Annual Report (in PDF) - Hongkong Land

More documents

Recommendations

Info

Notes to the Financial Statements 1 Principal Accounting Policies continued m. Employee pension obligations The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in trustee administered funds. Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under this method, the costs of providing pensions are charged to the consolidated profit and loss account spreading the regular cost over the service lives of employees in accordance with the advice of qualified actuaries, who carry out a full valuation of major plans every year. The pension obligations are measured as the present value of the estimated future cash outflows by reference to market yields on high quality corporate bonds which have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value. Actuarial gains and losses are recognised in the year in which they occur, outside profit or loss, in the consolidated statement of recognised income and expense. The Group’s total contributions to the defined contribution plans are charged to the consolidated profit and loss account in the year to which they relate. n. Non-current assets held for sale Non-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less costs to sell if their carrying amount is recovered principally through a sale transaction rather than through continuing use. o. Derivative financial instruments The Group only enters into derivative financial instruments in order to hedge underlying exposures. Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss is dependent on the nature of the item being hedged. The Group designates certain derivatives as either a hedge of the fair value of a recognised asset or liability (fair value hedge), or a hedge of a forecast transaction or of the foreign currency risk on a firm commitment (cash flow hedge), or a hedge of net investment in foreign entities. i) Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges and that are highly effective, are recorded in the consolidated profit and loss account, along with any changes in the fair value of the hedged asset or liability that is attributable to the hedged risk. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, the cumulative adjustment to the carrying amount of a hedge item for which the effective interest method is used is amortised to the consolidated profit and loss account over the residual period to maturity. ii) Cash flow hedge Changes in the fair value of derivatives that are designated and qualify as cash flow hedges and that are highly effective, are recognised in the hedging reserve. Where the forecast transaction or firm commitment results in the recognition of a non-financial asset or of a non-financial liability, the gains and losses previously deferred in the hedging reserve are transferred from hedging reserve and included in the initial measurement of the cost of the asset or liability. Otherwise, amounts deferred in the hedging reserve are transferred to the consolidated profit and loss account and classified as income or expense in the same periods during which the hedged firm commitment or forecast transaction affects the consolidated profit and loss account. 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 committed or forecast transaction ultimately is recognised in the consolidated profit and loss account. When a committed or forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in hedging reserve is immediately transferred to the consolidated profit and loss account. iii) Hedges of net investments in foreign entities Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in exchange reserve; the gain or loss relating to the ineffective portion is recognised immediately in the consolidated profit and loss account. 24 Hongkong Land
Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies, do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting under IAS 39 are recognised immediately in the consolidated profit and loss account. The fair values of derivatives, which are designated and qualify as effective hedges are classified as non-current assets or liabilities if the remaining maturities of the hedged assets or liabilities are greater than twelve months after the balance sheet date. p. Dividends Dividends proposed or declared after the balance sheet date are not recognised as a liability at the balance sheet date. q. Revenue Revenue is measured at the fair value of the consideration received and receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes. Receipts under operating leases are accounted for on an accrual basis over the lease terms. Revenue from the sale of properties is recognised on the transfer of significant risks and rewards of ownership. Revenue from the rendering of services is recognised when services are performed, provided that the amount can be measured reliably. r. Pre-operating costs Pre-operating costs are expensed as they are incurred. s. Non-trading items Non-trading items are separately identified to provide greater understanding of the Group’s underlying business performance. Items classified as non-trading items include fair value gains or losses on revaluation of investment properties; gains and losses arising from the sale of businesses, investments and properties; impairment of non-depreciable intangible assets and other investments; provisions for the closure of businesses; and other credits and charges of a non-recurring nature that require inclusion in order to provide additional insight into underlying business performance. t. Earnings per share Basic earnings per share are calculated on profit attributable to shareholders and on the weighted average number of shares in issue during the year. For the purpose of calculating diluted earnings per share, profit attributable to shareholders is adjusted for the effects of the conversion of dilutive potential ordinary shares, and the weighted average number of shares is adjusted for the number of shares that are deemed to be issued on the conversion of convertible bonds into ordinary shares. 2 Financial Risk Management a. Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s treasury function co-ordinates, under the directions of the Board of Hongkong Land Limited, financial risk management policies and their implementation on a groupwide basis. The Group’s treasury policies are designed to manage the financial impact of fluctuations in interest rates and foreign exchange rates and to minimise the Group’s financial risks. The Group uses derivative financial instruments, principally interest rate swaps, caps and forward foreign exchange contracts as appropriate for hedging transactions and managing the Group’s assets and liabilities in accordance with the Group’s financial risk management policies. Certain derivative transactions, while providing effective economic hedges under the Group’s risk management policies, do not qualify for hedge accounting under the specific rules in IAS 39. It is the Group’s policy not to enter into derivative transactions for speculative purposes. The notional amounts and fair values of derivative financial instruments at 31st December 2007 are disclosed in Note 31. i) Market risk Foreign exchange risk Entities within the Group are exposed to foreign exchange risk from future commercial transactions, net investments in foreign operations and net monetary assets and liabilities that are denominated in a currency that is not the entity’s functional currency. Annual Report 2007 25
Page 1 and 2: Hongkong Land Holdings Limited Annu
Page 3 and 4: Highlights • Continued strength i
Page 5 and 6: The newly refurbished retail areas
Page 7 and 8: The Singapore office market also wi
Page 9 and 10: Central portfolio at 31st December
Page 11 and 12: Residential Property The profit con
Page 13 and 14: Financial Review Financial Market R
Page 15 and 16: As Management considers that the Gr
Page 17 and 18: Directors’ Profiles Simon Keswick
Page 19 and 20: Consolidated Balance Sheet at 31st
Page 21 and 22: Consolidated Cash Flow Statement fo
Page 23 and 24: Amendments to IFRS 2, Share-based P
Page 25: g. Depreciation Depreciation is cal
Page 29 and 30: Price risk The Group is exposed to
Page 31 and 32: The Group determines the appropriat
Page 33 and 34: Underlying profit attributable to s
Page 35 and 36: 7 Operating profit 2007 2006 US$m U
Page 37 and 38: 11 Earnings per share Basic earning
Page 39 and 40: 14 Joint ventures 2007 2006 US$m US
Page 41 and 42: 17 Pension plans The Group has defi
Page 43 and 44: 18 Properties for sale 2007 2006 US
Page 45 and 46: 21 Non-current assets classified as
Page 47 and 48: 23 Borrowings continued Fixed rate
Page 49 and 50: 25 Revenue and other reserves conti
Page 51 and 52: 31 Derivative financial instruments
Page 53 and 54: 34 Related party transactions In th
Page 55 and 56: 36 Principal subsidiaries and joint
Page 57 and 58: 36 Principal subsidiaries and joint
Page 59 and 60: Five Year Summary 2003 2004 2005 20
Page 61 and 62: Directors’ Appointment, Retiremen
Page 63 and 64: Prior to completion and announcemen
Page 65 and 66: Shareholder Information Financial C
Page 67 and 68: Report of the Valuers To Hongkong L
Page 69 and 70: Residential Development Property fo
Page 71 and 72: 11 9 8 1 2 10 6 5 3 7 12 4 13
Page 73: Hongkong Land Holdings Limited Jard

Annual Report (in PDF) - Hongkong Land

Create successful ePaper yourself

Delete template?

Save as template?