from October
2011 to March 2012.
Notes:
(1)
The registered owner of the property is Grandeur Investments Limited, a wholly owned subsidiary of Winsor Group.
(2)
According to our recent Land Registry search, the following encumbrances and instruments were registered against the
property:
.
Mortgage dated 31 March 2008 vide Memorial No. 08041502660207 in favour of The Hongkong and Shanghai
Banking Corporation Limited to the extent of all moneys.
.
Tenancy agreement (Re: Part B of A on G/F) dated 2 July 2009 vide Memorial No. 09072802740137 for a term of 3
years commencing on 3 June 2009 and expiring on 2 June 2012 at a rent of HK$20,000 per month with an option to
renew for a further term of 3 years in favour of Circle K Convenience Stores Limited.
.
Tenancy agreement (Re: Units 101A, B & C, 102 and 104 on 1/F) dated 14 October 2010 vide Memorial
No. 10102800680346 for a term of 3 years from 1 October 2010 to 30 September 2013 at a rent of HK$82,061.6 per
month with an option to renew for a further term of 3 years in favour of TUV Rheinland Hong Kong Limited.
– 283 –
APPENDIX VII
.
PROPERTY VALUATION
Order No. UBCS/06–07/0001/10 by the Building Authority under S.24(1) of the Buildings Ordinance with plan dated
13 January 2012 vide Memorial No. 12031401360010.
(3)
The property falls within zone ‘‘Other Specified Uses (Business)’’ under draft Ngau Tau Kok and Kowloon Bay Outline
Zoning Plan No. S/K13/27 dated 14 October 2011. The height restriction on the property is 120m above Principal Datum or
the height of the existing building, whichever is the greater.
(4)
The potential tax liability which might arise on the disposal of the property as at the date of valuation in Hong Kong is
profit tax at 16.5% on assessable profits from the sales of the property. Nevertheless, Grandeur Investments Limited, the
registered owner of the property, confirms that the property is held as long term investment for rental income and there is
no plan or intention to dispose of the property. Hence, the likelihood of such tax liability being crystallised is slim.
– 284 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
4.
W Square,
314–324 Hennessy Road,
Wan Chai,
Hong Kong
The property comprises a 25-storey
(including a basement) commercial
building completed in 1978. It has been
substantially renovated in 2008.
The Remaining Portion and
Section D of Marine Lot
No. 122 (the ‘‘Lot’’)
The basement to the 6th Floor are
designated for retail use, the 7th Floor
is designated as the mechanical floor,
whereas the upper floors are for office
use.
The property has a total gross floor
area of approximately 128,658ft2
(11,952.62m2 ).
The site area of the property is
approximately 7,652ft2 (710.89m2 ).
The Lot is held from the Government
under a Government Lease for a term
of 999 years from 26 December 1860.
The current government rent payable
for the Lot is at an aggregate amount
of HK$96.
Particulars of
occupancy
The property was let to
various tenants with an
occupancy rate of
approximately 91% as
at the date of valuation.
Capital value as at
30 April 2012
HK$1,270,000,000
(100% attributable to
Winsor Group:
HK$1,270,000,000)
The majority of the
lease terms are for 3
years with the latest
tenancy due to expire
on 14 April 2015.
The aggregate monthly
passing income as at
the date of valuation
was approximately
HK$3.75 million,
exclusive of
government rates,
government rent and
management fees.
(See Note 2)
Notes:
(1)
The registered owner of the property is Winnion Limited, a wholly owned subsidiary of Winsor Group.
(2)
According to our recent Land Registry search, the following encumbrances and instruments were registered against the
property:
(3)
.
Mortgage dated 29 June 2006 in favour of The Bank of East Asia, Limited vide Memorial No. 06071301660407.
.
No-objection letter dated 21 December 2007 vide Memorial No. 08012202030175.
.
In addition, various tenancy agreements were registered against the property.
The aggregate monthly passing income includes the rents of 6/F and 25/F and the Penthouse occupied by subsidiaries of
Wing Tai. The tenancies of 6/F and of 25/F and the Penthouse were conditionally agreed to be renewed in the following
manner (Such renewal constitute special deals under the Takeover Code):
Premises
Term
Monthly Rent
6/F
1 October 2012 to 8 July 2013
HK$192,885, exclusive of government rates and
management fees and air-conditioning charges
and all other tenant’s outgoings
25/F & Penthouse
The date on which the consent of the
Executive (as defined in the circular
of the Company dated 20 June 2012)
has been granted and all conditions
attaching to such consent have been
fulfilled to 8 July 2013
HK$303,412.5, exclusive of government rates and
management fees and air-conditioning charges
and all other tenant’s outgoings
– 285 –
APPENDIX VII
PROPERTY VALUATION
(4)
The property falls within zone ‘‘Other Specified Uses (Mixed Use)’’ under draft Wan Chai Outline Zoning Plan No. S/H5/26
dated 24 September 2010. The height restriction on the property is 110m above Principal Datum or the height of the
existing building, whichever is the greater.
(5)
The potential tax liability which might arise on the disposal of the property as at the date of valuation in Hong Kong is
profit tax at 16.5% on assessable profits from the sales of the property. Nevertheless, Winnion Limited, the registered owner
of the property, confirms that the property is held as long term investment for rental income and there is no plan or
intention to dispose of the property. Hence, the likelihood of such tax liability being crystallised is slim.
– 286 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
Particulars of
occupancy
5.
Winner Godown Building,
503–515 Castle Peak Road
Tsuen Wan Section and
1–9 Sha Tsui Road,
Tsuen Wan,
New Territories,
Hong Kong
The property comprises a 20-storey
(including a mezzanine floor) godown
building completed in 1988.
The property was fully
let to various tenants as
at the date of valuation.
A portion of the ground floor provides
1 container parking space, 25 lorry and
25 private car parking spaces together
with loading/unloading areas. The
mezzanine floor and part of the first
floor provide ancillary offices whilst
the remaining portion of the ground
floor and upper levels provide godown
space.
The majority of the
lease terms are for 2
years with the latest
tenancy due to expire
on 30 November 2014.
The Remaining Portion of
Tsun Wan Inland Lot
No. 28 (the ‘‘Lot’’)
The property has a total gross floor
area of approximately 497,140ft2
(46,185.43m2 ).
The registered site area of the property
is approximately 50,804ft2
(4,719.81m 2 ).
The Lot is held from the Government
under a Government Lease for a term
of 75 years from 1 July 1898, renewed
for a further term of 24 years less the
last 3 days. The lease has been
extended until 30 June 2047 by virtue
of Section 6 of the New Territories
Leases (Extension) Ordinance. The
current government rent payable for the
property is an amount equal to 3% of
the prevailing rateable value.
Capital value as at
30 April 2012
HK$777,000,000
(100% attributable to
Winsor Group:
HK$777,000,000)
The aggregate monthly
passing rent excluding
carpark licence fee as at
the date of valuation
was approximately
HK$3.3 million,
exclusive of
government rates,
government rent and
management fees.
Car parking spaces are
licensed on monthly
and hourly basis. The
average monthly
carpark licence fee was
approximately
HK$161,911, inclusive
of government rates,
government rent and
management fees, for
the period from October
2011 to March 2012.
Notes:
(1)
The registered owners of the property are Zofka Properties Limited (1/2 share) and Baudinet Investment Limited (1/2 share),
both a wholly owned subsidiaries of Winsor Group.
(2)
According to our recent Land Registry search, the following encumbrances and instruments were registered against the
property:
.
Mortgage to secure general banking facilities in favour of The Hongkong and Shanghai Banking Corporation Limited
dated 23 December 1996 vide Memorial No. UB6896857.
.
Deed of Variation of Memorial No. UB6896857 and Further Charge to secure general banking facilities dated 2
September 1999 vide Memorial No. UB7882029 in favour of The Hongkong and Shanghai Banking Corporation
Limited.
.
Tenancy Agreement (Re: Unit A on 8/F) dated 16 June 2009 vide Memorial No. 09061900680166 for 3 years from 4
May 2009 to 3 May 2012 at a rent of HK$59,547.60 per month in favour of G.O.D. (International) Limited.
(3)
The property falls within zone ‘‘Industrial’’ under draft Tsuen Wan Outline Zoning Plan No. S/TW/29 dated 24 February
2012. The height restriction on the property is 100m above Principal Datum or the height of the existing building,
whichever is the greater.
(4)
The potential tax liability which might arise on the disposal of the property as at the date of valuation in Hong Kong is
profit tax at 16.5% on assessable profits from the sales of the property. Nevertheless, Zofka Properties Limited and Baudinet
Investment Limited, the registered owners of the property, confirm that the property is held as long term investment for
rental income and there is no plan or intention to dispose of the property. Hence, the likelihood of such tax liability being
crystallised is slim.
– 287 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Group II — Properties held as investments in the PRC
No.
Property
Description, age and tenure
6.
Flats 402 and 403 of
Block A, #1,
Huaguoshan Mansion,
Gongyuan Road and
Gongye 7th Road,
Shekou, Shenzhen City,
The PRC
The properties comprise two residential
units on Level 4 of a 25-storey
(including basement) residential
building completed in 1993.
The properties have a total gross floor
area of approximately 220.4m2
(2,372ft2 ).
The land use rights of the properties
are for residential use for a common
term of 50 years from 13 August 1993
to 12 August 2043.
Particulars of
occupancy
Flat 402 with a gross
floor area of
approximately 109.3m 2
(1,176ft2 ) is leased to
an independent third
party for a term of one
year from 1 April 2012
at a monthly rent of
RMB4,000, exclusive of
management fee and
other outgoings.
Capital value as at
30 April 2012
HK$3,800,000
(30% attributable to
Winsor Group:
HK$1,140,000)
Flat 403 of Block A
with a gross floor area
of approximately
111.1m2 (1,196ft2 ) was
occupied as staff
quarters as at the date
of inspection.
Notes:
(1)
According to the Realty Title Certificates 深房地字第6002861號 and 深房地字第6002862號 both dated 29 March 1996, the
properties are held by CMIC, an associated company in which 30% interest is attributable to Winsor Group.
(2)
We have in the course of the valuation accepted and taken into account the following legal opinion provided by the PRC
Legal Advisor:
(a)
CMIC possesses the good and formal title of the property and has the rights to freely sell the property to local and
foreign purchaser(s);
(b)
CMIC enjoys the rights to occupy, to let, to charge, to dispose of and to mortgage the property; and
(c)
the tenancy agreement of Flat 402 is valid and binding and CMIC has the right to bill the tenant.
(3)
As advised by the PRC Legal Advisor, the major potential tax liability which might arise on the disposal of the property as
at the date of valuation is deed tax at 1.5% and stamp duty at 0.05% on the transaction price of the property. Nevertheless,
CMIC confirms that the property is held as long term investment for rental income and there is no plan or intention to
dispose of the property. Hence, the likelihood of such tax liability being crystallised is slim.
(4)
The properties have been valued in Renminbi and the valuation has been translated into Hong Kong dollars at the rate of
exchange prevailing on the date of valuation at RMB1 to HK$1.2356.
– 288 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
7.
A land parcel to the North
of Zhenhai Road and to the
East of Tonghai Road,
Qianhaiwan Logistics Park,
Nanshan District,
Shenzhen City,
The PRC
The property comprises a land parcel
with site area of approximately
50,779.31m 2 (546,588ft2 ).
As advised, the property is proposed to
be developed into a cold storage
development with a total gross floor
area of approximately 76,000 m2
(818,064 ft2 ).
Particulars of
occupancy
The property is
currently leased to an
independent third party
for open storage use for
a term of 2 years due to
expire on 14 October
2012 at a monthly rent
of RMB120,000.
Capital value as at
30 April 2012
No commercial value
(See Note 2)
Notes:
(1)
According to the Land Use Right Confirmation Contract dated 5 May 2009 entered into between China Merchants Shekou
Industrial Zone Company Limited (招商局蛇口工業區有限公司) (Party A) and CMIC, an associated company in which 30%
interest is attributable to Winsor Group, CMIC agreed to purchase and Party A agreed to sell the land parcel, which is
restricted for warehouse and storage use, for a total consideration of approximately RMB76,168,965. Total deposit paid by
CMIC up to the date of valuation was RMB30,467,585.
(2)
As CMIC has not yet obtained the Land Use Rights Certificate of the property at the date of valuation, we have given ‘‘no
commercial value’’ to the property. Should the land use rights of the property be obtained by CMIC at the date of valuation,
the capital value of the property as at 30 April 2012 would be RMB78,000,000 (30% attributable to Winsor Group:
RMB23,400,000) subject to terms and conditions stipulated in the Land Use Rights Confirmation Contract and on the
assumption that the relevant approval for the proposed development parameters has been obtained.
(3)
We have in the course of the valuation accepted and taken into account the following legal opinion provided by the PRC
Legal Advisor:
(4)
(a)
Party A is authorised by the relevant land bureau to enter into the Land Use Rights Confirmation Contract with
CMIC; and
(b)
After entering into the Land Use Rights Transfer Agreement with the relevant land bureau and receiving the realty
title certificate, CMIC will possess the land use rights of the property. CMIC will have the rights to transfer, to
mortgage, to let and to develop after obtaining the land use rights.
The property has been valued in Renminbi and the valuation has been translated into Hong Kong dollars at the rate of
exchange prevailing on the date of valuation at RMB1 to HK$1.2356.
– 289 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Group III — Property rented by Winsor Group in Hong Kong
No.
Property
Description, age and tenure
8.
8th Floor of
Tai Sang Container &
Godown Centre,
Nos. 2–10 Cheung Fai
Road,
Tsing Yi,
New Territories,
Hong Kong
The property with a gross floor area of
approximately 58,500ft2 (5,434.78m2 )
comprises the whole 8th floor in a 23storey warehouse building completed in
1982.
Particulars of
occupancy
The property is rented
by Winsor Group for its
godown operation for a
term of 2 years
commencing on 1 July
2010.
Capital value as at
30 April 2012
No commercial value
Notes:
(1)
The registered owner of the property is Montgomery Enterprises Limited, an independent third party.
(2)
According to the tenancy agreement between Montgomery Enterprises Limited (‘‘Landlord’’) and Winner Godown Limited
(‘‘Tenant’’) dated 26 April 2010, both the Landlord and the Tenant have renewed the tenancy of the property for a term of
two years commencing on 1 July 2010 at a total monthly rent of HK$292,500, inclusive of management fee, government
rates and government rent.
(3)
According to the renewal agreement attached to a letter dated 4 May 2012, both the Landlord and the Tenant have agreed to
renew the tenancy of Units B and C of the property with a gross floor area of approximately 39,000ft2 (3,623.19m2 ) for a
further term of 2 years commencing on 1 July 2012 at a monthly rent of HK$246,200 inclusive of management fee,
government rates and government rent. This renewal excludes Unit A of the property.
– 290 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Group IV — Properties rented by CMIC in the PRC
No.
Property
Description, age and tenure
Particulars of
occupancy
9.
A cold storage
development located at
No. 3 Nan Gang Road,
Shekou Industrial Zone,
Nanshan District,
Shenzhen City,
The PRC
The property comprises a roughly
trapezium-shaped site of approximately
20,040.88m 2 (215,720ft2 ). It is
bounded by Nan Gang Road in its
north-west and neighbouring lots
currently occupied by the Shekou
Container Terminal.
The property is rented
for a term of 25 years
due to expire on 30
April 2015 with an
option to renew for a
further term of 5 years
or more.
Building improvements erected upon
the property include a 9-storey
industrial building for cold storage
with ancillary office uses (‘‘Building
A’’) and a single storey warehouse
(‘‘Building B’’) (hereinafter collectively
known as the ‘‘Complex’’). Buildings
A and B were completed in 1992 and
2005 respectively.
The majority portion of
the property is currently
occupied by CMIC for
its cold storage
operation.
As per the Realty Title Certificate
dated 30 March 1998, the gross floor
area (‘‘GFA’’) of Building A is
approximately 35,792.2m2 (385,267ft2 ).
As advised by CMIC, Building B has a
gross floor area of approximately
1,201.2m2 (12,930ft2 ).
Portions of buildings
with total GFA of
approximately 2,244m 2
(24,154ft2 ) are subleased to two
independent third
parties for ‘‘warehouse
and ancillary office
uses’’ for terms with the
latest tenancy due to
expire on 19 May 2014.
The current total
monthly rent is
RMB96,003, subject to
pre-determined annual
adjustment.
Portion of the open
space with area of
approximately 7,900m 2
(85,036ft2 ) is sub-leased
to a connected party of
CMIC for a term of 2
years due to expire on
30 September 2012 for
open storage at a
monthly income of
RMB71,100, inclusive
of land use tax.
– 291 –
Capital value as at
30 April 2012
No commercial value
APPENDIX VII
PROPERTY VALUATION
Notes:
(1)
According to Land Use Rights Lease Agreement (土地使用協議書) dated 23 February 1990 (modified with various
Supplemental Lease Agreements) between Real Estate Co. of China Merchants Shekou Industrial Zone (招商局蛇口工業區
房地產公司) (now known as Shenzhen China Merchants Real Estate Co. Ltd. (深圳招商房地產有限公司)) (‘‘Party A’’), an
independent third party to Winsor Group, and CMIC, Party A agreed to lease the property to CMIC for a term of 25 years
due to expire on 30 April 2015 with an option to renew for a further term of 5 years or more. According to the latest
Supplemental Lease Agreement No.2010D142–1 dated December 2010, the rent for the property is reviewed at
RMB1,903,884 per annum for the period from 1 January 2011 to 31 December 2013.
(2)
As advised, CMIC is an associated company in which 30% interest is attributable to Winsor Group.
(3)
According to the Realty Title Certificate 深房地字第6018644號 dated 30 March 1998 (the ‘‘Certificate’’), Building A with a
total gross floor area of approximately 35,792.2m2 is held by CMIC. However, the Certificate also stated that disposal of
the building is prohibited. Mortgage or lease of the building is permitted subject to the compliance of relevant rules and
regulations. The land use rights is allocated to Party A.
(4)
We have in the course of the valuation accepted and taken into account the following legal opinion provided by the PRC
Legal Advisor:
(a)
Party A can lease out the property to CMIC for cold storage operation. The Land Use Rights Lease Agreement is
valid and binding after signature and seal by both parties. CMIC can use the property according to the agreement for
a term of 25 years;
(b)
CMIC has the title of the Building A, while the land use rights was vested in Shenzhen China Merchants Real Estate
Co. Ltd. CMIC has the rights to use and to let the property, but not the rights to mortgage and dispose of the
property;
(c)
After the term of the Land Use Rights Lease Agreement, the titles of the land and the buildings will be reverted to
Shenzhen China Merchants Real Estate Co., Ltd.;
(d)
The tenancy agreements are valid and binding; and
(e)
Building B is a temporary structure, CMIC has the rights to use it.
– 292 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
No.
Property
Description, age and tenure
10.
Warehouse Nos. 105–108
located at 53 Linhai
Avenue,
Qianhaiwan Free Trade
Port Area,
Nanshan District,
Shenzhen City,
The PRC
The property comprises a single-storey
warehouse building with a total gross
floor area of approximately 13,944m 2
(150,093ft2 ) completed in about 2010.
Particulars of
occupancy
The property is rented
for a term due to expire
on 28 February 2029,
with an option to
extend for a further 5
years.
Capital value as at
30 April 2012
No commercial value
The majority portion of
the property is currently
occupied by CMIC for
its cold storage
operation.
Part of the ancillary
office with an area of
approximately 60m2
(646ft2 ) is leased under
an agreement to an
independent third party
for a term of two years
from 25 October 2011
to 24 October 2013 at a
monthly rent of
RMB3,600, exclusive of
management fee and
other outgoings (the
‘‘Tenancy Agreement’’).
Notes:
(1)
According to the Warehouse Cooperation Agreement (倉庫合作協議) dated 1 March 2010 between China Merchants Marine
& Logistics (Shenzhen) Co. Ltd. (深圳招商局海運物流有限公司) (Party A) and CMIC, Party A agreed to lease the property
to CMIC for a term due to expire on 28 February 2029 with an option to extend for a further term of 5 years. The monthly
rent of the property is RMB278,880 inclusive of tax for the first 4 years.
(2)
As advised, CMIC is an associated company in which 30% interest is attributable to Winsor Group.
(3)
We have in the course of the valuation accepted and taken into account the following legal opinion provided by the PRC
Legal Advisor:
(a)
Party A is the owner of the property;
(b)
Party A has the rights to let the property to CMIC for storage, loading/unloading and other value-added uses. The
Warehouse Cooperation Agreement is valid and binding. CMIC can use the property according to the agreement for a
term of 19 years;
(c)
CMIC has gained the rights to use the property according to the Warehouse Cooperation Agreement; and
(d)
The Tenancy Agreement is valid and binding and CMIC has the right to bill the tenant.
– 293 –
APPENDIX VII
PROPERTY VALUATION
SECTION C
The following is the text of a report prepared for the purpose of incorporation in this circular
received by the Group from B.I. Appraisals Limited, an independent valuer, in connection with its
valuation as at 30 April 2012 of the market value of a portfolio of property interests of the Privateco
Group.
Unit 1301, 13th Floor, Tung Wai Commercial Building,
Nos. 109-111 Gloucester Road, Wan Chai, Hong Kong
Tel: (852) 21277762
Fax: (852) 21379876
Email: [email protected]
Website: www.bigroupchina.com
20 June 2012
The Directors
Winsor Properties Holdings Limited
8th Floor, AXA Tower, Landmark East
100 How Ming Street
Kwun Tong
Kowloon
Dear Sirs,
Re: Peng Chau Lot No. 1, Peng Chau and various lots in Demarcation District Nos. 6, 310, 311
and 326, Lantau Island, New Territories, Hong Kong
In accordance with the instructions from Winsor Properties Holdings Limited (hereinafter referred
to as the ‘‘Company’’) for us to value the captioned properties (hereinafter referred to as the
‘‘Properties’’), which are held by the Company and/or its subsidiaries (hereinafter together referred to as
the ‘‘Group’’), we confirm that we have carried out inspections, conducted land searches at the Land
Registry, made relevant enquiries and obtained such further information as we consider necessary for the
purpose of providing you with our opinion of value of the Properties in existing state as at 30 April
2012 (hereinafter referred to as the ‘‘Date of Valuation’’).
It is our understanding that this valuation document is to be used by the Company for disclosure
purpose.
This letter, forming part of our valuation report, identifies the properties being valued, explains the
basis and methodology of our valuations, and lists out the assumptions and the title investigation we
have made in the course of our valuations, as well as the limiting conditions.
– 294 –
APPENDIX VII
PROPERTY VALUATION
BASIS OF VALUATION
Our valuation of each of the Properties is our opinion of its market value which we would define
as intended to mean ‘‘the estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’’.
We have valued the Properties on the basis that each of them is considered individually. We have
not allowed for any discount for the Properties to be sold to a single party nor taken into account any
effect on the values if the Properties are to be offered for sale at the same time as a portfolio.
In valuing the Properties, the Government Lease of which have expired prior to 30 June 1997, we
have taken into account the provisions of the New Territories Leases (Extension) Ordinance 1988 that
such leases have been extended without payment of premium until 30 June 2047, and that a rent
equivalent to three per cent. of the rateable value of each of the Properties is charged per annum from
the date of extension.
Our valuations have been carried out in accordance with The HKIS Valuation Standards on
Properties (1st Edition 2005) issued by the Hong Kong Institute of Surveyors and under generally
accepted valuation procedures and practices, which are in compliance with Chapter 5 of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and Rule 11 of The
Codes on Takeovers and Mergers and Share Repurchases published by Securities and Futures
Commission.
VALUATION METHODOLOGY
In arriving at our opinion of value of each of the Properties, which are held for investment, we
have adopted the Direct Comparison Approach assuming sale of each of the Properties in its existing
state with the benefit of immediate vacant possession and by making reference to comparable
transactions as available in the relevant market.
VALUATION ASSUMPTIONS
Our valuations have been made on the assumption that the Properties are sold on the open market
in their existing states without the benefit of a deferred terms contract, leaseback, joint venture,
management agreement or any similar arrangement which might serve to affect their values. In addition,
no account has been taken of any option or right of pre-emption concerning or effecting sales of the
Properties and no forced sale situation in any manner is assumed in our valuations.
No allowance has been made in our valuations for any charges, mortgages or amounts owing on
the Properties nor for any expenses or taxation that may be incurred in effecting sales. Unless otherwise
stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings of an
onerous nature that could affect their values.
We have carried out inspections of the Properties in the period from 4 to 7 June 2012. Yet, due to
the topography and accessibility of the Properties, we were unable to carry out inspection to the entire
area of each of the Properties. However, we are aware that there have been certain trespass activities in
– 295 –
APPENDIX VII
PROPERTY VALUATION
Property 1 and Property 3. In the course of our valuations, we have not taken into account the effect of
these activities and have assumed that the Properties are vacant and may be utilised for the use
permitted under the relevant Government Leases.
We have based our assessment of the Properties on the registered site areas stated in the relevant
Block Government Leases, which are only approximations. For the purpose of our valuations, we have
assumed that the site areas shown on the relevant Government Leases and/or other documents made
available to us are correct.
In the course of our valuations, we have relied on the relevant lot index plans, demarcation and
survey sheets to identify the location of the Properties as we are not in the capacity to carry out land
survey to delineate the exact boundaries of the Properties. We have assumed that the Properties are
under the custody of their registered owner(s) and are without being encroached upon by owners/
occupiers of the adjacent parcels of land.
TITLE INVESTIGATION
We have caused searches to be made at the Land Registry for the Properties. However, we have
not scrutinized the original documents to ascertain ownership or to verify any amendments that may not
appear on the copies handed to us. All documents and leases have been used for reference only.
POTENTIAL TAX LIABILITIES
In the course of our valuations, we have not taken into account any potential tax liabilities that
might arise on the disposal of each of the Properties. We have been advised by the Group that there is
no immediate plan nor intention to dispose any or all of the Properties. However, should the Properties
be disposed of, the potential tax liability which might arise is the profit tax. Yet, it is considered that
there is little likelihood such potential tax liability might be crystallised.
LIMITING CONDITIONS
We have not carried out any land survey and site measurements to verify the site areas of the
Properties. Dimensions, measurements and areas included in the valuation certificates are based on
information contained in copies of documents provided to us and are therefore approximations only.
Moreover, we have not carried out any site investigations to determine or otherwise the suitability
of the ground conditions, the presence or otherwise of contamination and the provision of/or suitability
for services etc. for any future development. Our valuations are prepared on the assumption that these
aspects are satisfactory and that no extraordinary expenses or delays will be incurred during any
construction period.
We have relied to a considerable extent on the information provided by the Group, particularly in
respect of planning approvals or statutory notices, easements, tenure, particulars of occupancy, site areas
and all other relevant matters in the identification of the Properties.
– 296 –
APPENDIX VII
PROPERTY VALUATION
We have had no reason to doubt the truth and accuracy of the information provided to us by the
Group. We were also advised by the Group that no material facts have been omitted from the
information provided. We consider that we have been provided with sufficient information to reach an
informed view, and have no reason to suspect that any material information has been withheld.
REMARKS
The registered site areas of the Properties are either stated in acre(s) or square feet (sq.ft.). In the
course of our valuations, we have adopted conversion factors of 1 acre = 43,560 sq.ft. and 1 square
metre (sq.m.) = 10.764 sq.ft.
Unless otherwise stated, all monetary amounts stated in our valuation certificates are in Hong
Kong dollars (HK$).
We hereby confirm that we have neither present nor prospective interests in the Group, its holding
company, the Properties or the values reported herein.
Our Summary of Values and Valuation Certificates are attached herewith.
Yours faithfully,
For and on behalf of
B.I. APPRAISALS LIMITED
William C. K. Sham
Registered Professional Surveyor (G.P.)
China Real Estate Appraiser
MRICS, MHKIS, MCIREA
Executive Director
Notes:
(1)
Mr. William C. K. Sham is a qualified valuer on the approved List of Property Valuers for Undertaking Valuation for
Incorporation or Reference in Listing Particulars and Circulars and Valuations in Connection with Takeovers and Mergers
published by the Hong Kong Institute of Surveyors. Mr. Sham has over 30 years’ experience in the valuation of properties
in Hong Kong and has over 15 years’ experience in the valuation of properties in the People’s Republic of China and the
Asia Pacific regions.
(2)
Inspections of the Properties were carried out in the period from 4 to 7 June 2012 by Mr. Ken Tsang, Assistant Manager,
who has more than 13 years’ experience in the valuation of properties in Hong Kong and the People’s Republic of China.
– 297 –
APPENDIX VII
PROPERTY VALUATION
SUMMARY OF VALUES
Property
Market value in
existing state as at
30 April 2012
1.
Peng Chau Lot No. 1, Peng Chau, New Territories, Hong Kong
HK$3,000,000.00
2.
Lot Nos. 385, 390, 397, 399, 404, 406, 407, 408, 411, 412, 414,
418, 420, 423, 425, 427, 433, 434, 436, 438, 440, 441, 442, 444,
447, 448, 450, 451, 453, 454, 461, 463, 464, 465, 466, 467, 468,
470, 471, 472, 478, 486, 492, 493, 501, 503, 509, 511, 516, 521,
532, 534, 535, 542, 545, 551, 555, 557, 570, 571, 572, 583, 588,
589, 592, 595, 596, 603, 614, 618, 619 and 620 in Demarcation
District No. 6, Tung Chung, Lantau Island, New Territories,
Hong Kong
HK$2,800,000.00
3.
Lot Nos. 20, 25, 26, 27, 30, 33, 35, 36, 37, 39, 43, 54, 58, 64, 67
R.P., 69, 71, 76, 90, 91, 92, 93, 94, 95, 97, 98, 111, 112, 120, 122,
129, 130, 132, 135, 138, 139, 140, 141, 142, 143, 144, 150, 152,
156, 161, 163, 164, 167, 171, 172, 175, 178, 181, 220, 222, 225,
242, 245, 328 and 361 in Demarcation District No. 310,
Lantau Island, New Territories, Hong Kong
HK$1,330,000.00
4.
Lot Nos. 406, 410, 411 R.P., 415, 416, 417, 418, 419, 420, 424,
425, 426 R.P., 427 R.P., 429 R.P., 463, 465 and 466 in Demarcation
District No. 311, Lantau Island, New Territories, Hong Kong
HK$670,000.00
5.
Lot Nos. 891, 905, 906, 908, 914, 920, 925, 1094, 1097, 1102 and
1141 in Demarcation District No. 326, Lantau Island,
New Territories, Hong Kong
HK$130,000.00
Total:
– 298 –
HK$7,930,000.00
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
1.
The property comprises a plot of
agricultural lot located in an area
known as Tai Lung Tsuen on the
northern part of Peng Chau.
Peng Chau Lot No. 1,
Peng Chau,
New Territories,
Hong Kong
The subject lot falls within an area
zoned for ‘‘Green Belt’’ use under the
Approved Peng Chau Outline Zoning
Plan No. S/I-PC/10 gazetted on 20
February 2009.
The registered site area of the property
is approximately 151,153sq.ft.
(14,042.46sq.m.).
The property is held under a Block
Government Lease for a term of 75
years from 1 July 1898, renewable for
a further term of 24 years less the last
3 days. The said lease term has been
statutorily extended until 30 June 2047.
Particulars of
occupancy
The property is covered
by fruit trees and
vegetation, except that a
number of temporary
structures and two
single-storey houses
were found erected at
the northeastern part of
the property.
Market value in
existing state as at
30 April 2012
HK$3,000,000.00
(100% interest
attributable to
the Group:
HK$3,000,000.00)
The western part of the
property is tenantoccupied under a
tenancy for a term from
1 March 2012 to 28
February 2013 at an
annual rent of HK$100.
The total Government rent for the
property is HK$347.40 per quarter.
Notes:
(1)
The registered owner of the property is Adam Knitters Limited, an indirect wholly owned subsidiary of the Company.
(2)
Pursuant to the Schedule of Uses for Approved Peng Chau Outline Zoning Plan No. S/I-PC/10, agricultural use is always
permitted in the ‘‘Green Belt’’ zone.
(3)
The potential tax liability that might arise on the disposal of the property as at the Date of Valuation is the profit tax at
16.5%.
– 299 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
2.
The property comprises 72 plots of
agricultural lot scattered in an area
known as San Tau, which is close to
Tung Chung Bay on Lantau Island.
Lot Nos. 385, 390, 397,
399, 404, 406, 407, 408,
411, 412, 414, 418, 420,
423, 425, 427, 433, 434,
436, 438, 440, 441, 442,
444, 447, 448, 450, 451,
453, 454, 461, 463, 464,
465, 466, 467, 468, 470,
471, 472, 478, 486, 492,
493, 501, 503, 509, 511,
516, 521, 532, 534, 535,
542, 545, 551, 555, 557,
570, 571, 572, 583, 588,
589, 592, 595, 596, 603,
614, 618, 619 and 620 in
Demarcation District
No. 6, Tung Chung,
Lantau Island,
New Territories,
Hong Kong
The total registered site area of the
property is approximately 119,354sq.ft.
(11,088.26sq.m.).
Particulars of
occupancy
The property is covered
by vegetation.
Market value in
existing state as at
30 April 2012
HK$2,800,000.00
(100% interest
attributable to
the Group:
HK$2,800,000.00)
The property is held under a Block
Government Lease for a term of 75
years from 1 July 1898, renewable for
a further term of 24 years less the last
3 days. The said lease term has been
statutorily extended until 30 June 2047.
The total ground rent for the property
is HK$3.29 per annum.
Notes:
(1)
The registered owner of the property is Adam Knitters Limited, an indirect wholly owned subsidiary of the Company.
(2)
The property is currently not covered by any Outline Zoning Plan prepared and published by the Town Planning Board.
(3)
The potential tax liability that might arise on the disposal of the property as at the Date of Valuation is the profit tax at
16.5%.
– 300 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
3.
The property comprises 60 plots of
agricultural lot scattered in an area
known as Upper Keung Shan on
Lantau Island.
Lot Nos. 20, 25, 26, 27,
30, 33, 35, 36, 37, 39, 43,
54, 58, 64, 67 R.P., 69, 71,
76, 90, 91, 92, 93, 94, 95,
97, 98, 111, 112, 120, 122,
129, 130, 132, 135, 138,
139, 140, 141, 142, 143,
144, 150, 152, 156, 161,
163, 164, 167, 171, 172,
175, 178, 181, 220, 222,
225, 242, 245, 328 and 361
in Demarcation District
No. 310, Lantau Island,
New Territories,
Hong Kong
The total registered site area of the
property is approximately 170,514sq.ft.
(15,841.14sq.m.).
Particulars of
occupancy
The property is covered
by fruit trees and
vegetation, except that a
few 1 to 2-storey
houses and temporary
structures were built on
portion of Lot No. 111
and Lot No. 328.
Market value in
existing state as at
30 April 2012
HK$1,330,000.00
(100% interest
attributable to
the Group:
HK$1,330,000.00)
Lot Nos. 328 and 361 are held under
New Grant Nos. 2803 and 3277
respectively and the remaining lots are
held under a Block Government Lease.
All the lots are held for a term of 75
years from 1 July 1898, renewable for
a further term of 24 years less the last
3 days. The said lease term has been
statutorily extended until 30 June 2047.
The total ground rent for the property
is about HK$10.14 per annum.
Notes:
(1)
The registered owner of the property is Adam Knitters Limited, an indirect wholly owned subsidiary of the Company.
(2)
The property is currently not covered by any Outline Zoning Plan prepared and published by the Town Planning Board.
(3)
The potential tax liability that might arise on the disposal of the property as at the Date of Valuation is the profit tax at
16.5%.
– 301 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
4.
The property comprises 17 plots of
agricultural lot scattered in an area
known as Lower Keung Shan on
Lantau Island.
Lot Nos. 406, 410, 411
R.P., 415, 416, 417, 418,
419, 420, 424, 425, 426
R.P., 427 R.P., 429 R.P.,
463, 465 and 466 in
Demarcation District
No. 311, Lantau Island,
New Territories,
Hong Kong
The total registered site area of the
property is approximately 86,078sq.ft.
(7,996.84sq.m.).
Particulars of
occupancy
The property is covered
by vegetation.
Market value in
existing state as at
30 April 2012
HK$670,000.00
(100% interest
attributable to
the Group:
HK$670,000.00)
The property is held under a Block
Government Lease for a term of 75
years from 1 July 1898, renewable for
a further term of 24 years less the last
3 days. The said lease term has been
statutorily extended until 30 June 2047.
The total ground rent for the property
is about HK$48.87 per annum.
Notes:
(1)
The registered owner of the property is Adam Knitters Limited, an indirect wholly owned subsidiary of the Company.
(2)
The property is currently not covered by any Outline Zoning Plan prepared and published by the Town Planning Board.
(3)
The potential tax liability that might arise on the disposal of the property as at the Date of Valuation is the profit tax at
16.5%.
– 302 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
5.
The property comprises 11 plots of
agricultural lot scattered in an area
known as Shui Hau on Lantau Island.
Lot Nos. 891, 905, 906,
908, 914, 920, 925, 1094,
1097, 1102 and 1141 in
Demarcation District
No. 326, Lantau Island,
New Territories,
Hong Kong
The subject lots falls within an area
zoned for ‘‘Country Park’’ use under
the Approved South Lantau Coast
Outline Zoning Plan No. S/SLC/16
gazetted on 12 November 2010.
Particulars of
occupancy
The property is covered
by vegetation.
Market value in
existing state as at
30 April 2012
HK$130,000.00
(100% interest
attributable to
the Group:
HK$130,000.00)
The total registered site area of the
property is approximately 13,068sq.ft.
(1,214.05sq.m.).
The property is held under a Block
Government Lease for a term of 75
years from 1 July 1898, renewable for
a further term of 24 years less the last
3 days. The said lease term has been
statutorily extended until 30 June 2047.
The total ground rent for the property
is HK$0.30 per annum.
Notes:
(1)
The registered owner of the property is Adam Knitters Limited, an indirect wholly owned subsidiary of the Company.
(2)
Pursuant to the Schedule of Uses for Approved South Lantau Coast Outline Zoning Plan No. S/SLC/16, all uses and
developments in the ‘‘Country Park’’ zone require consent from the Country and Marine Parks Authority and approval from
the Town Planning Board is not required.
(3)
The potential tax liability that might arise on the disposal of the property as at the Date of Valuation is the profit tax at
16.5%.
– 303 –
APPENDIX VII
PROPERTY VALUATION
SECTION D
The following is the text of a report prepared for the purpose of incorporation in this circular
received by the Group from Savills Valuation and Professional Services Limited, an independent valuer,
in connection with its valuation as at 30 April 2012 of the market value of a portfolio of property
interests of the Privateco Group.
The Directors
Winsor Properties Holdings Limited
8th Floor
AXA Tower
Landmark East
100 How Ming Street
Kwun Tong
Kowloon
Hong Kong
20 June 2012
Dear Sirs
RE: LANSON PLACE HOTEL, 133 LEIGHTON ROAD, CAUSEWAY BAY, HONG KONG
In accordance with your instructions for us to value the captioned property, we confirm that we
have carried out inspections, made relevant enquiries and carried out searches and obtained such further
information as we consider necessary for the purpose of providing you with our opinion of the market
value of this property as at 30 April 2012 for public circular purpose.
Our valuation is our opinion of the market value of the property which we would define as
intended to mean ‘‘the estimated amount for which a property should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing
wherein the parties had each acted knowledgeably, prudently and without compulsion’’.
The market value is the best price reasonably obtainable in the market by the seller and the most
advantageous price reasonably obtainable in the market by the buyer. This estimate specifically excludes
an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale
and leaseback arrangements, joint ventures, management agreements, special considerations or
concessions granted by anyone associated with the sale, or any element of special value. The market
value of a property is also estimated without regard to costs of sale and purchase, and without offset for
any associated taxes.
Our valuation is prepared in accordance with The HKIS Valuation Standards on Properties (1st
Edition 2005) published by The Hong Kong Institute of Surveyors and in compliance with the
requirements of Chapter 5 of the Rules Governing the Listing of Securities published by The Stock
Exchange of Hong Kong Limited as well as Rule 11 of The Codes on Takeovers and Mergers and Share
Repurchases published by Securities and Futures Commission.
– 304 –
APPENDIX VII
PROPERTY VALUATION
We have valued the property as an operating hotel by capitalisation of the net operating income
shown on the schedules handed to us and with reference to sales evidence as available on the market.
We have not been provided with any title document relating to the property but we have caused
searches to be made at the Land Registry. We have not, however, inspected the original documents to
verify ownership or to ascertain the existence of any amendment which does not appear on the copies
obtained by us.
We have relied to a very considerable extent on information given by Fore Prosper Limited (‘‘Fore
Prosper’’), the registered owner of the property, and have accepted advice given to us on such matters as
planning approvals or statutory notices, easements, tenure, operating incomes and expenses, occupancy
status, floor areas and all other relevant matters. Dimensions, measurements and areas included in the
valuation certificate are based on information contained in the documents provided to us and are
therefore only approximations. We have no reason to doubt the truth and accuracy of the information
provided to us. We have also been advised by Fore Prosper that no material facts have been omitted
from the information provided.
We have inspected the exterior of the property and where possible, we have also inspected the
interior of the premises. However, no structural survey has been made but in the course of our
inspection, we did not note any serious defect. We are not, however, able to report that the property is
free of rot, infestation or any other structural defect. No test was carried out on any of the services.
No allowance has been made in our valuation for any charges, mortgages or amounts owing on the
property nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise
stated, it is assumed that the property is free from encumbrances, restrictions, and outgoings of an
onerous nature which could affect its value.
Fore Prosper confirms that the property is held as long term investment for rental income and
hence there is no plan or intention to dispose of the property. Nevertheless, the potential tax liability
which might arise on the disposal of the property as at the date of valuation is profit tax at 16.5%. The
likelihood of such tax liability being crystallised is slim.
We enclose herewith our valuation certificate for your attention.
Yours faithfully
For and on behalf of
Savills Valuation and Professional Services Limited
Freddie Ling
MRICS MHKIS RPS(GP)
Senior Director
* Freddie Ling is a qualified surveyor who has about 26 years experience in the valuation of properties in Hong Kong.
– 305 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
Lanson Place Hotel,
133 Leighton Road,
Causeway Bay,
Hong Kong
The property comprises a roughly
triangular level site with a registered site
area of approximately 687.60sq.m.
(7,401sq.ft.).
Inland Lot No. 8774.
Currently standing on the site is a
26-storey (including a Mechanical Floor)
office/commercial/hotel building with the
Ground Floor to 25th Floor completed in
1996 and 27th to 28th Floors in 1999.
Particulars of
occupancy
The property is
currently occupied as a
serviced apartment/hotel
under the name of
Lanson Place Hotel.
Market value in
existing state as at
30 April 2012
HK$1,290,000,000
(40% attributable to
the Group:
HK$516,000,000)
The building was converted into a
serviced apartment/hotel building in 2005
accommodating a total of 194 units with
a total gross floor area of approximately
10,599.87sq.m. (114,097sq.ft.).
Inland Lot No. 8774 is held under
Conditions of Exchange No. 12159 for a
term from 2 September 1991 to 30 June
2047 at an annual Government rent
equivalent to 3% of the rateable value for
the time being of the lot.
Notes:
(1)
The current registered owner of the property is Fore Prosper, in which Success Grab Investments Limited and Dragon Eye
Holding Limited are beneficially interested in the proportion of 60:40. Success Grab Investments Limited is a wholly-owned
subsidiary of Wing Tai whereas Dragon Eye Holding Limited is a wholly-owned subsidiary of the Company. The property
is held by Fore Prosper for investment purpose.
(2)
The property is subject to a mortgage in favour of The Bank of Tokyo-Mitsubishi UFJ, Limited, Hong Kong Branch.
(3)
The property currently lies within an area zoned ‘‘Commercial’’ on Causeway Bay Outline Zoning Plan No. S/H6/15.
(4)
Our inspection was carried out by Eddie So, MRICS, MHKIS, on 18 May 2012. The property was maintained in a reasonable
condition commensurate with its age and uses and equipped with normal building services.
– 306 –
APPENDIX VII
PROPERTY VALUATION
SECTION E
The following is the text of a report prepared for the purpose of incorporation in this circular
received by the Group from CBRE Pte. Ltd., an independent valuer, in connection with its valuation as
at 30 April 2012 of the market value of a portfolio of property interests of the Privateco Group.
CBRE Pte. Ltd.
6 Battery Road #32-01
Singapore 049909
T (65) 6224 8181
F (65) 6225 1987
www.cbre.com.sg
Co. Reg. No.: 197701161R
Agency Licence No.: L3002163I
20 June 2012
Winsor Properties Holdings Limited
8th Floor, AXA Tower,
Landmark East, 100 How Ming Street,
Kwun Tong, Kowloon,
Hong Kong
And
Wing Tai Properties Limited
27th Floor, Two Landmark East,
100 How Ming Street,
Kwun Tong, Kowloon,
Hong Kong
Dear Sirs
Valuation of
24 unsold units within Belle Vue Residences,
19/21/23/25/27/31/33 Oxley Walk,
Singapore 238592/3/4/5/6/8/9 respectively, known as the ‘‘Property’’
We refer to joint instructions issued by Winsor Properties Holdings Limited (‘‘Winsor’’) and Wing
Tai Properties Limited (‘‘Wing Tai’’) to assess the market value as at 30 April 2012 of the Property
(‘‘the date of valuation’’) for inclusion in the circulars issued by Winsor and Wing Tai respectively on
20 June 2012 (the ‘‘Circulars’’). We confirm that we have carried out a site inspection on 29 May 2012,
– 307 –
APPENDIX VII
PROPERTY VALUATION
by our Mr. Philip Pang, Senior Manager, made relevant enquiries and obtained such further information
as we consider necessary for the purpose of providing you with our opinion of the Market Value of the
Property as at 30 April 2012.
VALUATION BASIS AND ASSUMPTIONS
In accordance with the International Valuation Standards and as advocated by the Royal Institution
of Chartered Surveyors (RICS), the definition of Market Value is as follows:
‘‘Market Value is the estimated amount for which a property should exchange on the date of
valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’’.
Our valuation is prepared in accordance with the ‘‘HKIS Valuation Standards on Properties (First
Edition 2005)’’ published by The Hong Kong Institute of Surveyors. We have also complied with all the
requirements contained in Chapter 5 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited as well as Rule 11 of The Codes on Takeovers and Mergers and Share
Repurchases published by the Securities and Futures Commission.
Our valuation has been made on the assumption that the owner sells the Property on the open
market in its existing state and without the benefit of a deferred terms contract, joint venture, or any
similar arrangement which would affect the value of the Property.
Where market value is assessed, it reflects the full contract value and no account is taken of any
liability to taxation on sale or of the cost involved in effecting a sale. The Property is valued on the
assumption that it is free and clear of all mortgages, encumbrances and other outstanding premiums and
charges.
Our valuation is prepared on the basis that the premises and any works thereto comply with all
relevant statutory regulations. We understand that the buildings on site have been issued with Certificate
of Statutory Completion by the Building Authority.
No structural survey has been made of the buildings and no guarantee is given in respect of rot,
termite or pest infestation or other hidden defects. None of the services in the building was tested.
SOURCE OF INFORMATION
Where applicable, information as to title particulars, site area and tenure are obtained from
searches carried out at Singapore Land Authority. We have also relied on information provided to us by
our client pertaining to matters such as the floor area, unit numbers of the unsold units etc. All
information provided is treated as true and accurate and CBRE accepts no responsibility for subsequent
changes in information and reserves the right to change our opinion of value if any other information
provided were to materially change.
– 308 –
APPENDIX VII
PROPERTY VALUATION
CONFIDENTIALITY AND DISCLAIMERS
This letter and Valuation Certificate may only be relied upon by Winsor and Wing Tai for
purposes of the Transactions as defined in the circulars issued by Winsor and Wing Tai dated 20 June
2012. This confidential document is for the sole use of persons directly provided with it by CBRE.
Use by, or reliance upon this document by anyone other than Winsor Properties Holdings Limited
and Wing Tai Properties Limited is not authorised by CBRE and CBRE is not liable for any loss arising
from such unauthorised use or reliance. This document should not be reproduced without our prior
written authority.
VALUATION RATIONALE
In arriving at the market value of the Property, we have considered relevant general and economic
factors and in particular have investigated recent sales transactions of comparable properties that have
occurred in the residential property market. We have utilised the Direct Comparison Method in
undertaking our assessment for the Property.
VALUER’S INTEREST
We affirm that the valuers are authorised under law to practice as valuers and have at least 5 years
continuous experience in valuation and do not have a pecuniary interest that could conflict with the
proper valuation of the property.
The key details and valuation of the Property are detailed in the Valuation Certificate attached
overleaf.
POTENTIAL TAX LIABILITY
The apartment units are available for sale. The profit arising from any sale is subject to corporate
tax applicable in Singapore as at the date of valuation. In the event of a sale, the likelihood of such
corporate tax liability being crystallised for the sold apartment units is definite. As advised by Winsor,
based on the estimated gross profit of S$69,000,000 for the Property and the corporate tax rate of 17%,
the maximum corporate tax exposure for the Property is S$11,730,000. Hence, for the 30% interest
attributable to Winsor Group, the maximum corporate tax exposure amounts to S$3,519,000.
Meanwhile, the property tax liability being crystallised for the unsold units held by Winquest
Investment Pte Ltd is definite. Based on the prevailing property tax rate of 10% per annum on the Chief
Assessor’s assessed Annual Value of S$3,091,200 for the Property, the maximum property tax exposure
for the Property is S$309,120 per annum. Hence, for the 30% interest attributable to Winsor Group, the
maximum property tax exposure amounts to S$92,736 per annum.
According to Section 2(a) of the Property Tax Act (Chapter 254) of the Republic of Singapore,
Annual Value in relation to a house or building or land or tenement, not being a wharf, pier, jetty or
landing-stage, means the gross amount at which the same can reasonably be expected to be let from year
to year, the landlord paying the expenses of repair, insurance, maintenance or upkeep and all taxes
(other than goods and services tax).
– 309 –
APPENDIX VII
PROPERTY VALUATION
In conducting this valuation, we have not taken into account the corporate tax/property tax
liabilities. However, we advise that these have no impact on the Market Value of the Property.
Yours sincerely
CBRE PTE. LTD.
LI HIAW HO
DipUrbVal (Auck) SNZPI FSISV
Appraiser’s Licence No. AD041–2445
Executive Director — Valuation & Advisory Services
(38 years continuous experience in Valuation)
CYNTHIA SOO
BSc (Est. Mgt) Hons MSISV
Appraiser’s Licence No. AD041–2006556
Associate Director — Valuation & Advisory Services
(18 years continuous experience in Valuation)
– 310 –
APPENDIX VII
PROPERTY VALUATION
VALUATION CERTIFICATE
Property
Description and tenure
Details of occupancy
24 unsold units within Belle Vue
Residences, 19/21/23/25/27/31/33
Oxley Walk, Singapore 238592/3/
4/5/6/8/9 respectively.
The Property comprises 24 unsold
residential units within Belle Vue
Residences, with a total strata area of
approximately 83,271sq.ft.
(7,736.13sq.m.).
The 24 unsold
residential units are
vacant as at date of
valuation and are held
by Winquest Investment
Pte Ltd for sale.
Belle Vue Residences is a condominium
development which contains nine 5storey blocks with basement carparks.
The development comprises a total of
176 residential units. The development
was issued with the Temporary
Occupation Permit (TOP) by the
Building and Construction Authority,
Singapore on 14 May 2010.
Belle Vue Residences is erected on Lot
665N of Town Subdivision 20 with
certified land area of approximately
247,610sq.ft. (23,003.5sq.m.).
The Property is within an area zoned
‘‘Residential’’ with a plot ratio of 1.4
under the Singapore Master Plan 2008.
Based on the Singapore Master Plan
2008, the site has a maximum height
restriction of 5 storeys.
The Property is in good condition.
The tenure of the Property is Estate in
Fee Simple.
The registered owner of the Property is
Winquest Investment Pte Ltd. As
advised, by Winsor Properties Holdings
Limited, Winquest Investment Pte Ltd is
a 30% associated company of the Winsor
Group.
The Property is unencumbered as at date
of valuation.
– 311 –
Market Value as at
30 April 2012
‘‘En-bloc’’ basis
S$141,600,000 (the
30% interest
attributable to
Winsor Group
amounts to
S$42,480,000)
‘‘Unit by unit’’ basis
S$157,285,000 (the
30% interest
attributable to
Winsor Group
amounts to
S$47,185,500)
APPENDIX VIII
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Set out below is a summary of certain provisions of the memorandum of association (the
‘‘Memorandum of Association’’ or the ‘‘Memorandum’’) and articles of association (the ‘‘Articles of
Association’’ or the ‘‘Articles’’) of the Privateco and of certain aspects of BVI company law.
(I)
SUMMARY OF CONSTITUTION OF THE PRIVATECO
1
Memorandum of Association
The Memorandum of Association of the Privateco was filed on 29 May 2012, and states,
inter alia, that the liability of members of the Privateco is limited, that the objects for which the
Privateco is established are unrestricted and the Privateco shall have full power and authority to
carry out any object not prohibited by the BVI Business Companies Act, 2004 (as amended) (the
‘‘Companies Act’’) or any other law of the BVI.
1.1
Classes of shares
The Privateco is authorised to issue ordinary shares. Pursuant to the Memorandum of
Association, the maximum number of shares that the Privateco is authorised to issue is
300,000,000 shares with a par value of HK$0.01 each.
1.2
Alteration to constitutional documents
Subject to the provisions of the Companies Act, the directors or members may from
time to time amend the Memorandum or Articles by resolution of directors or resolution of
members. The directors shall give notice of such resolution to the registered agent of the
Privateco, for the registered agent to file with the Registrar of Corporate Affairs in the BVI
(the ‘‘Registrar’’) a notice of the amendment to the Memorandum or Articles, or a restated
memorandum and articles of association incorporating the amendment(s) made, and any such
amendment(s) to the Memorandum or Articles will take effect from the date of the
registration by the Registrar of the notice of amendment or restated memorandum and articles
of association incorporating the amendment(s) made.
The directors shall not have the power to amend the Memorandum or Articles:
(a)
to restrict the rights or powers of the members to amend the Memorandum or
Articles;
(b)
to change the percentage of members required to pass a resolution to amend the
Memorandum or Articles; or
(c)
in circumstances where the Memorandum or Articles may only be amended by the
members.
– 312 –
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1.3
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Variation of rights of existing shares or classes of shares
If at any time the Privateco is authorised to issue shares of more than one class the
rights attached to any class (unless otherwise provided by the terms of issue of the shares of
that class) may, whether or not the Privateco is being wound up, be varied only with the
consent in writing of the holders of not less than three-fourths of the issued shares of that
class and the holders of not less than three-fourths of the issued shares of any other class of
shares which may be affected by such variation.
The rights conferred upon the holders of the shares of any class issued with preferred or
other rights shall not, unless otherwise expressly provided by the terms of issue of the shares
of that class, be deemed to be varied by the creation or issue of further shares ranking pari
passu therewith.
1.4
Alteration to the number of shares the Privateco is authorised to issue
The directors or members may from time to time by resolution of directors or resolution
of members increase the maximum number of shares the Privateco is authorised to issue, by
amendment to the Memorandum in accordance with the Memorandum of Association.
2
Articles of Association
The Articles of Association of the Privateco were filed on 29 May 2012, and include
provisions to the following effect:
2.1
Directors
(a)
Power to allot and issue shares
Subject to the provisions of the Companies Act and the Memorandum and Articles
of Association, the unissued shares of the Privateco (whether forming part of its
original or any increased authorised shares) shall be at the disposal of the directors,
who may offer, allot, grant options over or otherwise dispose of them to such persons at
such times and for such consideration, being not less than the par value (if any) of the
shares being disposed of, and upon such terms, as the directors shall determine.
Subject to the provisions of the Companies Act, shares may be issued on the terms
that they are redeemable, or at the option of the Privateco be liable to be redeemed on
such terms and in such manner as the directors before or at the time of the issue of such
shares may determine. The directors may redeem any share issued by the Privateco at a
premium.
(b)
Business and affairs of the Privateco
The business of the Privateco shall be managed by the directors who may pay all
expenses incurred preliminary to and in connection with the formation and registration
of the Privateco, and may exercise all such powers of the Privateco necessary for
– 313 –
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SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
managing and for directing and supervising, the business and affairs of the Privateco as
are not by the Companies Act or by the Memorandum or Articles of Association
required to be exercised by the members, subject to any delegation of such powers as
may be authorised by the Articles of Association and permitted by the Companies Act
and to such requirements as may be prescribed by resolution of the members, but no
requirement made by resolution of the members shall prevail if it be inconsistent with
the Articles of Association nor shall such requirement invalidate any prior act of the
directors which would have been valid if such requirement had not been made.
(c)
Disclosure of interest in contracts with the Privateco or any of its subsidiaries
No director shall be disqualified by his office from contracting with the Privateco
either as a buyer, seller or otherwise, nor shall any such contract or arrangement entered
into by or on behalf of the Privateco in which any director shall be in any way
interested be voided, nor shall any director so contracting or being so interested be
liable to account to the Privateco for any profit realised by any such contract or
arrangement, by reason of such director holding that office or by reason of the fiduciary
relationship thereby established, provided such director shall, immediately after
becoming aware of the fact that he is interested in a transaction entered into or to be
entered into by the Privateco, disclose such interest to the board. For the purposes of
this:
(i)
a director is not required to make such a disclosure if:
(A) the transaction or proposed transaction is between the director and the
Privateco; and
(B)
(ii)
the transaction or proposed transaction is or is to be entered into in the
ordinary course of the Privateco’s business and on usual terms and
conditions;
a disclosure to the board to the effect that a director is a member, director,
officer or trustee of another named company or other person and is to be
regarded as interested in any transaction which may, after the date of the
entry or disclosure, be entered into with that company or person, is a
sufficient disclosure of interest in relation to that transaction. Such a
disclosure is not made to the board unless it is made or brought to the
attention of every director on the board; and
(iii) subject to section 125(1) of the Companies Act, the failure by a director to
comply with the Article does not affect the validity of a transaction entered
into by the director or the Privateco.
A director who is interested in a transaction entered into or to be entered into by
the Privateco may:
(i)
vote on a matter relating to the transaction;
– 314 –
APPENDIX VIII
(ii)
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
attend a meeting of directors at which a matter relating to the transaction
arises and be included among the directors present at the meeting for the
purposes of a quorum; and
(iii) sign a document on behalf of the Privateco, or do any other thing in his
capacity as a director, that relates to the transaction.
(d)
Remuneration
The remuneration of directors (whether by way of salary, commission,
participation in profits or otherwise) in respect of services rendered or to be rendered
in any capacity to the Privateco (including to any company in which the Privateco may
be interested) shall be fixed by resolution of directors or resolution of members. The
directors may also be paid such travelling, hotel and other expenses properly incurred
by them in attending and returning from meetings of the directors, or any committee of
the directors or meetings of the members, or in connection with the business of the
Privateco as shall be approved by resolution of directors or resolution of members.
(e)
Retirement, appointment and removal
The first director or directors shall be appointed by the registered agent of the
Privateco. Thereafter, the directors shall be appointed and removed by resolution of
directors or resolution of members for such terms as the directors or members may so
determine. Sections 114(2) and 114(3) of the Companies Act shall not apply to the
Privateco.
Each director holds office until:
(i)
his disqualification to act as a director under section 111 of the Companies
Act (on which his office as director shall be automatically terminated if he
has not resigned in accordance with section 115(2) of the Companies Act);
(ii)
his death;
(iii) his resignation; or
(iv) the effective date of his removal by resolution of directors or resolution of
members.
The following are disqualified for appointment as a director:
(i)
an individual who is under 18 years of age;
(ii)
a person who is a disqualified person within the meaning of section 260(4)
of the Insolvency Act, 2003;
(iii) a person who is a restricted person within the meaning of section 409 of the
Insolvency Act, 2003; and
– 315 –
APPENDIX VIII
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OF PRIVATECO AND BVI COMPANY LAW
(iv) an undischarged bankrupt.
(f)
Proceedings of the board
The directors may meet together for the despatch of business, adjourn and
otherwise regulate their meetings as they think fit. Questions arising at any meeting of
directors shall be determined by a majority of votes. In case of an equality in votes, the
Chairman of the board shall have a second or casting vote.
(g)
Delegation
Subject to the provisions of section 110 of the Companies Act, the directors may
delegate any of their powers to committees consisting of such member or members of
their body as they think fit.
The directors may, by resolution of directors, appoint officers of the Privateco at
such times as shall be considered necessary or expedient.
The directors may from time to time by power of attorney appoint any company,
firm or person or body of persons to be the attorney or attorneys of the Privateco for
such purposes and with such powers, authorities and discretions (not exceeding those
vested in or exercisable by the directors under the Articles of Association) and for such
period and subject to such conditions as the directors think fit.
The directors may appoint any person, including a person who is a director, to be
an agent of the Privateco. The directors may at any time remove an agent and may
revoke or vary a power conferred on him.
2.2
Notice of meetings of members
The directors may convene meetings of the members at such times and in such manner
and places (within or outside the British Virgin Islands) as the directors consider necessary or
desirable, and they shall convene such a meeting upon the written request of members
entitled to exercise at least thirty (30) percent of the voting rights in respect of the matter for
which the meeting is requested.
Not less than seven (7) days’ notice specifying at least the place, the day and the hour
of the meeting and general nature of the business to be conducted shall be given in the
manner hereinafter mentioned to such persons whose names on the date the notice is given
appear as members in the Privateco’s register of members and are entitled to vote at the
meeting. Notwithstanding the foregoing, a meeting of members held in contravention of the
requirement to give notice is valid if members holding ninety (90) percent of:
(a)
the total voting rights on all the matters to be considered at the meeting; or
– 316 –
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(b)
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
the votes of each class or series of shares where members are entitled to vote
thereon as a class or series together with an absolute majority of the remaining
votes,
have waived notice of the meeting and, for this purpose, the presence of a member at
the meeting shall be deemed to constitute waiver on his part (unless such member
objects in writing before or at the meeting).
The inadvertent failure of the directors to give notice of a meeting to a member or the
fact that a member has not received a notice that has been properly given, shall not invalidate
the meeting.
2.3
Quorum for meetings
No business shall be transacted at any meeting of members unless a quorum of
members is present at the time when the meeting proceeds to business. A quorum shall
consist of the holder or holders present in person or by proxy entitled to exercise at least fifty
(50) percent of the voting rights of the shares of each class or series of shares entitled to vote
as a class or series thereon and the same proportion of the votes of the remaining shares
entitled to vote thereon.
A member shall be deemed to be present at a meeting of members if:
(a)
he or his proxy participates by telephone or other electronic means; and
(b)
all members and proxies participating in the meeting are able to hear each other.
If, within half an hour from the time appointed for the meeting, a quorum is not
present, the meeting shall be dissolved.
2.4
Voting rights
At any meeting a resolution put to the vote of the meeting shall be decided on a show
of hands by the holders of a majority of in excess of fifty (50) percent of the votes of those
members (or their duly appointed proxies) entitled to vote and voting on the resolution,
unless a poll is (before or on the declaration of the result of the show of hands) demanded:
(a)
by the Chairman; or
(b)
by any member present in person or by proxy and holding not less than one tenth
of the total voting shares issued and having the right to vote on such resolution.
Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a
show of hands been carried, and an entry to that effect in the book containing the minutes of
the proceedings of the Privateco, shall be sufficient evidence of the fact, without proof of the
number or proportion of the votes recorded in favour of or against such resolution.
– 317 –
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OF PRIVATECO AND BVI COMPANY LAW
If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and
the result of the poll shall be deemed to be the resolution of the meeting at which the poll
was demanded. The demand for a poll may be withdrawn, at the discretion of the Chairman.
On a poll, every holder of a voting share present in person or by proxy shall have one
vote for every voting share of which he is the holder which confers the right to a vote on the
resolution.
In the case of an equality of votes, whether on a show of hands or on a poll, the
Chairman of the meeting at which the show of hands takes place, or at which the poll is
demanded, shall not be entitled to a second or casting vote.
Where shares are registered in the names of joint owners, if two or more are present in
person or by proxy, they must vote as one. If more than one joint owner votes in person or
by proxy at any meeting of members or by written resolution, the vote of the joint owner
whose name appears first among such voting joint holders in the Privateco’s register of
members shall alone be counted.
2.5
Transfer of shares
Registered shares in the Privateco shall be transferred by a written instrument of
transfer signed by the transferor and containing the name and address of the transferee. The
instrument of transfer shall also be signed by the transferee if registration as a holder of the
shares imposes a liability to the Privateco on the transferee. The instrument of transfer of a
registered share shall be sent to the Privateco for registration.
Subject to the Memorandum, the Articles of Association and to section 54(5) of the
Companies Act, the Privateco shall, on receipt of an instrument of transfer, enter the name of
the transferee of the share in the Privateco’s register of members unless the directors resolve
to refuse or delay the registration of the transfer for reasons that shall be specified in the
resolution. Where the directors pass such a resolution, the Privateco shall send to the
transferor and the transferee a notice of the refusal or delay. Notwithstanding anything
contained in the Memorandum or Articles of Association, the directors shall not decline to
register any transfer of shares, nor may they suspend registration thereof where such transfer
is:
(a)
to any mortgagee or chargee whose interest has been noted on the Privateco’s
register of members;
(b)
by any such mortgagee or chargee, pursuant to the power of sale under its
security; or
(c)
by any such mortgagee or chargee in accordance with the terms of the relevant
security document.
The transfer of a registered share is effective when the name of the transferee is entered
in the Privateco’s register of members.
– 318 –
APPENDIX VIII
2.6
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Power of the Privateco to purchase its own shares
The directors may, on behalf of the Privateco, subject to the written consent of all the
members whose shares are to be purchased, redeemed or otherwise acquired, purchase,
redeem or otherwise acquire any of the Privateco’s own shares for such consideration as the
directors consider fit, and either cancel or hold such shares as treasury shares. Shares may be
purchased or otherwise acquired in exchange for newly issued shares in the Privateco.
The directors shall not, unless permitted pursuant to the Companies Act, purchase,
redeem or otherwise acquire any of the Privateco’s own shares unless immediately after such
purchase, redemption or other acquisition:
(a)
the value of the Privateco’s assets exceeds it liabilities; and
(b)
the Privateco is able to pay its debts as they fall due.
Sections 60 and 61 of the Companies Act shall not apply to the Privateco.
2.7
Distributions
Subject to the provisions of the Companies Act, the directors may, by resolution of
directors, authorise a distribution by the Privateco at a time, and of an amount, and to any
members they think fit if they are satisfied, on reasonable grounds that, immediately after the
distribution, the value of the Privateco’s assets will exceed the Privateco’s liabilities and the
Privateco is able to pay its debts as they fall due.
No distribution shall be paid on those shares which are held by the Privateco as
treasury shares at the date of declaration of the distribution.
The directors may, before recommending any distribution, set aside out of the profits of
the Privateco such sums as they think proper as a reserve or reserves which shall, at their
discretion, either be employed in the business of the Privateco or be invested in such
investments as the directors may from time to time think fit.
If several persons are registered as joint holders of any share, any of them may give
effectual receipt for any distribution or other monies payable on or in respect of the share.
Notice of any distribution that may have been declared shall be given to each member
in manner hereinafter mentioned and all distributions unclaimed for three years after having
been declared may be forfeited by the directors for the benefit of the Privateco.
No distribution shall bear interest against the Privateco.
2.8
Proxies
A member may attend a meeting of members personally or be represented by a proxy
who may speak and vote on behalf of the member.
– 319 –
APPENDIX VIII
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
The instrument appointing a proxy shall be produced at the place appointed for the
meeting before the time for holding the meeting at which the person named in such
instrument proposes to vote. An instrument appointing a proxy shall be in such form as the
Chairman of the meeting shall accept as properly evidencing the wishes of the member
appointing the proxy, but must be in writing under the hand of the appointer unless the
appointer is a corporation or other form of legal entity (other than one or more individuals
holding as joint owner) in which case the instrument appointing a proxy shall be in writing
under the hand of an individual duly authorised by such corporation or legal entity to execute
the same.
2.9
Forfeiture of shares
The Privateco may, at any time after the due date for payment, serve on a member who
has not paid in full for shares registered in the name of that member, a written notice of call
(‘‘Notice of Call’’) specifying a date for payment to be made. The Notice of Call shall name
a further date not earlier than the expiration of 14 days from the date of service of the Notice
of Call on or before which the payment required by the Notice of Call is to be made and
shall contain a statement that in the event of non-payment at or before the time named in the
Notice of Call the shares, or any of them, in respect of which payment is not made will be
liable to be forfeited.
Where a written Notice of Call has been issued under the foregoing Article and the
requirements of the Notice of Call have not been complied with, the directors may, at any
time before tender of payment, forfeit and cancel the shares to which the Notice of Call
relates. The Privateco is under no obligation to refund any moneys to the member whose
shares have been cancelled pursuant to the Article and that member shall be discharged from
any further obligation to the Privateco.
2.10 Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles of Association concerning the rights of minority
shareholders in relation to fraud or oppression.
2.11 Audit
The directors may by a resolution of directors call for the accounts of the Privateco to
be examined by an auditor or auditors to be appointed by them at such remuneration as may
from time to time be agreed.
The auditor may be a member but no director or officer of the Privateco shall be
eligible during his continuance in office.
Every auditor of the Privateco shall have a right of access at all times to the books of
account of the Privateco, and shall be entitled to require from the officers of the Privateco
such information and explanations as he thinks necessary for the performance of his duties.
– 320 –
APPENDIX VIII
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
The report of the auditor shall be annexed to the accounts upon which he reports, and
the auditor shall be entitled to receive notice of, and to attend, any meeting at which the
Privateco’s audited profit and loss account and/or balance sheet is to be presented.
2.12 Winding up
The Privateco may be voluntarily liquidated under Part XII of the Companies Act if it
has no liabilities and it is able to pay its debts as they become due. A liquidator may, subject
to the terms of the Companies Act, be appointed by a resolution of directors or by a
resolution of members.
If the Privateco shall be wound up, the liquidator may divide amongst the members in
specie or in kind the whole or any part of the assets of the Privateco (whether they shall
consist of property of the same kind or not) and may for such purpose set such value as he
deems fair upon any such property to be divided as aforesaid and may determine how such
division shall be carried out as between the members or different classes of members. The
liquidator may vest the whole or any part of such assets in trustees upon such trust for the
benefit of the contributors as the liquidator shall think fit, but so that no member shall be
compelled to accept any shares or other securities whereon there is any liability.
(II) SUMMARY OF BVI COMPANY LAW
1
Introduction
The Companies Act is derived, to a large extent, from English corporate legislation, although
there are significant differences between the Companies Act and English corporate legislation. Set
out below is a summary of certain provisions of the Companies Act, although this summary does
not purport to be a complete review of all matters of corporate law and taxation which may differ
from equivalent provisions in jurisdictions with which interested parties may be more familiar.
2
Incorporation
The Privateco was incorporated in the BVI as BVI Business Company on 29 May 2012 under
the Companies Act. The Privateco is required to pay an annual fee to the Registrar of Corporate
Affairs in the BVI which is based on the number of shares the company is authorised to issue.
3
Shares
One of the major features of the Companies Act is that the concept of share capital has been
abolished.
Instead, a company limited by, or otherwise authorised to issue shares, can now simply state
in its memorandum of association the maximum number and classes of shares that the company is
authorised to issue. Companies may also divide their shares (including those shares already in
issue) into a larger number of shares or combine them into a smaller number of shares in the same
– 321 –
APPENDIX VIII
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
class or series, provided that the maximum number of shares the company is permitted to issue is
not exceeded. On any such division or combination of shares the aggregate par value (if any) of
the new shares must be equal to the aggregate par value of the original shares.
The directors of a company can, at their discretion, issue shares in registered or bearer form
(although in order to issue bearer shares there must be an express authorisation in the
memorandum of association and such bearer shares must be held by an approved custodian) for
such consideration and on such terms as they may determine.
Shares can be issued for consideration in any form, provided such consideration is not less
than par value where the share is a par value share.
If so authorised by its memorandum of association, a company can issue more than one class
of shares and, if so, the memorandum of association must also specify the rights, privileges,
restrictions and conditions which attach to each class.
The Companies Act provides that companies may issue redeemable shares, shares with no
rights, limited rights or preferential rights to share in distributions, or shares with no or special or
limited or conditional voting rights. They may also, subject to their memorandum of association
and articles of association, issue bonus shares, partly or nil paid shares, and fractional shares.
The Companies Act provides that a company may purchase, redeem or otherwise acquire its
own shares, either in accordance with the procedure set out in the Companies Act, or any other
procedure as provided for in the memorandum of association and articles of association of the
company.
Under the provisions in the Companies Act, the directors may make an offer for the company
to purchase, redeem or otherwise acquire shares in the company provided that the offer is either (a)
to all shareholders and would, if successful, leave the relative voting and distribution rights
unaffected, or (b) to one or more shareholders and consented to in writing by all shareholders, or
is otherwise permitted by the memorandum of association or articles of association. Where the
offer is to one or more shareholders, the directors must pass a resolution to the effect that in their
opinion the purchase, redemption or other acquisition would benefit the remaining shareholders,
and the proposed offer is fair and reasonable to the company and the remaining shareholders.
Where an acquisition by a company of its own shares would be treated as a distribution, the
conditions imposed on distributions (detailed in paragraph 5 below) must be met. The purchase,
redemption or other acquisition by a company of its own shares is not deemed to be a distribution
where it is effected pursuant to, inter alia, a right of a shareholder to have his shares redeemed or
exchanged for money or other property of the company or where the share is redeemable at the
option of the company.
– 322 –
APPENDIX VIII
4
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Financial assistance
There is no statutory restriction in the BVI on the provision of financial assistance by a
company for the purchase of, or subscription for, its own or its holding company’s shares.
Accordingly, a company may provide financial assistance if the directors of the company consider,
in discharging their duties of due care, skill and diligence that they are acting in good faith, for a
proper purpose and in the interests of the company, that such assistance can be given.
5
Dividends and distributions
The directors of a company may only declare a distribution by the company if they are
satisfied, on reasonable grounds, that the company will, immediately after the distribution, satisfy
the solvency test set out in section 57(1) of the Companies Act. A company satisfies the solvency
test if the value of its assets exceeds its liabilities and it is able to pay its debts as they fall due.
6
Shareholders’ remedies
The Companies Act has introduced a series of remedies available to shareholders. Where a
company engages in activity which breaches the Companies Act or the company’s memorandum of
association and articles of association, the court can issue a restraining or compliance order.
Shareholders can also bring derivative, personal and representative actions under certain
circumstances. The traditional English basis for shareholders’ remedies has also been incorporated
into the Companies Act — where a shareholder of a company considers that the affairs of the
company have been, are being or are likely to be conducted in a manner likely to be oppressive,
unfairly discriminating or unfairly prejudicial to him, he may apply to the court for an order on
such conduct.
7
Mergers and consolidations
Under the Companies Act two or more companies, each a ‘‘constituent company’’, may
merge or consolidate.
A merger involves merging two or more companies into one of the constituent companies
that will remain as the surviving company and a consolidation involves two or more companies
consolidating into a new company. Subject to the memorandum of association and articles of the
company a merger or consolidation must be authorised by a resolution of shareholders of every
class of shares entitled to vote on the merger.
There are differing procedures depending on the type of merger that is taking place. Under
the Companies Act a merger may occur between any of the following:
(a)
Two or more companies incorporated under the Companies Act;
(b)
One or more companies incorporated under the Companies Act and one or more
companies incorporated under the laws of a jurisdiction outside the BVI where the BVI
company is the surviving entity;
– 323 –
APPENDIX VIII
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
(c)
One or more companies incorporated under the Companies Act and one or more
companies incorporated under the laws of a jurisdiction outside the BVI where the
foreign company is the surviving entity;
(d)
A parent company and one or more of its subsidiaries where the companies are
incorporated under the Companies Act;
(e)
A parent company and one or more of its subsidiaries where one or more of the
companies are incorporated under the Companies Act, one or more are incorporated
under the laws of a jurisdiction outside the BVI and where the BVI company is the
surviving company; or
(f)
A parent company and one or more of its subsidiaries where one or more of the
companies are incorporated under the Companies Act, one or more are incorporated
under the laws of a jurisdiction outside the BVI and where the foreign company is the
surviving entity.
Under the Companies Act, a shareholder of a company is entitled to payment of the fair value
of his shares upon dissenting from:
(a)
A merger, if the company is a constituent company, unless the company is the surviving
company and the shareholder continues to hold the same or similar shares;
(b)
A consolidation, if the company is a constituent company.
The Companies Act sets out the procedure that must be followed in effecting dissenters’
rights. Ultimately, if the company and the dissenter fail to agree on the price to be paid for the
shares owned by the dissenter, then the statutory procedure provides that the fair value of the
shares owned by the dissenter is fixed by three appraisers.
8
Redemption of minority shares
Under the Companies Act and subject to the memorandum of association or articles of
association of a company, shareholders of a company holding 90 per cent of the votes of the
outstanding shares entitled to vote; and shareholders of a company holding 90 per cent of the votes
of the outstanding shares of each class of shares entitled to vote as a class, may give a written
instruction to the company directing it to redeem the shares held by the remaining shareholders.
Upon receiving this direction, the company must redeem the shares it has been directed to redeem
and must give written notice to each shareholder stating the redemption price and the manner by
which the redemption will be effected.
The shareholders having their shares compulsorily redeemed are entitled to receive fair value
for their shares and may dissent from the compulsory redemption. The Companies Act sets out the
procedure that must be followed in effecting dissenters’ rights. Ultimately, if the company and the
dissenter fail to agree on the price to be paid for the shares owned by the dissenter, then the
statutory procedure provides that the fair value of the shares owned by the dissenter is fixed by
three appraisers.
– 324 –
APPENDIX VIII
9
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Disposal of assets
Under the Companies Act and subject to the memorandum of association or articles of
association of a company, any sale, transfer, lease, exchange or other disposition, other than a
mortgage, charge or other encumbrance or the enforcement thereof, of more than 50 per cent in
value of the assets of the company, if not made in the usual or regular course of the business
carried on by the company, requires the approval of the shareholders.
The Companies Act sets out the procedure that must be followed in relation to effecting such
a disposal.
10
Accounting and auditing requirements
The Companies Act requires that a company shall cause to be kept proper books of account
that (a) are sufficient to show and explain the company’s transactions; and (b) will, at any time,
enable the financial position of the company to be determined with reasonable accuracy.
11
Register of shareholders
A BVI Business Company may, subject to the provisions of its articles of association,
maintain its principal register of members and any branch registers at such locations, whether
within or outside of the BVI, as its directors may, from time to time, think fit. However either the
register of members or a copy of the register of members of the BVI Business Company has to be
kept at the office of its registered agent in the BVI.
There is no mandatory requirement under the Companies Act for a company to make any
filings of shareholder information to the Registrar of Corporate Affairs in the BVI. The names and
addresses of the shareholders are, accordingly, not a matter of public record and are not available
for public inspection.
12
Inspection of books and records
Subject to the Companies Act, a shareholder of a company will have general right under the
Companies Act to inspect or obtain copies of the register of members, the register of directors and
minutes of meetings and resolutions of members and of those classes of members of which he is a
member. However, subject to the company’s memorandum of association and articles of
association, the directors may, if they are satisfied that it would be contrary to the company’s
interests to allow a shareholder to inspect any document (or part of a document) refuse to permit
the shareholder to inspect the document or limit the inspection of the document, including limiting
the making of copies or the taking of extracts from the records.
13
Special resolutions
The Companies Act does not define ‘‘special resolution’’. However a company’s
memorandum of association and articles of association may make provisions for varying threshold
levels of votes required to pass a resolution and require that certain matters may only be approved
if passed by a certain percentage of votes.
– 325 –
APPENDIX VIII
14
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Subsidiary owning shares in parent
The Companies Act does not prohibit a BVI company acquiring and holding shares in its
parent company. The directors of any subsidiary making such acquisition must discharge their
duties of care and to act honestly and in good faith and in what the director believes to be in the
best interests of the company.
Under the Companies Act:
15
(a)
a director of a company that is a wholly-owned subsidiary may, when exercising powers
or performing duties as a director, if expressly permitted to do so by the memorandum
of association and articles of association of the company, act in a manner which he
believes is in the best interests of that company’s holding company even though it may
not be in the best interests of the company.
(b)
a director of a company that is a subsidiary, but not a wholly-owned subsidiary, may,
when exercising powers or performing duties as a director, if expressly permitted to do
so by the memorandum of association or articles of association of the company and
with the prior agreement of the shareholders, other than its holding company, act in a
manner which he believes is in the best interests of that company’s holding company
even though it may not be in the best interests of the company.
(c)
a director of a company that is carrying out a joint venture between the shareholders
may, when exercising powers or performing duties as a director in connection with the
carrying out of the joint venture, if expressly permitted to do so by the memorandum of
association or articles of association of the company, act in a manner which he believes
is in the best interests of a shareholder or shareholders, even though it may not be in
the best interests of the company.
Indemnification
BVI law in general does not limit the extent to which a company’s articles of association may
provide for indemnification of officers and directors, subject to the conditions set out in the
Companies Act (e.g. the officer or director has acted honestly and in good faith and in what he
believed to be in the best interests of the company and, in the case of criminal proceedings, that
officer or director had no reasonable cause to believe that his conduct was unlawful).
16
Liquidation
A company is placed in liquidation either by an order of the court or by a resolution of
directors or shareholders. A liquidator is appointed whose duties are to collect the assets of the
company (including the amount (if any) due from the contributories (shareholders)), settle the list
of creditors and discharge the company’s liability to them, rateably if insufficient assets exist to
discharge the liabilities in full, and to settle the list of contributories and divide the surplus assets
(if any) amongst them in accordance with the rights attaching to the shares.
– 326 –
APPENDIX VIII
17
SUMMARY OF THE CONSTITUTION
OF PRIVATECO AND BVI COMPANY LAW
Stamp duty on transfers
No stamp duty is payable in the BVI on transfers of shares of BVI companies.
18
Taxation
Companies incorporated or registered under the Companies Act are currently exempt from
income and corporate tax. In addition, the British Virgin Islands currently does not levy capital
gains tax on companies incorporated or registered under the Companies Act.
19
Exchange control
There are no exchange control regulations or currency restrictions in the BVI.
20
General
Any person wishing to have a detailed summary of BVI company law or advice on the
differences between it and the laws of any jurisdiction with which he/she is more familiar is
recommended to seek independent legal advice.
Maples and Calder have sent to the Company a letter of advice summarising aspects of BVI
company laws. This letter of advice, together with a copy of the Companies Act, is available for
inspection as referred to in the paragraphed ‘‘Documents available for inspection’’ in Appendix IX
to this circular.
– 327 –
APPENDIX IX
1.
GENERAL INFORMATION
RESPONSIBILITY STATEMENT
All Directors jointly and severally accept full responsibility for the accuracy of information
contained in this circular and confirm, having made all reasonable inquiries, that to the best of their
knowledge, opinions expressed in this circular have been arrived at after due and careful consideration
and there are no other facts not contained in this circular, the omission of which would make any
statement in this circular misleading.
Information and confirmation relating to Wing Tai, the Purchaser, the Offeror and parties acting in
concert, the Listco Offer and the Privateco Offer set out in this circular have been duly extracted from
the Joint Announcement or provided by the respective parties. The Directors jointly and severally accept
responsibility for the correctness and fairness of reproduction or presentation of such information.
2.
INDEBTEDNESS STATEMENT
Indebtedness
At the close of business on 30 April 2012, being the latest practicable date for the purpose of
preparing this indebtedness statement prior to the printing of this circular, the Group had total
outstanding borrowings of approximately HK$2,092.6 million, comprising secured bank loans of
approximately HK$1,961.8 million, other long-term loan due to a minority shareholder in a
subsidiary of approximately HK$32.5 million and the fair value of derivative financial instruments
liabilities of approximately HK$98.3 million in relation to interest rate swap contracts with an
aggregate notional principal amount of HK$1,000 million.
As at 30 April 2012, the bank loans were secured by certain of the Group’s investment
properties, available-for-sale financial assets and held-to-maturity investments with carrying values
of approximately HK$12,114.7 million, HK$239.1 million and HK$64.2 million, respectively.
As at 30 April 2012, the Group was contingently liable for a guarantee of HK$228 million
executed in favour of a bank for banking facilities granted to an associated company.
General
Save as aforesaid or as otherwise disclosed herein and apart from intra-group liabilities, at
the close of business on 30 April 2012, the Group did not have any outstanding debt securities and
loan capital issued and outstanding or agreed to be issued, bank overdrafts, loans or other similar
indebtedness (whether guaranteed, unguaranteed, secured or unsecured), mortgages, charges or
debentures, guarantees or other material contingent liabilities.
The Directors have confirmed that there has not been any other material change in the
indebtedness and contingent liabilities of the Group since 30 April 2012 and up to the Latest
Practicable Date.
– 328 –
APPENDIX IX
3.
GENERAL INFORMATION
WORKING CAPITAL
Taking into account the expected net cash inflows to be generated from the Property and the cash
and bank balances of the Remaining Group upon completion of the Transactions, the Directors consider
that the Remaining Group, in the absence of unforeseeable circumstances, will have sufficient working
capital for its current requirements for at least the next twelve months from the date of this circular.
4.
MATERIAL ADVERSE CHANGE
As at the Latest Practicable Date, the Directors were not aware of any material adverse change in
the financial or trading position of the Group since 31 December 2011, being the date to which the
latest published audited accounts of the Group were made up.
5.
SHARE CAPITAL
The authorised and issued share capital of the Company as at the Latest Practicable Date were as
follows:
HK$’000
Authorised share capital:
750,000,000 Shares of HK$0.01 each
7,500
Issued and fully paid up:
259,685,288 Shares of HK$0.01 each
2,597
The Company had not issued any Shares since 31 December 2011, being the end of the last
financial year of the Company. All issued Shares rank pari passu in all respects with each other,
including all rights as to dividends, voting and interests in capital.
The Shares are listed and traded on the main board of the Stock Exchange. None of the Shares are
listed, or dealt in, on any other stock exchange, nor is any listing of or permission to deal in the Shares
being, or proposed to be, sought on any other stock exchange.
6.
SHARE OPTIONS
As at the Latest Practicable Date, the Company had no outstanding securities, options, warrants or
derivatives which are convertible into or which confer rights to require the issue of Shares.
7.
DISCLOSURE OF INTERESTS
(a)
Directors’ interests in equity or debt securities
As at the Latest Practicable Date, the interests or short positions of the Directors and the
chief executive of the Company in the shares, underlying shares or debentures of the Company or
any of its associated corporations (within the meaning of Part XV of the SFO), which were
required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the SFO (including interests or short positions which they were taken or deemed to
– 329 –
APPENDIX IX
GENERAL INFORMATION
have under such provisions of the SFO), or which were required, pursuant to section 352 of the
SFO, to be entered in the register referred to therein, or which were required, pursuant to the
Model Code for Securities Transactions by Directors of Listed Issuers (the ‘‘Model Code’’) to be
notified to the Company and the Stock Exchange, were set out as follows:
(i)
Interests in the Company
Name of Director
Interests held
as beneficial
owner
Number of Shares held
Interests Interests held
Percentage
held by by controlled
Other
of issued
spouse
corporations
interests Total interests share capital
—
27,000
—
205,835,845
(Note 2)
205,862,845
79.27%
Mr. Chow Wai Wai,
John
2,713,000
—
—
—
2,713,000
1.04%
Mr. Cheng Wai Sun,
Edward
—
—
—
205,835,845
(Note 2)
205,835,845
79.26%
Mrs. Chen Chou Mei
Mei, Vivien
70,000
—
—
—
70,000
0.03%
Mr. Cheng Wai Chee,
Christopher
Notes:
1.
The total number of ordinary shares of the Company in issue as at the Latest Practicable Date was
259,685,288.
2.
For the purpose of Part XV of the SFO, Mr. Cheng Wai Chee, Christopher and Mr. Cheng Wai Sun,
Edward being beneficiaries of a family trust, were deemed to be interested in (i) 148,944,458 Shares
held by Wing Tai; (ii) 42,991,387 Shares held through Twin Dragon, a wholly-owned subsidiary of
Wing Tai and (iii) 13,900,000 Shares which are subject to a put option granted by Wing Tai to
Standard Chartered Bank. These interests represented the same interests and were therefore duplicated
amongst these two Directors.
– 330 –
APPENDIX IX
(ii)
GENERAL INFORMATION
Interests in an associated corporation, Wing Tai
Number of ordinary shares held
Name of Director
Interests
held as
beneficial
owner
Interests Interests held
held by by controlled
spouse corporations
Other
interests
Number of
underlying
shares held
under equity
derivative
(Note 4)
Percentage
of issued
Total
share
interests
capital
7,450,566
—
—
462,488,185
(Note 2)
2,211,000
472,149,751
35.44%
Mr. Chow Wai Wai,
John
200,002
—
—
—
—
200,002
0.02%
Mr. Cheng Wai Sun,
Edward
7,349,234
—
—
462,488,185
(Note 2)
2,211,000
472,048,419
35.43%
Mr. Au Hing Lun,
Dennis
2,364,747
—
—
—
959,250
3,323,997
0.25%
696,718
—
—
—
580,500
1,277,218
0.10%
Mr. Cheng Wai Chee,
Christopher
Ms. Fung Ching Man,
Janet (Note 3)
Notes:
1.
The total number of ordinary shares of Wing Tai in issue as at the Latest Practicable Date was
1,332,257,279.
2.
As at the Latest Practicable Date, Mr. Cheng Wai Chee, Christopher and Mr. Cheng Wai Sun, Edward
were beneficiaries of a family trust whose assets included indirect interests in 462,488,185 ordinary
shares of Wing Tai. These interests represented the same interests and were therefore duplicated
amongst these two Directors.
3.
Alternate Director to Mr. Cheng Wai Chee, Christopher and Mr. Cheng Wai Sun, Edward respectively.
4.
These represented interests in shares options or incentive shares granted by Wing Tai to its directors
and employees as beneficial owners, details of which are set out in the section headed ‘‘Underlying
shares in Wing Tai’’.
(iii) Underlying shares in Wing Tai
Pursuant to a share option scheme of Wing Tai adopted on 10 June 2003 (the ‘‘Wing
Tai Share Option Scheme’’), the board of directors of Wing Tai may in its absolute discretion
grant options to directors and employees of Wing Tai Group to subscribe for shares of Wing
Tai at an exercise price to be determined by the directors of Wing Tai in accordance with the
rules of the scheme.
Pursuant to a share incentive scheme of Wing Tai adopted on 17 June 2005 (the ‘‘Wing
Tai Share Incentive Scheme’’), the board of directors of Wing Tai or a duly authorised
committee thereof may in its absolute discretion make offer of awards to selected employees
(including executive directors) of the Wing Tai Group to subscribe in cash at par for shares
of Wing Tai. Funds for subscription of shares of Wing Tai will be provided by Wing Tai
when the right to subscribe for the shares is exercised.
– 331 –
APPENDIX IX
GENERAL INFORMATION
There were no outstanding options granted to the Directors as at the Latest Practicable
Date under the Wing Tai Share Option Scheme. Details of the outstanding incentive shares
awarded to the Directors under the Wing Tai Share Incentive Scheme are as follows:
Name of Director
Exercise period
Mr. Cheng Wai Chee, Christopher
19/1/2013
20/1/2013
20/1/2014
17/1/2013
17/1/2014
17/1/2015
to
to
to
to
to
to
25/6/2020
31/3/2021
31/3/2021
24/5/2022
24/5/2022
24/5/2022
Number of
incentive shares
as at the Latest
Practicable Date
532,000
193,000
386,000
275,000
275,000
550,000
2,211,000
Mr. Cheng Wai Sun, Edward
19/1/2013
20/1/2013
20/1/2014
17/1/2013
17/1/2014
17/1/2015
to
to
to
to
to
to
25/6/2020
31/3/2021
31/3/2021
24/5/2022
24/5/2022
24/5/2022
532,000
193,000
386,000
275,000
275,000
550,000
2,211,000
Mr. Au Hing Lun, Dennis
19/1/2013
20/1/2013
20/1/2014
17/1/2013
17/1/2014
17/1/2015
to
to
to
to
to
to
25/6/2020
31/3/2021
31/3/2021
24/5/2022
24/5/2022
24/5/2022
255,500
81,250
162,500
115,000
115,000
230,000
959,250
Ms. Fung Ching Man, Janet
19/1/2013
20/1/2013
20/1/2014
17/1/2013
17/1/2014
17/1/2015
to
to
to
to
to
to
25/6/2020
31/3/2021
31/3/2021
24/5/2022
24/5/2022
24/5/2022
106,500
58,000
116,000
75,000
75,000
150,000
580,500
– 332 –
APPENDIX IX
GENERAL INFORMATION
All the interests in the shares disclosed under this section represent long position in the
shares and underlying shares of the Company or its associated corporations. Save as
disclosed herein, as at the Latest Practicable Date, none of the Directors or the chief
executive of the Company had any interests or short positions in the shares, underlying
shares and debentures of the Company or any of its associated corporations (within the
meaning of Part XV of the SFO) which was required to be recorded in the register kept by
the Company under section 352 of the SFO or which was required to be notified to the
Company and the Stock Exchange pursuant to the Model Code.
(b)
Interests of substantial Shareholders and other persons in the Company and other
members of the Group
As at the Latest Practicable Date, the following persons, other than a Director or the chief
executive of the Company, had an interest or a short position in the Shares or underlying Shares as
recorded in the register kept by the Company pursuant to section 336 of the SFO, or were directly
or indirectly interested in 10% or more of the nominal value of any class of share capital carrying
rights to vote in all circumstances at general meetings of any other member of the Group, or held
any option in respect of such capital:
(i)
The Company
Name of shareholder
Nature of interests and capacity in which interests are held
Interests
Long
held as
Interests Interests held
position/
beneficial
held as by controlled
Total
short
owner
trustee corporations
interests
position
Percentage
of issued
share
capital
Deutsche Bank International
Trust Co. Limited (the
successor of Deutsche
Bank International Trust
Co. (Jersey) Limited)
(Note 1)
—
205,835,845
—
205,835,845 Long position
79.26%
Deutsche Bank International
Trust Co. (Cayman)
Limited (Note 1)
—
205,835,845
—
205,835,845 Long position
79.26%
Wing Tai Holdings Limited
(Note 2)
—
—
205,835,845
205,835,845 Long position
79.26%
162,844,458
—
42,991,387
205,835,845 Long position
79.26%
—
—
42,991,387
42,991,387 Long position
16.56%
42,991,387
—
—
42,991,387 Long position
16.56%
Standard Chartered PLC
(Note 4)
—
—
13,900,000
13,900,000
13,900,000 Long position
13,900,000 Short position
5.35%
5.35%
Standard Chartered Holdings
Limited (Note 4)
—
—
13,900,000
13,900,000
13,900,000 Long position
13,900,000 Short position
5.35%
5.35%
13,900,000
13,900,000
—
—
—
—
13,900,000 Long position
13,900,000 Short position
5.35%
5.35%
—
—
191,935,845
191,935,845 Long Position
73.91%
Wing Tai (Note 3)
Wing Tai Properties (B.V.I.)
Limited (Note 3)
Twin Dragon (Note 3)
Standard Chartered Bank
(Note 4)
Vanke (Note 5)
– 333 –
APPENDIX IX
GENERAL INFORMATION
Notes:
(ii)
1.
Deutsche Bank International Trust Co. Limited (the successor of Deutsche Bank International Trust Co.
(Jersey) Limited) was the trustee of a family trust (of which Mr. Cheng Wai Chee, Christopher and Mr.
Cheng Wai Sun, Edward were beneficiaries) which held all units of a unit trust (the ‘‘Unit Trust’’).
Deutsche Bank International Trust Co. (Cayman) Limited was the trustee of the Unit Trust. The assets
of the Unit Trust included indirect interests in more than one-third of the issued shares of Wing Tai
Holdings Limited (‘‘Wing Tai Holdings’’). Deutsche Bank International Trust Co. Limited and
Deutsche Bank International Trust Co. (Cayman) Limited were deemed (by virtue of the SFO) to be
interested in all the shares of the Company in which Wing Tai Holdings was interested. Accordingly,
these interests were duplicated with the interests set out in note 2 entirely.
2.
Wing Tai Holdings held more than one-third of the issued shares of Wing Tai. Under Part XV of the
SFO, Wing Tai Holdings was deemed to be interested in all the shares of the Company in which Wing
Tai was interested. Accordingly, these interests were duplicated with the interests set out in note 3
entirely.
3.
Wing Tai was interested in 205,835,845 Shares comprising 162,844,458 Shares held as beneficial
owner and 42,991,387 Shares held under Twin Dragon. The interest in the 162,844,458 Shares included
interest in 13,900,000 Shares held through equity derivatives which was duplicated with the interest set
out in note 4 entirely. Twin Dragon was a wholly-owned subsidiary of Wing Tai Properties (B.V.I.)
Limited, which in turn was a wholly-owned subsidiary of Wing Tai. Under Part XV of the SFO, Wing
Tai and Wing Tai Properties (B.V.I.) Limited were deemed to be interested in all the Shares
beneficially owned by Twin Dragon.
4.
On 22 October 2010, Standard Chartered Bank entered into an agreement to acquire 13,900,000 Shares.
The transaction was completed on 25 October 2010. Also on 22 October 2010, Wing Tai entered into
an option agreement with Standard Chartered Bank pursuant to which Standard Chartered Bank was
granted with an option to sell the 13,900,000 Shares to Wing Tai subject to the terms and conditions
therein. Standard Chartered Bank was a wholly-owned subsidiary of Standard Chartered Holdings
Limited which in turn was a wholly-owned subsidiary of Standard Chartered PLC. Under Part XV of
the SFO, Standard Chartered PLC and Standard Chartered Holdings Limited were deemed to be
interested in all the Shares in which Standard Chartered Bank was interested. SCB Singapore is the
Singapore branch of Standard Chartered Bank.
5.
Pursuant to the Share Sale Agreement entered into between the Purchaser, Wing Tai and the Guarantor,
the Purchaser agreed to acquire or procure the Offeror to acquire 191,935,845 Shares from Wing Tai
and its subsidiary, Twin Dragon. Vanke was the ultimate holding company of each of the Purchaser
and the Offeror. Under Part XV of the SFO, Vanke was deemed to be interested in all the Shares in
which the Purchaser or the Offeror was interested.
Subsidiaries of the Company
Percentage of issued
share capital of the
subsidiary
Name of subsidiary
Name of shareholder
Winsor Billion Management
Limited
Billion Development
and Project
Management Limited
20%
Winner Godown Limited
Mr. Chang Hong Kwai
15%
Winner Godown Limited
Mr. Chang Hong Song
15%
– 334 –
APPENDIX IX
GENERAL INFORMATION
Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware
of any other persons or corporations (other than Directors or the chief executive of the
Company and the respective companies controlled by them whose interests have been
disclosed above) who had an interest or a short position in the Shares or underlying Shares
which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3
of Part XV of the SFO, or who was, directly or indirectly interested in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of the Company and any other members of the Group, or in any options in
respect of such capital.
8.
DIRECTORS’ INTERESTS IN ASSETS
On 18 June 2012, as part of the Group Reorganisation, the Remaining Holdco and Parex have
entered into the WPFSL Shares Sale Agreement pursuant to which Parex will sell, and the Remaining
Holdco will purchase, the outstanding approximately 4.76% minority interest in WPFSL. Parex is a
company wholly-owned by Mr. Cheng Wai Chee, Christopher, Mr. Cheng Wai Keung and Mr. Cheng
Wai Wing, Edmund. Mr. Cheng Wai Chee, Christopher is a Director and, as at the Latest Practicable
Date, was interested in 27,000 Shares through his wife Ms. Cheng Chan Sau Ching, Ivy, Mr. Cheng Wai
Keung and Mr. Cheng Wai Wing, Edmund are brothers of Mr. Cheng Wai Chee, Christopher. The
details of the WPFSL Shares Sale Agreement are set out in the paragraph headed ‘‘Winsor Connected
Transaction’’ in the section headed ‘‘Special Deals’’ in the Letter from the Board set out in this circular.
Saved as disclosed above, as at the Latest Practicable Date, none of the Directors had any interest,
direct or indirect, in any assets which had since 31 December 2011 (being the date to which the latest
published audited accounts of the Group were made up) been acquired or disposed of by or leased to
any members of the Group, or was proposed to be acquired or disposed of by or leased to any members
of the Group.
9.
DIRECTORS’ INTERESTS IN CONTRACTS
(a)
On 18 April 2002, Allied Effort Limited (‘‘AEL’’), a wholly-owned subsidiary of the
Company, and Wing Tai Properties International Limited, a wholly-owned subsidiary of
Wing Tai, formed a 20:80 joint venture company in the name of Universal Plus Limited for
the sole purpose of investing in 50% of the issued share capital of Landyork Investment
Limited (‘‘Landyork’’). The other 50% of the issued share capital of Landyork is held by an
independent third party. Landyork is the developer of the residential development known as
The Grandville at No. 2 Lok Kwai Path, Sha Tin, New Territories, Hong Kong.
(b)
On 21 June 2002, Winprop Pte. Ltd. (‘‘Winprop’’) a wholly-owned subsidiary of the
Company, entered into a subscription agreement with Winworth Investment Pte Ltd
(‘‘Winworth’’) pursuant to which Winprop subscribed for 15% of the enlarged share capital
of Winworth. The other 85% of the issued share capital of Winworth is held by Wing Tai
Land Pte. Ltd. (‘‘WTL’’), a wholly-owned subsidiary of Wing Tai Holdings. On 26 June
2002, Winprop and WTL entered into a joint venture agreement to regulate, amongst other
things, their relationship as shareholders of Winworth. For a nominal consideration Winprop
also acquired from WTL a portion of the loan previously advanced by WTL to Winworth
– 335 –
APPENDIX IX
GENERAL INFORMATION
such that the loans owing by Winworth to Winprop and WTL respectively are always in the
proportion of 15:85. Winworth is the developer of the residential development known as
Draycott 8 at Draycott Drive, Singapore.
(c)
On 20 November 2003, Winprop, WTL and Kosheen Investments Limited, a wholly-owned
subsidiary of Wing Tai, formed a 20:60:20 joint venture company in the name of Winwill
Investment Pte Ltd (‘‘Winwill’’). Winwill is an investment vehicle and its sole business is to
invest in 60% of the issued share capital of Winhome Investment Pte Ltd (‘‘Winhome’’). The
other two shareholders of Winhome each holding 20% of Winhome’s issued share capital are
independent third parties. Winhome is the developer of the residential development known as
Kovan Melody at Flower Road/Kovan Road, Singapore.
(d)
On 14 March 2005, the Company and Wing Tai entered into a memorandum of agreement
whereby the Company and Wing Tai agreed to form a 20:80 joint venture in the name of
Pangold Development Limited (‘‘Pangold’’) for the investment in and development of the
property known as Forfar at 2 Forfar Road, Hong Kong. The Company nominated AEL to
hold the Group’s 20% interest in Pangold and a shareholders’ agreement of Pangold was
entered into on 14 July 2005.
(e)
On 20 December 2005, Winprop and WTL entered into a memorandum of agreement
whereby Winprop and WTL agreed to form a 30:70 joint venture in the name of Winquest
Investment Pte. Ltd. (‘‘Winquest’’) in respect of the residential development known as Belle
Vue Residences at 15–23 Oxley Walk, Singapore. WTL subsequently sold 10% of Winquest
to an independent third party, and a shareholders’ agreement of Winquest was entered into on
28 February 2006.
(f)
On 20 July 2009, Begin Land, an indirect wholly-owned subsidiary of the Company, as
landlord entered into a preliminary tenancy agreement with WTPHKL, an indirect whollyowned subsidiary of Wing Tai, as tenant in respect of the leasing of 27th Floor of Two
Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong for a term of
approximately thirty-one months commencing from January 2010.
(g)
On 20 April 2011, Begin Land, an indirect wholly-owned subsidiary of the Company, as
landlord entered into an offer letter with Wing Tai Corporation Limited (‘‘Wing Tai
Corporation’’) as tenant in respect of the leasing of 15th Floor, AXA Tower, Landmark East,
100 How Ming Street, Kwun Tong, Kowloon, Hong Kong for a term of three years
commencing from 16 May 2011.
(h)
On 6 May 2011, the Company entered into a share purchase agreement in respect of the
acquisition of the entire issued share capital of Dragon Eye Holding Ltd. (‘‘Dragon Eye’’)
from independent third parties for a consideration of HK$229,097,000. Dragon Eye holds
40% equity interest in Fore Prosper Limited (‘‘Fore Prosper’’) and the remaining 60% interest
in Fore Prosper is held by Success Grab Investments Limited (‘‘Success Grab’’), a whollyowned subsidiary of Wing Tai. Fore Prosper owns the property at 133 Leighton Road,
Causeway Bay, Hong Kong at which Lanson Place Hotel is situated. On 6 May 2011, the
Company also entered into a supplemental deed with Wing Tai pursuant to which Wing Tai
has given certain representations and warranties relating to Fore Prosper in favour of the
Company and a deed of adherence and amendments to shareholders’ agreement with Success
– 336 –
APPENDIX IX
GENERAL INFORMATION
Grab, Dragon Eye, Wing Tai and Fore Prosper pursuant to which the Company has
undertaken to adhere to and be bound by the provisions of the shareholders’ agreement dated
23 June 2004 relating to Fore Prosper and to perform the obligations imposed thereby.
Completion of the transactions took place on 30 June 2011.
(i)
On 28 June 2011, Winnion, an indirect wholly-owned subsidiary of the Company, as landlord
entered into a tenancy renewal confirmation with WTPDL, an indirect wholly-owned
subsidiary of Wing Tai, as tenant in respect of the renewal of tenancy of 25th Floor and
penthouse of W Square for a term of one year commencing from July 2011.
(j)
On 23 September 2011, Winnion, an indirect wholly-owned subsidiary of the Company, as
landlord entered into an offer letter with True Synergy, an indirect wholly-owned subsidiary
of Wing Tai, as tenant in respect of the leasing of 6th Floor of W Square for a term of one
year commencing from October 2011.
(k)
On 18 June 2012, Begin Land, an indirect wholly-owned subsidiary of the Company, as
landlord entered into a tenancy agreement with WTPHKL, an indirect wholly owned
subsidiary of Wing Tai, as tenant in respect of the renewal of tenancy of 27/F of Two
Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong, details of which
are set out in the paragraph headed ‘‘Continuing Connected Transactions and/or Special Deal
— New Tenancy Agreements’’ in the section headed ‘‘Special Deals’’ in the Letter from the
Board set out in this circular.
(l)
On 18 June 2012, Winnion, an indirect wholly-owned subsidiary of the Company, as landlord
entered into a tenancy agreement with WTPDL, an indirect wholly-owned subsidiary of Wing
Tai, as tenant in respect of the renewal of tenancy of 25/F and penthouse of W Square,
details of which are set out in the paragraph headed ‘‘Continuing Connected Transactions
and/or Special Deal — New Tenancy Agreements’’ in the section headed ‘‘Special Deals’’ in
the Letter from the Board set out in this circular.
(m) On 18 June 2012, Winnion, an indirect wholly-owned subsidiary of the Company, as landlord
entered into a tenancy agreement with True Synergy, an indirect wholly-owned subsidiary of
Wing Tai, as tenant in respect of the renewal of tenancy of 6/F of W Square, details of which
are set out in the paragraph headed ‘‘Continuing Connected Transactions and/or Special Deal
— New Tenancy Agreements’’ in the section headed ‘‘Special Deals’’ in the Letter from the
Board set out in this circular.
(n)
On 18 June 2012, the Remaining Holdco, a wholly-owned subsidiary of the Company, as the
purchaser entered into the WPFSL Shares Sale Agreement with Parex as the vendor in
respect of the sale and purchase of WPFSL Sale Shares, details of which are set out in the
paragraph headed ‘‘Winsor Connected Transaction’’ in the section headed ‘‘Special Deals’’ in
the Letter from the Board set out in this circular.
(o)
On 18 June 2012, Privateco entered into the Management Agreement with Remaining Holdco
pursuant to which Privateco shall procure its subsidiaries to provide ongoing services to
members of the Remaining Group, details of which are set out in the paragraph headed
‘‘Special Deal — The Management Agreement’’ in the Letter from the Board set out in this
– 337 –
APPENDIX IX
GENERAL INFORMATION
circular. After Completion of the Distribution In Specie, Privateco will cease to be a whollyowned subsidiary of the Company whereas the Remaining Holdco will remain as a whollyowned subsidiary of the Company.
Wing Tai Holdings is a substantial shareholder of the Company within the meaning of Part XV of
the SFO and in which Mr. Cheng Wai Chee, Christopher and Mr. Cheng Wai Sun, Edward are both
beneficiaries of a family trust, the assets of which included indirect interests in more than one-third of
the issued shares of Wing Tai Holdings.
Wing Tai is the Company’s ultimate holding company and in which Mr. Cheng Wai Chee,
Christopher, Mr. Chow Wai Wai, John, Mr. Cheng Wai Sun, Edward, Mr. Au Hing Lun, Dennis and
Ms. Fung Ching Man, Janet have beneficial interests. Mr. Cheng Wai Chee, Christopher, Mr. Chow Wai
Wai, John, Mr. Cheng Wai Sun, Edward and Mr. Au Hing Lun, Dennis are executive directors of Wing
Tai whereas Ms. Fung Ching Man, Janet is the company secretary and chief financial officer of Wing
Tai.
Mr. Cheng Wai Chee, Christopher and Mr. Cheng Wai Sun, Edward have beneficial interests in
Wing Tai Corporation. Mr. Cheng Wai Chee, Christopher is also a director of Wing Tai Corporation.
Save as disclosed above, none of the Directors was materially interested, directly or indirectly, in
any contracts or arrangements entered into by any members of the Group subsisting at the Latest
Practicable Date and which was significant in relation to the business of the Group.
10.
LITIGATION
As at the Latest Practicable Date, none of the members of the Group was engaged in any litigation,
arbitration of material importance and no litigation or claim of material importance was known to the
Directors to be pending or threatened by or against any member of the Group.
11.
MATERIAL CONTRACTS
The following contracts, not being contracts entered into in the ordinary course of business, had
been entered by members of the Group after the date falling two years prior to the issue of this circular
and up to the Latest Practicable Date and which are or may be material:
(a)
a share purchase agreement dated 6 May 2011 and entered into between the Company, Wing
Tai, and independent third parties, being MSREF IV TE Holding, L.P., Morgan Stanley Real
Estate Fund IV International-T, L.P., Morgan Stanley Real Estate Investors IV International,
L.P., Morgan Stanley Real Estate Fund IV Special International, L.P. Further details of the
share purchase agreement are disclosed in paragraph (h) in the section headed ‘‘Directors’
interests in contracts’’ in this appendix and were disclosed in the joint announcement of the
Company and Wing Tai dated 6 May 2011 and the circular of the Company dated 1 June
2011;
– 338 –
APPENDIX IX
12.
GENERAL INFORMATION
(b)
a supplemental deed dated 6 May 2011 and entered into between the Company and Wing Tai,
further details of the supplemental deed are disclosed in paragraph (h) in the section headed
‘‘Directors’ interests in contracts’’ in this appendix and were disclosed in the joint
announcement of the Company and Wing Tai dated 6 May 2011 and the circular of the
Company dated 1 June 2011;
(c)
a deed of adherence and amendments to shareholders’ agreement dated 6 May 2011 and
entered into between the Company, Success Grab, Dragon Eye, Wing Tai and Fore Prosper.
Further details of the deed of adherence are disclosed in paragraph (h) in the section headed
‘‘Directors’ interests in contracts’’ in this appendix and were disclosed in the joint
announcement of the Company and Wing Tai dated 6 May 2011 and the circular of the
Company dated 1 June 2011;
(d)
the WPFSL Shares Sale Agreement, details of which are disclosed in this circular; and
(e)
the Management Agreement, details of which are disclosed in this circular.
QUALIFICATION AND CONSENT OF EXPERTS
(a)
The following is the qualification of the experts who have given opinion or advice contained
in this circular:
Name
Qualification
B.I. Appraisals Limited
(‘‘B.I. Appraisals’’)
Independent property valuer
CBRE Pte. Ltd. (‘‘CBRE’’)
Independent property valuer
Jones Lang LaSalle Limited
(‘‘Jones Lang LaSalle’’)
Independent property valuer
Maples and Calder
BVI legal advisers
PricewaterhouseCoopers
Certified public accountants
Savills Valuation and
Professional Services Limited
(‘‘Savills’’)
Independent property valuer
Somerley Limited (‘‘Somerley’’)
a corporation licensed to conduct Type 1 (dealing in
securities), Type 4 (advising on securities), Type 6
(advising on corporate finance) and Type 9 (asset
management) regulated activities under the SFO
– 339 –
APPENDIX IX
13.
GENERAL INFORMATION
(b)
As at the Latest Practicable Date, each of B.I. Appraisals, CBRE, Jones Lang LaSalle,
Maples and Calder, PricewaterhouseCoopers, Savills and Somerley had no shareholding in
any member of the Group or the right (whether legally enforceable or not) to subscribe for or
to nominate persons to subscribe for securities of any member in the Group.
(c)
Each of B.I. Appraisals, CBRE, Jones Lang LaSalle, Maples and Calder,
PricewaterhouseCoopers, Savills and Somerley has given and has not withdrawn its written
consent to the issue of this circular with the inclusion of its letter and references to its name
in the form and context in which they appear respectively.
(d)
As at the Latest Practicable Date, each of B.I. Appraisals, CBRE, Jones Lang LaSalle,
Maples and Calder, PricewaterhouseCoopers, Savills and Somerley did not have any interest,
direct or indirect, in any assets which have been, since 31 December 2011, being the date to
which the latest published audited accounts of the Group were made up, acquired or disposed
of by or leased to any member of the Group, or proposed to be acquired or disposed of by or
leased to any member of the Group.
SERVICE CONTRACTS
As at the Latest Practicable Date, none of the Directors had any existing or proposed service
contracts with the Company or any member of the Group which does not expire or is not determinable
by the Group within one year without payment of compensation, other than statutory compensation.
14.
COMPETING INTERESTS
(a)
Ms. Chen Chou Mei Mei, Vivien is an independent non-executive director of Emcom
International Limited (‘‘Emcom’’). Businesses of Emcom consist of provision of property
management services and may be regarded as competing businesses to the Group.
As an independent non-executive director of Emcom, Ms. Chen Chou Mei Mei, Vivien is not
participating in the routine businesses of Emcom. Also, Emcom is listed in Hong Kong with
an independent management team and administration which are separated from those of the
Group. In this respect, coupled with the diligence of the Company’s Independent NonExecutive Directors and the members of its Audit Committee, the Group is capable of
carrying on its businesses at arm’s length and independently of such competing businesses.
– 340 –
APPENDIX IX
(b)
GENERAL INFORMATION
The following Directors (including alternate Director) are also directors and/or officers of
Wing Tai as set out in the table below.
Name of Director
Position held in Wing Tai
Mr. Chow Wai Wai, John
Managing Director
Executive Director
Mr. Au Hing Lun, Dennis
Executive Director
Executive Director
Mr. Cheng Wai Chee, Christopher
Non-Executive Chairman
Chairman
Mr. Cheng Wai Sun, Edward
Non-Executive Director
Deputy Chairman and Chief Executive
Ms. Fung Ching Man, Janet
Company Secretary and Chief Financial Officer
Wing Tai Group is principally engaged in property development, hospitality investment and
management, garment manufacturing and investing activities. Wing Tai Group may also be
involved from time to time in property investment and management activities.
The Group is principally engaged in property investment and management, warehousing and
investment holding. The Group is also involved from time to time in property development
activities. As at the Latest Practicable Date, the Directors were not aware of any competing
businesses between the Wing Tai Group and the Group.
Mr. Chow Wai Wai, John is not participating in the routine businesses of Wing Tai whereas
Mr. Cheng Wai Chee, Christopher, Mr. Cheng Wai Sun, Edward and Ms. Fung Ching Man,
Janet are not participating in the routine businesses of the Group. Also, Wing Tai is a
company listed in Hong Kong with an independent management team and administration
which are separate from those of the Group. In this respect, coupled with the diligence of the
Company’s independent non-executive Directors and the members of its audit committee, the
Group is capable of carrying on its businesses at arm’s length and independently of any
possible competing businesses with Wing Tai.
(c)
Although the disclosure requirements under rule 8.10(2) of the Listing Rules do not apply to
independent non-executive Directors, Dr. Lo Ka Shui disclosed for the sake of transparency
that, being the chairman, managing director and a substantial shareholder of Great Eagle
Holdings Limited (‘‘GEHL’’) and a non-executive director and the chairman of Eagle Asset
Management (CP) Limited (manager of the publicly listed Champion Real Estate Investment
Trust (‘‘Champion REIT’’)), he is to be considered as having interests in GEHL and
Champion REIT under rule 8.10(2) of the Listing Rules. Businesses of GEHL and Champion
REIT consist of property investment and management and may be regarded as competing
businesses to the Group.
– 341 –
APPENDIX IX
GENERAL INFORMATION
As an independent non-executive Director, Dr. Lo Ka Shui is not participating in the routine
businesses of the Group. Also, GEHL and Champion REIT whose shares/units are listed in
Hong Kong have independent management teams and administration which are separate from
those of the Group. In this respect, coupled with the diligence of the Company’s independent
non-executive Directors and the members of its audit committee, the Group is capable of
carrying on its businesses at arm’s length and independently of such competing businesses.
15.
16.
MISCELLANEOUS
(a)
The Company’s registered office is at PO Box 309, Ugland House, Grand Cayman KY11104, Cayman Islands. The principal place of business of the Company in Hong Kong is at
8th Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong
Kong.
(b)
The Hong Kong branch share registrar and transfer office of the Company is Computershare
Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen’s Road
East, Wanchai, Hong Kong.
(c)
The Company Secretary of the Company is Mr. Au Shiu Kee, who is an associate member of
The Hong Kong Institute of Chartered Secretaries and the Institute of Chartered Secretaries
and Administrators.
(d)
The English text of this circular and the accompanying form of proxy shall prevail over their
respective Chinese text in case of inconsistency.
DOCUMENTS AVAILABLE FOR INSPECTION
Copies of the following documents are available for inspection at the principal place of business of
the Company at 8th Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon,
Hong Kong, from 9:00 a.m. to 5:00 p.m., from Monday to Friday, from the date of this circular up to
and including the date of the EGM:
(a)
the memorandum and articles of association of the Company;
(b)
the annual reports of the Company for each of the two financial years ended 31 December
2010 and 31 December 2011;
(c)
the memorandum and articles of association of the Privateco;
(d)
the letter of recommendation from the Independent Board Committee, the text of which is set
out in this circular;
(e)
the letter of advice from the Independent Financial Adviser, the text of which is set out in
this circular;
(f)
the written consents of the experts referred to in the section headed ‘‘Qualification and
consent of experts’’ in this appendix;
(g)
the material contracts referred to in the section headed ‘‘Material contracts’’ in this appendix;
– 342 –
APPENDIX IX
GENERAL INFORMATION
(h)
the WPFSL Shares Sale Agreement, the Management Agreement and the New Tenancy
Agreements;
(i)
The accountant’s report on the Company for the three financial years ended 31 December
2009, 2010 and 2011, the text of which is set out in Appendix II to this circular;
(j)
the accountant’s report on the Privateco Group for the three financial years ended 31
December 2009, 2010 and 2011, the text of which is set out in Appendix III to this circular;
(k)
the report on unaudited pro forma financial information of the Remaining Group, the text of
which is set out in Appendix V to this circular;
(l)
the report on unaudited pro forma financial information of the Privateco Group, the text of
which is set out on Appendix VI to this circular;
(m) the property valuation reports from B.I. Appraisals, CBRE, Jones Lang LaSalle and Savills as
set out in Appendix VII to this circular;
(n)
the letter from Maples and Calder as referred to in Appendix VIII to this circular
summarising certain aspects of BVI company law, together with a copy of the BVI Business
Companies Act, 2004 (as amended); and
(o)
this circular.
– 343 –
NOTICE OF EXTRAORDINARY GENERAL MEETING
(Stock Code: 1036)
NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the ‘‘Meeting’’) of Winsor
Properties Holdings Limited (the ‘‘Company’’) will be held at 10:00 am on Monday, 9 July 2012 at 8th
Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong for the
purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of
the Company (with or without amendments):
ORDINARY RESOLUTIONS
1.
‘‘THAT:
(a)
the conditional tenancy agreement dated 18 June 2012 entered into between Wing Tai
Properties (Hong Kong) Limited (‘‘WTPHKL’’, a wholly-owned subsidiary of Wing Tai
Properties Limited (‘‘WTPL’’), the holding company of the Company) as tenant and
Begin Land Limited (an existing indirect wholly-owned subsidiary of the Company
which will cease to be a subsidiary of the Company after completion of the Distribution
In Specie (as defined in paragraph (b) of Ordinary Resolution No. 9 set out in the
notice of meeting to which this resolution forms part)) as landlord (the ‘‘New Tenancy
Agreement 1’’, a copy of which has been produced to the Meeting marked ‘‘A’’ and
signed by the Chairman of the Meeting for the purpose of identification) in respect of
27/F, Two Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong
with an aggregate gross floor area of about 19,906 square feet for a term of three years
from 25 July 2012 to 24 July 2015 (both dates inclusive) at (i) the monthly rental
(exclusive of management fee, government rates and all other tenant’s outgoings) of
HK$507,603.00; and (ii) the monthly management fee of HK$85,595.80 (such
management fee being subject to review by Begin Land Limited or the property
manager from time to time) and subject to the terms and conditions therein contained,
and the transactions contemplated thereunder, be and are hereby approved, confirmed
and ratified; and
(b)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the New Tenancy Agreement 1, and to approve such variations, amendment or
waiver to the New Tenancy Agreement 1 as are, in the opinion of the directors of the
Company, in the interest of the Company (such approval to be conclusively evidenced
by the execution thereof).’’
– 344 –
NOTICE OF EXTRAORDINARY GENERAL MEETING
2.
3.
‘‘THAT:
(a)
the conditional tenancy agreement dated 18 June 2012 entered into between Wing Tai
Properties Development Limited (‘‘WTPDL’’, a wholly-owned subsidiary of WTPL) as
tenant and Winnion Limited (an existing indirect wholly-owned subsidiary of the
Company which will cease to be a subsidiary of the Company after the Distribution In
Specie (as defined in paragraph (b) of Ordinary Resolution No. 9 set out in the notice
of meeting to which this resolution forms part)) as landlord (the ‘‘New Tenancy
Agreement 2’’, a copy of which has been produced to the Meeting marked ‘‘B’’ and
signed by the Chairman of the Meeting for the purpose of identification) in respect of
25/F and Penthouse, W Square, 314–324 Hennessy Road, Wan Chai, Hong Kong with
an aggregate gross floor area of about 8,091 square feet for a term of from the date on
which the consent of the Executive (as defined in the circular of the Company dated 20
June 2012 (the ‘‘Circular’’, a copy of which has been produced to the Meeting marked
‘‘C’’ and signed by the Chairman of the Meeting for the purpose of identification)) for
this tenancy agreement has been granted and all conditions attaching to such consent
have been fulfilled to 8 July 2013 (both dates inclusive) at (i) the monthly rental
(exclusive of management fee and air-conditioning charges, government rates and all
other tenant’s outgoings) of HK$303,412.50; and (ii) the monthly management fee and
air-conditioning charges of HK$40,455.00 (such management fee and air-conditioning
charges being subject to review by Winnion Limited or the property manager from time
to time) and subject to the terms and conditions therein contained, and the transactions
contemplated thereunder, be and are hereby approved, confirmed and ratified; and
(b)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the New Tenancy Agreement 2, and to approve such variations, amendment or
waiver to the New Tenancy Agreement 2 as are, in the opinion of the directors of the
Company, in the interest of the Company (such approval to be conclusively evidenced
by the execution thereof).’’
‘‘THAT:
(a)
the conditional tenancy agreement dated 18 June 2012 entered into between True
Synergy Limited (a wholly-owned subsidiary of WTPL) as tenant and Winnion Limited
(an existing indirect wholly-owned subsidiary of the Company which will cease to be a
subsidiary of the Company after the Distribution In Specie (as defined in paragraph (b)
of Ordinary Resolution No. 9 set out in the notice of meeting to which this resolution
forms part)) as landlord (the ‘‘New Tenancy Agreement 3’’, a copy of which has been
produced to the Meeting marked ‘‘D’’ and signed by the Chairman of the Meeting for
the purpose of identification) in respect of 6/F, W Square, 314–324 Hennessy Road,
Wan Chai, Hong Kong with an aggregate gross floor area of about 5,511 square feet for
a term of nine months and eight days from 1 October 2012 to 8 July 2013 (both dates
inclusive) at (i) the monthly rental (exclusive of management fee and air-conditioning
– 345 –
NOTICE OF EXTRAORDINARY GENERAL MEETING
charges, government rates and all other tenant’s outgoings) of HK$192,885.00; and (ii)
the monthly management fee and air-conditioning charges of HK$35,821.50 (such
management fee and air-conditioning charges being subject to review by Winnion
Limited or the property manager from time to time) and subject to the terms and
conditions therein contained, and the transactions contemplated thereunder, be and are
hereby approved, confirmed and ratified; and
(b)
4.
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the New Tenancy Agreement 3, and to approve such variations, amendment or
waiver to the New Tenancy Agreement 3 as are, in the opinion of the directors of the
Company, in the interest of the Company (such approval to be conclusively evidenced
by the execution thereof).’’
‘‘THAT:
(a)
the conditional licence agreement dated 18 June 2012 entered into between East Sun
Estate Management Company Limited (an existing indirect wholly-owned subsidiary of
the Company which will cease to be a subsidiary of the Company after completion of
the Distribution In Specie (as defined in paragraph (b) of Ordinary Resolution No. 9 set
out in the notice of meeting to which this resolution forms part)) as licensee and
Chericourt Company Limited (‘‘Chericourt’’, an existing indirect non-wholly owned
subsidiary of the Company which will remain as a subsidiary of the Company after
completion of the Distribution In Specie) as licensor (the ‘‘Licence Agreement 1’’, a
copy of which has been produced to the Meeting marked ‘‘E’’ and signed by the
Chairman of the Meeting for the purpose of identification) in respect of Unit 701, 7/F,
Tower B, Regent Centre, 70 Ta Chuen Ping Street, Kwai Chung, New Territories, Hong
Kong) with an aggregate gross floor area of about 1,432 square feet for a term of one
year from 1 September 2012 to 31 August 2013 (both dates inclusive) with a licence fee
free period of one month from 1 September 2012 to 30 September 2012 (both dates
inclusive) at (i) the monthly licence fee (exclusive of management fee, government rent
and rates and all other tenant’s outgoings) of HK$9,751.92; and (ii) the monthly
management fee of HK$2,577.60 (such management fee being subject to review by the
property manager from time to time) and subject to the terms and conditions therein
contained, and the transactions contemplated thereunder, be and are hereby approved,
confirmed and ratified; and
(b)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the Licence Agreement 1, and to approve such variations, amendment or waiver
– 346 –
NOTICE OF EXTRAORDINARY GENERAL MEETING
to the Licence Agreement 1 as are, in the opinion of the directors of the Company, in
the interest of the Company (such approval to be conclusively evidenced by the
execution thereof).’’
5.
6.
‘‘THAT:
(a)
the conditional licence agreement dated 18 June 2012 entered into between Winsor
Estate Agents Limited (an existing indirect wholly-owned subsidiary of the Company
which will cease to be a subsidiary of the Company after completion of the Distribution
In Specie (as defined in paragraph (b) of Ordinary Resolution No. 9 set out in the
notice of meeting to which this resolution forms part)) as licensee and Chericourt as
licensor (the ‘‘Licence Agreement 2’’, a copy of which has been produced to the
Meeting marked ‘‘F’’ and signed by the Chairman of the Meeting for the purpose of
identification) in respect of Unit 2209, 22/F, Tower B, Regent Centre, 70 Ta Chuen
Ping Street, Kwai Chung, New Territories, Hong Kong with an aggregate gross floor
area of about 1,348 square feet for a term of one year from 3 October 2012 to 2
October 2013 (both dates inclusive) with a licence fee free period of one month from 3
October 2012 to 2 November 2012 (both dates inclusive) at (i) the monthly licence fee
(exclusive of management fee, government rent and rates and all other tenant’s
outgoings) of HK$10,527.88; and (ii) the monthly management fee of HK$2,426.40
(such management fee being subject to review by the property manager from time to
time) and subject to the terms and conditions therein contained, and the transactions
contemplated thereunder, be and are hereby approved, confirmed and ratified; and
(b)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the Licence Agreement 2, and to approve such variations, amendment or waiver
to the Licence Agreement 2 as are, in the opinion of the directors of the Company, in
the interest of the Company (such approval to be conclusively evidenced by the
execution thereof).’’
‘‘THAT:
(a)
the conditional tenancy agreement dated 18 June 2012 entered into between Winsor
Health Products Limited as tenant and Chericourt as landlord (the ‘‘New Tenancy
Agreement 4’’, a copy of which has been produced to the Meeting marked ‘‘G’’ and
signed by the Chairman of the Meeting for the purpose of identification) in respect of
Units 818–819, 8/F, Tower A, Regent Centre, 63 Wo Yi Hop Road, Kwai Chung, New
Territories, Hong Kong with an aggregate gross floor area of about 2,599 square feet
for a term of 10 months from 1 January 2013 to 31 October 2013 (both dates inclusive)
at (i) the monthly rental (exclusive of management fee, government rent and rates and
all other tenant’s outgoings) of HK$18,452.90; and (ii) the monthly management fee of
HK$4,678.20 (such management fee being subject to review by the property manager
– 347 –
NOTICE OF EXTRAORDINARY GENERAL MEETING
from time to time) and subject to the terms and conditions therein contained, and the
transactions contemplated thereunder, be and are hereby approved, confirmed and
ratified; and
(b)
7.
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under any of the New Tenancy Agreement 4, and to approve such variation, amendment
or waiver to any of the New Tenancy Agreement 4 as are, in the opinion of the
directors of the Company, in the interests of the Company (such approval to be
conclusively evidenced by the execution thereof).’’
‘‘THAT:
(a)
the conditional sale and purchase agreement (the ‘‘WPFSL Shares Sale Agreement’’)
dated 18 June 2012 entered into between Future Best Developments Limited (the
‘‘Remaining Holdco’’, a wholly-owned subsidiary of the Company) as purchaser and
Parex International Limited (‘‘Parex’’, a company owned by Mr. Cheng Wai Chee,
Christopher, a director of the Company, and by his brothers, Mr. Cheng Wai Keung and
Mr. Cheng Wai Wing, Edmund) as vendor and Winsor Properties Financial Services
Limited (‘‘WPFSL’’, a non wholly-owned subsidiary of the Company) in relation to the
purchase by the Remaining Holdco from Parex of 40 shares of HK$1 each in the issued
share capital of WPFSL (the ‘‘WPFSL Sale Shares’’), representing approximately 4.76%
of the entire issued share capital of WPFSL, at a cash consideration equal to 1/21 of the
consolidated net asset value of WPFSL on the date of completion of the sale and
purchase of the WPFSL Sale Shares and upon and subject to the terms and conditions
therein contained (a copy of which is produced to the Meeting marked ‘‘H’’ and signed
by the Chairman of the Meeting for the purpose of identification) and all transactions
contemplated thereunder and in connection therewith be and are hereby approved,
confirmed and ratified;
(b)
the repayment by WPFSL to Parex of the entire amount of shareholder’s loan owing by
WPFSL to Parex as at the date of completion of, and contemporaneously with, the
acquisition of the WPFSL Sale Shares as contemplated by the WPFSL Shares Sale
Agreement be and is hereby approved;
(c)
(i) the declaration by Chericourt of a dividend of an amount equal to all or substantially
all its distributable reserves on or around the date of completion of the acquisition of
the WPFSL Sale Shares as contemplated by the WPFSL Shares Sale Agreement and the
payment thereof to WPFSL; and (ii) the declaration by WPFSL of a dividend of an
amount equal to all its distributable reserves (including the reserves distributed to it by
Chericourt in the form of dividend as aforesaid) as contemplated by the WPFSL Shares
Sale Agreement and the payment thereof to Parex and the Remaining Holdco, be and
are hereby approved; and
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NOTICE OF EXTRAORDINARY GENERAL MEETING
(d)
8.
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the WPFSL Shares Sale Agreement, the repayment of shareholder’s loan to Parex
and the declaration and payment of dividend by Chericourt and by WPFSL as
mentioned in paragraphs (a) to (c) of this resolution and to approve such variation,
amendment or waiver to the WPFSL Shares Sale Agreement as are, in the opinion of
the directors of the Company, in the interests of the Company (such approval to be
conclusively evidenced by the execution thereon).’’
‘‘THAT:
(a)
the conditional management arrangements agreement (the ‘‘Management Agreement’’)
dated 18 June 2012 entered into between Cherrytime Investments Limited (the
‘‘Privateco’’, an existing wholly-owned subsidiary of the Company which will cease to
be a subsidiary of the Company after completion of the Distribution In Specie (as
defined in paragraph (b) of Ordinary Resolution No.9 set out in the notice of meeting to
which this resolution forms part)), and Future Best Developments Limited (‘‘Remaining
Holdco’’, which will remain as a wholly-owned subsidiary of the Company after
completion of the Distribution In Specie) whereby upon and subject to the conditions
therein contained the Privateco has agreed to procure its subsidiaries to provide, to the
Company, the Remaining Holdco and the subsidiaries of the Remaining Holdco
(together the ‘‘Remaining Group’’) with management and administration services in
relation to the operation and management of all those units and car park podium in
Regent Centre situated at 63 Wo Yi Hop Road and 70 Ta Chuen Ping Street, Kwai
Chung, New Territories, Hong Kong owned by the Remaining Group after completion
of the Group Reorganisation (as defined in Ordinary Resolution No.9 set out in the
notice of meeting to which this resolution forms part) (a copy of the Management
Agreement has been produced to the Meeting marked ‘‘I’’ and signed by the Chairman
of the Meeting for the purpose of identification), including but not limited to, the
provision of estate and leasing management, brokerage and agency services for property
disposal, company secretarial, bookkeeping and other related administrative services
and all transactions contemplated thereunder and in connection therewith be and are
hereby approved, confirmed and, ratified; and
(b)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all acts and things and to sign, seal (where required) and deliver all
documents and take all such steps which they may in their discretion consider
necessary, desirable or expedient for the implementation of, giving effect to, and
otherwise in connection with or incidental to any and all transactions contemplated
under the Management Agreement and to approve such variation, amendment or waiver
to the Management Agreement as are, in the opinion of the directors of the Company,
in the interests of the Company (such approval to be conclusively evidenced by the
execution thereon).’’
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NOTICE OF EXTRAORDINARY GENERAL MEETING
9.
‘‘THAT subject to (A) the completion of the Group Reorganisation (as defined in the
Circular) save for those matters relating to or contemplated under this resolution; and (B) all
the conditions to the agreement dated 13 May 2012 entered into between Wing Tai Properties
Limited (‘‘WTPL’’) as seller, Vanke Property (Hong Kong) Company Limited (the
‘‘Purchaser’’) as purchaser and Vanke Real Estate (Hong Kong) Company Limited as
guarantor of the Purchaser (the ‘‘Share Sale Agreement’’, a copy of which has been produced
to the Meeting marked ‘‘J’’ and signed by the Chairman of the Meeting for the purpose of
identification) in respect of the acquisition by the Purchaser of (i) the aggregate interest of
191,935,845 shares of HK$0.01 each in the Company directly and indirectly owned by
WTPL (the ‘‘Sale Shares’’); and (ii) (if applicable) any shares of HK$0.01 each in the
Company (other than the Sale Shares) which may be acquired by WTPL prior to the
completion of the unconditional mandatory cash offer to be made by CITIC Securities
Corporate Finance (HK) Limited on behalf of Wkland Investments Company Limited (an
indirect wholly-owned subsidiary of the Purchaser) (the ‘‘Offeror’’) to acquire all the issued
shares in the capital of the Company (other than those already owned or agreed to be
acquired by the Purchaser, the Offeror and parties acting in concert with it) pursuant to an
agreement entered into between WTPL and Standard Chartered Bank, Singapore Branch
dated 22 October 2010, at an aggregate cash consideration of not less than
HK$1,078,621,868, having been satisfied or waived (save for those matters relating to or
contemplated under this resolution),
(a)
the declaration and payment by the Company of a special cash dividend of HK$0.7803
per share to the shareholders of the Company (the ‘‘Shareholders’’) whose names appear
on the register of members of the Company as at the close of business of a record date
as determined by the Directors for ascertaining entitlements of the Shareholders thereto
and to the Distribution In Specie (as defined in paragraph (b) below) (the ‘‘Record
Date’’), which shall be a date falling after this Meeting and before the date of
completion of the Share Sale Agreement, be and is hereby approved; and
(b)
the distribution in specie (the ‘‘Distribution In Specie’’) of all the issued shares with par
value HK$0.01 each in the capital of Cherrytime Investments Limited (the ‘‘Privateco
Shares’’) held by the Company to the Shareholders whose names appear on the register
of members of the Company on the Record Date on a one-for-one basis (i.e. one
Privateco Share for one share of HK$0.01 each in the capital of the Company held by
such Shareholders on the Record Date) by applying a sufficient amount standing to the
credit of contributed surplus accounts and/or retained earnings accounts of the Company
which is lawfully available for distribution equivalent to the carrying amount of the
investment in Privateco in the books of the Company immediately prior to completion
of the Distribution In Specie, (it being noted that the directors of the Company have
determined that the Company will be able to pay its debts as they fall due in the
ordinary course of its business immediately following the date on which the
Distribution In Specie is implemented) be and is hereby approved; and
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NOTICE OF EXTRAORDINARY GENERAL MEETING
(c)
the directors of the Company be and are hereby authorised, for and on behalf of the
Company, to do all such acts and things, to sign, seal (where required) and deliver all
documents and to take all such steps as they may in their discretion consider necessary,
desirable or expedient to give effect to or to implement, or deemed by them to be
incidental to, ancillary to or in connection with, the declaration and payment of
dividend mentioned in paragraph (a) above, the Distribution In Specie, the Share Sale
Agreement or any of the transactions contemplated thereunder.’’
By Order of the Board
WINSOR PROPERTIES HOLDINGS LIMITED
AU SHIU KEE
Company Secretary
Hong Kong, 20 June 2012
Notes:
1.
A member entitled to attend and vote is entitled to appoint not more than 2 persons (who must be individuals) as his/her
proxies to attend and vote on his or her behalf. A proxy need not be a member of the Company.
2.
Where there are joint registered holders of any share, any one of such persons may vote at the Meeting (or any adjournment
thereof), either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of
such joint holders be present at the Meeting (or any adjournment thereof) personally or by proxy, that one of the said
persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the
relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of
the joint holders stand on the register in respect of the relevant joint holding.
3.
The form of proxy shall be in writing under the hand of the appointor or of his attorney authorised in writing, or if the
appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorised to
sign the same.
4.
In order to be valid, the form of proxy and the power of attorney or other authority (if any) under which it is signed, or a
notarially certified copy of such power or authority, must be deposited at the principal place of business of the Company, at
8th Floor, AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Kowloon, Hong Kong not less than 48 hours
before the time fixed for the holding of the Meeting or any adjournment thereof. Completion and return of the form of
proxy will not preclude you from attending and voting in person at the Meeting or any adjournment meeting if you so wish.
5.
The register of members and the transfer books of the Company in Hong Kong will be closed on Monday, 9 July 2012. In
order to be eligible to attend and vote at the Meeting, all transfers accompanied by the relevant share certificates must be
lodged with the share registrar of the Company, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716,
17th Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Friday, 6 July
2012.
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