AGP.L Regulatory News (AGP)

19 August 2016

Asian Growth Properties Limited

Results for the period ended 30 June 2016

Asian Growth Properties Limited (the "Company") (AIM Stock Code: AGP), the Hong Kong based China property development and investment company, announces its unaudited condensed consolidated results for the period ended 30 June 2016 as follows:

Financial Highlights

n Profit attributable to the Company's shareholders of HK$561.3 million (£53.7 million) (2015: HK$274.7 million (£22.6 million)).

n Profit attributable to the Company's shareholders (excluding revaluation deficit net of deferred tax) was HK$573.9 million (£54.9 million) (2015: HK$39.2 million (£3.2 million)). The increment was a result of a realized gain of HK$611.5 million (£58.5 million) on the sale of property of Dah Sing Financial Centre after netting off of

(i) realized loss of HK$90.5 million (£8.7 million) on the sale of the Kaifeng project; and

(ii) the increase of HK$69.3 million (£6.6 million) in management fee paid to South-East Asia Investment And Agency Company, Limited ("SEAI"), a wholly-owned subsidiary of S E A Holdings Limited (the holding company of the Company), pursuant to a cost sharing agreement made between the Company, its various subsidiaries and SEAI in 2014 for the use of SEAI's personnel and facilities on a cost-sharing basis for the Company to carrying its business activities. The increase in the said management fee is mainly due to the rise in SEAI's employee benefits during the period under review.

n Earnings per share for profit attributable to the Company's shareholders of HK63.3 cents (6.1 pence) (2015: HK31.0 cents (2.6 pence)).

n Net asset value per share attributable to the Company's shareholders as at 30 June 2016 of HK$14.7 (140.6 pence) (31 December 2015: HK$16.0 (139.3 pence)).

n Geographical location of the Group's property assets were as follows:

n As at 30 June 2016, bank balances and cash of the Group amounted to HK$10,045.6 million (£960.7 million). After netting off bank borrowings of HK$1,459.4 million (£139.6 million), the Group had a net cash position of HK$8,586.2 million (£821.2 million) at period end date, compared to a net debt position of HK$342.3 million (£29.8 million) with gearing ratio of 2.3% as at 31 December 2015.

Operational Highlights

n Sale of Dah Sing Financial Centre was completed in May 2016 and realised a gain on disposal of HK$611.5 million (£58.5 million) and generated net cash after repayment of bank loans of approximately HK$8,019 million (approximately £766.9 million).

n Prior to the completion of disposal of Dah Sing Financial Centre in May 2016, stable gross rental income was generated from Dah Sing Financial Centre in Hong Kong and its occupancy rate remains high.

n The hotel operation results of Crowne Plaza Hong Kong Causeway Bay were in general in line with the weaker hotel business environment in 2016.

n Major mixed use development projects in Chengdu, Mainland China are progressing. Commercial basement works have been completed.

n On 19 April 2016, the Group entered into a sale and purchase agreement in relation to the disposal of Kaifeng Nova City Project for a consideration of HK$900 million (£86.1 million) in cash. Completion of the disposal took place on 26 April 2016.

Notes:

1. Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates

prevailing on the latest practicable business day of the respective accounting periods. The relevant exchange rates adopted are stated as follows:

2. For the Company's shareholders' information, the exchange rate on 18 August 2016 was £1 = HK$10.1975

Miscellaneous

The results included in this announcement are extracted from the unaudited condensed consolidated financial statements of the Company for the period ended 30 June 2016, which have been approved by the Board of Directors on 19 August 2016.

The 2016 Interim Report is expected to be posted to the Company's shareholders and holders of depositary interests in late September 2016.

This announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

For further information, please contact:

Attached:-

1. Chairman's Review;

2. Executive Directors' Review;

3. Condensed Consolidated Statement of Profit or Loss;

4. Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income;

5. Condensed Consolidated Statement of Financial Position;

6. Condensed Consolidated Statement of Changes in Equity;

7. Condensed Consolidated Statement of Cash Flows; and

8. Notes to the Condensed Consolidated Financial Statements.

This announcement can also be viewed on the Company's website at:

http://www.asiangrowth.com/html/eng/news.asp

CHAIRMAN'S REVIEW

I am pleased to present the unaudited condensed consolidated financial results of Asian Growth Properties Limited ("AGP" or the "Company", together with its subsidiaries, the "Group") for the first six months of 2016 to the shareholders of the Company. 

Results

AGP reported a profit attributable to the Company's shareholders of HK$561.3 million (£53.7 million) for the period ended 30 June 2016 (2015: HK$274.7 million (£22.6 million)). The reported profit included a revaluation deficit on investment properties net of deferred taxation of HK$12.6 million (£1.2 million) (2015: revaluation surplus of HK$235.5 million (£19.4 million)). By excluding the net effect of such deficit, the Group's net profit attributable to the Company's shareholders was HK$573.9 million (£54.9 million) (2015: HK$39.2 million (£3.2 million)), including a realised gain of HK$611.5 million (£58.5 million) in relation to the sale of the property of Dah Sing Financial Centre and a realized loss of HK$90.5 million (£8.7 million) in relation to the sale of the Kaifeng project.

As at 30 June 2016, the Group's equity attributable to the Company's shareholders amounted to HK$13,027.7 million (£1,245.9 million) (31 December 2015: HK$14,218.8 million (£1,238.1 million)). The net asset value per share attributable to the Company's shareholders as at 30 June 2016 was HK$14.7 (140.6 pence) as compared with HK$16.0 (139.3 pence) as at 31 December 2015.

Figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting periods. 

Operations

During the period ended 30 June 2016, the Group has continued the development of various property projects in Hong Kong and Mainland China. 

The rental income from investment properties situated in both Hong Kong and Mainland China continue to provide stable returns to the Group. Crowne Plaza Hong Kong Causeway Bay's performance dropped compared to 2015, which was a result in line with the weaker hotel business market, and the tense relationship between Hong Kong residents and China visitors may also further reduce Hong Kong's attractiveness to visitors.

The Company completed the sale of Dah Sing Financial Centre in May 2016. The sale realised a gain on disposal of HK$611.5 million (£58.5 million) and generated net cash after repayment of bank loans of approximately HK$8,019 million (approximately £766.9 million). The Board believes that the disposal of Dah Sing Financial Centre provided an optimum opportunity for the Company to realise cash and unlock the value of its investment in the property at fair market value.

For details of the Group's operations, please refer to the Executive Directors' Review.

Outlook

Global economic growth is likely to remain modest in the near term, with risks still towards the downside. Recoveries in Japan and the Eurozone are still fragile. Geopolitical tensions and the uncertainty about the exit of the UK from the EU have also posed additional challenges. While the economic performance of the US is relatively better, there remains notable policy risks associated with its interest rate normalization and increasing policy divergence among major central banks, which could add financial volatility and pose a threat to the global economy.

China's economic growth held steady in the most recent quarter, with a sign that the slowdown in China's economy is stabilizing. The economy expanded by 6.7 percent in the April-June period compared with the same period of last year. Despite the slowdown of China's economic growth, the "One Belt and One Road" policy will enhance economic growth and sustainable development. It is believed that the economy in Mainland China is under way to a more sustainable growth model. Having said that, the domestic and external conditions are still complicated and severe and the downward economic pressure remains.

Interim Dividend

The Board does not propose the payment of an interim dividend for the period ended 30 June 2016 (2015: Nil).

Acknowledgement

The Board would like to take this opportunity to thank the executive and management team for the execution of the Board's strategy and their ongoing support.

Richard Prickett

Non-executive Chairman

Hong Kong, 19 August 2016

EXECUTIVE DIRECTORS' REVIEW

FINANCIAL SUMMARY

Turnover for the period ended 30 June 2016 amounted to HK$294.6 million (£28.2 million) (2015: HK$308.6 million (£25.4 million)). The turnover was principally attributable to the recognition of rental income from investment properties, revenue from hotel operation and the sales of residential units in Kaifeng Nova City.

Profit attributable to the Company's shareholders for the period amounted to HK$561.3 million (£53.7 million) (2015: HK$274.7 million (£22.6 million)), equivalent to a basic earnings per share of HK63.3 cents (6.1 pence) (2015: HK31.0 cents (2.6 pence)). The reported profit included a revaluation deficit on investment properties net of deferred taxation of HK$12.6 million (£1.2 million) (2015: revaluation surplus of HK$235.5 million (£19.4 million)). By excluding the net effect of such deficit, the Group's net profit attributable to the Company's shareholders was HK$573.9 million (£54.9 million) (2015: HK$39.2 million (£3.2 million)), equivalent to HK64.8 cents (6.2 pence) (2015: HK4.4 cents (0.4 pence)) per share. 

As at 30 June 2016, the Group's equity attributable to the Company's shareholders amounted to HK$13,027.7 million (£1,245.9 million) (31 December 2015: HK$14,218.8 million (£1,238.1 million)). The net asset value per share attributable to the Company's shareholders as at 30 June 2016 was HK$14.7 (140.6 pence) as compared with HK$16.0 (139.3 pence) as at 31 December 2015.

For the Company's shareholders' information, figures in Pounds Sterling are translated from Hong Kong dollars based upon the exchange rates prevailing on the latest practicable business day of the respective accounting periods and the relevant exchange rates adopted are stated as follows:

For 30 June 2016: £1 = HK$10.4562

For 31 December 2015: £1 = HK$11.4841

For 30 June 2015: £1 = HK$12.1357

BUSINESS REVIEW

Property Investment and Development

The Group continues to focus on its development and investment projects in Hong Kong and Mainland China. It is the Group's approach to review and optimise the project portfolios from time to time. The Group's core projects located in Hong Kong and Mainland China are listed below.

Following the disposal of certain properties as summarized in these results, the Group owns one property in Hong Kong (Crowne Plaza Hong Kong Causeway Bay) and four properties in China (one development project and three investment properties). 

Hong Kong

The Group entered into an agreement in February 2016 to conditionally dispose of its entire interest in companies which beneficially owned the property of Dah Sing Financial Centre, for a consideration of approximately HK$10,000 million (approximately £956.4 million), subject to adjustment. The disposal was completed in May 2016 and generated a net cash consideration (after repayment of bank loans) of approximately HK$8,019 million (approximately £766.9 million).

Mainland China

Chengdu, Sichuan Province

During the period under review, the occupancy rate for the two 30-storey office towers of Plaza Central remained at a high level and its retail podium with a gross floor area of about 29,000 square metres is fully let principally to Chengdu New World Department Store on a long-term lease. As at 30 June 2016, the aggregate occupancy rate for the two office towers and the retail podium was approximately 84% (31 December 2015: 84%). Leasing activities for the remaining areas of Plaza Central continue.

The shopping arcade of New Century Plaza with a gross floor area of about 16,300 square metres is fully let to a hotel on a long-term lease.

The master layout plan of the Longquan project (known as "Chengdu Nova City"), which has a site area of 506,000 square metres, was approved by the local government in January 2014. Commercial basement works have been completed.

Kaifeng, Henan Province

On 19 April 2016, the Group entered into a sale and purchase agreement in relation to the disposal of Kaifeng Nova City Project for a consideration of HK$900 million (£86.1 million) in cash. Completion of the disposal took place on 26 April 2016.

Guangzhou, Guangdong Province

As at 30 June 2016, the occupancy rate of the 14-storey office tower of Westmin Plaza Phase II of about 16,100 square metres was 99% with more than one-third of the total office space being leased to AIA (31 December 2015: 100%). Leasing activities for the 3-storey shopping arcade of Westmin Plaza Phase II with a total gross floor area of about 26,400 square metres are in progress.

Huangshan, Anhui Province

The project in Huangshan has a site area of about 337,000 square metres comprising of development land of about 117,000 square metres and landscape land of 220,000 square metres. The master layout plan for the development of the project comprises a hotel, serviced apartments and resort villas in the integrated resort site has been approved by the local government and site formation work for Phase I of the project has been completed.

The Group entered into a sale and purchase agreement with an independent third party on

3 August 2016 to sell the entire interest in companies which beneficially own the properties under development in Huangshan City, Anhui Province, the PRC for a consideration of HK$2 million (£0.2 million).

Chi Shan, Nanjing, Jiangsu Province

The Group has established two 51%-owned joint venture companies to participate in the tenant relocation arrangements and excavation and infrastructure works on certain pieces of land in Chi Shan. The Group intends to acquire such lands through land auctions by different stages.

Hotel Operation

Crowne Plaza Hong Kong Causeway Bay is a 29-storey five-star hotel comprising 263 guest rooms with ancillary facilities and is managed by the InterContinental Hotels Group. Its performance dropped compared to 2015, which was a result in line with the weaker hotel business market. The hotel will strive to gain further market share and look for cost saving measures in the challenging market conditions.

WORKING CAPITAL AND LOAN FACILITIES

As at 30 June 2016, the Group's total cash balance was HK$10,045.6 million (£960.7 million) (31 December 2015: HK$3,671.2 million (£319.7 million)) and unutilised facilities were HK$595.0 million (£56.9 million) (31 December 2015: HK$370.2 million (£32.2 million)).

As at 30 June 2016, after netting off bank borrowings of HK$1,459.4 million (£139.6 million), the Group had a net cash position of HK$8,586.2 million (£821.2 million), compared to a net debt position of HK$342.3 million (£29.8 million) with gearing ratio of 2.3% as at 31 December 2015.

As at 30 June 2016, the maturity of the Group's outstanding borrowings was as follows:

Pledge of Assets

For the Company's subsidiaries operating in Hong Kong and Mainland China, the total bank loans drawn as at 30 June 2016 amounted to HK$1,468.5 million (£140.4 million) (31 December 2015: HK$4,035.6 million (£351.4 million)) which comprised secured bank loans of HK$1,468.5 million (£140.4 million) (31 December 2015: HK$4,035.6 million (£351.4 million)). The secured bank loans were secured by properties valued at HK$2,414.9 million (£231.0 million) (31 December 2015: HK$12,237.5 million (£1,065.6 million)) and note receivables of HK$54.3 million (£5.2 million) (31 December 2015: HK$54.3 million (£4.7 million)). 

Treasury Policies

The Group adheres to prudent treasury policies. As at 30 June 2016, all of the Group's borrowings were raised through its wholly-owned or substantially controlled subsidiaries on a non-recourse basis.

International Financial Reporting Standards ("IFRS")

The Group has adopted IFRS and the unaudited condensed consolidated financial statements accompanying this Review have been prepared in accordance with IFRS.

OUTLOOK

The Hong Kong economy slowed further in 2016. The external environment deteriorated, characterised by soft global growth and fluctuation in global financial and monetary conditions. Weak global outlook with rising downside risks affected local economic sentiment. In the medium term, the Hong Kong economy will still likely be affected by a challenging and unsteady external environment. 

The supply of residential units in Hong Kong is rising and it is inevitable that the local market price for the residential sector is under pressure. The appreciation of the Hong Kong dollar against the RMB and other major currencies has reduced Hong Kong's attractiveness to visitors. Also, the tense relationship between Hong Kong residents and China visitors may also have a negative impact on the number of visitors. The market share of Crowne Plaza Hong Kong Causeway Bay was generally maintained among primary and secondary competitors, but with a recently improving trend. With a tougher year to come, we will strive to gain market share, improve the hotel operations efficiency and at the same time look for cost saving measures, so as to maintain the return of the operations. Subsequent to the disposal of Dah Sing Financial Centre in May 2016, the contribution of rental income to the Group in year 2016 will be significantly reduced.

In respect of our development projects in Mainland China, the pace of price growth in new and pre-owned housing markets both decelerated in June 2016 from May 2016, with growth slowing in all cities except first-tier ones. For the Longquan project in Chengdu, the master layout plan was approved and commercial basement works have been completed.

After completion of the disposal of Dah Sing Financial Centre and the Kaifeng project, the Group has significant funds for future investments. The Group will remain cautiously proactive and continue to monitor the property markets of Hong Kong, Mainland China and overseas closely in order to identify potential acquisition targets at opportune times.

On behalf of the Executive Directors

Lu Wing Chi

Executive Director

Hong Kong, 19 August 2016

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 June 2016

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 June 2016

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 June 2016

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION - continued

AT 30 June 2016

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 June 2016

Other reserves comprise (i) a discount on acquisition/assumption of certain assets and liabilities from the intermediate holding company, S E A Holdings Limited ("SEA"), and the excess of the consideration over the market closing price of the shares issued for the acquisition. The amounts attributable to those assets and liabilities derecognised in subsequent years will be recognised in retained profits, as such, an amount of approximately HK$340,096,000 was transferred to retained profits upon disposal of subsidiaries (note 24); and (ii) the excess of the consideration paid for acquisition of an additional interest in a subsidiary from a non-controlling shareholder over the carrying amount of the non-controlling interests acquired.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 June 2016

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 June 2016

1. GENERAL

The Company is a public company incorporated in the British Virgin Islands with limited liability and its shares are admitted for trading on the AIM Market of The London Stock Exchange plc.

The Company acts as an investment holding company. The principal subsidiaries of the Company are engaged in property investment, property development and the operation of a hotel.

2. BASIS OF PREPARATION

The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 "Interim Financial Reporting" issued by the International Accounting Standards Board (the "IASB").

3. PRINCIPAL ACCOUNTING POLICIES

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

Except as described below, the accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2016 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2015.

In the current interim period, the Group has applied, for the first time, the following new and revised International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board that are mandatorily effective for an accounting period that begins on or after 1 January 2016:

Amendments to IFRSs Annual Improvements to

IFRSs 2012 - 2014 Cycle

Amendments to IFRS 10, IFRS 12 Investment Entities: Applying the Consolidation

and IAS 28 Exception

Amendments to IFRS 11 Accounting for Acquisitions of Interests and

Joint Operations

IFRS 14 Regulatory Deferral Accounts

Amendments to IAS 1 Disclosure Initiative

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of

Depreciation and Amortisation

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

Amendments to IAS 27 Equity Method in Separate Financial Statements

The application of the above new and revised IFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/ or disclosures set out in these condensed consolidated financial statements.

4. SEGMENT INFORMATION

Information reported to the executive directors of the Company, being the chief operating decision maker, for the purposes of resource allocation and assessment of segment performance is mainly focused on the property development, property investment, hotel operation and financial investment. No operating segments identified by the chief operating decision maker have been aggregated in arriving at the reportable segments of the Group.

Property investment activity is in Hong Kong and the People's Republic of China (the "PRC"). The investment property in Hong Kong was disposed during the current period as set out on (note 24(a)).

Property development activity is in the PRC and the hotel operation is in Hong Kong.

During the period, a new operating segment - financial investment has been established. The directors of the Group are seeking potential investment opportunities for their investment portfolio, consisting mainly of investment in debt and/or equity investments and bank deposits. The investment income from investment portfolio will be included in financial investment segment.

The following is an analysis of the Group's revenue and results by reportable segment:

Six months ended 30 June 2016

Six months ended 30 June 2015

4. SEGMENT INFORMATION - continued

Segment profit of the property investment division for the six months ended 30 June 2016 included a decrease in fair value of investment properties of HK$16,813,000 (30.6.2015: an increase in fair value of investment properties of HK$238,001,000) and a gain on disposal of a subsidiary of HK$611,499,000 (note 24(a)) (30.6.2015: nil).

The Group does not allocate general interest income, corporate income less expenses and finance costs to individual reportable segment profit or loss for the purposes of resource allocation and performance assessment by the chief operating decision maker.

The accounting policies adopted in preparing the reportable segment information are the same as the Group's accounting policies.

No segment assets and liabilities are presented as the information is not reportable to the chief operating decision maker in the resource allocation and assessment of performance.

5. PROPERTY AND RELATED COSTS

6. OTHER EXPENSES

7. FINANCE COSTS

8. PROFIT BEFORE TAXATION

9. INCOME TAX CREDIT (EXPENSE)

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profits for each of the periods.

PRC Enterprise Income Tax is calculated at 25% of the estimated assessable profits for each of the periods. The PRC Land Appreciation Tax for the Guangzhou project was finalised with the PRC Tax Bureau and the overprovision of amounting to approximately HK$80,848,000 was written back during the period.

10. EARNINGS PER SHARE

The calculation of the basic earnings per share attributable to the Company's shareholders is based on the following data:

No diluted earnings per share is presented as the Company did not have any potential ordinary shares in issue during both periods or at the end of each reporting period.

For the purpose of assessing the performance of the Group, the directors of the Company are of the view that the profit for the period should be adjusted for the fair value changes on investment properties recognised in profit or loss and the related deferred taxation in arriving at the "adjusted profit attributable to the Company's shareholders". A reconciliation of the adjusted earnings is as follows:

The denominators used in the calculation of adjusted earnings per share are the same as those detailed above.

11. DIVIDENDS

The directors of the Company do not recommend the payment of any interim dividend.

12. INVESTMENT PROPERTIES

In estimating the fair value of investment properties, the Group uses market-observable data to the extent it is available. The Group engages third party qualified valuers to perform the valuation of the Group's investment properties. At the end of each reporting period, the Group works closely with the qualified external valuers to establish and determine the appropriate valuation techniques and inputs to the model.

The fair values of investment properties as at 30 June 2016 and 31 December 2015 were arrived at on the basis of valuations carried out at those dates by Savills Valuation and Professional Services Limited ("Savills"), a firm of Chartered Surveyors not connected to the Group, recognised by The Hong Kong Institute of Surveyors, that has appropriate qualifications and recent experience in the valuation of properties in the relevant locations.

The valuation, which conforms to the appropriate sections contained in "The HKIS Valuation Standards (2012 Edition)" published by The Hong Kong Institute of Surveyors in Hong Kong, was arrived at by reference to market evidence of transaction prices or by capitalisation of future rental which is estimated by reference to comparable rental as available in the relevant markets. In the valuation, which falls under Level 3 of the fair value hierarchy, the market rentals of all lettable units as well as those of similar properties are made by reference to the rentals achieved by the Group in the lettable units as well as those of similar properties in the neighbourhood. The capitalisation rate adopted is by reference to the yield rates observed by the valuer for similar properties in the locality and adjusted for the valuer's knowledge of factors specific to the respective properties.

During the current period, the Group disposed of an investment property as set out in note 24(a). The decrease in the fair value of investment properties of HK$16,813,000 (1.1.2015 - 30.6.2015: increase in the fair value of investment properties of HK$238,001,000) has been recognised directly in the condensed consolidated statement of profit or loss.

13. PROPERTIES FOR DEVELOPMENT

The carrying amount represents the Group's interest in certain pieces of land located in the PRC to be held for future development. During the current period, the Group disposed of certain piece of land as set out in note 24(b).

The carrying amount is amortised on a straight-line basis over the lease terms ranging from 40 to 70 years.

14. OTHER RECEIVABLES

At 30 June 2016, the Group incurred a total amount of RMB321,060,000 (31.12.2015: RMB321,060,000) equivalent to HK$375,640,000 (31.12.2015: HK$383,217,000) for the tenant relocation arrangements, excavation and infrastructure work on certain pieces of land in Nanjing, the PRC. The amount, together with further costs to complete the work, are wholly refundable from the relevant PRC local government either by deduction against the consideration payable if the Group is successful in bidding for the land or out of the proceeds received by the relevant PRC local government from another successful tenderer. The directors of the Company estimated that, based on the Group's development plan, the time schedule for auction of the relevant land will be initiated before the end of 2018 and by then the full amount will be recovered.

The balance of HK$353,974,000 (31.12.2015: HK$361,114,000) represents the Hong Kong dollar equivalent of the present value of the original amount of RMB321,060,000 (31.12.2015: RMB321,060,000) expected to be recovered in 2018 discounted at the rate of 2% per annum.

15. TRADE RECEIVABLES, DEPOSITS AND PREPAYMENTS

Trade receivables mainly represent rental receivables from tenants for the use of the Group's properties and receivables from corporate customers and travel agents for the use of hotel facilities. No credit is allowed to tenants. Rentals are payable upon presentation of demand notes. An average credit period of 30 days is allowed to corporate customers and travel agents.

Other receivables include an amount of HK$200,000,000 (31.12.2015: nil) representing cash consideration receivable for the disposal of subsidiaries as shown in note 24(b) which was settled in July 2016.

16. AMOUNTS DUE FROM/TO NON-CONTROLLING INTERESTS

The balances are unsecured, interest-free and repayable on demand.

17. PAYABLES, DEPOSITS AND ACCRUED CHARGES

Included in other payables is an aggregate amount of HK$94,410,000 (31.12.2015: HK$93,010,000) payable to contractors for the cost in relation to the tenant relocation arrangements, excavation and infrastructure work on certain pieces of land as detailed in note 14.

Rental deposits to be settled after twelve months from the end of the reporting period based on the respective lease terms amounted to HK$27,988,000 at 30 June 2016 (31.12.2015: HK$76,376,000).

18. BANK BORROWINGS

During the period, the Group repaid bank loans amounting to HK$2,410,088,000 (1.1.2015 - 30.6.2015: HK$211,114,000) and drew bank loans which carry interest at variable rates amounting to HK$11,924,000 (1.1.2015 - 30.6.2015: HK$150,000,000).

19. SHARE CAPITAL

20. deferred TAXATION

The balance at the end of reporting period mainly represents deferred tax liabilities recognised on the fair value changes of the investment properties amounting to HK$227,993,000 (31.12.2015: HK$236,814,000).

21. PLEDGE OF ASSETS

At the end of the reporting period, the Group had pledged the following assets to secure banking facilities granted to the Group:

(a) Fixed charges on investment properties and property, plant and equipment with an aggregate carrying value of HK$1,508,986,000 (31.12.2015: HK$10,934,981,000) together with a floating charge over all the assets of the property owning subsidiaries and benefits accrued to the relevant properties.

(b) Fixed charges on hotel properties with an aggregate carrying value of HK$905,932,000 (31.12.2015: HK$919,691,000) together with a floating charge over all the assets of the property owning subsidiaries and benefits accrued to the relevant properties.

(c) Fixed charges on properties under development held for sale with carrying amount of HK$195,963,000 as at 31 December 2015, which were released in the current period.

(d) Fixed charges on properties for development with carrying amount of HK$186,898,000 as at 31 December 2015, which were released in the current period.

(e) Note receivables of HK$54,312,000 (31.12.2015: HK$54,256,000).

22. RELATED PARTY BALANCES AND TRANSACTIONS

(a) For the six months ended 30 June 2016, the Group paid fees of HK$108,200,000 (1.1.2015 - 30.6.2015: HK$46,221,000) to South-East Asia Investment and Agency Company, Limited ("SEAI"), a wholly-owned subsidiary of S E A Holdings Limited (an intermediate holding company of the Company), pursuant to the agreement entered into between the Company, certain subsidiaries of the Company and SEAI for using SEAI's personnel and facilities on a cost-sharing basis to carry out the Group's business activities.

(b) The remuneration of directors of the Company who are the Group's key management personnel during the period amounted to HK$12,597,000 (1.1.2015 - 30.6.2015: HK$1,663,000).

23. CONTINGENT LIABILITIES

At 31 December 2015, the Group had given guarantees to banks in respect of mortgage loans provided to the Group's customers for the purchase of the Group's properties located in Kaifeng, the PRC. The total outstanding mortgage loans which were under the guarantee were HK$43,382,000. This development project has been disposed during the period as set out in note 24(b) and such contingent liabilities are therefore no longer existed at 30 June 2016.

24. GAIN ON DISPOSAL OF SUBSIDIARIES

During the period, the Group has disposed of certain subsidiaries which owned the following properties/projects:

(a) Dah Sing Financial Centre

On 25 February 2016, the Group entered into a sale and purchase agreement, pursuant to which the Group agreed to sell the entire issued shares of SEA (BVI) Limited, which wholly owns the issued shares of Wing Siu Company Limited (the sole registered and beneficial owner of Dah Sing Financial Centre), to an independent third party at an aggregate consideration of HK$10,101 million in cash. The disposal was completed on 24 May 2016.

(b) Kaifeng Nova City

On 19 April 2016, the Group entered into a sale and purchase agreement, pursuant to which the Group agreed to sell the entire issued share of New Insight Holdings Limited, which wholly owns the issued shares of all investment companies (the beneficial owners of a property development project at Kaifeng Nova City, Henan Province, the PRC), to an independent third party at an aggregate consideration of HK$900 million in cash. The disposal was completed on 26 April 2016.

24. GAIN ON DISPOSAL OF SUBSIDIARIES - continued

The major classes of assets and liabilities of the disposed subsidiaries at the respective date of each disposal were as follows:

25. EVENT AFTER THE END OF THE REPORTING PERIOD

Subsequent to the end of the reporting period, the Group entered into a sale and purchase agreement with an independent third party on 3 August 2016 to sell the entire issued share capital of Rich Motion Development Limited, which wholly owns the entire registered capital of the investment company of a property development project located at Huangshan City, Anhui Province, the PRC for a consideration of HK$2 million in cash. The disposal was completed on the same date.

26. COMPARATIVE FIGURES

The amount of interest income contained in the comparative figures in the condensed consolidated statement of profit or loss have been reclassified to "other income" to conform with current year's presentation. Details are disclosed in respective notes.