Tern Properties : 2023 Annual Report

太興置業有限公司

TERN PROPERTIES COMPANY LTD.

Stock Code 股份代號 : 277

Annual Report

2023

Contents

Corporate Information

Chairman's Statement

Management Discussion and Analysis

Profile of Directors and Senior Management

Corporate Governance Report

Environmental, Social and Governance Report

Directors' Report

Independent Auditor's Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements Five-Year Group Financial Summary Particulars of Major Properties

2

3

5

9

11

29

60

68

72

73

75

76

78

135

136

2 Tern Properties Company Limited Annual Report 2023

Corporate Information

Board of Directors

Executive Directors

Chan Hoi Sow

(Chairman and Managing Director)

Chan Yan Wai, Emily

(Vice Chairman)

Chan Yan Tin, Andrew

Chan Yan Lam, Alan

Independent Non-Executive Directors

Chan Kwok Wai

Cheung Chong Wai, Janet

Tse Lai Han, Henry

Audit Committee

Chan Kwok Wai

(Chairman)

Cheung Chong Wai, Janet

Tse Lai Han, Henry

Remuneration Committee

Chan Kwok Wai

(Chairman)

Chan Yan Tin, Andrew

Tse Lai Han, Henry

Nomination Committee

Chan Kwok Wai

(Chairman)

Chan Yan Wai, Emily

Tse Lai Han, Henry

Principal Bankers

Credit Suisse Group AG

Hang Seng Bank Limited

The Bank of East Asia, Limited

Nanyang Commercial Bank, Ltd.

Registered Office

26th Floor, Tern Centre, Tower I

237 Queen's Road Central

Hong Kong

Share Registrar and Transfer Office

Computershare Hong Kong Investor Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre, 183 Queen's Road East

Wan Chai, Hong Kong

Company Secretary

Lee Ka Man ACG, HKACG

Auditor

HLM CPA Limited

Rooms 1501-8, 15/F, Tai Yau Building,

181 Johnston Road,

Wanchai, Hong Kong

Solicitors

Woo, Kwan, Lee & Lo

Website

www.tern.hk

Stock Code

277

Annual Report 2023 Tern Properties Company Limited 3

Chairman's Statement

I am pleased to present to shareholders of Tern Properties Company Limited (the "Company") the annual results of the Company and its subsidiaries (the "Group") for the year ended 31 March 2023.

Financial Results

The revenue of the Group for 2023 was HK$51.9 million, a decrease of 9.19% from last year. The reduction was primarily attributable to lower rents from renewals in commercial shop properties and decrease in the Group's rental portfolio occupancy rate.

The loss attributable to the owners of the Company for the year was HK$75.2 million. Such loss was primarily attributable by the decrease in the fair value of the Group's investment properties as compared with the end of last year. Loss per share amounted to HK27.1 cents.

Dividend

The Board of Directors of the Company has resolved to recommend a final dividend of HK1.2 cents per share for the year ended 31 March 2023. Together with the interim dividend of HK0.5 cent per share that have already been paid, the total dividends for the year will amount to HK1.7 cents per share. The proposed final dividend, subject to approval by the shareholders of the Company at the annual general meeting to be held on Wednesday, 23 August 2023, will be payable on Friday, 15 September 2023 to the shareholders on the Register of Members of the Company on Monday, 4 September 2023.

Closure of Register Members

To ascertain the entitlement of the shareholders to attend and vote at the 2023 Annual General Meeting, the Register of Members of the Company will be closed from Friday, 18 August 2023 to Wednesday, 23 August 2023, both days inclusive, during which period no transfer of shares will be registered by the Company. In order to be eligible to attend and vote at the 2023 Annual General Meeting, all duly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's Share Registrar and Transfer Office, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Thursday, 17 August 2023.

Subject to the approval of the shareholders at the 2023 Annual General Meeting, the proposed final dividend will be payable to the shareholders whose names appear on the Register of Members of the Company on 4 September 2023. To ascertain the entitlement of the shareholders to the proposed final dividend, the Register of Members of the Company will be closed from Thursday, 31 August 2023 to Monday, 4 September 2023, both days inclusive, during which period no transfer of shares will be registered by the Company. In order to qualify for the proposed final dividend, all duly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's Share Registrar and Transfer Office, Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong not later than 4:30 p.m. on Wednesday, 30 August 2023.

4 Tern Properties Company Limited Annual Report 2023

Chairman's Statement

Business Outlook

The global economy is still facing uncertainties and challenges even though it has been recovering gradually since early last year. In 2022, the rising interest rates and the Russia-Ukraine conflict continue to weigh on the global economic activities, and the growth is expected to slow down, especially for the leading economies. The central banks across the world hike interest rates significantly to curb inflation, but the inflation remains at a high level, and coupled with various other factors such as rising borrowing costs, persistent geopolitical tensions and conflicts, energy price fluctuations and the supply chain disruptions, the risk of a global economic recession is still lingering.

With the reopening of borders, the relaxation of control measures for the COVID-19 and the lifting of quarantine restrictions, inbound tourism has somewhat recovered, driving the local economy to rebound with expected optimism. We believe Hong Kong's retail industry has bottomed out and should return to its growth trajectory, which will likely drive business owners to rent more shops and upper retail floors, bring positive effects to the Group's rental income.

With adequate net cash balance on hand, the rising interest rates did not bring huge pressure to the Group's operating expenses. Adhering to the principle of financial prudence, the Group maintains a low level of liabilities while seeking continued income growth, striving to strike a balance between the business stability and income growth.

The challenges and opportunities will continue coexist in the coming year. In the context of economic uncertainty, the Group will adhere to the principle of financial prudence and continue to manage our operations in an optimistic manner.

Appreciation

I would like to take this opportunity to express my sincere gratitude to the board of directors for their continued support, all our loyal employees for their valuable contributions and all the stakeholders for their longstanding trust.

Chan Hoi Sow

Chairman and Managing Director

Hong Kong, 21 June 2023