万科海外(01036) - 2019 - 中期财报

Company Information This section provides key details about the company's board members, auditor, company secretary, and principal place of business - Board members include Executive Directors Zhang Xu (Chairman), Que Dongwu (CEO), Li Kaiyan, and Lin Lily, Non-executive Director Chen Zhiyu, and Independent Non-executive Directors Chen Weixi, Luo Zhiyan, and Zhang Anzhi[6] - The auditor is KPMG, and the principal bankers are Bank of China (Hong Kong) Limited[6] - The company secretary is Chan Wing Kit (appointed since August 15, 2019), and the principal place of business is 55/F, Bank of China Tower, 1 Garden Road, Central, Hong Kong[6] Management Discussion and Analysis This section provides an overview of the company's operational and financial performance, including business segments, liquidity, and future outlook Business Review The group's revenue for the six months ended June 30, 2019, primarily from Regent Centre rentals, increased by 2%, while profit attributable to shareholders decreased due to lower fair value gains on investment properties, but profit excluding fair value changes rose by 29% driven by associate earnings and interest income, with acquisitions in London, San Francisco, and New York completed during the period | Metric | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Revenue | 51,100 | 50,300 | | Profit attributable to shareholders | 77,700 | 171,000 | | Profit excluding fair value changes of Regent Centre | 45,200 | 35,000 | - Acquisitions of equity interests or investment vehicles in certain properties located in London, UK, San Francisco, and New York, USA were completed[9] - The management services framework agreement became effective on June 30, 2019, under which the Group will provide management services to Vanke Hong Kong contracting parties[9] Property Investment The Group's property investments include Regent Centre in Hong Kong and the newly acquired Ryder Court in the UK, with Regent Centre maintaining high occupancy and increased average rent, but fair value gains on investment properties significantly decreased, and Ryder Court is expected to generate income in the second half Regent Centre Operating Data | Metric | June 30, 2019 | June 30, 2018 | | :--- | :--- | :--- | | Occupancy Rate | 98% | 97% | | Average Rent (HKD per sq ft) | 9.9 | 9.6 | Investment Property Financial Data | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Fair Value of Investment (HKD) | 2,001,500,000 | 1,968,000,000 | | Fair Value Gain (HKD) | 32,600,000 | 136,000,000 | - Ryder Court did not generate revenue for the Group during the period and is expected to contribute from the second half of 2019[16] Property Development The Group's property development business, primarily through its associate Ultimate Vantage Limited in the Pavilia Bay project, has sold over 99% of its units, leading to a significant increase in associate earnings - Over 99% of Pavilia Bay project units have been sold, with total proceeds of approximately HKD 10 billion[17] Investment in and Profit from Associates | Metric | June 30, 2019 (HKD) | December 31, 2018 (HKD) | | :--- | :--- | :--- | | Total Investment in Associates | 330,800,000 | 346,400,000 | | Share of Profit from Associates | 14,500,000 | 800,000 | - During the period, approximately HKD 1,400,000 was repaid for amounts due from Ultimate Vantage and approximately HKD 28,700,000 for amounts due from Goldrich[18] Asset Management Starting from the second half of 2019, the Group will provide asset management services for UK and US projects to Vanke Hong Kong contracting parties, charging an annual fee of 1.25% of the total invested capital - Asset management services for UK and US projects will be provided to Vanke Hong Kong contracting parties starting from the second half of 2019[22] - The asset management service fee is 1.25% per annum of the total invested capital by Vanke Hong Kong contracting parties in the relevant projects[22] General and Administrative Expenses General and administrative expenses significantly increased during the period, primarily due to higher staff costs and legal and professional fees related to acquisitions and management services General and Administrative Expenses | Metric | 2019 (HKD) | 2018 (HKD) | | :--- | :--- | :--- | | General and Administrative Expenses | 17,900,000 | 5,500,000 | - The increase in expenses was primarily due to higher staff costs and legal and professional fees related to acquisitions and management services[23] Finance Income Finance income significantly increased during the period, driven by higher bank interest rates and balances, as well as interest income from loans to associates Finance Income | Metric | 2019 (HKD) | 2018 (HKD) | | :--- | :--- | :--- | | Total Finance Income | 14,700,000 | 7,400,000 | | Interest Income from Bank Deposits and Balances | 11,100,000 | 4,000,000 | | Interest Income from Shareholder Loan to Goldrich | 3,600,000 | 3,400,000 | - The increase in finance income was primarily due to higher bank interest rates and bank balances[24] Financial Review The Group's financial position shows an increase in shareholders' equity, but also significant interest-bearing bank and other borrowings due to property investments and acquisitions, leading to a substantial rise in the debt-to-equity ratio, with rights issue proceeds fully utilized and liquidity expected to be sufficient Rights Issue The net proceeds of HKD 1,032,000,000 from the 2015 rights issue were fully utilized during the period, with HKD 393,000,000 used to partially pay for acquisitions - The 2015 rights issue raised net proceeds of HKD 1,032,000,000[26] - During the period, the remaining net proceeds of approximately HKD 393,000,000 from the rights issue were used to partially pay for acquisitions, and the net proceeds from the rights issue have been fully utilized[31] - There were no material changes to the intended use of proceeds[32] Liquidity, Financial Resources, Gearing Ratio and Capital Structure The Group's equity attributable to shareholders increased, but interest-bearing bank and other borrowings significantly rose due to property investments and acquisition financing, causing both the debt-to-equity ratio and net debt-to-equity ratio to increase from zero, while bank balances and cash decreased, but Regent Centre remains unencumbered and available for fundraising Liquidity and Gearing Ratios | Metric | June 30, 2019 (HKD) | December 31, 2018 (HKD) | | :--- | :--- | :--- | | Equity attributable to shareholders | 3,709,500,000 | 3,666,800,000 | | Interest-bearing bank and other borrowings | 1,165,100,000 | Nil | | Debt-to-equity ratio | 31.4% | Nil | | Net debt-to-equity ratio | 6.2% | Nil | | Bank balances and cash | 934,500,000 | 1,425,100,000 | - Bank loans of HKD 738,600,000 and a loan from an intermediate holding company of HKD 366,000,000 are arranged on a floating interest rate basis, while lease liabilities of HKD 60,500,000 are on a fixed interest rate basis[33] - Regent Centre is currently unencumbered and available for fundraising and generating additional cash resources[35] Exchange Rate Fluctuation Risk Operating in Hong Kong, the US, and the UK, the Group faces exchange rate risks related to HKD, USD, and GBP, which it monitors and mitigates through measures like natural hedging - The Group operates in Hong Kong, the US, and the UK, with assets and liabilities denominated in HKD, USD, and GBP[39] - Natural hedging for GBP foreign exchange risk is achieved by funding its equity investment in Ryder Court with a loan from an intermediate holding company[39] Capital Commitments As of June 30, 2019, the Group had no significant capital commitments - As of June 30, 2019, the Group had no significant capital commitments (December 31, 2018: nil)[40] Contingent Liabilities and Financial Guarantees As of June 30, 2019, the Group had no outstanding contingent liabilities or financial guarantees - As of June 30, 2019, the Group had no outstanding contingent liabilities or financial guarantees (December 31, 2018: nil)[40] Pledge of Assets The Group's bank loans are secured by all assets held by its indirect non-wholly owned subsidiary, Lithium Real Estate (Jersey) Limited, which owns the Ryder Court investment property in London - Bank loans are secured by all assets held by the indirect non-wholly owned subsidiary, Lithium Real Estate (Jersey) Limited[41] - This subsidiary holds the company's investment property, Ryder Court, located in London[41] Significant Investments, Acquisitions and Disposals in Subsidiaries and Associates Apart from the acquisitions disclosed in Note 19 to the interim financial information, there were no other significant investments, acquisitions, or disposals in subsidiaries and associates during the period - Apart from the acquisitions disclosed in Note 19, there were no other significant investments, acquisitions, or disposals in subsidiaries and associates during the period[41] Employees and Remuneration Policy The Group experienced a significant increase in employee numbers and staff costs, primarily due to an increase in the number of directors and higher average remuneration for Hong Kong office staff, while administrative and management support fees from Vanke Hong Kong decreased Employee and Remuneration Data | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Number of Employees | 33 | 3 | | Staff Costs (HKD) | 4,300,000 | 3,200,000 | | Fees Payable to Vanke Hong Kong (HKD) | 1,000,000 | 1,300,000 | - 28 employees were transferred to the Group during the period, incurring no related staff costs[42] - Remuneration and benefits are determined based on market terms, individual responsibilities, and performance[42] Dividends The Board does not recommend the payment of an interim dividend for the current period - The Directors do not recommend the payment of an interim dividend for the period (six months ended June 30, 2018: nil)[43] Outlook Despite global economic uncertainties, the Group maintains a cautiously optimistic outlook, seeking diversified development and expansion opportunities in Hong Kong and overseas property markets, with new acquisitions and management personnel expected to enhance investment capabilities in the UK and US, and new properties anticipated to generate revenue and profit in the second half - Despite the US-China trade war, Brexit, and economic uncertainties in Hong Kong, the Group will maintain a cautiously optimistic attitude[47] - The Group will continue to seek opportunities for diversified development and business expansion in Hong Kong and overseas property markets[47] - New acquisitions and the addition of management personnel with expertise in the UK and US property markets will enhance the Group's investment and expansion capabilities in these markets[47] - Occupancy rates and average rents for Regent Centre and Ryder Court are expected to remain high in the second half of 2019, and newly acquired UK and US investment properties and investment vehicles are anticipated to generate revenue and profit[47] Review Report on Interim Financial Information KPMG has reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410, concluding no matters that would lead them to believe the information is not prepared in all material respects according to HKAS 34 - KPMG has reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[51] - The review concluded that nothing has come to the reviewer's attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[52] Consolidated Statement of Comprehensive Income This statement summarizes the Group's financial performance, including revenue, profit before tax, and total comprehensive income attributable to shareholders for the period Summary of Consolidated Statement of Comprehensive Income | Metric | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Revenue | 51,136 | 50,328 | | Gross Profit | 40,622 | 39,623 | | Increase in fair value of investment properties | 32,564 | 136,005 | | Operating Profit | 54,705 | 169,486 | | Finance Income | 14,666 | 7,440 | | Share of results of associates | 14,451 | 756 | | Profit Before Taxation | 83,822 | 177,682 | | Taxation | (6,060) | (6,718) | | Profit and total comprehensive income for the period attributable to shareholders of the Company | 77,762 | 170,964 | | Earnings Per Share—Basic and Diluted (HKD) | 0.20 | 0.44 | Consolidated Statement of Financial Position This statement presents the Group's financial position, detailing assets, liabilities, and equity as of the reporting date Summary of Consolidated Statement of Financial Position | Metric | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | Assets | | | | Total Non-current Assets | 4,203,331 | 2,306,572 | | Investment Properties | 3,136,799 | 1,968,000 | | Interests in Associates | 481,574 | 338,435 | | Investment Instruments | 522,798 | - | | Bank Balances and Cash | 934,533 | 1,425,085 | | Liabilities | | | | Total Current Liabilities | (622,141) | (38,798) | | Loan from an Intermediate Holding Company | (365,979) | - | | Bank Loans (Current) | (9,919) | - | | Total Non-current Liabilities | (828,918) | (40,966) | | Bank Loans (Non-current) | (728,735) | - | | Lease Liabilities (Non-current) | (57,948) | - | | Equity | | | | Total Equity attributable to shareholders of the Company | 3,709,471 | 3,666,767 | | Total Equity | 3,709,682 | 3,666,767 | Consolidated Statement of Changes in Equity This statement details the changes in the Group's equity attributable to shareholders, including profit for the period, dividends, and other equity movements Summary of Consolidated Statement of Changes in Equity | Metric | June 30, 2019 (HKD '000) | June 30, 2018 (HKD '000) | | :--- | :--- | :--- | | Total Equity at January 1 | 3,666,767 | 3,001,610 | | Profit and total comprehensive income for the period | 77,762 | 170,964 | | Final dividend approved for previous year | (35,058) | (11,686) | | Acquisition of subsidiaries | 203 | - | | Contribution from non-controlling interests | 8 | - | | Total Equity at June 30 | 3,709,682 | 3,160,888 | Condensed Consolidated Statement of Cash Flows This statement provides a summary of the Group's cash flows from operating, investing, and financing activities for the period Summary of Condensed Consolidated Statement of Cash Flows | Metric | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 30,427 | (16,583) | | Net cash (used in)/generated from investing activities | (851,908) | 441,094 | | Payment for acquisition of subsidiaries (net of cash and cash equivalents acquired) | (1,020,715) | - | | Net cash generated from/(used in) financing activities | 330,929 | (11,686) | | Proceeds from loan from an intermediate holding company | 365,979 | - | | Net (decrease)/increase in cash and cash equivalents | (490,552) | 412,825 | | Cash and cash equivalents at end of period | 934,533 | 1,278,730 | Notes to the Unaudited Interim Financial Information This section provides detailed notes and explanations supporting the unaudited interim financial information, covering accounting policies, segment data, and significant transactions General Information The Company is a limited liability company incorporated in the Cayman Islands, listed on the Hong Kong Stock Exchange, primarily engaged in asset management and property development and investment, with Vanke Co., Ltd. as its ultimate holding company - The Company is a limited liability company incorporated in the Cayman Islands, with its shares listed on the Hong Kong Stock Exchange[75] - The Group is principally engaged in asset management and property development and investment[75] - Vanke Co., Ltd. is the ultimate holding company of the Company[75] Basis of Preparation and Principal Accounting Policies The interim financial information is prepared in accordance with HKAS 34 and the Listing Rules, with accounting policies consistent with the prior year's financial statements, except for the adoption of HKFRS 16 "Leases" - The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the HKICPA and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[76] - Except for the adoption of HKFRS 16 "Leases" and certain amendments to HKFRSs, the interim financial information has been prepared in accordance with the same accounting policies adopted in the financial statements for the year ended December 31, 2018[76][81] Changes in Accounting Policies The Group first adopted HKFRS 16 "Leases," requiring capitalization of all leases as a lessee by recognizing right-of-use assets and lease liabilities, with no significant change to lessor accounting, and no impact on the opening equity balance - First-time adoption of Hong Kong Financial Reporting Standard 16 "Leases," replacing Hong Kong Accounting Standard 17 "Leases"[81][82] - As a lessee, all leases are capitalized, recognizing right-of-use assets and lease liabilities, with recognition exemptions applied for short-term leases and leases of low-value assets[84] - Impact on interim financial information: The adoption of HKFRS 16 had no impact on the opening balance of the Group's equity[86] Revenue and Segment Information The Group's revenue primarily derives from investment property rentals and property management fees, with segment reporting divided into property investment and property development, showing increased property investment segment results before fair value changes and significantly enhanced property development segment results due to share of associate profits Revenue Composition | Revenue Category | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Rental income from investment properties | 43,347 | 42,649 | | Property management fee income | 7,789 | 7,679 | | Total Revenue | 51,136 | 50,328 | - The Group has two segments: property investment and property development[90] Segment Results (Before Fair Value Changes) | Segment | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Property Investment | 40,045 | 38,869 | | Property Development | 18,001 | 4,261 | Other Income The Group's other income primarily consists of compensation received from tenants for early lease terminations Other Income Details | Income Category | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Handling fee income | - | 111 | | Compensation received from tenants for early lease terminations | 300 | 32 | | Others | 55 | 51 | | Total | 355 | 194 | Profit Before Taxation Profit before taxation is calculated after deducting depreciation, defined contribution plan contributions, salaries and other benefits, and net exchange losses, and including finance income Profit Before Taxation Adjustments | Item | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Finance income | (14,666) | (7,440) | | Interest income from bank deposits and balances | (11,116) | (4,046) | | Interest income from amounts due from an associate | (3,550) | (3,394) | | Depreciation | 48 | 56 | | Contributions to defined contribution plans | 53 | 37 | | Salaries, wages and other benefits (including directors' emoluments) | 4,258 | 3,260 | | Net exchange losses | 1,651 | - | Taxation The Group's taxation expense comprises current tax (Hong Kong Profits Tax) and deferred tax, with Hong Kong Profits Tax provisioned at a rate of 16.5% Taxation Expense Details | Tax Category | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Current tax (Hong Kong Profits Tax) | 4,791 | 5,228 | | Deferred tax (origination and reversal of temporary differences) | 1,269 | 1,490 | | Total | 6,060 | 6,718 | - Hong Kong Profits Tax is provided at a rate of 16.5% on the estimated assessable profit for the period[102] - Share of taxation expense of associates of HKD 277,000 has been included in the share of results of associates for the period[103] Earnings Per Share The Group's basic and diluted earnings per share are both HKD 0.20, as there were no potentially dilutive shares outstanding during the period Earnings Per Share Data | Metric | 2019 (HKD) | 2018 (HKD) | | :--- | :--- | :--- | | Basic and Diluted Earnings Per Share | 0.20 | 0.44 | | Profit attributable to shareholders of the Company (HKD '000) | 77,762 | 170,964 | | Number of shares in issue (shares) | 389,527,932 | 389,527,932 | - Diluted earnings per share are equal to basic earnings per share as there were no potentially dilutive shares in issue during the period[104] Dividends The Board does not recommend an interim dividend for the current period, while a final dividend of HKD 0.09 per share for the previous year was approved and paid - The Directors do not recommend the payment of an interim dividend for the period (six months ended June 30, 2018: nil)[105] Dividends Paid for Previous Financial Years | Dividend Type | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | HKD 0.09 per share (2018: HKD 0.03 per share) | 35,058 | 11,686 | Property, Plant and Equipment Additions to property, plant and equipment during the period primarily consisted of right-of-use assets arising from the lease of office properties under fixed monthly payment terms - Additions to property, plant and equipment amounted to HKD 9,656,000 during the period[109] - Primarily right-of-use assets arising from the lease of office properties under fixed monthly payment terms[109] Investment Properties The Group's investment properties were revalued at the end of the period, showing a significant increase in fair value primarily due to investment properties acquired through subsidiary acquisitions, with valuations conducted by independent surveyors Changes in Fair Value of Investment Properties | Metric | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | At January 1 | 1,968,000 | 1,830,000 | | Acquisition of subsidiaries | 1,135,339 | - | | Additions | 896 | 1,995 | | Fair value gains | 32,564 | 136,005 | | At June 30/December 31 | 3,136,799 | 1,968,000 | - Investment properties were valued by independent surveyors, JLL Corporate Appraisal and Advisory Limited and Knight Frank LLP[110] Interests in Associates and Amounts Due from/to Associates The Group's total interests in associates increased, mainly due to new associate acquisitions during the period, while amounts due from Goldrich Limited decreased, and amounts due to Ultimate Vantage Limited were newly recognized Interests in Associates and Amounts Due from/to Associates | Metric | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | Share of net assets | 249,915 | 79,714 | | Amounts due from an associate (non-current portion) | 231,659 | 258,721 | | Total | 481,574 | 338,435 | | Amounts due from an associate (current portion) | 6,375 | 7,973 | | Amounts due to an associate (current portion) | (125,585) | - | - The balance includes newly acquired associates of HKD 157,165,000 through the acquisition of subsidiaries during the period[115] - Amounts due from Goldrich Limited are unsecured and bear interest at the Hong Kong Prime Rate less 2.1% per annum[116] - Amounts due to Ultimate Vantage Limited are unsecured, interest-free, and repayable on demand[116] Investment Instruments The Group holds an investment instrument bearing interest at 14.15% per annum, maturing on December 20, 2020, which is partially secured and guaranteed by one of the borrowers, Zhou Holdings Limited - The investment instrument bears interest at 14.15% per annum and will mature on December 20, 2020 (borrower has an option to extend for one year)[117] - The instrument is guaranteed by Zhou Holdings Limited, one of the borrowers[117] - A balance of HKD 341,305,000 is secured by the equity interest of the borrower, while the remaining HKD 181,493,000 is unsecured[117] Trade and Other Receivables The Group's total trade and other receivables significantly increased, primarily due to a substantial rise in unamortized rental receivables, most of which are non-current Trade and Other Receivables Details | Item | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | Trade receivables | 891 | 530 | | Unamortised rental receivables | 61,276 | 944 | | Other receivables | 862 | 870 | | Deposits | 3,243 | 2,603 | | Prepayments | 758 | 127 | | Total | 67,033 | 5,074 | | Current | 14,696 | 5,074 | | Non-current (unamortised rental receivables) | 52,337 | - | Ageing Analysis of Trade Receivables | Ageing | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | 0 to 30 days | 810 | 500 | | 31 to 90 days | 81 | 30 | | Total | 891 | 530 | Other Payables and Accrued Charges The Group's total other payables and accrued charges significantly increased, primarily including advances received and accrued expenses, with most expected to be paid or recognized as income within one year Other Payables and Accrued Charges Details | Item | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | Other payables | 1,191 | 1,148 | | Advances received | 13,857 | 510 | | Rental and other deposits received | 24,777 | 24,673 | | Accrued charges | 24,013 | 5,588 | | Total | 63,838 | 31,919 | - Except for rental and other deposits received for properties of HKD 16,379,000 which are expected to be repaid after one year, all other payables and accrued charges are expected to be settled or recognized as income within one year or repayable on demand[124] Amounts Due to an Intermediate Holding Company and Fellow Subsidiaries Amounts due to an intermediate holding company and fellow subsidiaries are unsecured, interest-free, and repayable on demand - Amounts due to an intermediate holding company and fellow subsidiaries are unsecured, interest-free, and repayable on demand[125] Loan from an Intermediate Holding Company The loan from an intermediate holding company is unsecured, bears interest at LIBOR plus 2.1% per annum or the lender's latest average cost of capital (whichever is higher), and is repayable when the Group obtains third-party financing - The loan from an intermediate holding company is unsecured, bears interest at LIBOR plus 2.1% per annum or the lender's latest average cost of capital (whichever is higher)[126] - Repayable when the Group obtains third-party financing[126] Lease Liabilities The Group's lease liabilities are primarily long-term, with most maturing after five years, reflecting the impact of adopting HKFRS 16 "Leases" Lease Liabilities Maturity Profile (Present Value) | Maturity Time | June 30, 2019 (HKD '000) | | :--- | :--- | | Within one year | 2,522 | | After one year but within two years | 2,659 | | After two years but within five years | 4,515 | | After five years | 50,774 | | Total | 60,470 | Bank Loans The Group incurred new secured bank loans, primarily denominated in GBP, for subsidiary acquisitions, collateralized by assets held by the subsidiary, bearing floating interest rates, and subject to financial covenants Bank Loan Details | Item | June 30, 2019 (HKD '000) | December 31, 2018 (HKD '000) | | :--- | :--- | :--- | | Secured bank loans | 741,786 | - | | Capitalised other borrowing costs | (3,132) | - | | Total bank loans | 738,654 | - | - Bank financing of GBP 75,000,000 (equivalent to HKD 743,910,000) is secured by all assets held by a subsidiary, including the Group's investment properties of HKD 1,135,339,000 as of June 30, 2019[134] - Bank loans bear interest at LIBOR plus 1.95% per annum and will mature on January 16, 2022[134] - As of June 30, 2019, there were no breaches of any covenants related to the drawdown of financing[134] Acquisition of Subsidiaries The Group completed the acquisitions of Lithium Topco Limited (UK property investment), 657-667 Mission Limited (US property investment), and Supreme J Limited (US investment instrument) on June 30, 2019, for a total consideration of approximately HKD 1,086.5 million, resulting in significant cash outflows during the period - Acquisition of approximately 99.95% effective interest in Lithium Topco Limited (UK property investment) for a consideration of approximately HKD 406,643,000[137] - Acquisition of the entire issued share capital of 657–667 Mission Limited (US property investment) for a consideration of approximately HKD 157,096,000[138] - Acquisition of the entire issued share capital of Supreme J Limited (US investment instrument) for a consideration of approximately HKD 522,798,000[139] Total Consideration and Cash Outflow for Acquisition of Subsidiaries | Item | Amount (HKD '000) | | :--- | :--- | | Total consideration | 1,086,537 | | Cash consideration paid | 1,049,577 | | Net cash outflow | 1,020,715 | - Given that the above acquisitions were completed on June 30, 2019, these subsidiaries did not contribute any revenue or profit to the Group during the period[142] Significant Related Party Transactions The Group engaged in significant related party transactions during the period, primarily involving management and administrative fees paid to an intermediate holding company and key management personnel remuneration Significant Related Party Transactions | Transaction Item | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Management and administrative fees payable to an intermediate holding company | 1,037 | 1,284 | | Key management personnel remuneration | 950 | 1,238 | Other Information This section covers additional information including the review of interim financial information, compliance with corporate governance, directors' securities dealings, and major shareholders Review of Interim Financial Information The Group's interim financial information has been reviewed by independent auditor KPMG and the audit committee, both without reservation - The interim financial information is unaudited but has been reviewed by the independent auditor, KPMG, whose unmodified review report is included in this interim report[150] - The interim financial information has also been reviewed by the Company's audit committee, which had no disagreements[150] Compliance with Corporate Governance Code The Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules throughout the period - The Company has complied with the code provisions set out in the Corporate Governance Code in Appendix 14 to the Listing Rules throughout the period[151] Compliance with Model Code for Securities Transactions by Directors The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors' securities dealings, and all directors confirmed compliance throughout the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules as its code of conduct for directors' securities transactions[152] - Following specific enquiry with the Directors, all Directors confirmed that they have complied with the required standards set out in the Model Code throughout the period[152] Purchase, Sale or Redemption of Shares Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's shares during the period[153] Update on Directors' Information Pursuant to Rule 13.51B(1) of the Listing Rules Since the publication of the 2018 annual report, there have been changes in directors' information, including Mr. Li Kaiyan and Ms. Lin Lily being re-designated as executive directors, and adjustments to several directors' annual remuneration and meeting allowances - Mr. Li Kaiyan and Ms. Lin Lily were re-designated from non-executive directors to executive directors, effective August 15, 2019[154] - Mr. Li Kaiyan and Ms. Lin Lily will each receive a fixed annual remuneration of HKD 200,000 for their services to the Board[155] - Mr. Chen Zhiyu, Mr. Chen Weixi, Ms. Luo Zhiyan, and Mr. Zhang Anzhi will each receive annual remuneration for their services to the Board, including a fixed director's fee and allowances for attending Company meetings[155] Directors' Interests in Shares or Debentures As of June 30, 2019, some directors held interests in shares of Vanke Co., Ltd., an associated corporation of the Company, primarily long positions in A shares and H shares Directors' Interests in Vanke Shares | Director's Name | Share Class | Number of Ordinary Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Zhang Xu | A shares | 904,039 | 0.009% | | Que Dongwu | A shares | 150,700 | 0.002% | | Chen Zhiyu | H shares | 500,203 | 0.032% | - All disclosed interests in shares are long positions in shares of an associated corporation of the Company[157] Directors' Rights to Acquire Shares or Debentures Mr. Zhang Xu, Ms. Que Dongwu, Mr. Li Kaiyan, and Ms. Lin Lily are beneficiaries of Vanke's 2014 Business Partner Scheme, and the Company had no share option scheme in place during the period - Mr. Zhang Xu, Ms. Que Dongwu, Mr. Li Kaiyan, and Ms. Lin Lily are beneficiaries of Vanke's Business Partner Scheme adopted in 2014[158] - At no time during the period was the Company or any of its subsidiaries or the Company's holding company or its subsidiaries a party to any arrangement to enable the Directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate[158] - The Company had no share option scheme in place during the period[159] Major Shareholders As of June 30, 2019, Vanke Co., Ltd. and its subsidiaries were the Company's major shareholders, holding 75.0% equity, while CITIC Securities Company Limited and its subsidiaries held 7.72% equity Major Shareholders' Shareholding | Name of Major Shareholder | Capacity of Interest | Total Number of Shares in which Shareholder is Interested | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Vanke | Held by controlled corporation | 292,145,949 | 75.0% | | CITIC Securities Company Limited | Held by controlled corporation | 30,080,000 | 7.72% | - Vanke holds 292,145,949 ordinary shares of the Company through its indirect wholly-owned subsidiary, Wkland Investments Company Limited[163] - CSI Capital Management Limited holds 30,080,000 ordinary shares of the Company, and it is a direct wholly-owned subsidiary of CITIC Securities Company Limited[164] Publication of Interim Report Printed copies of the interim report in both English and Chinese are available and can be viewed on the Company's website and the HKEX website, with shareholders able to change their communication preferences at any time - Printed copies of the English and Chinese versions of the interim report are available and can be viewed on the Company's website (www.vankeoverseas.com) and the HKEX website (www.hkexnews.hk)[165](index=165&type=chunk) - Shareholders may at any time change their choice of means of receiving corporate communications from the Company free of charge by giving reasonable written notice to the Company's Hong Kong Share Registrar or by email to vankeoverseas.ecom@computershare.com.hk[165]