Tsim Sha Tsui Properties : 2020 Annual Report

This annual report ("Annual Report") is available in both English and Chinese. Shareholders who have received either the English or the Chinese version of the Annual Report may request a copy in the language different from that has been received by writing to the Company's Share Registrar,

Tricor Friendly Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.

The Annual Report (in both English and Chinese versions) has been posted on the Company's website at www.sino.com. Shareholders who have chosen to rely on copies of the Corporate Communications (including but not limited to annual report, summary financial report (where applicable), interim report, summary interim report (where applicable), notice of meeting, listing document, circular and proxy form) posted on the Company's website in lieu of any or all the printed copies thereof may request printed copy of the Annual Report.

Shareholders who have chosen or are deemed to have consented to receive the Corporate Communications using electronic means through the Company's website and who have difficulty in receiving or gaining access to the Annual Report posted on the Company's website will upon request be sent the Annual Report in printed form free of charge.

Shareholders may at any time choose to change their choice of language and means of receipt (i.e. in printed form or by electronic means through the Company's website) of all future Corporate Communications from the Company by giving notice in writing by post to the Company's Share Registrar, Tricor Friendly Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong or by email at [e-mail].

Contents

1. Corporate information
2. Group financial summary

1. Chairman's statement

15 Sustainable development

22 Corporate governance report

1. Risk management report

1. Directors' report

1. Biographical details of Directors & senior management

1. Independent auditor's report

1. Consolidated statement of profit or loss
2. Consolidated statement of profit or loss and other comprehensive income
3. Consolidated statement of financial position

1. Consolidated statement of changes in equity
2. Consolidated statement of cash flows

78 Notes to the consolidated financial statements

1. Disclosure pursuant to Rule 13.22 of the Listing Rules
2. Major properties held by the Group

Annual Report 2020	Tsim Sha Tsui Properties Limited		1

Corporate information

Board of Directors

Robert Ng Chee Siong, Chairman

Daryl Ng Win Kong, JP, Deputy Chairman Ronald Joseph Arculli, GBM, CVO, GBS, OBE, JP# Allan Zeman, GBM, GBS, JP*

Adrian David Li Man-kiu,JP* Steven Ong Kay Eng*

(# Non-Executive Director)

(* Independent Non-Executive Directors)

Audit Committee

Adrian David Li Man-kiu,JP, Chairman

Allan Zeman, GBM, GBS, JP

Steven Ong Kay Eng

Nomination Committee

Robert Ng Chee Siong, Chairman

Allan Zeman, GBM, GBS, JP

Adrian David Li Man-kiu,JP

Remuneration Committee

Steven Ong Kay Eng, Chairman

Allan Zeman, GBM, GBS, JP

Adrian David Li Man-kiu,JP

Daryl Ng Win Kong, JP

Authorized Representatives

Robert Ng Chee Siong

Daryl Ng Win Kong, JP

Company Secretary

Principal Bankers

Bank of China (Hong Kong) Limited Hang Seng Bank Limited

The Hongkong and Shanghai Banking Corporation Limited DBS Bank Ltd., Hong Kong Branch

China Construction Bank (Asia) Corporation Limited Industrial and Commercial Bank of China (Asia) Limited Standard Chartered Bank (Hong Kong) Limited Bangkok Bank Public Company Limited

The Bank of East Asia, Limited

Investor relations contact

Please direct enquiries to:

Group General Manager (Corporate Finance & Investor Relations)

Telephone	:	(852) 2132 8090
Fax	:	(852) 2137 5963
Email	:	[e-mail]

Registered Office

12th Floor, Tsim Sha Tsui Centre,

Salisbury Road, Tsim Sha Tsui,

Kowloon, Hong Kong

Telephone	:	(852) 2721 8388
Fax	:	(852) 2723 5901
Website	:	www.sino.com
Email	:	[e-mail]
Listing information
Stock Code		247

Shareholders' calendar

Fanny Cheng Siu King (appointed on 1st May, 2020)

Auditor

Deloitte Touche Tohmatsu

Registered Public Interest Entity Auditors

Solicitors

Woo, Kwan, Lee & Lo

Clifford Chance

Share Registrar

Tricor Friendly Limited

Level 54, Hopewell Centre,

183 Queen's Road East,

Hong Kong
Telephone	:	(852) 2980 1333
Fax	:	(852) 2861 1465
Email	:	[e-mail]

Closure of Register of Members for entitlement to attend and vote at Annual General Meeting

Annual General Meeting

Closure of Register of Members for dividend entitlement

Record Date for

final dividend entitlement

Last Date for lodging form of election for scrip dividend

Interim Dividend

Paid

Final Dividend

Payable

22nd October, 2020 to 28th October, 2020 (both dates inclusive)

28th October, 2020

3rd November, 2020 to 4th November, 2020 (both dates inclusive)

4th November, 2020

26th November, 2020 4:30 p.m.

HK14 cents per share 20th April, 2020

HK41 cents per share 8th December, 2020

2		Tsim Sha Tsui Properties Limited Annual Report 2020

Group financial summary

		2016	2017	2018		2019		2020
		HK$	HK$	HK$	HK$		HK$
Turnover	10,857,439,489	18,386,482,899	10,780,571,217	8,060,213,837	5,934,504,668
Underlying net profit from										2,471,844,783
operations	2,936,015,815	2,889,125,183	5,884,235,351	2,508,693,897
Profit attributable to
the Company's shareholders		3,622,174,285	3,848,282,418	7,328,005,075	3,714,769,199	901,781,260
Underlying earnings per share											132.11
(cents)	174.20	167.53	332.71	136.96
Reported earnings per share									48.20
(cents)	214.91	223.15	414.35	202.80
Dividends per share (cents)	51	53	98		55		55

Underlying earnings & dividends per share
HK Cent
360360
330
330
300300
270
270
240240
210
210
180
180
150
150
120
120
9090						Underlying
6060
					earnings per
30						share
30
00						Dividends per
2016	2017	2018	2019	2020	Year	share

Annual Report 2020	Tsim Sha Tsui Properties Limited		3

Group financial summary (Continued)

Consolidated statement of financial position

	2016	2017	2018		2019		2020
		HK$		HK$		HK$		HK$		HK$
Non-current assets	91,549,114,906	95,098,241,924	106,642,412,401	106,983,178,886	107,109,780,881
Current assets	58,485,356,279	61,224,607,351	53,488,487,781	74,805,386,609	80,668,495,460
Current liabilities	(17,842,791,243)	(20,250,266,384) (12,314,350,603) (25,570,680,509)	(32,507,391,927)
	132,191,679,942	136,072,582,891	147,816,549,579	156,217,884,986	155,270,884,414
Share capital	9,719,312,922	10,588,811,638	12,308,150,098	13,285,452,664	14,302,286,718
Reserves	52,438,670,660	55,762,416,688	61,738,785,895	64,551,971,946	64,580,746,144
Shareholders' funds	62,157,983,582	66,351,228,326	74,046,935,993	77,837,424,610	78,883,032,862
Non-controlling interests	59,934,117,414	62,460,742,601	65,907,528,744	67,840,852,670	66,389,970,003
Non-current liabilities	10,099,578,946		7,260,611,964		7,862,084,842	10,539,607,706	9,997,881,549
	132,191,679,942	136,072,582,891	147,816,549,579	156,217,884,986	155,270,884,414
Shareholders' funds at book												41.68
value per share	36.44	38.02	40.82	42.04

Shareholders' funds
HK$ Billion
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0					Year
2016	2017	2018	2019	2020

Profit attributable to

the Company's shareholders

HK$ Million

7,500
7,000
6,500
6,000
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0					Year
2016	2017	2018	2019	2020

4		Tsim Sha Tsui Properties Limited Annual Report 2020

Group financial summary (Continued)

The Company and its subsidiaries (the "Group")

Breakdown of segment results		Breakdown of segment revenue
for the year ended 30th June, 2020		for the year ended 30th June, 2020

Property sales 1.2%	Property sales 14.6%
Property rental 82.5%	Property rental 54.1%
Property management and other services 8.3%	Property management and other services 19.3%
Hotel operations 5.0%	Hotel operations 10.3%
Investments in securities and financing 3.0%	Investments in securities and financing 1.7%

Annual Report 2020	Tsim Sha Tsui Properties Limited		5

Group financial summary (Continued)

The Group and attributable share from associates and joint ventures

Breakdown of segment results		Breakdown of segment revenue
for the year ended 30th June, 2020		for the year ended 30th June, 2020

Property sales 16.5%	Property sales 27.3%
Property rental 71.6%	Property rental 47.5%
Property management and other services 5.9%	Property management and other services 14.5%
Hotel operations 3.8%	Hotel operations 9.3%
Investments in securities and financing 2.2%	Investments in securities and financing 1.4%

6		Tsim Sha Tsui Properties Limited Annual Report 2020

Chairman's statement

I am pleased to present 2019/2020 Annual Report to the shareholders.

Final results

The Group's underlying profit attributable to shareholders, excluding the effect of fair-value changes on investment properties for the year ended

30th June, 2020 ("Financial Year") was HK$2,471.8 million compared to HK$2,508.6 million last year. Underlying earnings per share was HK$1.32, compared to HK$1.37 last year.

After taking into account the revaluation loss (net of deferred taxation) on investment properties of

HK$1,386.4 million, which is a non-cash item, compared to a revaluation surplus (net of deferred taxation) of HK$1,298.2 million last year, the Group reported a net profit attributable to shareholders of HK$901.7 million for the Financial Year (2018/2019: HK$3,714.7 million). Earnings per share for the Financial Year was HK$0.48 (2018/2019: HK$2.03).

Dividends

The Directors have resolved to recommend a final dividend of HK41 cents per share in respect of the Financial Year to shareholders whose names appear on the Register of Members of the Company on

4th November, 2020. Together with the interim dividend of HK14 cents per share paid on 20th April, 2020,

the total dividend for the Financial Year is HK55 cents per share.

The Directors propose that shareholders be given the option to receive the final dividend in new shares in lieu of cash. The scrip dividend proposal is subject to: (1) the approval of the proposed final dividend at the Annual General Meeting to be held on 28th October, 2020; and

1. The Stock Exchange of Hong Kong Limited granting the listing of and permission to deal in the new shares to be issued pursuant to this proposal.

A circular containing details of the scrip dividend proposal will be dispatched to shareholders together with the form of election for scrip dividend on or about 11th November, 2020. It is expected that the final dividend warrants and share certificates for the scrip dividend will be dispatched to shareholders on or about 8th December, 2020.

Annual Report 2020	Tsim Sha Tsui Properties Limited		7

Chairman's statement (Continued)

Review of operations

The operations under Sino Land Company Limited ("Sino Land") represent a substantial portion of the operations of the Group as a whole. As at 30th June, 2020, Tsim Sha Tsui Properties Limited had 54.82% interest in Sino Land. Therefore, for discussion purposes, the focus here will be on the operations of Sino Land.

(1)Sales activities

For the Financial Year, Sino Land's property sales at subsidiary level was HK$863.9 million compared to HK$2,541.7 million last year. The year-on-year reduction was primarily due to no new completion of property sales took place at subsidiary level this Financial Year, whereas, there were booking of property sales of HK$1,305.4 million from Commune Modern

in the last financial year. Including property sales of associates and joint ventures recognised by Sino Land, the total revenue from property sales attributable to Sino Land for the Financial Year was HK$2,372.7 million compared to HK$2,986.5 million last year.

Sino Land's property sales at subsidiary level for the Financial Year comprise mainly the sales of residential units as well as carparking spaces in projects completed in previous financial years including Park Mediterranean in Sai Kung (100% sold), The Mediterranean in Sai Kung (96% sold), The Palazzo in Shatin (100% sold), and Commune Modern in Fanling (100% sold). Property sales of Sino Land's associates and joint ventures

for the Financial Year comprise mainly the sales of commercial space in Capital Tower at 38 Wai Yip Street in Kowloon East (50% sold); as well as residential units and carparking spaces in projects completed in previous financial years including Providence Bay in Pak Shek Kok (100% sold), The Coronation in South West Kowloon (100% sold), and The Spectra in Yuen Long (99% sold).

During the Financial Year, certain units of 133 Portofino in Sai Kung were launched for sale by way of tender. Subsequent to the Financial Year end, Sino Land obtained pre-sale consent for St. George's Mansions at 24A Kadoorie Avenue in Ho Man Tin in July 2020 and certain units of the project were launched for sale by way of tender. Sino Land expects to obtain pre-sale consents for five other residential projects in the next 12 months. These residential projects are Silversands (STTL 611) in Ma On Shan, KIL 11254 in Mongkok, Grand Victoria (NKIL 6549) in South West Kowloon,

IL 9064 (Site A) in Central, and AIL 467 (Site B) in Aberdeen. The timing for launching the projects for sale will depend on when the pre-sale consents are received and the prevailing market conditions.

(2)Land bank

As at 30th June, 2020, Sino Land has a land bank of approximately 22.3 million square feet of attributable floor area in Mainland China, Hong Kong, Singapore and Sydney which comprises a balanced portfolio of properties of which 39.7% is commercial; 37.1% residential; 10.8% industrial; 7.0% car parks and 5.4% hotels. In terms of breakdown of the land bank by status, 9.8 million square feet were properties under development, 11.8 million square feet of properties for investment and hotels, together with 0.7 million square feet of properties held for sale. Sino Land will continue to be selective in replenishing its land bank to optimise its earnings potential.

During the Financial Year, Sino Land was awarded the right to develop a residential project at Wong Chuk Hang Station from MTR Corporation Limited with attributable floor area of approximately 159,576 square feet. Details of the project are as follows:

Location	Usage	Group's	Attributable
		Interest	Floor Area
			(Square feet)
AIL 467 (Site D)	Residential	Joint Venture	159,576
Wong Chuk Hang Station Package Four Property Development,
Wong Chuk Hang, Aberdeen, Hong Kong

8		Tsim Sha Tsui Properties Limited Annual Report 2020

Chairman's statement (Continued)

Review of operations (Continued)

(2)Land bank (Continued)

In addition, Sino Land acquired a commercial site in Qianhai in Shenzhen. The project will provide total attributable plot ratio area of 258,336 square feet. Details of the project are as follows:

Location	Usage	Group's	Attributable
		Interest	Floor Area
			(Square feet)
Lot No. T102-0261	Commercial	30%	258,336
Land Parcel 03, Unit 7,
Qianwan Area, Qianhai
Shenzhen-Hong Kong Modern
Service Industry Cooperation Zone, Shenzhen,
People's Republic of China

(3)Property development

During the Financial Year, Sino Land obtained Occupation Permits for two projects, namely Madison Park and 133 Portofino. Details of the two projects are as follows:

Location	Usage	Group's		Attributable
		Interest		Floor Area
				(Square feet)
1. Madison Park	Residential/	Joint Venture	52,571
1 Kowloon Road,	Retail
Cheung Sha Wan,
Kowloon,
Hong Kong
2. 133 Portofino	Residential	100%	51,592
133 Hong Kin Road,
Sai Kung,
New Territories,
Hong Kong
			104,163

Annual Report 2020	Tsim Sha Tsui Properties Limited		9

Chairman's statement (Continued)

Review of operations (Continued)

(4)Rental activities

For the Financial Year, Sino Land's gross rental revenue, including attributable share from associates and joint ventures, was HK$4,061.9 million (2018/2019: HK$4,239.9 million), representing a decrease of 4.2% year-on-year. The decrease was primarily due to the impact of the COVID-19 pandemic, including rental relief granted to tenants. In terms of net rental income, it only declined 2.3% year-on-year, to HK$3,599.8 million for the Financial Year (2018/2019: HK$3,685.2 million), as the decline in relevant expenses is greater than that of the gross rental revenue. Overall occupancy of the Group's investment property portfolio was at approximately 94.8% for the Financial Year (2018/2019: 96.3%).

Rental income from Sino Land's retail portfolio was much affected by the rental relief granted to tenants and a slightly lower occupancy rate of 96.0% (2018/2019: 97.2%). As for the leasing performance of Sino Land's office portfolio, there was a slight rental growth compared to last year mainly due to positive rental reversion on lease renewals, while occupancy rate remains broadly flat at approximately 95.2% (2018/2019: 96.0%). Leasing performance of Sino Land's industrial portfolio saw a slight rental decline mainly due to occupancy rate which declined 3.4% points to approximately 90.3% (2018/2019: 93.7%).

Sino Land's investment property portfolio primarily serves the need of its customers which include tenants, shoppers and the communities around the properties. The design and condition of the properties together with the quality of service provided to customers are of paramount importance. To ensure that the properties are in good condition, Sino Land performs regular review of the properties as part of its asset enhancement initiatives. Going forward, Sino Land will adopt a proactive asset management approach to its balanced portfolio of rental properties. On service quality, Sino Land places a strong emphasis on regular training particularly for all front-line staff to ensure that the service provided to customers meets their expectations. Comments from customers, reports by silent shoppers and recognitions from professional institutions all play a

role in assessing the quality of service delivered by the staff. With health and safety being our utmost priority, proactive measures have been taken to strengthen the standards of hygiene at Sino Land's shopping malls, offices, and other properties to offer a safe and clean environment for customers, residents, and staff.

As at 30th June, 2020, Sino Land has approximately

11.8 million square feet of attributable floor area of investment properties and hotels in Mainland China, Hong Kong, Singapore and Sydney. Of this portfolio, commercial developments (retail and office) account for 61.6%, industrial 14.7%, car parks 13.2%, hotels 7.7%, and residential 2.8%.

Total attributable value of Sino Land's investment properties (including associates and joint ventures) amounted to HK$83,385.3 million (2018/2019: HK$86,285.6 million), representing an overall decrease of 3.36% year-on-year. Excluding additions and disposals during the year, the decrease in value of Sino Land's investment properties is 2.83%.

(5)Hotels

The performance of Sino Land's hotels was much affected by the outbreak of COVID-19 and its adverse impact on cross border and international travel. For the Financial Year, Sino Land's hotel revenue, including attributable share from associates and joint ventures, was HK$811.3 million compared to HK$1,353.0 million last year, and the corresponding operating profit was HK$192.6 million compared to HK$537.3 million last year.

Sino Land is taking all practicable measures to cope with the challenges. The first priority is to deliver feeling of safety to our discerning guests therefore we are putting in place strict sanitization and hygiene protocol to ensure guests returning to stay or dine with us will have complete peace of mind and full assurance in

our product and service. Moreover, we are introducing marketing and sales recovery strategies to target the domestic market (staycation) and at the same time, taking decisive decision to reduce operating costs. Sino Land will continue to improve the quality of its hotel services to ensure our discerning guests have enjoyable experiences during their stays in the hotels.

10		Tsim Sha Tsui Properties Limited Annual Report 2020

Chairman's statement (Continued)

Review of operations (Continued)

(5)Hotels (Continued)

As at 30th June, 2020, Sino Land's portfolio of hotels comprises The Fullerton Hotel Singapore, The Fullerton Bay Hotel Singapore, Conrad Hong Kong, The Fullerton Hotel Sydney (rebranded from Westin Sydney Hotel in October 2019) and The Olympian Hong Kong.

(6)Mainland China business

Urbanisation continues to play a key role in Central Government's urban planning and policy. In November 2019, Central Government introduced a total of 16 measures to expedite the economic cooperation within the Greater Bay Area. These measures would fortify the economic strengths of the cities within the Greater Bay Area and open a wide spectrum of opportunities for people and enterprises. In December 2019, the Communist Party of China Central Committee and the State Council jointly published an outline for integrating the cities within Yangtze River Delta setting the development goals and roadmap for the region by 2025. The policy of developing city clusters will significantly take urbanisation in Mainland China to the next level.

As at 30th June, 2020, Sino Land has approximately 5.5 million attributable square feet of land bank in Mainland China. Of the total, approximately 4.5 million square feet are projects under development and the remaining are mainly investment properties. The projects under development include 100% interest in Dynasty Park

in Zhangzhou, 50% interest in a serviced apartment project in Qianhai, 20% interest in The Palazzo in Chengdu, and 30% interest in a new commercial development site located in Qianwan Area in Qianhai.

Other than the matters mentioned above, there has been no material change from the information published in the report and accounts for the year ended 30th June, 2019.

Finance

The Group's financial position remains strong. As at 30th June, 2020, the Group had cash and bank deposits of HK$43,834.9 million. After netting off total borrowings of HK$6,696.7 million, the Group had net cash of HK$37,138.2 million as at 30th June, 2020. Of the total borrowings, 14.0% repayable within one year, 71.0% repayable between one and three years and the remaining between four and five years. The majority of the Group's borrowings are subject to floating interest rates. Total assets and shareholders' funds of the Group were HK$187,778.2 million and HK$78,883.0 million, respectively.

As at 30th June, 2020, the majority of the Group's debts are denominated in Hong Kong dollars. Other than the above-mentioned, there was no material change in foreign currency borrowings and the capital structure of the Group for the Financial Year. The majority of the Group's cash are denominated in Hong Kong dollars with a portion in Renminbi, Australian dollars and US dollars. The Group has maintained a sound financial management policy and foreign exchange exposure has been prudently kept at a minimal level.

Corporate governance

The Group places great importance on corporate integrity, business ethics and good governance. With the objective of practising good corporate governance, the Group has formed Audit, Compliance, Remuneration and Nomination Committees. The Group is committed to maintaining corporate transparency and disseminates information about new developments through various channels, including press releases, its corporate website, results briefings, non-deal roadshows, site visits and participation in investor conferences.

Annual Report 2020	Tsim Sha Tsui Properties Limited		11

Chairman's statement (Continued)

Customer service

Sino Land is committed to building quality projects. In keeping with its mission to enhance customer satisfaction, Sino Land will, wherever possible, ensure that attractive design concepts and features are also environmentally-friendly for its developments. Management conducts regular reviews of its properties and service so that improvements can be made on a continuous basis.

Corporate social responsibility

Sustainability is integral to the Group's business and operations. We have been structuring our corporate social responsibility efforts around the six areas crucial to our vision of 'Creating better lifescapes', namely Green, Wellness, Design, Innovation, Heritage & Culture and Community. In recognition of the Group's continuous efforts in promoting sustainability and upholding high standards in environmental, social and governance aspects, Sino Land has been named a constituent company of the Hang Seng Corporate Sustainability Index Series since September 2012.

Management recognises the importance of environmental protection, social responsibility and governance, as well as our role in building a more sustainable community. Sino Land's annual sustainability reporting highlights the corporate sustainability footprints and initiatives, and has been conducted in accordance with Hong Kong Exchanges and Clearing Limited's 'Environmental, Social and Governance Reporting Guide' under Appendix 27 to the Main Board Listing Rules.

Sino Land joined the United Nations Global Compact as a Signatory in April 2020, becoming one of the first property companies in Hong Kong to do so. Incorporating the Ten Principles of the United Nations Global Compact into strategies, policies and procedures, the participation reaffirms our commitment to operating in a principled and responsible manner.

The built environment has a profound impact on health and well-being. In March 2020, 133 Portofino, Sino Land's latest residential project in Sai Kung, received WELL v2TM Pre-certification, becoming the first Hong Kong residential project accredited by WELL v2TM, the world's first architectural benchmark focusing exclusively on human health and wellness to improve sustainability.

Sino Land's integrated green project 'Farm Together' was launched in March 2020 to promote urban farming and bring nature into the lives of those in our community. With a total area of over 23,000 square feet, the 'Farm Together' project currently operates across the city including Sky Farm at the Skyline Tower, 148 Farm at 148 Electric Road, Gold Coast Fun Farm, Gold Coast Eco Farm, Gold Coast Farm and the Butterflies and Herbs Farm at the Hong Kong Gold Coast Hotel. The harvest of the farms has been shared with our staff, tenants, residents and donated to charity organisations to support the community.

The Group initiates programmes and collaborates with charitable organisations to promote volunteering and community services for the less resourced on a regular basis. Sino Caring Friends, volunteers comprising staff of the Group, have been actively taking part in community programmes and charitable work. During the reporting period, over 174,000 volunteering service hours have been recorded.

The Group seeks to foster a culture of innovation to harness technology and explore business applications. Sino Inno Lab, a sandbox platform for technology companies to facilitate co-creation and support innovation, has been honoured at the Global Most Innovative Knowledge Enterprise (MIKE) Award 2019 and Hong Kong MIKE Award 2019, alongside 21 organisations from eight countries and regions. Sino Inno Lab is part of the holistic innovation ecosystem of Hong Kong Innovation Foundation to support innovation and technology. Since its inception, Sino Inno Lab has showcased more than 70 inventions and technologies, facilitated over 40 adoptions and welcomed more than 4,800 visitors from business associates, trade organisations and the academia.

12		Tsim Sha Tsui Properties Limited Annual Report 2020

Chairman's statement (Continued)

Corporate social responsibility

(Continued)

In a further effort to foster innovation, Sinovation, a group-wide competition, was launched in June 2019 to encourage innovative ideas from staff and to turn concepts into functional prototypes. Sino Land has also been supporting the HKUST-Sino One Million Dollar Entrepreneurship Competition since 2018 to nurture home-grown innovations.

In March 2008, the Ng Family set up a non-profit- making organisation, Hong Kong Heritage Conservation Foundation Limited ("HCF"). HCF revitalised and converted the Old Tai O Police Station, a Grade

1. historic building, into a boutique hotel, it has been operating as a not-for-profit social enterprise since March 2012 with surpluses used to support maintenance of the site. Named Tai O Heritage Hotel ("Hotel"), it is home to nine colonial-style rooms and suites, and is part of the HKSAR Government's 'Revitalising Historic Buildings Through Partnership Scheme'. It provides permanent employment opportunities for Tai O and Lantau residents, and has organised community engagement programmes encompassing cultural activities, community services and home care services for the elderly living in Tai O. In 2018, HCF initiated 'Tai O Stilt House Restoration Programme' to provide financial assistance to repair and restore stilt houses of elderly villagers, and to preserve its unique architecture and cultural value. Six stilt houses have been repaired and restored since launch. The Hotel won Merit Award at the '2013 UNESCO Asia-Pacific Awards for Cultural Heritage Conservation', becoming the first UNESCO-awarded hotel in Hong Kong.

Prospects

The financial year 2019/2020 was indeed challenging due to unprecedented and exceptional circumstances, exacerbated by the outbreak of the COVID-19 pandemic. While central banks and governments have been supportive with measures such as interest rate cuts and stimulus plans (including relief packages, wage subsidies, and one time direct cash payment to individuals etc.) to ease the pressure during this difficult time, economic growth is expected to slow before

it recovers as economies gradually re-open. Despite macro headwinds, the residential property market in Hong Kong remains resilient and fundamentally sound. Record low interest rates and favorable mortgage terms continue to encourage home ownership and they are providing support to the Hong Kong residential market.

For China, although its economy was negatively impacted by the pandemic in the first quarter of 2020, the leadership implemented good decisions on monetary and fiscal stimuli which are lending support to a recovery of the mainland economy. Moreover, the Central Government has adopted decisive measures to overcome the outbreak. China is now the first major economy to recover from the pandemic. With long-term positive economic fundamentals, China is expected to remain one of the world's key growth engine. Prominent Central Government policy like the Greater Bay Area and Belt and Road Initiatives will be instrumental in driving this growth. Hong Kong, as the most open

and international city for business in the Greater Bay Area, and with an established economic and regulatory system, is well positioned to benefit from opportunities arising from continuous and rapid developments in the region. This will strengthen Hong Kong's position as an international hub for finance, business, trade and tourism, and support a stable economic environment for Hong Kong. We remain optimistic that Hong Kong will see brighter tomorrow and continue to be a vibrant international city.

Annual Report 2020	Tsim Sha Tsui Properties Limited		13

Chairman's statement (Continued)

Prospects (Continued)

During these challenging times, management have taken the opportunity to learn and improve. We have reviewed the processes, procedures, and the structure of operations in order to streamline workflow to enhance efficiency, as well as taken decisive decisions to achieve cost savings across the organization. When the situation improves and economic recovery returns, the Group is able to leverage on an enhanced operational structure which will lead to higher shareholders' value.

The Group will continue to optimize earnings, enhance efficiency and productivity, and improve the quality of products and services. Management of Sino Land shall maintain a policy of selectively and continuously replenishing its land bank. In terms of property sales, product quality and service as well as price are the main critical success factors and Sino Land shall make every effort to deliver what the customers want in order to further enhance our brand. Regarding recurrent businesses of Sino Land, which comprise property leasing, hospitality, and property management services, they will continue to be core pillars of Sino Land contributing a good and steady stream of income. Additionally, the importance of applying commercially viable technologies in the business operations to expedite our work has been well recognized by management. Technology advancement is growing at an exponential speed and the Group will stay abreast with the latest digitization developments and use it

to enhance business development and operational efficiency.

The Group is cautiously optimistic on the outlook of the economy and property market in Hong Kong. We have strong faith that Hong Kong will overcome this challenging period. Meanwhile our organization must adopt a new mindset and take this as the most important lesson that we should learn and improve from. With a strong financial position and sustainable business growth strategy, the Group is well placed to meet the challenging economic environment and to grasp opportunities.

Staff and management

On behalf of the Board, I would like to take this opportunity to express my sincere appreciation to all staff for their commitment, dedication and continuing support. I would also like to express my gratitude to my fellow Directors for their guidance and wise counsel.

Robert NG Chee Siong

Chairman

Hong Kong, 26th August, 2020

14		Tsim Sha Tsui Properties Limited Annual Report 2020

Sustainable development

This Sustainable Development Section highlights the Group's performance in sustainability for the financial year ended 30th June, 2020 and focuses on the activities of the Company's major listed subsidiary, Sino Land Company Limited ("Sino Land"), as the operations under Sino Land represent a substantial portion of the operations of the Group. Further details of the Group's environmental, social and governance ("ESG") policies and performance are included in the standalone Sustainability Report for the financial year ended 30th June, 2020, which has been prepared

in accordance with the 'Core' option of the Global Reporting Initiative (GRI) Sustainability Reporting Standards as well as the requirements of the ESG Reporting Guide under Appendix 27 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The Sustainability Report will be made available on our corporate website at www.sino.com.

At Sino, sustainability is central to what we do,

it is integrated into every aspect of our operations as we strive to create long-term value for customers, employees, business partners, shareholders, investors and the broader community. From architectural planning to green property management, from exploring green innovations to serving the community, we take a holistic approach and contribute to a sustainable built environment.

We collaborate with like-minded partners - colleagues, residents, tenants, business associates and the broader community - on our sustainability journey. This is encapsulated in our ethos of 'Creating better lifescapes'

• committed and together, we make every effort to build a better life together, where communities thrive in harmony by embracing green living and wellness, by engaging with all and pursuing meaningful designs, and by seeking innovation while respecting heritage and culture. It is brought to life through work in six areas, namely Green, Wellness, Design, Innovation, Heritage & Culture and Community; these six pillars shape and guide how we plan, design, work and deliver products and services.

The Sustainability Committee was set up in 2010 to drive the planning and implementation of our strategies to build a more sustainable business. It was restructured and renamed as the Environmental, Social and Governance Steering Committee ("ESG Steering Committee") in 2020. The ESG Steering Committee comprises Executive Director and key executives from different business units to support the Board of Directors in overseeing and steering the planning and execution of the Group's sustainability programmes.

It provides overall stewardship, formulates direction, strategies, policies and goals, in addition to facilitating execution of plans and activities.

We continue to make strides on our sustainability journey. In April 2020, Sino Land joined the United Nations Global Compact as a Signatory, becoming one of the first property companies in Hong Kong to do so, and standing in collaboration with over 13,000 leading companies, organisations and government authorities from around the world to champion principled business. Incorporating the Ten Principles of the United Nations Global Compact into strategies, policies and processes, the participation reaffirms our commitment to operate in a responsible manner.

We have aligned our sustainability strategies with

15 United Nations Sustainable Development Goals, and undertaken to report progress to promote responsible business practices.

We have formulated our Sustainability Vision 2030 to guide our sustainability efforts, as well as strategies to accelerate environmental actions while seeking to make a positive impact on the community.

Annual Report 2020	Tsim Sha Tsui Properties Limited		15

Sustainable development (Continued)

Sustainability vision 2030 and performance

Governance

Our performance

• Sino Land as a Signatory of the United Nations Global Compact since April 2020
• No corruption case recorded in the 2019/2020 financial year

Green

Our vision

• To achieve greenhouse gas ("GHG") emission reduction by 30% by 2030 from 2012 level

Our performance

• As of June 2020, achieved GHG emission reduction by 17.73% from 2012 level

Wellness

Our vision

• To improve the well-being of our employees through wellness programmes covering work, family, physical health and mental health
• To increase training hours per employee by 50% by 2025 and 100% by 2030 from 2019 level
• To increase recruitment diversity by employing different ethnic groups and less-abled personnel

Our performance

• On top of paid maternity leave entitlement of 14 weeks (effective October 2018), increased paid parental leave by 10 days effective June 2019
• On average 11 training hours per employee in the 2019/2020 financial year

Design

Our vision

• To achieve BEAM Plus certification for all of our new buildings in Hong Kong
• Seek to achieve WELLTM certification for all of our new buildings in Hong Kong

Our performance

• 76% of our projects under development have obtained BEAM Plus provisional rating
• 133 Portofino, the Group's latest residential project in Sai Kung, has received WELL v2TM pre-certification, becoming the first Hong Kong residential project receiving WELL v2TM accreditation

16		Tsim Sha Tsui Properties Limited Annual Report 2020

Sustainable development (Continued)

Sustainability vision 2030 and performance (Continued)

Innovation

Our vision

• To foster a culture of innovation that enables colleagues and external innovators to test out new ideas and build a mechanism to apply new technologies in our business operations
• To receive ISO 27001 (Information security management) certification by 2025

Our performance

• Sino Inno Lab welcomed over 2,400 visitors during the 2019/2020 financial year; evaluated over 100 technologies with 47 under study for adoption, and over 40 adopted and at trial stage
• 131 innovative ideas were received from colleagues through the Sinovation programme

Heritage & Culture

Our vision

• To work on revitalisation of heritage building, promote appreciation of heritage conservation as well as arts and culture to enrich life

Our performance

• The Fullerton Hotel Sydney, housed in the heritage-listed former Sydney General Post Office, opened doors in October 2019
• The Fullerton Hotel Sydney carried out chemical-free cleaning of the building's ornate sandstone façade; the remediation works spanned 38,000 hours over nine months

Community

Our vision

• To improve the well-being of less-resourced families
• To establish a wellness education programme to promote good health education in the community
• To collaborate with local NGOs to promote social inclusion

Our performance

• Sino Caring Friends performed over 174,000 volunteer service hours in Hong Kong in the 2019/2020 financial year
• Undertaken a two-year partnership with The Boys and Girls Brigade, a Sydney-based children's charity. Support includes upgrading current facility to create a multifaceted space that will improve physical and mental health of beneficiaries

Annual Report 2020	Tsim Sha Tsui Properties Limited		17

Sustainable development (Continued)

Green

The Group is committed to contributing to the sustainable development of our community by minimising environmental impact while facilitating societal changes.

Climate resilience, energy and emissions

The Group had set a carbon reduction target of reducing GHG emission across the common areas of buildings under the Group's management by 16% before 2020 from 2012 level, the target was achieved and exceeded in 2019. The Group has set a new target of reducing GHG emission by 30% by 2030 from 2012 level, equivalent to planting 1,072,223 trees. As at 30th June, 2020,

a reduction of 17.73% was recorded.

The Group's Energy Policy outlines our commitment to managing energy consumption and to adopting energy-efficient technologies. Since September 2019, we have adopted IoT technology, AI analysis and digitalisation to enhance property services. A good example is Exchange Tower, which has recorded

an 8% year-on-year reduction in chiller plant energy consumption while maintaining indoor comfort level through deploying a smart energy management system.

To support the use of renewable energy, we have installed renewable energy features in our managed properties and established smart monitoring platforms to optimise building services and renewable power systems. The Group is expanding the coverage of solar panels across our managed properties. Over 2,100 photovoltaic panels, with a total rated power capacity of more than 700 kW, have been installed at properties under the Group's management in

Hong Kong.

The Group preserves and cares for trees at its properties. When it becomes necessary to fell trees due to safety or any other concerns, we try to make the most of the precious resources. Felled trees are examined and sorted; branches and twigs with no signs of pest infestation or disease are recycled into compost or mulch, while larger trunks and branches are upcycled into planters, furniture and art pieces. Since the launch of the tree recycling/upcycling initiative in 2018,

536 trees have been collected and converted into more than 50 m3 of mulch and compost.

Supplier environmental performance

In May 2019, the Group updated the Contractor/Supplier Code of Conduct, which outlines the Group's fundamental requirements on the environmental performance of

its contractors and suppliers. Suppliers are expected to observe the Group's core values and are required to comply with applicable environmental codes, laws and regulations in the places where they operate and ensure that they obtain and maintain all necessary environmental permits and registrations to conduct their business. Regular compliance checks on suppliers are conducted. Environmental conservation training is also provided for suppliers to ensure they share the same values with the Group.

Wellness

In order to 'make Sino the preferred choice for customers, investors and employees', we make every effort to address stakeholders' feedback. We strive to safeguard and enhance the wellness of our people and community, including their physical and mental health.

18		Tsim Sha Tsui Properties Limited Annual Report 2020

Sustainable development (Continued)

Wellness (Continued)

Employees

The well-being and safety of our employees are the first and foremost concerns of the Group. Providing a safe, fair and inclusive workplace is crucial for our human capital.

With regard to occupational health and safety,

15 of our properties are certified under the ISO 45001 Occupational Health and Safety Management System standard. Since 2008, 6,263 staff members have completed the Mandatory Basic Safety Training Course (Construction Work), and 620 staff members have completed the Safety Training Course for Competent Persons of Confined Spaces Operation.

Employee development is vital to the sustainable growth of the Group. We provide a wide spectrum of internal and external training opportunities to deepen their professional knowledge and essential skills. During the reporting period, approximately 106,000 training hours were provided, with each employee receiving an average of 11 hours of training. We aim to increase training hours by 50% by 2025 and 100% by 2030 from our 2019 baseline.

To enhance internal communication and employee experience, the Group launched its first proprietary staff mobile app, inSino, in December 2019, enabling employees to access e-learning while on the move. The app also serves as a platform for engaging staff with the latest corporate updates, announcements, management messages, staff discounts, annual leave and medical benefit balance as well as a library of useful reference.

During the first half of 2020, around 10,000 care packs were distributed to colleagues to help combat COVID-19. Other initiatives to support staff include counselling services, Employee Wellness Programme, Happy@Work and outdoor fun day for colleagues and their families.

Customers, tenants and partners

The Group strives to achieve service and product excellence by thoroughly understanding the needs of customers and consistently surpassing their expectations, in line with one of our core values of 'Customers First'. To this end, we collect feedback regarding our service and product quality through communication channels such as our annual customer satisfaction survey. Customers are welcome to rate our services and facilities, including those related to our management, clubhouse services, cleanliness and security. We have also established an ISO 10002 certified Customer Satisfaction and Complaint Handling System, which is facilitated by a digital platform, iPromise, to ensure customer feedback is handled promptly and communicated efficiently. During the reporting period, we achieved a customer satisfaction rating of 3.67 out of 4 in Hong Kong.

Different systems and technologies have been harnessed to enhance the environmental quality for tenants and customers of the Group. Highlights include:

• robot for Indoor Air Quality ("IAQ") measurement to keep track of IAQ for the health and well-being of tenants;
• inorganic paint Airlite that is capable of reducing pollutants and removing germs in the air;
• award-winningproprietary innovation City Air Purification System that can purify air in the open space;
• air purifiers featuring double-layered HEPA filter, PMmagnet technology and patented disinfecting and bactericidal solution that are capable of removing pollutants and killing bacteria and viruses in the air by up to 99.99%.

Annual Report 2020	Tsim Sha Tsui Properties Limited		19

Sustainable development (Continued)

Design

Innovation

The Group attaches great importance to the sustainability of its business operations. We continue to adopt sustainable building standards, invest in improvements and incorporate energy-efficient features in our projects. Our Sustainable Building Guidelines provide a comprehensive framework for integrating sustainability attributes at the building design stage and throughout its lifecycle. To holistically and comprehensively reduce the environmental footprint of our developments and to improve their performance, we seek to achieve green building certification for both existing properties and new development projects. During the reporting period, 76% of our projects under development obtained BEAM Plus provisional rating.

We also seek to achieve WELLTM certification for all of our new buildings in Hong Kong. WELLTM is the world's first architectural benchmark focusing exclusively

on health and well-being to improve sustainability.

133 Portofino, the Group's latest residential project in Sai Kung, has become the first residential property in Hong Kong to receive WELL v2TM pre-certification.

The Group holds the firm belief that innovation and technology are key to developing a diversified, sustainable and resilient economy while enhancing Hong Kong's competitiveness internationally. The Group has set a goal of achieving ISO 27001 certification

by 2025. An independent consultant was engaged to conduct cybersecurity assessment and review systems and infrastructure in 2019. Regular employee training on cybersecurity issues is also arranged.

To create a culture of innovation, drive efficiency and improve quality, a group-wide competition - Sinovation

• was launched in June 2019. Staff members at all levels are encouraged to share ideas to enhance efficiency and customer service with shortlisted ideas receiving support from the Sino Innovation Fund. Technical sharing sessions in IoT, AI, robotics and presentation skills, as well as meet-the-innovator sessions with other start-ups, have also been arranged.

To date, 131 innovative ideas have been received, and nine colleagues with outstanding ideas have been shortlisted as Sinovators. Four of them have been selected as winners, and received funds to turn their proposals into functional prototypes. One of the winning entries is Dr temi, a robot piloted at Exchange Tower; it is capable of measuring body temperature, body weight, blood pressure and other health metrics for tenants and customers.

Sino Inno Lab, a sandbox platform for technology companies to test out inventions and facilitate co-creation, was honoured at the Global Most Innovative Knowledge Enterprise ("MIKE") and Hong Kong MIKE Awards 2019, alongside 21 organisations from

eight countries and regions. During the reporting period, Sino Inno Lab welcomed more than 2,400 visitors and evaluated over 100 technologies and solutions;

over 40 have been adopted for trial and 47 are under study for adoption.

20		Tsim Sha Tsui Properties Limited Annual Report 2020

Sustainable development (Continued)

Heritage & Culture

Community

The Group appreciates the crucial role that cultural heritage plays in preserving defining memories, building identity and strengthening the sense of belonging.

The Fullerton Hotel Sydney had engaged more than 30 stonemasons to carry out a meticulous, chemical-free cleaning of the building's ornate sandstone façades in preparation of its opening in October 2019. The works spanned 38,000 hours over nine months.

'Think Like Leonardo da Vinci 500th Anniversary Exhibition' was held in Olympian City between December 2019 and February 2020. Partnering with the Hong Kong Innovation Foundation, Italy's acclaimed Leonardo3 Museum ("L3") and the Italian Consulate-General in Hong Kong, the exhibition showcased da Vinci's ideas, inventions and contributions to humanity in an interactive and engaging way that encouraged the audience to delve into the amazing universe of the celebrated genius. In addition to the fascinating machines constructed by L3 based on da Vinci's ideas, the exhibition featured over 1,000 digitised manuscripts and interactive drawings as part of a multi-sensory experience tailored for this inspiring event.

As a committed corporate citizen, the Group holds the firm belief in supporting people in need and working hand in hand with community partners towards a better future.

We stay committed to reaching out to support those in need. Since 2010, Sino Caring Friends, the corporate volunteers, have been building relationships with less-resourced families in various districts through continued volunteer services. Through the Community Care Project launched in 2018, Sino Caring Friends and community members deepen their understanding of community care services through training and participation in volunteer services.

During the reporting period, Sino Caring Friends organised over 260 activities, with over 1,600 volunteers participating in services for over 8,000 less-resourced elderly, children, youth and families. In total, they performed over 174,000 hours of volunteer services in Hong Kong.

Annual Report 2020	Tsim Sha Tsui Properties Limited		21

Corporate governance report

The Board of Directors ("Board") is committed to providing effective management and sound control of the Company for maximizing the shareholders' value. The corporate governance principles of the Company emphasize the attainment and maintenance of a high standard of corporate governance practices and procedures, a quality board, sound internal control, and high transparency and accountability to the shareholders. The Company has adopted its own Corporate Governance Code and has complied with all code provisions as set out in Appendix 14 ("Code") to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"), save as disclosed in this report. The corporate governance practices of the Company in compliance with the Code during the financial year ended 30th June, 2020 with explanation of the deviation are set out in this report.

Corporate governance practices

Directors

Corporate governance principle

The Board provides overall leadership and control for the Company in an effective and responsible manner with a view to maximizing the financial performance of the Company and the shareholders' value. The Board makes decisions on business strategies and corporate governance practices, determines the Company's objectives, value and standards, and oversees and monitors the management performance within the control and delegation framework of the Company. These include the Company's financial statements, dividend policy, any significant changes in accounting policy, adoption of corporate governance practices and procedures, and risk management and internal control strategies.

Board composition

The current Board has six Directors comprising two Executive Directors including the Chairman and the Deputy Chairman of the Board, one Non-Executive Director and three Independent Non-Executive Directors, details of which are set out under the section entitled "Directors' Report" of this Annual Report. Biographical details of the Directors and their relationships, where applicable, are contained under the section entitled "Biographical Details of Directors

• Senior Management" of this Annual Report. The Company has maintained on its website and on the website of The Stock Exchange of Hong Kong Limited ("Stock Exchange") an updated list of its Directors identifying their roles and functions and whether they are Independent Non-Executive Directors. Independent Non-Executive Directors are identified in all corporate communications that disclose the names of Directors of the Company.

22		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Directors (Continued)

Division of responsibilities

The Board, led by the Chairman, is responsible for the Company's future development directions, overall strategies and policies, evaluation of the financial performance of the Company and approval of matters that are of a material or substantial nature, including adequacy of systems of financial, risk management and internal control and conduct of business in conformity with applicable laws and regulations. The Executive Directors, constituting the senior management of the Company, are delegated with responsibilities in the day-to-day management of the Company and make operational and business decisions within the control and delegation framework of the Company. The Board gives clear directions as to the matters that must be approved by the Board before decisions are made

on behalf of the Company. The implementation of strategies and policies of the Board and the operations of each business unit are overseen and monitored by designated responsible Executive Directors. The Board has found that the current arrangement has worked effectively in enabling it to discharge its responsibilities satisfactorily. The types of decisions to be delegated by the Board to the management include implementation of the strategy and direction determined by the Board, operation of the business of the Company

and its subsidiaries ("Group"), preparation of financial statements and operating budgets, and compliance with applicable laws and regulations.

The Chairman ensures that the Board works effectively to discharge its responsibilities in the best interests of the Company, and, to establish good corporate governance practices and procedures. He also ensures that all key and appropriate issues are discussed by the Board in a timely manner and all Directors are encouraged to make a full and active contribution to the board's affairs. Directors with different views are encouraged to voice their concerns. They are allowed sufficient time for discussion of issues so as to ensure that board decisions fairly reflect board consensus.

A culture of openness and debate is promoted to facilitate the effective contribution of Non-Executive Directors and ensure constructive relations between Executive and Non-Executive Directors. During the year, the Chairman held a meeting in December 2019 with the Independent Non-Executive Directors without the presence of other directors in compliance with the applicable code provision of the Code.

There is no separation of the roles of the chairman and the chief executive in the Company. The Chairman of the Board provides leadership to the Board and undertakes both roles of chairman and chief executive. The Board is of the view that the current management structure has been effective in facilitating the Company's operation and business development and that necessary checks and balances consistent with sound corporate governance practices are in place. In addition, the three Independent Non-Executive Directors have contributed valuable views and proposals for the board's deliberation and decisions. The Board reviews the management structure regularly to ensure that it continues to meet these objectives and is in line with the industry practices.

Annual Report 2020	Tsim Sha Tsui Properties Limited		23

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Directors (Continued)

Directors' and officers' liabilities insurance

The Company has arranged appropriate directors' and officers' liabilities insurance coverage for the Directors and officers of the Company.

Division of responsibilities (Continued)

To enhance the function of the Board, four board committees, namely the Remuneration Committee, Nomination Committee, Audit Committee and Compliance Committee, have been set up to take up different responsibilities. All board committees have specific terms of reference clearly defining their powers and responsibilities. All board committees are required by their terms of reference to report to the Board in relation to their decisions, findings or recommendations, and in certain specific situations, to seek the Board's approval before taking any action.

The Non-Executive Directors, including Independent Non-Executive Directors, provide the Company with diverse skills, expertise and varied backgrounds and qualifications. They participate in board/board committee (including Audit Committee, Nomination Committee and Remuneration Committee) meetings to bring independent views, advice and judgment on important issues relating to the Company's strategy, policy, financial performance, and take the lead on matters where potential conflicts of interests arise. They also attend annual general meetings of the Company to understand the view of shareholders. They make

a positive contribution to the development of the Company's strategy and policy through independent, constructive and informed comments.

Every Director is considered to have given sufficient time and attention to the Company's affairs for the year under review. Each of the Directors is required to disclose to the Company the number and nature of offices he held in public companies or organizations and other significant commitments as well as the identity of such public companies or organizations.

Board meetings and supply of and access to information

The Board holds at least four regular meetings a year, which are normally scheduled in advance in the fourth quarter of the preceding year. During the financial year ended 30th June, 2020, the Board had held five meetings. The attendance records of the Directors to these board meetings are set out below:

	Meeting(s)
Directors	attended/held
Executive Directors
Mr. Robert Ng Chee Siong (Chairman)	3/5
Mr. Daryl Ng Win Kong (Deputy Chairman)	5/5
Non-Executive Director
The Honourable Ronald Joseph Arculli	5/5
Independent Non-Executive Directors
Dr. Allan Zeman	5/5
Mr. Adrian David Li Man-kiu	5/5
Mr. Steven Ong Kay Eng	5/5

24		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Directors (Continued)

Board meetings and supply of and access to information (Continued)

Notice incorporating the agenda for each regular board meeting or board committee meeting is given to all Directors or board committee members at least

14 days in advance, and, all Directors or board committee members are given the opportunity to include matters for discussion in the agenda. All Directors/ board committee members are entitled to have access to board/board committee papers and related materials in sufficient details to enable them to make informed decisions on matters to be placed before the board/ board committee meetings. Meeting papers are normally sent to all Directors or board committee members at least 5 days in advance of every regular board meeting or board committee meeting.

The Company Secretary assists the Chairman of the Board and the chairmen of board committees in preparing meeting agendas and ensures that the Code as well as all applicable laws and regulations are duly complied with. Minutes of board meetings and board committee meetings are recorded in sufficient details of the matters considered and decisions reached at the relevant meetings. Draft and final versions of

the minutes in respect of board meetings and board committee meetings are sent to all Directors or board committee members respectively for comment and records within a reasonable time after the relevant meetings. All minutes are properly kept by the Company Secretary and are available for the Directors' and board committee members' inspection.

All Directors are given unrestricted access to the advice and services of the Company Secretary who is responsible to the Board for ensuring that the board procedures and all applicable laws, rules and regulations are followed. The selection, appointment or dismissal of the Company Secretary is subject to approval by the Directors at board meeting.

All Directors are entitled to have access to timely information in relation to the Company's business and make further enquiries or retain independent professional advisors where necessary. The management provides all relevant explanation and information to the Board so as to give the Board the information it needs to discharge its responsibilities. During the year under review, the management provided all members of the Board with the relevant updates of major business operations giving a balanced and understandable assessment of the Company's performance, position and prospects.

Directors' appointment, re-election and removal

All Non-Executive Directors have entered into letters of appointment with the Company for a specific term of three years. The Company's Articles of Association provide that each Director is subject to retirement from office by rotation and re-election once every three years and that one-third (or the number nearest to one-third) of the Directors shall retire from office every year at the annual general meeting. New appointment to the Board is subject to re-election at the next following annual general meeting. In addition, the appointment of an Independent Non-Executive Director who has served on the Board for more than nine years will be subject to a separate resolution to be approved by shareholders. The Board will provide in the circular accompanying the annual report sent to shareholders the reason why the Board considers the Independent Non-Executive Director is still independent and its recommendation to shareholders to vote in favour of the re-election of such Independent Non-Executive Director.

Annual Report 2020	Tsim Sha Tsui Properties Limited		25

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Directors (Continued)

Directors' appointment, re-election and removal

(Continued)

The Directors who are subject to retirement and re-election at the 2020 annual general meeting are set out on page 47 of this Annual Report.

The Board is empowered under the Company's Articles of Association and is collectively responsible to appoint any person as a Director either to fill a casual vacancy or as an additional board member. Only the most suitable candidate who is experienced, competent and able to fulfill the fiduciary duties and duties of skill, care and diligence would be selected as Director.

Confirmation of independence

The independence of the Independent Non-Executive Directors has been assessed in accordance with the applicable Listing Rules. Each of the Independent Non-Executive Directors has provided an annual written confirmation of independence pursuant to Rule 3.13

of the Listing Rules. The Company is of the view that all the Independent Non-Executive Directors meet the guidelines for assessing independence as set out in Rule 3.13 of the Listing Rules and are independent.

Directors' training and professional development

Every Director keeps abreast of responsibilities as a Director and of the conduct, business activities and development of the Company. Every newly appointed director receives a comprehensive induction package covering the statutory and regulatory obligations of directors, organizational structure, policies, procedures and codes of the Company, terms of reference of board committees and internal audit charter of internal audit. The Company Secretary from time to time updates and provides written training materials to the Directors, and organizes seminars on the latest development of the Listing Rules, applicable laws, rules and regulations relating to Directors' duties and responsibilities.

The Company Secretary maintains records of trainings attended by the Directors. The trainings attended by the current Directors during the year are as follows:

	Training
Directors	matters(Notes)
Executive Directors
Mr. Robert Ng Chee Siong	a, b
Mr. Daryl Ng Win Kong	a, b
Non-Executive Director
The Honourable Ronald Joseph Arculli	a, b, c, d
Independent Non-Executive Directors
Dr. Allan Zeman	a, b, d
Mr. Adrian David Li Man-kiu	a, b, c, d
Mr. Steven Ong Kay Eng	a, b

Notes:

1. corporate governance
2. regulatory
3. finance
4. managerial

26		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Remuneration of Directors and senior management

Emolument policy

The Company's emolument policy is to ensure that the remuneration offered to employees, including Executive Directors and senior management, is based on skill, knowledge, responsibilities and involvement in the Company's affairs. The remuneration packages of Executive Directors are also determined by reference to the Company's performance and profitability, the prevailing market conditions and the performance or contribution of each Director. The emolument policy for Non-Executive Directors is to ensure that the Non-Executive Directors are adequately compensated for their efforts and time dedicated to the Company's affairs, including their participation in board committees. Individual Directors and senior management have not been involved in deciding their own remuneration.

Remuneration Committee

The Company established its Remuneration Committee with written terms of reference on 23rd June, 2005. The current written terms of reference are available at the Company's website www.sino.com and the Stock Exchange's website.

The Remuneration Committee is responsible for making recommendations to the Board on the Company's policy and structure for all Directors' and senior management's remuneration and on the establishment of a formal and transparent procedure for developing remuneration policy. In arriving at its recommendations, the Committee consults the Chairman of the Board and takes into consideration factors including salaries paid by comparable companies, employment

conditions elsewhere in the Group, and desirability of performance-based remuneration. The Committee makes recommendations to the Board relating to the remuneration package of individual Executive Directors and senior management, and it also makes recommendations to the Board on the remuneration of Non-Executive Directors. The Committee meets at least once a year and is provided with sufficient resources enabling it to discharge its duties.

The Remuneration Committee currently comprises four members with the Independent Non-Executive Directors constituting the majority of the Committee and an Independent Non-Executive Director acting as its chairman.

During the year, the Remuneration Committee had performed the following works:

• reviewed the existing emolument policy of Directors;
• reviewed the remuneration packages of Executive Directors; and
• made recommendations on Non-Executive Directors' fees.

No Director was involved in deciding his own remuneration at the meeting of the Remuneration Committee. The attendance records of the committee members to committee meeting(s) are set out below:

	Meeting(s)
Committee members	attended/held
Mr. Steven Ong Kay Eng*	1/1
(Committee Chairman)
Dr. Allan Zeman*	1/1
Mr. Adrian David Li Man-kiu*	1/1
Mr. Daryl Ng Win Kong	1/1

* Independent Non-Executive Director

Details of Directors' emoluments for the year are set out in Note 12 to the consolidated financial statements.

Annual Report 2020	Tsim Sha Tsui Properties Limited		27

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Nomination of Directors and senior management

Nomination policy

The Company has adopted the Nomination Policy for Directorship ("Nomination Policy") with effect from 1st January, 2019 which supplements the terms of reference of the Nomination Committee and sets out the processes and criteria for the nomination of a candidate for directorship in the Company. This Policy ensures that all nominations of Board members are fair and transparent in order to facilitate the constitution of the Board with a balance of skills, experience and diversity of perspectives that is appropriate to the requirements of the Company's business.

The Nomination Policy contains a number of factors in assessing the suitability of a proposed candidate which include the reputation for integrity, accomplishment and professional knowledge and industry experience which may be relevant to the Company, commitment in respect of available time, merit and potential contributions to the Board with reference to the Company's Board Diversity Policy, and the independence criteria under Rule 3.13 of the Listing Rules if the candidate is proposed to be appointed as an independent non-executive director. This Policy also lays down the nomination procedures on appointment or re-appointment of directors. The Nomination Committee will conduct the relevant selection process (coupled with the relevant selection criteria) against the nominated candidate for new directorship or director offer for re-election and make recommendations to the Board for consideration.

The Board will then make a decision as to whether the nominated candidate or the director offer for re-election shall be eligible to be appointed as a director or eligible to be re-appointed as a director of the Company respectively.

Board diversity policy

With a view to achieving a sustainable and balanced development, the Company has been considering diversity at the Board level as an essential element in supporting the attainment of its strategic objectives and its sustainable development. The Board Diversity Policy allows the Company to consider board diversity from a number of factors when deciding on new and re-appointments to the Board in order to achieve a diversity of perspectives among Board members. These factors include but not limited to gender, age, ethnicity, cultural and educational background, professional

or industry experience, skills, knowledge and other qualities of Directors. The Nomination Committee shall consider candidates on merits as well as against these measurable objectives with due regard for the benefits of the appropriate diversity of perspectives within the Board and also the candidates' potential contributions thereto.

The Board as a whole is responsible for reviewing the structure, size and composition of the Board with due regard to the intended benefits of board diversity. The balance between the number of Executive and Non-Executive Directors is considered effective in ensuring independent judgment being exercised effectively to provide sufficient checks and balances to safeguard the interests of the Company and its shareholders. The Company believes that the current Board composition is well-balanced and of a diverse mix appropriate for the business of the Company. The Board reviews and monitors the implementation of board diversity on a regular basis to ensure its effectiveness on determining the optimal composition of the Board.

28		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Nomination of Directors and senior

management (Continued)

Nomination Committee

The Company established its Nomination Committee with written terms of reference on 20th February, 2012. The current written terms of reference are available at the Company's website www.sino.com and the Stock Exchange's website.

The Nomination Committee reports to the Board and holds regular meeting to assist the Board in discharging its responsibility in reviewing the structure, size and composition of the Board with reference to the Board Diversity Policy of the Company. The Committee makes recommendations on any proposed changes

to the Board to complement the Company's corporate strategy. Its duties include making recommendations to the Board on the selection of individuals nominated for directorships, the appointment or re-appointment of Directors and succession planning for Directors, and regularly reviewing the time required from a Director to perform his responsibilities. The Committee is

also responsible for assessing the independence of Independent Non-Executive Directors and reviewing their annual confirmations on independence. The Committee meets at least once a year and is provided with sufficient resources enabling it to discharge its duties.

The Nomination Committee, which is chaired by the Chairman of the Board, currently comprises three members with the Independent Non-Executive Directors constituting the majority of the Committee.

During the year, the Nomination Committee had performed the following works:

• reviewed the current structure, size and composition of the Board and recommended the re-appointment of the retiring Directors;
• assessed the independence of Independent Non-Executive Directors and their annual confirmations on independence; and
• reviewed time commitment of Directors.

The attendance records of the committee members to committee meeting(s) are set out below:

	Meeting(s)
Committee members	attended/held
Mr. Robert Ng Chee Siong	1/1
(Committee Chairman)
Dr. Allan Zeman*	1/1
Mr. Adrian David Li Man-kiu*	1/1

* Independent Non-Executive Director

Annual Report 2020	Tsim Sha Tsui Properties Limited		29

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit

Directors' responsibilities for financial statements

The Board is responsible for the preparation of the financial statements which should give a true and fair view of the state of affairs of the Company and of the results and cash flows for such reporting period. In preparing the financial statements, the Board has adopted generally accepted accounting standards in Hong Kong and suitable accounting policies and applied them consistently, made judgments and estimates that are prudent, fair and reasonable, and prepared the financial statements on a going concern basis. The Board is responsible for ensuring that the Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company.

The Board is not aware of any material uncertainties relating to events or conditions which may cast significant doubt over the Company's ability to continue as a going concern. Accordingly, the Board has continued to adopt the going concern basis in preparing the financial statements.

The auditor is responsible for auditing and reporting its opinion on the financial statements of the Company and the independent auditor's report for the financial year ended 30th June, 2020 is set out in the section entitled "Independent Auditor's Report" of this Annual Report.

Risk management and internal control

The Board has the overall responsibility for evaluating and determining the nature and extent of the risks

it is willing to take in achieving the Company's strategic objectives, and ensuring that the Company establishes and maintains appropriate and effective risk management and internal control systems. The Audit Committee is delegated with the authority from the Board to oversee the risk management and internal control systems.

Effective risk management is important to the Company's achievement of its strategic goals. To this end, the Company adopts an Enterprise Risk Management ("ERM") approach to assist the Board in discharging its risk management responsibilities and individual business units in managing the key risks faced by the Company. Details of the main features of the ERM system including the processes for the identification, evaluation and management of significant risks are set out in the "Risk Management Report" on pages 40 to 45.

The Company's internal control system is built on a sound control environment with a strong commitment to ethical values. "Staff integrity" is among one of our core values. A Code of Conduct, including prevention of bribery and avoidance of conflict of interest has been established. The core values and Code of Conduct are communicated to all new staff during orientation. This information is also included in the Staff Handbook and available on our intranet. The importance of integrity is reiterated regularly by messages from senior management and through training and seminar. The Business Ethics Committee has been established as a whistle-blowing channel for staff and other relevant parties to report misconduct cases. Every reported case will be handled in confidence and followed through

in accordance with the policy and procedures for notification of unethical conduct.

30		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit (Continued)

Risk management and internal control (Continued)

The internal control system also includes an appropriate organizational structure with clearly defined responsibilities, accountability and authorities underpinning proper segregation of duties, complemented by monitoring and reporting mechanism to ensure proper checks and balances. Policies and procedures covering key business processes are established and communicated to staff, and are reviewed regularly to ensure continued relevance and effectiveness, and for continuous improvement.

The Company's internal control system is fully integrated with the risk management framework.

The ERM is a process through which risks together with the relevant controls are identified, assessed, evaluated and reviewed on an ongoing basis. All the significant risks identified are mapped to and incorporated in the annual internal audit plan. Key controls are subject to regular independent review and test by the Internal Audit Department in order to assess their adequacy and effectiveness.

Internal audit

The Internal Audit Department provides independent assurance regarding the existence of adequate and effective controls in the operations of the Company's business units. The Head of Internal Audit Department reports directly to the Audit Committee. In performing its duties, the Internal Audit Department has free and unfettered access to information and to meet with any of the department heads or persons-in-charge as stipulated in the Internal Audit Charter.

The Internal Audit Department adopts a risk-based audit approach. It conducts annual risk assessment and devises a 3-year-rolling internal audit plan which is reviewed and approved by the Audit Committee. Depending on the nature and level of the risks, the Internal Audit Department performs audits and reviews on the operations of individual business units, and conducts recurring and impromptu site investigations on selected risk areas to assess the effectiveness of the controls implemented by the business units concerned. The audit findings regarding control weaknesses are communicated to the relevant business units. Significant audit findings and recommendations are reported to the Audit Committee, which in turn reports to the Board. The implementation of the agreed actions in response to the audit findings are tracked and followed up regularly, and the status is reported to the Audit Committee.

Internal control self-assessment

To further enhance the risk management and internal control systems, the heads of individual business units conduct annual internal control self-assessment with reference to the 17 principles of the COSO (The Committee of Sponsoring Organizations of

the Treadway Commission) 2013 Internal Control - Integrated Framework. Through the use of internal control self-assessment questionnaires, the heads of individual business units systemically review and assess the effectiveness of all the key internal controls over their business operations that are in place to mitigate the risks, identify potential new risks affecting their businesses and operations, design and execute enhancement plans to address such new risks. The results of the self-assessment are reported to the Board through the Audit Committee and form part of the annual assessment of the adequacy and effectiveness of the risk management and internal control systems.

Annual Report 2020	Tsim Sha Tsui Properties Limited		31

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit (Continued)

Risk management and internal control (Continued)

Evaluation of the adequacy of resources of the Company's accounting and financial reporting function, and internal audit function

For the year ended 30th June, 2020, the Internal Audit Department has conducted an assessment and concluded that the resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function were adequate. The Head of Internal Audit Department, in conjunction with the Human Resources Department, also carried out a review of the internal audit function and concluded that its resources, staff qualifications and experience, training programmes and budget were adequate. The results of the review were reported to the Audit Committee.

Based on the above, the Board and the Audit Committee were satisfied with the adequacy of the resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function, and internal audit function.

Review of the effectiveness of risk management and internal control systems

The Board has the overall responsibility for the risk management and internal control systems and reviewing effectiveness of such systems. Such systems are designed to manage rather than eliminate the risks of failure to achieve business objectives, and can only provide reasonable but not absolute assurance against material misstatement or loss.

On behalf of the Board, the Audit Committee evaluates the effectiveness of the Company's risk management and internal control systems at least annually. For the financial year ended 30th June, 2020, the Audit Committee, with the assistance of the Risk and Control Committee, conducted a review of the effectiveness of the Group's risk management and internal control systems covering all the material controls, including environmental, social and governance related risks, financial, operational and compliance controls. Throughout the year, the Audit Committee also oversaw the risk management system on an ongoing basis through various activities including reviewing and approving the updated ERM Policy and Framework as well as the ERM reports.

For the financial year ended 30th June, 2020, the Board received a confirmation statement from management on the effectiveness of the risk management and internal control systems. The confirmation is based on:

• the work performed by management in identifying, evaluating, monitoring and managing the existing, new and emerging risks on an ongoing basis;
• the results of formal risk assessments conducted quarterly during the year in accordance with the approved ERM Policy and Framework;
• the results of the Group-wide internal control self- assessment performed by individual business units; and
• the independent verification and assurance provided through audit and review performed by the external auditor and the Internal Audit Department.

In the light of the above, the Board and the Audit Committee concluded that the risk management and internal control systems of the Group were adequate and effective. Although there were no significant control failings or weaknesses or areas of major concerns identified during the year, the risk management and internal control systems will be reviewed regularly for continuous improvement.

32		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit (Continued)

Policy and procedures of inside information handling and dissemination

The Company handles and disseminates inside information in accordance with the Securities and Futures Ordinance and the Listing Rules and with reference to the Guidelines on Disclosure of Inside Information issued by the Securities and Futures Commission. Potential inside information is captured through established reporting channels of the business units and escalated to senior management which will consider the price sensitivity of the information. Inside information is kept strictly confidential and is restricted to relevant parties on a need-to-know basis so as

to ensure confidentiality until consistent and timely disclosure by way of corporate announcement is made to inform the public of the inside information in an equal and timely manner. A strict prohibition on the unauthorized use of confidential information is included in the Company's code of conduct applicable to all employees of the Group.

The Audit Committee reports to the Board and holds regular meetings to assist the Board in discharging its responsibilities for effective financial reporting controls, risk management and internal control. The Committee monitors the integrity of the Company's financial statements, annual report and accounts and half-year report and reviews significant financial reporting judgments contained in them. It reviews, makes recommendations and reports to the Board on findings relating to the financial statements, reports and accounts, risk management and internal control systems and compliance issues. The Committee also oversees the Company's relationship with the external auditor, reviews auditor's letter of engagement and makes recommendations to the Board on the appointment and re-appointment of external auditor. It is empowered

to review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standards. It reviews external auditor's management letter and any material queries raised by the auditor to the management and the management's response. The Committee meets at least four times a year and is provided with sufficient resources enabling it to discharge its duties.

Audit Committee

The Company established its Audit Committee with written terms of reference on 23rd September, 1998. The current written terms of reference are available at the Company's website www.sino.com and the Stock Exchange's website.

Annual Report 2020	Tsim Sha Tsui Properties Limited		33

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit (Continued)

Audit Committee (Continued)

The Audit Committee currently comprises three members, all of them being Independent Non-Executive Directors.

During the year, the Audit Committee had held

four meetings and reviewed, inter alia, the following matters:

• the Company's 2019 annual report and audited financial statements and the 2019/2020 interim report and unaudited interim financial statements, including the accounting policies and practices adopted by the Company, before submitting to the Board;
• the ERM Policy and Framework of the Company for the enhancement of the risk management system;
• internal audit reports and ERM reports on the risk management and internal control systems, including the effectiveness of the risk management and internal control systems of the Group, the adequacy of resources, staff qualifications and experience, training programmes and budget of the Company's accounting and financial reporting function, and internal audit function;
• internal audit plan 2020/2021;
• usage of annual caps on certain continuing connected transactions of the Company; and
• re-appointmentof the Company's auditor before submitting to the Board.

All the meetings were attended by the external auditor of the Company. The attendance records of the committee members to these committee meetings are set out below:

	Meeting(s)
Committee members	attended/held
Mr. Adrian David Li Man-kiu	4/4
(Committee Chairman)
Dr. Allan Zeman	4/4
Mr. Steven Ong Kay Eng	4/4

Codes for dealing in the Company's securities

The Company has adopted its own code for dealing in the Company's securities by Directors ("Directors Dealing Code") on terms no less exacting than the required standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers of the Listing Rules ("Model Code"). The Company has made specific enquiries of all Directors who held such offices during the year under review. All of them confirmed their compliance with the required standard set out in the Directors Dealing Code during the year ended 30th June, 2020. The Company has also adopted a code for dealing in the Company's securities by relevant employees, who are likely to be in possession of inside information in relation to the securities of the Company, on no less exacting terms than the Model Code.

34		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Accountability and audit (Continued)

Auditor's remuneration

The fees in respect of audit and non-audit services provided to the Group by the external auditor of the Company for the year ended 30th June, 2020 amounted to HK$5,649,516 and HK$1,328,000 respectively.

The non-audit services mainly consist of review and consultancy services.

Corporate governance functions

The Board is responsible for performing the following corporate governance duties as required under the Code:

• to develop and review the Company's policies and practices on corporate governance;
• to review and monitor the training and continuous professional development of Directors and senior management;
• to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements;
• to develop, review and monitor the code of conduct and compliance manual applicable to employees and Directors; and
• to review the Company's compliance with the Code and disclosure in the Corporate Governance Report.

During the year, the Board considered the following corporate governance matters:

• reviewed the usage of annual caps on certain continuing connected transactions of the Company;
• reviewed the compliance with the Code through the Compliance Committee; and
• reviewed the effectiveness of the risk management and internal control systems of the Group through the Risk and Control Committee and the Audit Committee.

Compliance Committee

The Company established its Compliance Committee with written terms of reference on 30th August, 2004 to enhance the corporate governance standard

of the Company. The Compliance Committee has dual reporting lines. A principal reporting line is to the Board through the Committee Chairman. A secondary reporting line is to the Audit Committee. The Compliance Committee currently comprises the Deputy Chairman of the Board Mr. Daryl Ng Win Kong (Committee Chairman), the other Executive Director of the Company, the Group Chief Financial Officer, a Senior Legal Counsel, the Company Secretary, the Head of Internal Audit Department, other department heads and the Compliance Officer. The Committee holds regular meetings on a bi-monthly basis to review bi-monthly management reports on ongoing compliance regarding continuing connected transactions and usage of annual caps, provide a forum for regulatory updates for the management, consider corporate governance issues and make recommendations to the Board and the Audit Committee on the Company's corporate governance issues and Listing Rules compliance matters.

Annual Report 2020	Tsim Sha Tsui Properties Limited		35

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Communication with shareholders

The Company affirms its commitment to maintaining a high degree of corporate transparency, communicating regularly with its shareholders and ensuring in appropriate circumstances, the investment community at large being provided with ready, equal and timely access to balanced and understandable information about the Company (including its financial performance, strategic goals and plans, material developments, governance, risk profile and other material information), in order to enable the shareholders to exercise their rights in an informed manner.

Communication strategies

Principles

The Board is dedicated to maintain an ongoing dialogue with the shareholders of the Company and the investment community. Information is communicated to the shareholders and the investment community mainly through the Company's financial reports (interim and annual reports), annual general meetings and regular meetings with research analysts and fund managers, as well as by making available all the disclosures submitted to the Stock Exchange and its corporate communications and other corporate publications on the Company's website. The Company continuously enhances its website in order to improve communication with shareholders. Investor/analyst briefings and one-on-one meetings, investor conferences, site visits and results briefings are conducted on a regular basis in order to facilitate effective communication between the Company, shareholders and the investment community. The Board strives to ensure effective and timely dissemination of information to shareholders and the investment community at all times and reviews regularly the above arrangements to ensure its effectiveness.

Shareholders' meetings

The Board strives to maintain a continuing open dialogue with the shareholders of the Company. Shareholders are encouraged to participate in general meetings or to appoint proxies to attend and vote at meetings for and on their behalf if they are unable to attend the meetings. The process of the Company's general meeting is monitored and reviewed on a regular basis, and, if necessary, changes will be made to ensure that shareholders' needs are best served.

The Company uses annual general meeting as one of the principal channels for communicating with its shareholders. The Company ensures that shareholders' views are communicated to the Board. At the annual general meeting, each substantially separate issue has been considered by a separate resolution, including the election of individual Directors. The Chairman of the Board, chairmen of the respective board committees and the external auditor usually attend annual general meetings to inter-face with and answer questions from shareholders.

36		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Communication with shareholders

(Continued)

Communication strategies (Continued)

Shareholders' meetings (Continued)

The last annual general meeting of the Company is the 2019 annual general meeting ("2019 AGM") which was held on 24th October, 2019 at The Pacific Rooms, 9th Floor, Towers Wing, The Royal Pacific Hotel & Towers, 33 Canton Road, Tsim Sha Tsui, Kowloon. The Directors, including the Chairman of the Board, the Chairman of the Audit Committee, the Chairman of the Nomination Committee and the Chairman of the Remuneration Committee, and the external auditor of the Company, Deloitte Touche Tohmatsu, attended the 2019 AGM. The attendance records of the Directors to the 2019 AGM are set out below:

	Meeting(s)
	attended/
	held
Executive Directors
Mr. Robert Ng Chee Siong	1/1
Mr. Daryl Ng Win Kong	1/1
Non-Executive Director
The Honourable Ronald Joseph Arculli	1/1
Independent Non-Executive Directors
Dr. Allan Zeman	1/1
Mr. Adrian David Li Man-kiu	1/1
Mr. Steven Ong Kay Eng	1/1

The Company's notice to shareholders for the 2019 AGM was sent to shareholders more than 20 clear business days prior to the meeting. The chairman of the meeting exercised his power under the Company's Articles of Association to put each proposed resolution to vote by way of a poll. The Company adopted poll voting for all resolutions put to vote at the meeting. The procedures for voting by poll at the 2019 AGM were contained in the circular of the Company to its shareholders, which was dispatched together with the 2019 annual report, and were further explained at the 2019 AGM prior to the polls being taken. Simultaneous translation from English to Cantonese was available at the 2019 AGM.

Separate resolutions were proposed at the 2019 AGM on each substantive issue and the percentage of votes cast in favour of such resolutions as disclosed in the announcement of the Company dated 24th October, 2019 are set out below:

		Percentage
Resolutions proposed at the 2019 AGM	of votes
1	Adoption of the audited Financial	99.99%
	Statements and the Directors' and
	Independent Auditor's Reports for
	the year ended 30th June, 2019	99.99%
2	Declaration of a final dividend of
	HK$0.41 per ordinary share with an
	option for scrip dividend
3(i)	Re-election of The Honourable	99.99%
	Ronald Joseph Arculli as Director
3(ii)	Re-election of Mr. Daryl Ng Win Kong	99.98%
	as Director
3(iii) Authorization of the Board to fix	99.99%
	the Directors' remuneration for the
	financial year ending 30th June, 2020
4	Re-appointment of Deloitte Touche	99.99%
	Tohmatsu as Auditor for the ensuing
	year and to authorize the Board to
	fix their remuneration
5(i)	Share buy-back mandate up to 10%	100%
	of the Company's issued shares
5(ii) Share issue mandate up to 20% of	99.98%
	the Company's issued shares
5(iii) Extension of share issue mandate to	99.98%
	the shares bought back under the
	share buy-back mandate

Annual Report 2020	Tsim Sha Tsui Properties Limited		37

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Communication with shareholders

(Continued)

Shareholders' privacy

The Company recognizes the importance of shareholders' privacy and will not disclose shareholders' information without their consent, unless required by law to do so.

Communication strategies (Continued)

Shareholders' meetings (Continued)

All resolutions put to shareholders at the 2019 AGM were passed. The Company's Share Registrar was appointed as scrutineers to monitor and count the

poll votes cast at that meeting. The results of the voting by poll were published on the respective websites of the Company and the Stock Exchange.

The latest version of the Articles of Association of the Company is available at the Company's website www.sino.com and the Stock Exchange's website. No changes have been made to the Company's Articles of Association during the year.

Enquiries

Shareholders can direct their questions about their shareholdings to the Company's Share Registrar. To the extent the requisite information of the Company is publicly available, shareholders and the investment community may at any time make a request for such information. Designated contacts, email addresses and enquiry lines of the Company have been provided in the "Corporate Information" section of this Annual Report to enable the shareholders and the investment community to make any enquiry in respect of the Company.

Corporate communications

Corporate communications issued by the Company have been provided to the shareholders in both English and Chinese versions to facilitate their understanding. Shareholders have the right to choose the language (either English or Chinese, or both) or means of receipt of the corporate communications (in hard copy or through electronic means). They are encouraged to provide, amongst other things, their email addresses to the Company in order to facilitate timely, effective and environmental friendly communication.

Company's website

A section entitled "Investor Relations" is available on the Company's website www.sino.com. Information on the Company's website is updated on a regular basis. Information released by the Company to the Stock Exchange is also posted on the Company's website immediately thereafter in accordance with the Listing Rules. Such information includes financial statements, announcements, circulars to shareholders and notices of general meetings, etc.

38		Tsim Sha Tsui Properties Limited Annual Report 2020

Corporate governance report (Continued)

Corporate governance practices

(Continued)

Communication with shareholders

(Continued)

Dividend policy

The Board has formalized and adopted a Dividend Policy with effect from 1st January, 2019 to set out the framework that the Company has put in place in relation to dividend payout to shareholders. The Company's Dividend Policy is consistent with its business profile and maintenance of a strong credit profile while providing steady dividend payout to shareholders. The Company aims to provide relatively consistent, and where appropriate increases, in ordinary dividends linked to the underlying earnings performance of the Company's business for the reporting period. The Company will declare and pay dividends in Hong Kong dollars.

The Company may also offer to its shareholders an option to receive dividends in the form of new shares in the Company credited as fully paid in lieu of cash dividends. The scrip dividend option will enable the shareholders to increase their investment in the Company without incurring brokerage fees, stamp duty and related dealing costs. The Company may, at the Board's discretion, declare and pay dividends in any other forms as prescribed by its Articles of Association, as the Board deems appropriate.

The Board will review the Dividend Policy from time to time and may adopt changes as appropriate at the relevant time to ensure the effectiveness of this Policy.

Shareholders' rights

Pursuant to Section 566 of the Companies Ordinance, Directors are required to call a general meeting if the Company has received requests to do so from shareholders representing at least 5% of the total voting rights of all the shareholders having a right to vote

at the general meetings. The request must state the general nature of the business to be dealt with at the meeting and may include the text of a resolution that

may properly be moved and is intended to be moved at the meeting. Such request must be authenticated by the shareholders making it and may either be deposited at the registered office of the Company at 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong for the attention of the Company Secretary or sent to the Company's email address at [e-mail].

In relation to an annual general meeting which the Company is required to hold, Sections 615 and 616 of the Companies Ordinance provide that the Company must give notice of a resolution if it has received request to do so from shareholders representing at least 2.5% of the total voting rights of all shareholders of the Company having a right to vote on the resolution at the annual general meeting, or at least 50 shareholders having a right to vote on the resolution at the annual general meeting. Such request must be authenticated by the shareholders making it and may either be deposited at the registered office of the Company or sent to the Company's email address, both of which are mentioned above.

Shareholders who wish to propose a person (other than a retiring Director) for election as director ("Candidate") at a general meeting of the Company, should (a) deposit a written notice of such proposal at the registered office of the Company for the attention of the Company Secretary, signed by the shareholders who should be qualified to attend and vote at the general meeting;

1. provide biographical details of the Candidate as set out in Rule 13.51(2)(a) to (x) of the Listing Rules; and
2. provide a written consent signed by the Candidate indicating his/her willingness to be elected. The period for lodgment of such a written notice shall be at least 7 days commencing no earlier than the day after the dispatch of the notice of the meeting appointed for such meeting and such election and ending not later than
   7 days prior to the meeting.

The Company has been practising the above shareholders' communication policy to handle enquiries put to the Board and will review them on a regular basis to ensure their effectiveness. Specific enquiries and suggestions by shareholders can be sent in writing to the Board or the Company Secretary at our registered office address or by email to the Company.

Annual Report 2020	Tsim Sha Tsui Properties Limited		39

Risk management report

Risk policy statement

Risk governance and management

Robust and effective management of risks is an essential and integral part of corporate governance. It helps to ensure that the risks encountered in the course of achieving the Group's strategic objectives are managed within the Group's risk appetite.

To achieve this, an Enterprise Risk Management ("ERM") approach is adopted for identifying, assessing, responding to and reporting on risks that might affect the Group in pursuit of its objectives and goals. The purposes of the implementation of ERM are as follows:

• to establish a structured and systematic process for

identifying, assessing, reporting and managing risks;

• to define roles and responsibilities within a "Three

Lines of Defence" framework;

• to increase risk awareness at all levels;

• to enhance constructive discussion, effective

communication and timely escalation of risks by

adopting a common platform for risk management;

• to focus on risks that are relevant to the Group's

business and reputation, the Board's requirements

and stakeholders' expectations;

• to provide senior management and the Board with a

In June 2020, the Audit Committee approved the updated ERM Policy and Framework, which was based on the International Standard ISO 31000:2018 Risk Management - Guidelines, proposed by the Risk Management function of the Internal Audit Department. To ensure continued relevance and continuous improvement, the ERM Policy and Framework is reviewed and updated with changes regularly.

The Group adopts a "Three Lines of Defence" model in risk governance. This is manifested by the oversight and directions from the Board, the Audit Committee and the Risk and Control Committee of the Group. The risk management framework of the Group combines a top-down strategic view with a bottom-up operational assessment conducted by each division and department. Members of senior management discuss the top-tier risks escalated through the bottom-up process and deliberate on any other risk issues that they consider important. This combined approach ensures that all the significant risks which need to be considered are identified and managed properly.

s

The following diagram illustrates the Group's Risk Governance and Management Framework:

holistic view of the Group's material risk exposures

and steps taken to manage and monitor such

exposures;

• to provide senior management and the Board with

the best available risk information and facilitate the

making of informed decisions;

• to ensure compliance with the relevant laws and

regulations, and the best practices in corporate

governance; and

• to help creating and protecting the value of the

Group.

The Group is committed to continuously improving its ERM framework and processes and building a risk- aware culture across the Group with a view to achieving a sustainable and balanced development.

Governance

3 Lines of defence

			approac	h
		up
Bottom	-

First line Business owners

Board

of Directors

Audit committee

Risk and control committee

Second line

Risk

management

h

Top - down

approac

Third line

Internal

audit

provider assurance External

40		Tsim Sha Tsui Properties Limited Annual Report 2020

Risk management report (Continued)

Risk governance and management

(Continued)

The Board has the overall responsibility for evaluating and determining the nature and extent of the risks it is willing to take in achieving the Group's strategic objectives, and ensuring that the Group establishes and maintains appropriate and effective risk management and internal control systems.

The Audit Committee is delegated with the authority from the Board to oversee the design, implementation and monitoring of the risk management and internal control systems within the Group. The Audit Committee advises the Board on the Group's risk-related matters. The Audit Committee is also responsible for reviewing and approving the Group's ERM Policy and Framework and for ensuring the adequacy and effectiveness of the Group's risk management and internal control systems. The Head of Internal Audit Department reports regularly to the Audit Committee, which in turn reports to the Board, on the Group's overall risk position and key exposures, the actions planned or taken by management, and major emerging risks that require special attention.

The Risk and Control Committee, with its formal terms of reference approved by the Audit Committee, is made up of members from senior management. The Risk and Control Committee assists the Audit Committee in discharging its corporate governance responsibilities for risk management and internal control. Regarding risk management, the Risk and Control Committee

is responsible for ensuring that the ERM system is adequate and effective and that the ERM framework is implemented consistently throughout the Group. It monitors the Group's overall risk profiles by reviewing the key risks relating to individual business units and the key risks that are enterprise-wide, and ensures alignment with the approved risk appetite.

As the first line of defence, heads of individual divisions and departments manage risks faced by their business units/functions. As the risk owners, they identify and

evaluate the risks which may potentially impact the achievement of their business objectives, mitigate and monitor the risks by designing and executing control procedures in their day-to-day operations. They conduct risk assessment and control self-assessment on a regular basis to evaluate the adequacy and effectiveness of controls that are in place to mitigate the identified risks.

As the second line of defence, the Risk Management function is responsible for the ongoing maintenance of the ERM infrastructure and recommending changes to the Risk and Control Committee and the Audit Committee as appropriate. The Risk Management function collects and collates risk information to create an enterprise-wide view of risks and controls. In doing so, it critically reviews the results of risk assessment individual business units, constructively challenges their views so as to ensure that all the risks relevant to the Group are identified properly, assessed consistently and reported timely. It prepares reports for the Risk and Control Committee and the Audit Committee and escalates risk and control issues with reference to the risk appetite thresholds.

As the third line of defence, the Internal Audit Department acts as an independent assessor. It conducts independent review and assessment of the adequacy and effectiveness of the risk management and internal control systems. The Internal Audit Department assesses if all the key risks are identified properly and evaluated according to the approved ERM Policy and Framework and whether the existing key controls are operating effectively. The results of risk assessment are also mapped to the internal audit plan to ensure the audit performed by the Internal Audit Department systematically covers all the significant risks and the corresponding key controls. As such, the Internal Audit Department is able to provide independent assurance on the adequacy and effectiveness of the risk management and internal control systems and to report any deficiencies and room for improvement to the Risk and Control Committee and the Audit Committee.

Annual Report 2020	Tsim Sha Tsui Properties Limited		41

Risk management report (Continued)

Risk management process

The ERM process is illustrated in the diagram below:

CONSULTATION&COMMUNICATION		Scope, context, criteria
			REVIEW&MONITORING
	Risk assessment
		Risk
		identification
		Risk
		analysis
		Risk
		evaluation
		Risk treatment
	RECORDING & REPORTING

into account the relevant external and internal factors, the relationships with the external and internal stakeholders and the contractual relationships and commitments to ensure that the risk management approach adopted is appropriate for the Group. To ensure a common assessment standard is adopted, risk criteria are defined to measure the relative significance of risk.

c) Risk identification

Divisions and departments analyze their respective business activities and main processes to identify operational risks, which forms a "bottom-up" approach. A "top-down" approach is also adopted by the senior management to identify business/ strategic risks. Combining the output from the two approaches, a comprehensive list of risks for individual business units and hence for the Group can be generated. Risk classification system is used to facilitate the identification and accumulation of similar risks.

(Source: The ISO 31000:2018 Risk Management Process)

a) Communication and consultation

Communication and consultation with appropriate external and internal stakeholders take place within and throughout all steps of the ERM process.

For instance, the management team holds daily meetings to raise risk concerns, discuss emerging risks identified and formulate early response actions.

b) Scope, context, criteria

The risk management process applies to all business and decision-making processes, including the formulation of strategic objectives, business planning and day-to-day operations. The context of the ERM process is developed from the understanding of the external and internal environment in which the Group operates, taking

d) Risk analysis

The purpose of risk analysis is to comprehend the nature of risk and its characteristics. Risk analysis involves a detailed consideration of the sources of risk, the consequences and likelihood, the existing controls and their effectiveness.

e) Risk evaluation

Divisions and departments use the predefined criteria to assign scores for the risks identified. With reference to the risk matrix (i.e. a combination of the consequence and likelihood scores), the risk ratings are determined (i.e. low risk, moderate risk, high risk and extreme risk). The risk ratings reflect the management attention and risk treatment effort required, taking into account the Group's risk appetite.

42		Tsim Sha Tsui Properties Limited Annual Report 2020

Risk management report (Continued)

Risk management process (Continued)

f) Risk treatment

The adequacy of existing controls is assessed in order to determine if additional measures are required to bring the remaining risks to an acceptable level. When determining the appropriate risk treatment plans, one or more of the following four types of risk response will generally be adopted:

1. • avoid (not starting or continuing with the activity that gives rise to the risk);
   • reduce (lessening the likelihood or consequences);
   • transfer (sharing the risk with another party, e.g. insurance); and
   • accept (retaining the risk by making an informed decision).
2. Monitoring and review

Annual risk assessment is conducted to effectively manage the Group's risk profile. A half-yearly review is also conducted to update the progress of risk treatment plans and incorporate changes in the

external and internal environment. Key risks and emerging risks are reviewed at least quarterly or when the situation may require.

h) Recording and reporting

The results of risk assessment are documented in the risk registers in a consistent manner. All the identified risks, risk scoring and ratings, together with the details of existing controls and proposed treatment plan (if any) are recorded in the risk registers. Daily management meetings are held to identify and discuss emerging risk and determine the response required.

Quarterly ERM report is prepared for the Risk and Control Committee and the Audit Committee. The Group's top tier risks are presented in a heat map which provides a dynamic and forward-looking picture of the Group's risk position. The changes in risk profile since the last review, the corresponding key controls and risk treatment plans, as well as the targeted risk positions upon the completion of risk treatment plans with specified time frame are highlighted in the ERM reports. The potential/ expected trend of certain risks, such as emerging risk, is also indicated on the heat map.

Principal risks to the Group

The principal risks faced by the Group include the following:

Risk	Risk	Risk	Key controls/
category	description	movement*	mitigation measures

Strategic	Changing market
risk	sentiment caused
	by uncertainties in
	macro-economic
	and political
	outlook, changes in
	government policies

• Closely monitoring market situation and adopting appropriate strategies promptly
• Stress test for different scenarios
• Regular performance review of individual business units/projects
• Maintaining sound financial position
• Closely monitoring the situation of public protests and civil unrest and taking the appropriate measures including but not limited to cost control.

Annual Report 2020	Tsim Sha Tsui Properties Limited		43

Risk management report (Continued)

Principal risks to the Group (Continued)

Risk	Risk	Risk	Key controls/
category	description	movement*	mitigation measures

Strategic	Changes in the
risk	competition
(Continued)	landscape
	regarding property
	development in
	Hong Kong, e.g.
	new competitors,
	increasing land
	cost, challenges in
	land acquisition
Operational	Rising costs,
risk	including
	construction costs
	and operating costs

Cyber security

Fraud

• Selective land bank replenishment to optimize earning potential
• Careful consideration of business cases before commitment, studies on market transactions, joint venture partnership if necessary
• Regular review of our properties, asset enhancement where necessary
• Continued effort to improve quality of products and services to strengthen our brand and market position
• Investments in Mainland China, Singapore and Australia
• Budgetary control mechanism established
• Analysis and benchmarking of construction and operating costs
• Tender/quotation procedures in place to ensure best prices are achieved through competitive bidding
• Broadening contractor/supplier base
• Ongoing enhancement of efficiency and productivity
• Implementation of security measures such as firewall, anti-spam and anti-virus protection
• Ongoing review of IT infrastructure and systems and the need for upgrade/enhancement
• Internal communication and training on cyber-attack threats
• Employment of IT Security Manager to focus on security issues
• Set up of emergency incident response team to handle imminent threat of cyber-attack
• Upgrade of the network service for contingency
• Engagement of independent consultant to perform penetration tests and to assess the cybersecurity risks
• High commitment to ethical values with "integrity" as one of our core values
• Code of Conduct covering prevention of bribery
• Whistle-blowingand staff grievance procedures in place
• Regular reinforcement of our core value of "integrity" to staff and external stakeholders (including contractors and suppliers) through training and communication
• Policies and procedures incorporating proper segregation of duties with checks and balances
• System of approved contractor and supplier lists with performance evaluation and business concentration monitoring mechanism

44		Tsim Sha Tsui Properties Limited Annual Report 2020

Risk management report (Continued)

Principal risks to the Group (Continued)

Risk	Risk	Risk	Key controls/
category	description	movement*	mitigation measures

Operational Disaster event, e.g.

risk pandemic, terrorist (Continued) attack, civil unrest

• Comprehensive insurance coverage for our properties and business operations
• Contingency plans developed for critical business processes/ functions and accounting system recovery drill performed
• Taking immediate response actions, e.g. stepping up hygiene measures during COVID-19 pandemic
• Special work arrangement (e.g. flexible working hours; and splitting of the team to work on different floors/locations)

For the financial risks of the Group, please refer to "Notes to the Consolidated Financial Statements" on pages 158 to 167.

*ﾠ Key - Risk Movement (change from last year)

Risk rating increased

Risk rating remained broadly the same

Apart from the above principal risks, other specific emerging risks have also been identified and kept under regular monitoring and review. In particular, the Group has identified and focused on the "technology strategic risk". Technology is advancing exponentially and disrupting the status quo. It is crucial that we can anticipate trends and adopt the appropriate technologies so as to maintain our competitiveness, market share, and branding position. The Group has signed a strategic memorandum of understanding with China Mobile Hong Kong Limited to develop a pre-5G infrastructure across the Group's residential and commercial properties. As at 30th June, 2020, 5G infrastructure has been installed in 4 of the Group's residential and commercial properties. This partnership, encompassing Smart Home, Smart Shopping Mall, and Smart Property Management, supports Hong Kong's transformation into a "smart city". Moreover, Sino Inno Lab was launched in September 2018 as a real-life incubator platform to try out new ideas.

Integration of risk management with internal control system

Risk management is closely linked to the Group's Internal Control Framework. Key controls for mitigating high risk items identified in the ERM process are subject to independent reviews and tests by the Internal Audit Department in order to assess their adequacy and effectiveness. Details of the internal control system are set out in the "Corporate Governance Report" on pages 30 to 32.

Review of the effectiveness of risk management and internal control systems

During the year, the Audit Committee, on behalf of the Board, has reviewed the effectiveness of the Group's risk management and internal control systems. Details of the aforesaid review of effectiveness are described in the "Corporate Governance Report" on page 32.

Annual Report 2020	Tsim Sha Tsui Properties Limited		45

Directors' report

The Directors present their annual report and the audited consolidated financial statements of the Company and its subsidiaries (collectively referred to as the "Group") for the year ended 30th June, 2020.

Principal activities

The Company acts as an investment holding company. The principal activities of its principal subsidiaries are set out in Note 54 to the consolidated financial statements.

Business review

A review of the business of the Group during the year and a discussion on the Group's future business development are provided in the Chairman's Statement on pages 7 to 14 of this Annual Report. Description of possible risks and uncertainties that the Group may be facing can be found in the Risk Management Report on pages 40 to 45. Also, the financial risk management objectives and policies of the Group can be found

in Note 50 to the consolidated financial statements. Particulars of important events affecting the Group that have occurred since the end of the financial year ended 30th June, 2020, if any, are provided in the Notes to the consolidated financial statements. An analysis of the Group's performance during the year using financial key performance indicators is provided in the Group Financial Summary on pages 3 to 6 of this Annual Report.

The Group has set up proper procedures to ensure adherence to the relevant laws and regulations which have a significant impact on the Group in conduct of its business, including but not limited to the Residential Properties (First-hand Sales) Ordinance, Competition Ordinance, Personal Data (Privacy) Ordinance, Minimum Wage Ordinance, Employment Ordinance and Occupational Safety and Health Ordinance in Hong Kong. The Group also complies with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"), the applicable companies laws and the Securities and

Futures Ordinance ("SFO"). Any new enactment of or changes in the relevant laws and regulations would be communicated to the relevant departments and staff to ensure compliance. Reminders on the compliance would also be sent out regularly where necessary.

Discussions on the Group's environmental policies, performance and relationships with its key stakeholders are contained in the Sustainable Development on pages 15 to 21 and the Company's Sustainability Report to be published on the Company's website. No incident of non-compliance to environmental laws and regulations that has a significant impact on the Group was recorded for the financial year ended 30th June, 2020.

Results and appropriations

The results of the Group for the year are set out in the consolidated statement of profit or loss on page 70.

An interim dividend of HK14 cents per share amounting to HK$263,457,581, including HK$1,041,939 by way of cash dividends and HK$262,415,642 by way of scrip alternatives, was paid to the shareholders during the year. The Directors now recommend the payment of a final dividend of HK41 cents per share amounting to HK$775,917,297 payable to shareholders whose names appear on the Register of Members of the Company on 4th November, 2020.

Major properties

Details of the major properties of the Group at 30th June, 2020 are set out on pages 188 to 199.

Subsidiaries, associates and joint ventures

Details of the Company's principal subsidiaries, associates and joint ventures at 30th June, 2020 are set out in Notes 54, 55 and 56 to the consolidated financial statements, respectively.

46		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Share capital

Name of Director

Details of shares issued by the Company during the year are set out in Note 37 to the consolidated financial statements. The shares issued during the year were in lieu of cash dividends.

Purchase, sale or redemption of the Company's listed securities

Neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the listed securities of the Company during the year.

Distributable reserve of the Company

The Company's reserve available for distribution to shareholders as at 30th June, 2020 was the retained profits of HK$9,168,330,261 (2019: HK$8,193,234,532).

Treasury, group borrowings and interest capitalised

The Group maintains a prudent approach in its treasury management with foreign exchange exposure being kept at a minimal level and interest rates on a floating rate basis. Bank borrowings and other loans repayable on demand or within one year are classified as current liabilities. Repayment analysis of bank borrowings and other loans as at 30th June, 2020 are set out in Notes 35 and 36 to the consolidated financial statements.

Interest expenses capitalised by the Group during the year in respect of properties under development amounted to HK$107,790,738 (2019: HK$74,471,973).

The Directors of the Company during the year and up to the date of this report are:

Executive Directors

Mr. Robert Ng Chee Siong (Chairman)

Mr. Daryl Ng Win Kong (Deputy Chairman)

Non-Executive Director

The Honourable Ronald Joseph Arculli

Independent Non-Executive Directors

Dr. Allan Zeman

Mr. Adrian David Li Man-kiu

Mr. Steven Ong Kay Eng

In accordance with the Company's Articles of Association and pursuant to Appendix 14 to the Listing Rules, Mr. Adrian David Li Man-kiu and Mr. Steven Ong Kay Eng will retire at the forthcoming Annual General Meeting and, who being eligible, will offer themselves for re-election.

The list of directors who have served on the boards of the subsidiaries of the Company included in the annual consolidated financial statements for the financial year ended 30th June, 2020 during the year and up to the date of this report is available on the Company's website at www.sino.com under Corporate Governance of the Investor Relations section.

Annual Report 2020	Tsim Sha Tsui Properties Limited		47

Directors' report (Continued)

Directors' interests

As at 30th June, 2020, the interests and short positions held by the Directors of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV

of the SFO), as recorded in the register required to be kept by the Company under Section 352 of the SFO or otherwise notified to the Company and The Stock Exchange of Hong Kong Limited ("Stock Exchange") pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers ("Model Code") contained in the Listing Rules, were as follows:

(a) Long positions in shares of the Company

Name of Director	Number of	Capacity and	% of
	ordinary shares	nature of interest	issued shares
Mr. Robert Ng Chee Siong	1,363,983,874	Beneficial owner of 732,493	72.07%
	(Note)	shares and trustee interest
		in 1,363,251,381 shares in
		the capacity as one of the
		co-executors of the estate of
		the late Mr. Ng Teng Fong
The Honourable Ronald Joseph Arculli	60,000	Beneficial owner	~ 0%
Dr. Allan Zeman	-	-	-
Mr. Adrian David Li Man-kiu	-	-	-
Mr. Steven Ong Kay Eng	-	-	-
Mr. Daryl Ng Win Kong	-	-	-

Note:

The trustee interest in 1,363,251,381 shares comprises:

1. 1,255,660,102 shares which were held through companies 100% controlled by the co-executors of the estate of the late Mr. Ng Teng Fong, namely, 130,149,144 shares by Fanlight Investment Limited, 176,371,078 shares by Nippomo Limited, 4,052,817 shares by Orient Creation Limited, 346,884,800 shares by Strathallan Investment Limited, 517,646,313 shares by Tamworth Investment Limited and 80,555,950 shares by Transpire Investment Limited; and
2. 107,591,279 shares which were held by the co-executors of the estate of the late Mr. Ng Teng Fong.

48		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Directors' interests (Continued)

(b)Long positions in shares of associated corporations

(i) Subsidiary

Sino Land Company Limited

Name of Director	Number of	Capacity and	% of
	ordinary shares	nature of interest	issued shares
Mr. Robert Ng Chee Siong	4,044,997,320	Beneficial owner of 232,218	57.41%
	(Note)	shares, spouse interest in
		4,968,916 shares and trustee
		interest in 4,039,796,186
		shares in the capacity as one of
		the co-executors of the estate
		of the late Mr. Ng Teng Fong
The Honourable Ronald Joseph Arculli	1,191,997	Beneficial owner	0.01%
Dr. Allan Zeman	-	-	-
Mr. Adrian David Li Man-kiu	-	-	-
Mr. Steven Ong Kay Eng	-	-	-
Mr. Daryl Ng Win Kong	133,107	Beneficial owner	~ 0%

Note:

The trustee interest in 4,039,796,186 shares comprises:

1. 1,729,155,449 shares which were held by Tsim Sha Tsui Properties Limited, which was 72.03% controlled by the co-executors of the estate of the late Mr. Ng Teng Fong;
2. (i) 53,498,941 shares which were held by Orchard Centre Holdings (Private) Limited, in which Nam Lung Properties Development Company Limited, a wholly-owned subsidiary of Tsim Sha Tsui Properties Limited, had a 95.23% control; and
3. 1. 2,079,729,979 shares which were held through wholly-owned subsidiaries of Tsim Sha Tsui Properties Limited;
4. 130,735,359 shares which were held through companies 100% controlled by the co-executors of the estate of the late Mr. Ng Teng Fong, namely, 216,604 shares by Fanlight Investment Limited, 209,024 shares by Garford Nominees Limited, 47,040,037 shares by Karaganda Investments Inc., 20,288,166 shares by Orient Creation Limited, 9,860,538 shares
   by Strathallan Investment Limited, 29,719,860 shares by Strong Investments Limited, 22,774,379 shares by Tamworth Investment Limited and 626,751 shares by Transpire Investment Limited; and
5. 46,676,458 shares which were held by the co-executors of the estate of the late Mr. Ng Teng Fong.

Annual Report 2020	Tsim Sha Tsui Properties Limited		49

Directors' report (Continued)

Directors' interests (Continued)

(b)Long positions in shares of associated corporations (Continued)

(ii) Associates and joint ventures

Mr. Robert Ng Chee Siong was deemed to be interested in shares of the following companies through corporations controlled by him:

Name of Company	Number of		% of
	ordinary shares	issued shares
Brighton Land Investment Limited	1,000,002	(Notes 1 and 2)	100%
Empire Funds Limited	1	(Notes 1 and 3)	50%
Erleigh Investment Limited	110	(Notes 1 and 3)	55%
Eternal Honest Finance Company Limited	1	(Notes 1 and 3)	50%
Famous Empire Properties Limited	5,000	(Notes 1 and 4)	50%
FHR International Limited	1	(Note 5)	33.33%
Island Resort Estate Management Company Limited	10	(Notes 1 and 3)	50%
Jade Result Limited	500,000	(Notes 1 and 3)	50%
Murdoch Investments Inc.	2	(Notes 1 and 2)	100%
Real Maker Development Limited	20,000	(Notes 1 and 6)	10%
Rich Century Investment Limited	500,000	(Notes 1 and 3)	50%
Sea Dragon Limited	70	(Notes 1 and 3)	70%
Silver Link Investment Limited	10	(Notes 1 and 3)	50%
Sino Club Limited	2	(Note 7)	100%
Sino Parking Services Limited	450,000	(Note 8)	50%
Sino Real Estate Agency Limited	50,000	(Note 8)	50%

Notes:

1. Osborne Investments Ltd. ("Osborne") was a wholly-owned subsidiary of Seaview Assets Limited which was in turn 100% owned by Boswell Holdings Limited in which Mr. Robert Ng Chee Siong had a 50% control.
2. The shares were held by Erleigh Investment Limited, a company 55% controlled by Osborne.
3. The share(s) was(were) held by Osborne.
4. The shares were held by Standard City Limited, a wholly-owned subsidiary of Osborne.
5. The share was held by Smart Link Limited in which Mr. Robert Ng Chee Siong had a 100% control.
6. The shares were held by Goegan Godown Limited, a wholly-owned subsidiary of Osborne.
7. The shares were held by Sino Real Estate Agency Limited, a company 50% controlled by Deansky Investments Limited in which Mr. Robert Ng Chee Siong had a 100% control.
8. The shares were held by Deansky Investments Limited.

Save as disclosed above, as at 30th June, 2020, none of the Directors had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or its associated

corporations which were recorded in the register required to be kept by the Company under Section 352 of the SFO or required to be notified to the Company and the Stock Exchange pursuant to the Model Code.

50		Tsim Sha Tsui Properties Limited Annual Report 2020

Share option schemes

The Company and its subsidiaries have no share option schemes.

Arrangement to purchase shares or debentures

At no time during the year was the Company, any of its subsidiaries or fellow subsidiaries a party to any arrangements to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

Directors' interests in competing businesses

Pursuant to Rule 8.10(2) of the Listing Rules, the Company discloses that during the year, the following current Directors held share interests and/or directorships in companies engaged in businesses which compete or likely to compete, either directly or indirectly, with the businesses of the Group:

Mr. Robert Ng Chee Siong and Mr. Daryl Ng Win Kong held share interests and directorships in companies of the Ng Family (including Mr. Robert Ng Chee Siong, Mr. Philip Ng Chee Tat, and as co-executors of the estate of the late Mr. Ng Teng Fong and/or their respective associates) which engage in businesses of property investment, development and management and hotel operation.

The Honourable Ronald Joseph Arculli is a Non-Executive Director of HKR International Limited, which engages in businesses of property investment, development and management and hotel operation.

As the Board of Directors of the Company is independent of the boards of the aforesaid companies and maintains three Independent Non-Executive

Directors' report (Continued)

Directors, the Group operates its businesses independently of, and at arm's length from, the businesses of the aforesaid companies.

Directors' material interests in transactions, arrangements or contracts

Apart from the transactions disclosed under the heading "Related Party Disclosures" as set out in Note 52 to the consolidated financial statements, there were

no other transactions, arrangements or contracts of significance in relation to the Group's business to which the Company or any of its subsidiaries was a party and in which a Director of the Company or his connected entities had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

Permitted indemnity provision

Pursuant to the Company's Articles of Association, every Director shall be entitled to be indemnified out of the assets of the Company against all losses or liabilities (to the fullest extent permitted by the Companies Ordinance) which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto. The Company has arranged appropriate directors' and officers' liability insurance coverage for the Directors and officers of the Group during the year, which remains in force.

Service contracts

None of the Directors of the Company has a contract of service with the Company or any of its subsidiaries not determinable by the employing company within one year without payment of compensation (except for statutory compensation).

Annual Report 2020	Tsim Sha Tsui Properties Limited		51

Directors' report (Continued)

Connected transactions

Continuing connected transactions for the year ended 30th June, 2020

The Company and its major subsidiary, Sino Land Company Limited ("Sino Land"), jointly announced on 28th June, 2019 that Sino Land and/or its subsidiaries ("Sino Land Group") had entered into agreements

on 28th June, 2019 ("Agreements" or individually, "Agreement") relating to the following continuing connected transactions between Sino Land Group and

the Ng Family (including Mr. Robert Ng Chee Siong, Mr. Philip Ng Chee Tat, and as co-executors of the estate of the late Mr. Ng Teng Fong, and/or their respective associates) for the three financial years commencing from 1st July, 2019 and ending on 30th June, 2022 with annual caps fixed for each of the years. Applicable particulars of the Agreements together with the total amount received/paid in respect of the transactions for the year ended 30th June, 2020 are disclosed herein as required under the Listing Rules:

Nature of	Parties to	Nature of	Basis of	Applicable	Total amount
services	the transactions	transactions	consideration	annual cap(s)	received/paid for
provided under the				under	the year ended
Agreement				the Agreement	30th June, 2020

1. Building cleaning	Service provider	Provision of building	A lump sum fee to be
services	Best Result Environmental	cleaning services and	agreed between the
	Services Limited, a	cleaning consultancy	parties which shall be
	wholly-owned subsidiary	services by	determined by reference
	of Sino Land	Sino Land Group to	to cost plus a profit
		properties developed/	margin ranging from
	Service recipient	owned/partly owned or	approximately 5% to
	Ng Family	to be developed/owned/	25% of the amount
		partly owned by the	thereof, payable in
		Ng Family	monthly instalments in
			arrears on the last
			day of each month.
			The parties will take into
			account factors such
			as the size, nature of
			the building, location,
			complexity of the work,
			image, competition and
			length of the contract
			in determining the lump
			sum fee under each
			individual contract in
			respect of the services
			contemplated thereunder

The aggregate	HK$112.99
amount payable by	million
the relevant members
of the Ng Family
under the Agreement
shall not exceed:

1. HK$180 million for the period from 1st July, 2019 to 30th June, 2020;
2. HK$198 million for the period from 1st July, 2020 to 30th June, 2021; and
3. HK$218 million for the period from 1st July, 2021 to 30th June, 2022

52		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

Nature of	Parties to	Nature of	Basis of	Applicable	Total amount
services	the transactions	transactions	consideration	annual cap(s)	received/paid for
provided under the				under	the year ended
Agreement				the Agreement	30th June, 2020

2. Car park	Service provider
management	Sino Parking Services
services	Limited ("SPSL"), a
	company held as to 50%
	by Sino Land and 50%
	by the Ng Family

Service recipient

Sino Land Group

Provision of car park management services by SPSL and/or members of the Ng Family to properties owned/ developed or to be owned/developed by Sino Land Group

A lump sum fee to be	The aggregate	HK$32.19 million
agreed between the	amount payable by
parties which shall	the relevant members
be determined by	of Sino Land Group
reference to a rate of	under the Agreement
approximately 16% to	shall not exceed:
20% of the total gross	(i) HK$57 million for
revenue generated
the period from
from car parking
1st July, 2019 to
operations in the
30th June, 2020;
relevant properties
managed by SPSL	(ii) HK$65 million for
and/or the relevant
the period from
member of the Ng Family,
1st July, 2020 to
payable in half-yearly
30th June, 2021;
instalments in arrears
and
on the last day of each
half year. The parties	(iii) HK$79 million for
will take into account	the period from
factors such as the size,	1st July, 2021 to
nature of the building,	30th June, 2022
location, complexity
of the work, image,
competition and length
of the contract in
determining the lump
sum fee under each
individual contract in
respect of the services
contemplated thereunder

Annual Report 2020	Tsim Sha Tsui Properties Limited		53

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

Nature of	Parties to	Nature of	Basis of	Applicable	Total amount
services	the transactions	transactions	consideration	annual cap(s)	received/paid for
provided under the				under	the year ended
Agreement				the Agreement	30th June, 2020

3. Estate	Service provider	Provision of estate	A lump sum fee to be
management	Sino Estates Management	management services,	agreed between the
and general	Limited ("SEML"), a	life-style services,	parties which shall be a
administrative	wholly-owned subsidiary	home maintenance	fixed sum or determined
services	of Sino Land	services, courtesy	by reference to a rate
		services and general	of approximately 2% to
	Service recipient	administrative services	15% of the management
	Ng Family	by Sino Land Group to	expenditure as shown
		properties developed/	in the annual budget of,
		owned/partly owned or	or actually incurred by,
		to be developed/owned/	the relevant member
		partly owned by the	of the Ng Family in
		Ng Family	respect of the properties
			managed by SEML,
			payable by periodic
			instalments (for example,
			monthly, quarterly or
			half-yearly) in advance
			or in arrears. The parties
			will take into account
			factors such as the size,
			nature of the building,
			location, complexity
			of the work, image,
			competition and length
			of the contract in
			determining the lump
			sum fee under each
			individual contract in
			respect of the services
			contemplated thereunder

The aggregate	HK$25.36 million
amount payable by
the relevant members
of the Ng Family
under the Agreement
shall not exceed:
(i) HK$52 million for
the period from
1st July, 2019 to
30th June, 2020;
(ii) HK$57 million for
the period from
1st July, 2020 to
30th June, 2021;
and
(iii) HK$63 million for
the period from
1st July, 2021 to
30th June, 2022

54		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

Nature of	Parties to	Nature of	Basis of	Applicable	Total amount
services	the transactions	transactions	consideration	annual cap(s)	received/paid for
provided under the				under	the year ended
Agreement				the Agreement	30th June, 2020

4. Security services Service provider	Provision of security	A lump sum fee to be
Sino Security Services	services by	agreed between the
Limited, a wholly-owned	Sino Land Group to	parties which shall be
subsidiary of Sino Land	properties developed/	determined by reference
Service recipient	owned/partly owned or	to cost plus a profit
to be developed/owned/	margin ranging from
Ng Family	partly owned by the	approximately 5% to
	Ng Family	25% of the amount
		thereof, payable in
		monthly instalments in
		arrears on the last
		day of each month.
		The parties will take into
		account factors such
		as the size, nature of
		the building, location,
		complexity of the work,
		image, competition and
		length of the contract
		in determining the lump
		sum fee under each
		individual contract in
		respect of the services
		contemplated thereunder

The aggregate	HK$89.90 million
amount payable by
the relevant members
of the Ng Family
under the Agreement
shall not exceed:

1. HK$131 million for the period from 1st July, 2019 to 30th June, 2020;
2. HK$144 million for the period from 1st July, 2020 to 30th June, 2021; and
3. HK$158 million for the period from 1st July, 2021 to 30th June, 2022

Annual Report 2020	Tsim Sha Tsui Properties Limited		55

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

Nature of	Parties to	Nature of	Basis of	Applicable	Total amount
services	the transactions	transactions	consideration	annual cap(s)	received/paid for
provided under the				under	the year ended
Agreement				the Agreement	30th June, 2020

5. Lease of	Service provider	(i) the Ng Family
properties	(i) Sino Land Group	(as lessee) leases
		properties owned or
	Service recipient	to be owned by
	(i) Ng Family	Sino Land Group
		(as lessor)

1. A lump sum base rent exclusive of rates, Government rent, management fees and, if any, other outgoings, with or without a variable turnover rent linked to the gross sales turnover of the lessee of the particular properties to be agreed between the parties which shall be determined by reference to the prevailing market rent of the particular properties. The base rent is payable monthly on the first day of every calendar month and the turnover rent, if any, is payable on terms to be agreed between the parties

(i) The total rent	(i)	HK$24.49
payable per annum		million
shall not exceed:
(a) HK$61.3
million for the
period from
1st July, 2019
to 30th June,
2020;
(b) HK$64.9
million for the
period from
1st July, 2020
to 30th June,
2021; and
(c) HK$68.8
million for the
period from
1st July, 2021
to 30th June,
2022

56		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

Nature of	Parties to	Nature of	Basis of	Applicable	Total rent
services	the transactions	transactions	consideration	annual cap(s)	recognized as
provided under the				under	right-of-use
Agreement				the Agreement	assets according
					to HKFRS 16 -
					Leases
5. Lease of	Service provider	(ii) Sino Land Group	(ii) A lump sum rent	(ii) The total rent	(ii) HK$24.45
properties	(ii) Ng Family	(as lessee) leases	exclusive of rates,	for the whole	million
(Continued)		properties owned or	Government rent,	tenancy/licence
	Service recipient	to be owned by the	management fees	period which shall
	(ii) Sino Land Group	Ng Family (as lessor)	and, if any, other	be recognized
			outgoings, to be	as right-of-use
			agreed between	assets according
			the parties which	to Hong Kong
			shall be determined	Financial Reporting
			by reference to the	Standard
			prevailing market	("HKFRS") 16 -
			rent of the particular	Leases relating
			properties, payable	to those tenancy
			monthly on the first	agreements or
			day of every calendar	licences to be
			month	entered into in the
				corresponding year
				shall not exceed:
				(a) HK$110.4
				million for the
				period from
				1st July, 2019
				to 30th June,
				2020;
				(b) HK$209.3
				million for the
				period from
				1st July, 2020
				to 30th June,
				2021; and
				(c) HK$140.9
				million for the
				period from
				1st July, 2021
				to 30th June,
				2022

Annual Report 2020	Tsim Sha Tsui Properties Limited		57

Directors' report (Continued)

Connected transactions (Continued)

Continuing connected transactions for the year ended 30th June, 2020 (Continued)

The Ng Family and SPSL, being an associate of the Ng Family, are connected persons of the Company and Sino Land by virtue of the Ng Family being the controlling shareholder of both the Company and

Sino Land. Therefore, the above transactions constituted continuing connected transactions of each of the Company and Sino Land under the Listing Rules.

During the year, the above continuing connected transactions were carried out within their respective applicable annual caps for the year. The Internal Audit Department has reviewed the above continuing connected transactions and concluded that the internal controls over such continuing connected transactions are adequate and effective. The findings have been submitted to the Audit Committee.

The Independent Non-Executive Directors have reviewed and confirmed that during the year, the above continuing connected transactions were all conducted and entered into:

1. in the ordinary and usual course of business of the Group;
2. on normal commercial terms; and
3. according to the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Company's shareholders as a whole.

The Company's auditor was engaged to report on the Group's continuing connected transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information" and with reference to Practice Note 740 "Auditor's Letter on Continuing Connected Transactions under the Hong Kong Listing Rules" issued by the Hong Kong Institute of Certified Public Accountants. The auditor has issued an unqualified letter containing its findings and conclusions in respect of the continuing connected transactions disclosed by the Group in this Annual Report in accordance with Rule 14A.56 of the Listing Rules. A copy of the auditor's letter has been provided by the Company to the Stock Exchange.

Details of the above continuing connected transactions have been disclosed in accordance with Chapter 14A of the Listing Rules and are set out in the announcement of the Company which is available at the Stock Exchange's website and the Company's website at www.sino.com.

Details of other related party transactions are set out in Note 52 to the consolidated financial statements.

58		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Substantial shareholders' and other shareholders' interests

As at 30th June, 2020, the interests and short positions of the substantial shareholders and other shareholders

(other than Directors of the Company) in the shares and underlying shares of the Company as notified to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO and as recorded in the register required to be kept under Section 336 of the SFO were as follows:

Long positions in shares of the Company

Name of	Number of	Capacity and	% of
substantial shareholder	ordinary shares	nature of interest	issued shares
Mr. Philip Ng Chee Tat	1,358,356,976	Interest of controlled corporations in	72.18%
	(Notes 1, 2, 3, 4 and 5)	2,801,364 shares and trustee interest in
		1,355,555,612 shares in the capacity as
		one of the co-executors of the estate of
		the late Mr. Ng Teng Fong
Tamworth Investment	474,423,302	Beneficial owner	27.34%
Limited	(Notes 3 and 5)
Strathallan Investment	317,920,220	Beneficial owner	18.32%
Limited	(Notes 3 and 5)

Name of	Number of	Capacity and	% of
other shareholder	ordinary shares	nature of interest	issued shares
Nippomo Limited	161,644,248	Beneficial owner	9.31%
	(Notes 3 and 5)
Fanlight Investment	124,724,897	Beneficial owner	6.87%
Limited	(Notes 3 and 5)

Annual Report 2020	Tsim Sha Tsui Properties Limited		59

Directors' report (Continued)

Substantial shareholders' and other shareholders' interests (Continued)

Long positions in shares of the Company (Continued)

Notes:

1. 2,801,364 shares were held through companies 100% controlled by Mr. Philip Ng Chee Tat, namely, 2,440,591 shares by Far East Ventures Pte. Ltd. and 360,773 shares by Western Properties Pte Ltd.

1. The trustee interest in 1,355,555,612 shares comprises:
2. 1. 1,248,571,703 shares which were held through companies 100% controlled by the co-executors of the estate of the late Mr. Ng Teng Fong, namely, 129,414,432 shares by Fanlight Investment Limited, 175,375,435 shares by Nippomo Limited, 4,029,939 shares by Orient Creation Limited, 344,926,580 shares by Strathallan Investment Limited, 514,724,118 shares by Tamworth Investment Limited and 80,101,199 shares by Transpire Investment Limited; and
   2. 106,983,909 shares which were held by the co-executors of the estate of the late Mr. Ng Teng Fong.
3. The interests of Tamworth Investment Limited, Strathallan Investment Limited, Nippomo Limited and Fanlight Investment Limited were duplicated in the interests of the co-executors of the estate of the late Mr. Ng Teng Fong.
4. The trustee interest of Mr. Philip Ng Chee Tat was duplicated in the trustee interest of Mr. Robert Ng Chee Siong as disclosed under the section headed "Directors' Interests" above as the co-executors of the estate of the late Mr. Ng Teng Fong.
5. The number and the percentage of shares as disclosed are based on the substantial shareholder notices filed with the Stock Exchange.

Save as disclosed above and so far as the Directors of the Company are aware, as at 30th June, 2020, no other person (other than Directors of the Company) had an interest or short position in the shares and underlying shares of the Company which were notified

to the Company and the Stock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO and were recorded in the register required to be kept under Section 336 of the SFO, or was otherwise a substantial shareholder of the Company.

60		Tsim Sha Tsui Properties Limited Annual Report 2020

Directors' report (Continued)

Donations

During the year, the Group made charitable and other donations amounting to approximately HK$5,222,000.

Equity-linked agreements

No equity-linked agreements were entered into by the Company during the year or subsisted at the end of the year.

Major suppliers and customers

The aggregate amount of purchases attributable to the Group's five largest suppliers accounted for approximately 81% of the Group's total purchases and the purchases attributable to the Group's largest supplier was approximately 51% of the Group's total purchases.

The percentage of sales attributable to the Group's five largest customers is less than 30% of the Group's total sales for the year.

At no time during the year did the Directors, their close associates or any shareholders of the Company (which to the knowledge of the Directors owns more than 5% of the Company's issued share capital) had an interest in the share capital of any of the Group's five largest suppliers.

Corporate governance

The corporate governance report is set out on pages 22 to 39.

Sufficiency of public float

Based on information that is publicly available to the Company and within the knowledge of the Directors of the Company as at the date of this Annual Report, the Company has maintained the prescribed public float under the Listing Rules.

Auditor

The consolidated financial statements for the year ended 30th June, 2020 of the Group have been audited by Messrs. Deloitte Touche Tohmatsu. A resolution will be submitted to the forthcoming Annual General Meeting to re-appoint Messrs. Deloitte Touche Tohmatsu as auditor of the Company.

On behalf of the Board

Robert NG Chee Siong

Chairman

Hong Kong, 26th August, 2020

Annual Report 2020	Tsim Sha Tsui Properties Limited		61

Biographical details of Directors & senior management

1. Executive Directors

Mr. Robert Ng Chee SiongN+, aged 68,

an Executive Director since 1978 and Chairman of the Group since 1991, was called to the Bar in 1975.

He has been actively engaged in property investment and development in Hong Kong during the last 44 years and is also a director of a number of subsidiaries and associated companies of the Company. Mr. Ng is the Chairman of Sino Land Company Limited, the major subsidiary of the Company, and the Chairman of Sino Hotels (Holdings) Limited. In addition, he is a Director of The Real Estate Developers Association of Hong Kong, a member of the 11th, 12th and 13th National Committee of the Chinese People's Political Consultative Conference ("CPPCC") and Deputy Director of the Committee for Economic Affairs of the 13th National Committee of the CPPCC. Mr. Ng

is the father of Mr. Daryl Ng Win Kong, the Deputy Chairman of the Company, a son of the late substantial shareholder Mr. Ng Teng Fong and the brother of

Mr. Philip Ng Chee Tat, the co-executor of the estate of the late Mr. Ng Teng Fong.

Mr. Daryl Ng Win KongR, JP, aged 42,

an Executive Director since April 2005 and Deputy Chairman of the Group since November 2017, holds

a Bachelor of Arts Degree in Economics, a Master Degree of Science in Real Estate Development from Columbia University in New York, an Honorary Doctor of Humane Letters degree from Savannah College of Art and Design and an Honorary University Fellowship from The Open University of Hong Kong. Mr. Ng first joined the Company as Executive (Development) in 2003. He is a director of a number of subsidiaries and associated companies of the Company, and an Executive Director and Deputy Chairman of Sino Land Company Limited and Sino Hotels (Holdings) Limited. He is also a Non-Executive Director of The Bank of East Asia, Limited, which is listed on the Hong Kong

Stock Exchange and the Chairman, Non-independent & Non-executive Director of Yeo Hiap Seng Limited,

a company listed on the main board of the Singapore Stock Exchange. He is a member of the Global Leadership Council of Columbia University in the City of New York,

a member of the 10th Sichuan Committee of the Chinese People's Political Consultative Conference ("CPPCC"),

a member of the 12th and 13th Beijing Municipal Committee of the CPPCC, a member of the 10th and 11th Committees of the All-China Youth Federation and the Deputy Chairman of the Chongqing Youth Federation. He is the President of Hong Kong United Youth Association, a Council Member of the Hong Kong Committee for UNICEF, a Council Member of The Hong Kong Management Association, an Advisor of Our Hong Kong Foundation, a Council Member of Hong Kong Chronicles Institute Limited, a Council Member of the Employers' Federation of Hong Kong and a member of the Board of Hong Kong Science and Technology Parks Corporation. Mr. Ng's major public service appointments include being a member of the Estate Agents Authority of the Government of Hong Kong Special Administrative Region, a member of the Council of the University of Hong Kong, a member of the Court of the Hong Kong University of Science and Technology, a member of NUS Medicine International Council at the Yong Loo Lin School of Medicine of National University of Singapore, a member of International Advisory Council of Singapore Management University,

a member of the Board of M Plus Museum Limited,

a Board Member of National Heritage Board, Singapore, a member of Hong Kong Trade Development Council Mainland Business Advisory Committee and a member of the Cyberport Advisory Panel of Hong Kong Cyberport Management Company Limited. He is a Director of The Real Estate Developers Association of Hong Kong and

a Director of The Community Chest of Hong Kong. He is the eldest son of the Chairman of the Group Mr. Robert Ng Chee Siong and the eldest grandson of the late substantial shareholder Mr. Ng Teng Fong.

N+: Nomination Committee Chairman R: Remuneration Committee member

62		Tsim Sha Tsui Properties Limited Annual Report 2020

Biographical details of Directors & senior management (Continued)

(II) Non-Executive Director

The Honourable Ronald Joseph Arculli,

GBM, CVO, GBS, OBE, JP, aged 81,

has been a Director of the Company since 1994 and was re-designated from an Independent Non-Executive Director to a Non-Executive Director in July 2005.

The Honourable Ronald Arculli through Ronald Arculli and Associates provides consultancy services to the Company. He is also a Non-Executive Director of Sino Land Company Limited and Sino Hotels (Holdings) Limited. The Honourable Ronald Arculli was an Independent Non-Executive Director of Hong Kong Exchanges and Clearing Limited from 2006 to April 2013, for which he was also a former Independent Non-Executive Chairman from 2006 to April 2012. He has a long and distinguished record of public service on numerous government committees and advisory bodies.

He was the Chairman of The Hong Kong Jockey Club from 2002 to August 2006. He is a practising solicitor and has served on the Legislative Council from 1988 to 2000. He was a Non-Official Member of the Executive Council of the HKSAR Government from November 2005 to June 2012, for which he also acted as Convenor of the Non-Official Members since December 2011. He chairs FWD Group, the Honorary Advisory Committee of SVHK Foundation Limited and Common Purpose Charitable Foundation Limited in Hong Kong. He is also

1. Non-ExecutiveDirector of Asia Art Archive Limited. He is a Board Member and the Vice-Chairman of the Board of The West Kowloon Cultural District Authority and chairs its Executive Committee and Development Committee. The Honourable Ronald Arculli is
   an Independent Non-Executive Director of Hang Lung Properties Limited and a Non-Executive Director of HKR International Limited, HK Electric Investments Manager Limited (as trustee-manager of HK Electric Investments) and HK Electric Investments Limited (all are listed on The Stock Exchange of Hong Kong Limited except
   HK Electric Investments Manager Limited).

1. Independent Non-Executive Directors

Dr. Allan ZemanA N R, GBM, GBS, JP, aged 72,

an Independent Non-Executive Director of the Company since September 2004. He is also an Independent Non-Executive Director of Sino Land Company Limited. Dr. Zeman is the Chairman of Lan Kwai Fong Group

in Hong Kong. Dr. Zeman serves as an Independent Non-Executive Director and the Chairman of Wynn Macau, Limited, a Non-Executive Director of Pacific Century Premium Developments Limited, and an Independent Non-Executive Director of Global Brands Group Holding Limited, Television Broadcasts Limited and Fosun Tourism Group, all of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited. Dr. Zeman was the Chairman of Hong Kong Ocean Park from July 2003 to June 2014 and is now the Honorary Advisor to the Park. He is also a Board member of the Alibaba Entrepreneurs Fund and the Airport Authority Hong Kong, an appointed member of the Economic Development Commission of Hong Kong, a member of the General Committee of the Hong Kong General Chamber of Commerce, a governor of the Board of Governors of Our Hong Kong Foundation and a representative of Hong Kong China to the APEC Business Advisory Council (ABAC). Dr. Zeman is also a member of the Board of Governors of The Canadian Chamber of Commerce in Hong Kong, a member of the Asian Advisory Board of the Richard Ivey School of Business, The University of Western Ontario and the Vice Patron of The Community Chest of Hong Kong. Dr. Zeman is a holder of Honorary Doctorate of Laws Degree from The University of Western Ontario, Canada. In 2012, he was awarded Honorary Doctorate Degrees of Business Administration from City University of Hong Kong and The Hong Kong University of Science and Technology.

A: Audit Committee member N: Nomination Committee member R: Remuneration Committee member

Annual Report 2020	Tsim Sha Tsui Properties Limited		63

Biographical details of Directors & senior management (Continued)

1. Independent Non-Executive
   Directors (Continued)

Mr. Adrian David Li Man-kiuA+N R, JP,

aged 47,

an Independent Non-Executive Director since April 2005, is Co-Chief Executive of The Bank of East Asia, Limited. He is also an Independent Non-Executive Director of Sino Land Company Limited. Mr. Li is a member of the Anhui Provincial Committee of the Chinese People's Political Consultative Conference and a Counsellor of the Hong Kong United Youth Association. He is Chairman of The Chinese Banks' Association, Vice President of The Hong Kong Institute of Bankers' Council and a member of the MPF Industry Schemes Committee of the MPFA. He is

a board member of The Community Chest of Hong Kong and serves on its Executive Committee, a member of the Advisory Board of The Salvation Army, Hong Kong and Macau Command, and a Trustee of The University of Hong Kong's occupational retirement schemes. Furthermore, he serves as a member of the Election Committees responsible for electing the Chief Executive of the HKSAR and deputies of the HKSAR to the 13th National People's Congress. He also sits on the Judging Panel

of the BAI Global Innovation Awards. Mr. Li is currently an Independent Non-Executive Director of China State Construction International Holdings Limited and COSCO SHIPPING Ports Limited, both companies listed in Hong Kong. In addition, he is a Non-Executive Director of The Berkeley Group Holdings plc, which is listed on the London Stock Exchange and a member of Mastercard's Asia Pacific Advisory Board. He was previously an Independent Non-Executive Director of Sino Hotels (Holdings) Limited, which is listed on the Hong Kong Stock Exchange. Mr. Li holds a Master of Management degree from the Kellogg School of Management, Northwestern University in the US, and a Master of Arts degree and Bachelor of Arts degree in Law from the University of Cambridge in Britain. He is a member of The Law Society of England and Wales, and The Law Society of Hong Kong.

Mr. Steven Ong Kay EngA R+, aged 74,

an Independent Non-Executive Director since July 2005. He is also an Independent Non-Executive Director of Sino Land Company Limited and Sino Hotels (Holdings) Limited. He is a Director of Altrade Investments Pte. Ltd. in Singapore. He is also a Non-Executive Independent Director of EnGro Corporation Limited and a substantial shareholder of Hwa Hong Corporation Limited, both

of which are listed on the main board of the Singapore Stock Exchange. Mr. Ong has been a veteran banker with extensive experience in banking and finance over 43 years. He was the General Manager and Country Head for American Express Bank in Singapore for nearly 10 years and also the Chief Representative and Country Manager in China for Banca Monte dei Paschi di Siena S.p.A. for 16 years. Mr. Ong remained as the bank's advisor and consultant for 2 years after he left China in 2006 having resided in the country for over 16 years. He was the Chairman of Foreign Bankers' Association in Beijing, PRC from 1999 to 2000.

(IV) Senior Management

Various businesses and functions of the Company are respectively under the direct responsibilities of the Executive Directors who are regarded as senior management of the Company.

A+: Audit Committee Chairman A: Audit Committee member N: Nomination Committee member

R+: Remuneration Committee Chairman R: Remuneration Committee member

64		Tsim Sha Tsui Properties Limited Annual Report 2020

Independent auditor's report

TO THE MEMBERS OF

TSIM SHA TSUI PROPERTIES LIMITED 尖沙咀置業集團有限公司

(incorporated in Hong Kong with limited liability)

Opinion

We have audited the consolidated financial statements of Tsim Sha Tsui Properties Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 70 to 186, which comprise the consolidated statement of financial position as at 30th June, 2020, and the consolidated statement of profit or loss, consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 30th June, 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards ("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAs") issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the HKICPA's Code of Ethics for Professional Accountants ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current year. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Annual Report 2020	Tsim Sha Tsui Properties Limited		65

Independent auditor's report (Continued)

Key audit matters (Continued)

Key audit matter

Valuation of investment properties

We identified the valuation of investment properties as a key audit matter due to the significance of the balance to the consolidated financial statements as a whole, combined with the significant judgments associated with the determination of the fair value.

The Group's investment properties are located in Hong Kong, Mainland China and Singapore. As at 30th June, 2020, the Group's investment properties amounted to HK$62,658,456,279 and represented 33% of the Group's total assets, with a fair value loss of HK$2,020,824,150 recognised in the consolidated statement of profit or loss for the year then ended.

All of the Group's investment properties are stated at fair value based on valuations carried out by independent qualified professional valuers (the "Valuers"). Majority of the valuations are dependent on capitalisation rates which are the significant unobservable inputs that involve significant judgment. Details of the valuation techniques and significant unobservable inputs used in the valuations are disclosed in Note 17 to the consolidated financial statements.

Net realisable value of properties under development and stocks of completed properties

We identified the determination of the net realisable value ("NRV") of the Group's properties under development and stocks of completed properties as a key audit matter due to the significant judgments involved in the determination of the NRV and the estimation of future cost to completion by management of the Group.

The Group's properties under development and stocks of completed properties are stated at the lower of cost and NRV. As at 30th June, 2020, the Group's properties under development and stocks of completed properties amounted to HK$29,661,206,200 and HK$1,320,403,999 respectively.

As disclosed in Note 4 to the consolidated financial statements, the NRV of properties under development is determined with reference to the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The NRV of stocks of completed properties is determined with reference to the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

How our audit addressed the key audit matter

Our procedures in relation to the valuation of the investment properties included:

• Evaluating the competence, capabilities and objectivity of the Valuers;
• Obtaining an understanding of the valuation process and techniques adopted by the Valuers to assess if they are consistent with industry norms; and
• Obtaining the valuation reports and meeting with the Valuers to assess the reasonableness of the significant unobservable inputs and the accuracy of the source data used by the Valuers and comparing them, on a sampling basis, to where relevant, existing tenancy profiles and publicly available information of similar comparable properties.

Our procedures in relation to the NRV of the properties under development and stocks of completed properties included:

• Challenging the assumptions and judgments applied by management in estimating the NRV including evaluating the accuracy of management's prior period estimation;
• Evaluating the reasonableness of the management's estimation of the total budgeted development costs of the properties under development, on a sampling basis, by comparing them to the actual development costs of similar completed properties of the Group and comparing to the relevant market information; and
• Assessing the appropriateness of the selling price estimated by management, on a sampling basis, by comparing the estimated selling price to recent market prices of units of the same projects or comparable properties, based on the current market conditions in the real estate industry and our knowledge of the Group's business.

66		Tsim Sha Tsui Properties Limited Annual Report 2020

Independent auditor's report (Continued)

Other information

The directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of directors and those charged with governance for the consolidated financial statements

The directors of the Company are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion solely to you, as a body, in accordance with section 405 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

Annual Report 2020	Tsim Sha Tsui Properties Limited		67

Independent auditor's report (Continued)

Auditor's responsibilities for the audit of the consolidated financial statements

(Continued)

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

68		Tsim Sha Tsui Properties Limited Annual Report 2020

Independent auditor's report (Continued)

Auditor's responsibilities for the audit of the consolidated financial statements

(Continued)

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in the independent auditor's report is Ip Chiu Yin.

Deloitte Touche Tohmatsu

Certified Public Accountants

Hong Kong

26th August, 2020

Annual Report 2020	Tsim Sha Tsui Properties Limited		69

Consolidated statement of profit or loss

For the year ended 30th June, 2020

		2020		2019
	NOTES			HK$		HK$
Revenue	5	5,934,504,668		8,060,213,837
Cost of sales		(540,711,582)	(1,319,224,798)
Direct expenses		(1,929,597,714)	(2,231,445,443)
Gross profit		3,464,195,372		4,509,543,596
Change in fair value of investment properties	17	(2,020,824,150)	1,965,519,436
Other income and other gains or losses		210,856,119		100,888,384
Change in fair value of financial assets at
fair value through profit or loss ("FVTPL")		(4,831,296)	1,150,475
Gain on disposal of investment properties		137,663,664	77,044,126
Gain on disposal of subsidiaries	41	41,623,517		49,855,396
Administrative expenses		(850,518,488)	(940,883,876)
Other operating expenses		(199,797,960)	(205,302,589)
Finance income	7		1,027,393,784			645,407,980
Finance costs	8		(150,757,867)		(147,842,886)
Less: interest capitalised	8		107,790,738			74,471,973
Finance income, net		984,426,655		572,037,067
Share of results of associates	9	910,888,761		1,378,020,003
Share of results of joint ventures	10		(472,666,590)	216,478,417
Profit before taxation	11		2,201,015,604			7,724,350,435
Income tax expense	14		(527,491,049)	(716,425,009)
Profit for the year			1,673,524,555			7,007,925,426
Attributable to:
The Company's shareholders		901,781,260		3,714,769,199
Non-controlling interests		771,743,295		3,293,156,227
			1,673,524,555		7,007,925,426
Earnings per share (reported earnings per share)			0.48
Basic	16(a)		2.03

70		Tsim Sha Tsui Properties Limited Annual Report 2020

Consolidated statement of profit or loss and other comprehensive income

For the year ended 30th June, 2020

	2020		2019
		HK$		HK$
Profit for the year	1,673,524,555		7,007,925,426
Other comprehensive (expense) income
Item that will not be reclassified to profit or loss:
Change in fair value of equity instruments at fair
value through other comprehensive income ("FVTOCI")	(300,707,763)	(86,317,377)
Items that may be reclassified subsequently to profit or loss:
Change in fair value of hedging instruments designated as cash	(16,020,273)
flow hedges		-
Reclassification of fair value adjustment to profit or loss on an interest	(1,916,161)
rate swap		-
Exchange differences arising on translation of foreign operations	(464,042,574)	(292,962,821)
Change in fair value of debt instruments at FVTOCI		362,072			-
		(481,616,936)	(292,962,821)
Other comprehensive expense for the year		(782,324,699)	(379,280,198)
Total comprehensive income for the year		891,199,856			6,628,645,228
Total comprehensive income attributable to:
The Company's shareholders	473,507,275		3,509,964,750
Non-controlling interests	417,692,581		3,118,680,478
	891,199,856		6,628,645,228

Annual Report 2020	Tsim Sha Tsui Properties Limited		71

Consolidated statement of financial position

At 30th June, 2020

		2020		2019
	NOTES		HK$		HK$
Non-current assets	17	62,658,456,279		65,035,087,581
Investment properties
Hotel properties	18	1,724,061,091		1,892,461,633
Property, plant and equipment	19	181,446,860		219,848,019
Right-of-use assets	21	1,186,301,166			-
Goodwill	20	739,233,918		739,233,918
Prepaid lease payments - non-current	22		-	1,103,916,724
Interests in associates	23	20,798,910,012		21,977,291,368
Interests in joint ventures	24	2,969,843,643		3,344,737,242
Equity and debt instruments at FVTOCI	25	679,630,327		866,712,547
Advances to associates	23	3,363,101,061		2,051,559,285
Advances to joint ventures	24	10,628,066,644		7,505,992,744
Long-term loans receivable	28	2,180,114,880		2,245,722,825
Other assets			615,000			615,000
		107,109,780,881		106,983,178,886
Current assets	48	29,661,206,200		25,866,538,169
Properties under development
Stocks of completed properties	48	1,320,403,999		1,825,625,869
Hotel inventories		19,985,062		21,276,567
Prepaid lease payments - current	22		-	20,135,984
Financial assets at FVTPL	29	12,568,237		17,371,656
Amounts due from associates	23	908,925,877		3,375,515,148
Amounts due from joint ventures	24	2,434,175,477		2,895,614,759
Amounts due from non-controlling interests	27	623,317,300		75,505,655
Trade and other receivables	30	1,577,625,529		1,245,519,362
Current portion of long-term loans receivable	28	87,741,043		80,941,385
Taxation recoverable		187,591,159		149,887,249
Restricted bank deposits	31	121,827,414		383,731,024
Time deposits	31	37,632,078,811		27,322,778,220
Bank balances and cash	31		6,081,049,352			11,524,945,562
		80,668,495,460		74,805,386,609
Current liabilities		5,006,724,548
32		4,994,664,419
Trade and other payables
Lease liabilities	33	32,031,671			-
Contract liabilities	34	23,454,168,068		16,208,373,613
Amounts due to associates	23	1,709,937,674		2,637,954,369
Amounts due to non-controlling interests	27	738,712,759		881,155,371
Taxation payable		625,867,436	738,324,928
Bank borrowings - due within one year	35	831,996,000			-
Other loans - unsecured	36		107,953,771			110,207,809
		32,507,391,927		25,570,680,509
Net current assets		48,161,103,533
			49,234,706,100
Total assets less current liabilities		155,270,884,414		156,217,884,986

72		Tsim Sha Tsui Properties Limited Annual Report 2020

Consolidated statement of financial position (Continued)

At 30th June, 2020

		2020		2019
	NOTES		HK$		HK$
Capital and reserves	37	14,302,286,718		13,285,452,664
Share capital
Reserves		64,580,746,144			64,551,971,946
Equity attributable to the Company's shareholders		78,883,032,862		77,837,424,610
Non-controlling interests	43	66,389,970,003			67,840,852,670
Total equity		145,273,002,865		145,678,277,280
Non-current liabilities	35	4,418,199,715		5,026,688,387
Long-term bank borrowings - due after one year
Other loans - due after one year	36	1,338,591,095		1,323,425,929
Derivative financial instrument	26	17,936,434			-
Lease liabilities	33	7,537,099			-
Deferred taxation	38	2,502,226,642		2,460,823,898
Advances from associates	39	1,570,678,347		1,622,090,423
Advances from non-controlling interests	40		142,712,217			106,579,069
		9,997,881,549		10,539,607,706
		155,270,884,414		156,217,884,986

The consolidated financial statements on pages 70 to 186 were approved and authorised for issue by the Board of Directors on 26th August, 2020 and are signed on its behalf by:

Robert NG Chee Siong	Daryl NG Win Kong
Chairman	Deputy Chairman

Annual Report 2020	Tsim Sha Tsui Properties Limited		73

Consolidated statement of changes in equity

For the year ended 30th June, 2020

					Attributable to the Company's shareholders
															Non-
					Investment
	Share	Capital	revaluation	Hedging	Exchange	Retained			controlling
	capital	reserve	reserve	reserve	reserve	profits	Total	interests	Total
	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$	HK$
At 1st July, 2018	12,308,150,098		1,665,281,800	118,101,444	-	182,889,459	59,772,513,192	74,046,935,993	65,907,528,744	139,954,464,737
Adjustments	-		-		(227,773,759)	-	-	227,773,759	-	-	-
At 1st July, 2018 (restated)	12,308,150,098		1,665,281,800	(109,672,315)	-	182,889,459	60,000,286,951	74,046,935,993	65,907,528,744	139,954,464,737
Profit for the year	-	-	-	-	-	3,714,769,199	3,714,769,199	3,293,156,227	7,007,925,426
Other comprehensive expense:
- change in fair value of equity
instruments at FVTOCI	-	-	(46,562,747)	-	-	-	(46,562,747)	(39,754,630)	(86,317,377)
- exchange differences arising on
translation of foreign operations	-	-	-	-	(158,241,702)	-	(158,241,702)	(134,721,119)	(292,962,821)
Total comprehensive (expense) income
for the year	-		-	(46,562,747)	-	(158,241,702)	3,714,769,199	3,509,964,750	3,118,680,478	6,628,645,228
Shares issued in lieu of cash dividends	977,302,566		-	-	-	-	-	977,302,566	-	977,302,566
Acquisition of additional interest in
a listed subsidiary	-	286,696,260	-	-	-	-	286,696,260	(287,487,997)	(791,737)
Scrip dividend re-invested by
non-controlling interests	-	-	-	-	-	-	-	850,105,282	850,105,282
Dividends paid to non-controlling
interests	-	-	-	-	-	-	-	(1,747,973,837)	(1,747,973,837)
Final dividend - 2018	-	-	-	-	-	(725,626,212)	(725,626,212)	-	(725,626,212)
Interim dividend - 2019	-		-	-	-	-	(257,848,747)	(257,848,747)	-	(257,848,747)
At 1st July, 2019	13,285,452,664		1,951,978,060	(156,235,062)	-	24,647,757	62,731,581,191	77,837,424,610	67,840,852,670	145,678,277,280
Profit for the year	-	-	-	-	-	901,781,260	901,781,260	771,743,295	1,673,524,555
Other comprehensive expense:
- change in fair value of equity and
debt instruments at FVTOCI	-	-	(165,155,972)	-	-	-	(165,155,972)	(135,189,719)	(300,345,691)
- exchange differences arising on
translation of foreign operations	-	-	-	-	(253,291,161)	-	(253,291,161)	(210,751,413)	(464,042,574)
- change in fair value of hedging
instruments designated as
cash flow hedges	-	-	-	(8,777,043)	-	-	(8,777,043)	(7,243,230)	(16,020,273)
- reclassification of fair value
adjustment to profit or loss
on an interest rate swap	-	-	-	(1,049,809)	-	-	(1,049,809)	(866,352)	(1,916,161)
Total comprehensive (expense) income
for the year	-		-	(165,155,972)	(9,826,852)	(253,291,161)	901,781,260	473,507,275	417,692,581	891,199,856
Shares issued in lieu of cash dividends	1,016,834,054		-	-	-	-	-	1,016,834,054	-	1,016,834,054
Acquisition of additional interest in
a listed subsidiary	-	577,901,435	-	-	-	-	577,901,435	(576,788,312)	1,113,123
Scrip dividend re-invested by
non-controlling interests	-	-	-	-	-	-	-	447,852,471	447,852,471
Dividends paid to non-controlling
interests	-	-	-	-	-	-	-	(1,739,639,407)	(1,739,639,407)
Final dividend - 2019	-	-	-	-	-	(759,176,931)	(759,176,931)	-	(759,176,931)
Interim dividend - 2020	-	-	-	-	-	(263,457,581)	(263,457,581)	-	(263,457,581)
At 30th June, 2020	14,302,286,718		2,529,879,495		(321,391,034)	(9,826,852)	(228,643,404)	62,610,727,939		78,883,032,862	66,389,970,003	145,273,002,865

74		Tsim Sha Tsui Properties Limited Annual Report 2020

Consolidated statement of cash flows

For the year ended 30th June, 2020

		2020		2019
	NOTE		HK$		HK$
OPERATING ACTIVITIES		2,201,015,604
Profit before taxation			7,724,350,435
Adjustments for:		42,967,129
Finance costs			73,370,913
Amortisation and depreciation of property,		111,287,660
plant and equipment and hotel properties			122,857,251
Depreciation of right-of-use assets		74,704,344		-
Release of prepaid lease payments			-	20,081,810
(Gain) loss on disposal of property, plant and equipment		(107,326)	1,167,883
Property, plant and equipment written off		1,150	22,308
Impairment loss on trade receivables, net of reversal		15,919,977	2,914,941
Share of results of associates		(910,888,761)	(1,378,020,003)
Share of results of joint ventures		472,666,590	(216,478,417)
Change in fair value of investment properties		2,020,824,150	(1,965,519,436)
Finance income		(1,027,393,784)	(645,407,980)
Change in fair value of financial assets at FVTPL		4,831,296	(1,150,475)
Gain on disposal of subsidiaries	41	(41,623,517)	(49,855,396)
Gain on disposal of investment properties		(137,663,664)	(77,044,126)
Fair value gain on non-currentinterest-free unsecured		(11,647,643)
other loans		(11,515,684)
Interest income from loans receivable		(69,974,228)	(61,039,744)
Dividend income from listed investments		(33,092,093)	(44,406,522)
Dividend income from unlisted investments			-			(4,206,900)
Operating cash flows before movements in working capital			2,711,826,884			3,490,120,858
Decrease (increase) in long-term loans receivable		58,808,287		(421,922,112)
Increase in properties under development		(3,659,449,786)	(2,458,433,610)
Decrease in stocks of completed properties		502,040,734		1,541,747,858
Decrease (increase) in hotel inventories		1,291,505		(343,095)
Increase in financial assets at FVTPL		(27,877)	(154,952)
Increase in trade and other receivables		(492,331,498)	(86,781,390)
Increase (decrease) in trade and other payables		25,961,029		(972,570,847)
Increase in contract liabilities			7,245,794,455		14,882,723,534
Cash generated from operations		6,393,913,733		15,974,386,244
Hong Kong Profits Tax paid		(433,102,425)	(712,371,965)
Taxation in other jurisdictions paid		(166,416,197)	(1,093,594,988)
Interest received from loans receivable		69,974,228		61,039,744
Dividends received from listed investments		26,678,353		12,996,833
Dividends received from unlisted investments			-	4,206,900
NET CASH FROM OPERATING ACTIVITIES			5,891,047,692			14,246,662,768

Annual Report 2020	Tsim Sha Tsui Properties Limited		75

Consolidated statement of cash flows (Continued)

For the year ended 30th June, 2020

		2020		2019
	NOTE		HK$		HK$
INVESTING ACTIVITIES		1,232,989,217
Repayments from associates			927,699,035
Repayments from joint ventures		72,476,384		2,794,101,611
Repayments from non-controlling interests		961,250		19,727,293
Dividends received from associates		2,436,905,265		494,285,046
Dividends received from joint ventures		109,000,000		109,500,000
Decrease in restricted bank deposits		261,903,610	50,114,668
Interest received		1,113,615,343	460,029,001
Proceeds from disposal of investment properties		229,347,999	229,338,087
Proceeds from disposal of property, plant and equipment		358,074	468,225
Advances to associates		(87,907,428)	(3,164,993,796)
Advances to joint ventures		(2,993,828,234)	(98,735,143)
Advances to non-controlling interests		(548,772,895)	(29,469,853)
Additions to investment properties		(181,329,177)	(181,518,093)
Additions to hotel properties		(1,188,758)	(7,140,582)
Additions to property, plant and equipment		(48,703,167)	(66,275,259)
Proceeds from disposal of subsidiaries
(net of cash and cash equivalents disposed of)	41	346,580,113		110,441,542
Decrease (increase) in time deposits with original		1,788,693,497
maturity over three months			(8,114,767,211)
Purchase of equity instruments at FVTOCI		(81,616,078)		-
Purchase of debt instruments at FVTOCI		(25,233,653)		-
Acquisition of interests in associates		(450,000,000)	(1,100,000,004)
Acquisition of interests in joint ventures			(15,535,872)		-
NET CASH FROM (USED IN) INVESTING ACTIVITIES			3,158,715,490			(7,567,195,433)
FINANCING ACTIVITIES		1,000,000,000
New bank borrowings raised			2,825,996,000
New other loans raised		199,762,418		12,619,022
Repayments of bank borrowings		(778,666,667)	(178,598,750)
Repayments of other loans		(182,874,372)		-
Repayments of lease liabilities		(51,928,782)		-
Advances from associates		299,013,113		725,701,480
Repayments to associates		(1,275,308,931)	(63,228,370)
Repayment to a joint venture			-	(65,945)
Repayments to non-controlling interests		(204,851,066)	(457,007,167)
Advances from non-controlling interests		98,541,602		161,658,651
Dividends paid to ordinary shareholders of the Company		(5,800,457)	(6,172,393)
Interest paid		(118,660,285)	(100,126,548)
Dividends paid to non-controlling interests		(1,299,277,090)		(904,878,939)
NET CASH (USED IN) FROM FINANCING ACTIVITIES		(2,320,050,517)		2,015,897,041

76		Tsim Sha Tsui Properties Limited Annual Report 2020

Consolidated statement of cash flows (Continued)

For the year ended 30th June, 2020

	2020		2019
		HK$		HK$
NET INCREASE IN CASH AND CASH EQUIVALENTS	6,729,712,665		8,695,364,376
CASH AND CASH EQUIVALENTS BROUGHT FORWARD	16,559,848,522		7,926,572,924
EFFECT OF FOREIGN EXCHANGE RATE CHANGES		(75,614,787)	(62,088,778)
CASH AND CASH EQUIVALENTS CARRIED FORWARD		23,213,946,400			16,559,848,522
ANALYSIS OF THE BALANCES OF CASH AND
CASH EQUIVALENTS
Restricted bank deposits	121,827,414		383,731,024
Time deposits	37,632,078,811		27,322,778,220
Bank balances and cash		6,081,049,352		11,524,945,562
Deposits, bank balances and cash in the consolidated statement of		43,834,955,577
financial position		39,231,454,806
Less: Time deposits with original maturity over three months	(20,499,181,763)	(22,287,875,260)
ﾠ Restricted bank deposits	(121,827,414)	(383,731,024)
Cash and cash equivalents in the consolidated statement of
cash flows	23,213,946,400		16,559,848,522

Annual Report 2020	Tsim Sha Tsui Properties Limited		77

Notes to the consolidated financial statements

For the year ended 30th June, 2020

1. General

The Company is a public listed limited liability company incorporated in Hong Kong and with its shares listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The address of the registered office and principal place of business of the Company is 12th Floor, Tsim Sha Tsui Centre, Salisbury Road, Tsim Sha Tsui, Kowloon, Hong Kong.

The Company acts as an investment holding company. The principal activities of its principal subsidiaries are set out in Note 54.

The consolidated financial statements of the Company and its subsidiaries (collectively referred to as the "Group") are presented in Hong Kong dollars, which is the same as the functional currency of the Company.

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs")

New and amendments to HKFRSs that are mandatorily effective for the current year

The Group has applied the following new and amendments to HKFRSs and an interpretation issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") for the first time in the current year:

HKFRS 16 HK(IFRIC) - Int 23 Amendments to HKFRS 9 Amendments to HKAS 19 Amendments to HKAS 28 Amendments to HKFRSs

Leases

Uncertainty over Income Tax Treatments Prepayment Features with Negative Compensation Plan Amendment, Curtailment or Settlement Long-term Interests in Associates and Joint Ventures Annual Improvements to HKFRSs 2015 - 2017 Cycle

Except as described below, the application of the new and amendments to HKFRSs and an interpretation in the current year has had no material impact on the Group's financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

78		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs that are mandatorily effective for the current year

(Continued)

HKFRS 16 "Leases"

The Group has applied HKFRS 16 for the first time in the current year. HKFRS 16 superseded HKAS 17 "Leases", and the related interpretations.

Definition of a lease

The Group has elected the practical expedient to apply HKFRS 16 to contracts that were previously identified as leases applying HKAS 17 and HK(IFRIC)-Int 4 "Determining whether an Arrangement contains a Lease" and not apply this standard to contracts that were not previously identified as containing a lease. Therefore, the Group has not reassessed contracts which already existed prior to the date of initial application.

For contracts entered into or modified on or after the date of initial application, the Group applies the definition of a lease in accordance with the requirements set out in HKFRS 16 in assessing whether a contract contains a lease.

As a lessee

The Group has applied HKFRS 16 retrospectively with the cumulative effect recognised at the date of initial application, 1st July, 2019.

As at 1st July, 2019, the Group recognised additional lease liabilities and right-of-use assets at amounts equal to the related lease liabilities adjusted by any prepaid or accrued lease payments by applying HKFRS 16.C8(b)(ii) transition. Any difference at the date of initial application is recognised in the opening retained profits and comparative information has not been restated.

When applying the modified retrospective approach under HKFRS 16 at transition, the Group applied the following practical expedients to leases previously classified as operating leases under HKAS 17, on lease- by-lease basis, to the extent relevant to the respective lease contracts:

1. relied on the assessment of whether leases are onerous by applying HKAS 37 "Provisions, Contingent Liabilities and Contingent Assets" as an alternative of impairment review;
2. elected not to recognise right-of-use assets and lease liabilities for leases with lease term ends within 12 months of the date of initial application; and
3. applied a single discount rate to a portfolio of leases with a similar remaining terms for similar class of underlying assets in similar economic environment.

When recognising the lease liabilities for leases previously classified as operating leases, the Group has applied incremental borrowing rates of the relevant group entities at the date of initial application. The weighted average incremental borrowing rate applied is 3.2%.

Annual Report 2020	Tsim Sha Tsui Properties Limited		79

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs that are mandatorily effective for the current year

(Continued)

HKFRS 16 "Leases" (Continued)

As a lessee (Continued)

Operating lease commitments disclosed as at 30th June, 2019

Lease liabilities discounted at relevant incremental borrowing rates Less: Recognition exemption - short-term leases

ﾠ Practical expedient - leases with lease term ending within 12 months from

• the date of initial application

Lease liabilities relating to operating leases recognised upon application of HKFRS 16 and lease liabilities as at 1st July, 2019

Analysed as

Current

Non-current

The carrying amount of right-of-use assets as at 1st July, 2019 comprises the following:

	Notes
Right-of-use assets relating to operating leases recognised upon
application of HKFRS 16
Reclassified from hotel properties	(a)
Reclassified from prepaid lease payments	(b)

By class:

Leasehold land

Leased properties

At 1st July, 2019 HK$

92,634,364

91,945,733

(160,001)

(10,751,256)

81,034,476

48,777,912

32,256,564

81,034,476

Right-of-use assets HK$

81,034,476

84,318,013

1,124,052,708

1,289,405,197

1,208,370,721

81,034,476

1,289,405,197

80		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs that are mandatorily effective for the current year

(Continued)

HKFRS 16 "Leases" (Continued)

As a lessee (Continued)

The following adjustments were made to the amounts recognised in the consolidated statement of financial position at 1st July, 2019. Line items that were not affected by the changes have not been included.

		Carrying		Carrying
		amounts		amounts
		previously		under
		reported at		HKFRS 16 at
		30th June,		1st July,
		2019	Adjustments	2019
	Notes	HK$	HK$	HK$
Non-current assets
Hotel properties	(a)	1,892,461,633	(84,318,013)	1,808,143,620
Prepaid lease payments
- non-current	(b)	1,103,916,724	(1,103,916,724)	-
Right-of-use assets		-	1,289,405,197	1,289,405,197
Current assets
Prepaid lease payments
- current	(b)	20,135,984	(20,135,984)	-
Current liabilities
Lease liabilities		-	48,777,912	48,777,912
Non-current liabilities
Lease liabilities		-	32,256,564	32,256,564

Notes:

1. Leasehold land in Hong Kong was classified as hotel properties as at 30th June, 2019. Upon application of HKFRS 16, the leasehold land in Hong Kong amounting to HK$84,318,013 was reclassified from hotel properties to right- of-use assets.
2. Leasehold land in Singapore was classified as prepaid lease payments as at 30th June, 2019. Upon application of HKFRS 16, the current and non-current portion of prepaid lease payments amounting to HK$20,135,984 and HK$1,103,916,724 respectively were reclassified to right-of-use assets.

Annual Report 2020	Tsim Sha Tsui Properties Limited		81

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs that are mandatorily effective for the current year

(Continued)

HKFRS 16 "Leases" (Continued)

As a lessor

In accordance with the transitional provisions in HKFRS 16, the Group is not required to make any adjustment on transition for leases in which the Group is a lessor but account for these leases in accordance with HKFRS 16 from the date of initial application and comparative information has not been restated.

1. Upon application of HKFRS 16, new lease contracts entered into but commence after the date of initial application relating to the same underlying assets under existing lease contracts are accounted for as if the existing leases are modified as at 1st July, 2019. The application has had no impact on the Group's consolidated statement of financial position at 1st July, 2019. However, effective from 1st July, 2019, lease payments relating to the revised lease term after modification are recognised as income on straight-line basis over the extended lease term.
2. Before application of HKFRS 16, refundable rental deposits received were considered as rights and obligations under leases to which HKAS 17 applied. Based on the definition of lease payments under HKFRS 16, such deposits are not payments relating to the right-of-use assets. The discounting effect has had no material impact on the consolidated financial statements of the Group for the current year.
3. Effective from 1st July, 2019, the Group has applied HKFRS 15 "Revenue from Contracts with Customers" to allocate consideration in the contract to each lease and non-lease components. The change in allocation basis has had no material impact on the consolidated financial statements of the Group for the current year.

82		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

2. Application of new and amendments to Hong Kong Financial Reporting Standards ("HKFRSs") (Continued)

New and amendments to HKFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective:

HKFRS 17	Insurance Contracts1
Amendment to HKFRS 16	Covid-19-Related Rent Concessions5
Amendments to HKFRS 3	Definition of a Business2
Amendments to HKFRS 3	Reference to the Conceptual Framework6
Amendments to HKFRS 10	Sale or Contribution of Assets between an Investor and
and HKAS 28	its Associate or Joint Venture3
Amendments to HKAS 1	Definition of Material4
and HKAS 8
Amendments to HKAS 1	Classification of Liabilities as Current or Non-current7
Amendments to HKAS 16	Property, Plant and Equipment - Proceeds before Intended Use6
Amendments to HKAS 37	Onerous Contracts - Cost of Fulfilling a Contract6
Amendments to HKFRS 9,	Interest Rate Benchmark Reform4
HKAS 39 and HKFRS 7
Amendments to HKFRSs	Annual Improvements to HKFRSs 2018 - 20206

1

2

3

4

5

6

7

Effective for annual periods beginning on or after 1st January, 2021

Effective for business combinations and asset acquisitions for which the acquisition date is on or after the beginning of the first annual period beginning on or after 1st January, 2020

Effective for annual periods beginning on or after a date to be determined

Effective for annual periods beginning on or after 1st January, 2020

Effective for annual periods beginning on or after 1st June, 2020

Effective for annual periods beginning on or after 1st January, 2022

Effective for annual periods beginning on or after 1st January, 2023

The Directors of the Company anticipate that the application of these new and amendments to HKFRSs will have no material impact on the consolidated financial statements in the foreseeable future.

Annual Report 2020	Tsim Sha Tsui Properties Limited		83

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies

The consolidated financial statements have been prepared in accordance with HKFRSs issued by the HKICPA and the Hong Kong Companies Ordinance, with the exception of section 381 which requires a company to include all its subsidiary undertakings (within the meaning of Schedule 1 to the Hong Kong Companies Ordinance) in the company's annual consolidated financial statements. Section 381 is inconsistent with the requirements of HKFRS 10 "Consolidated Financial Statements" so far as they apply to subsidiary undertakings which are not controlled by the Group in accordance with HKFRS 10. For this reason, under the provisions of section 380(6), the Company has departed from section 381 and has not treated such companies as subsidiaries but they are accounted for in accordance with the accounting policies in Note 3. Those excluded subsidiary undertakings of the Group are disclosed in Note 56. In addition, the consolidated financial statements include applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange.

The consolidated financial statements have been prepared on the historical cost basis except for investment properties and certain financial instruments, which are measured at fair values, as explained in the accounting policies set out below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of HKFRS 2 "Share- based Payment", leasing transactions that are accounted for in accordance with HKFRS 16 (since 1st July, 2019) or HKAS 17 (before application of HKFRS 16), and measurements that have some similarities to fair value but are not fair value, such as net realisable value in HKAS 2 "Inventories" or value in use in HKAS 36 "Impairment of Assets".

A fair value measurement of a non-financial asset takes into account a market participants' ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

84		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

The significant accounting policies adopted are as follows:

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries. Control is achieved when the Company:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Non-controlling interests in subsidiaries are presented separately from the Group's equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the shareholders of the Company. All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable HKFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under HKFRS 9, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Annual Report 2020	Tsim Sha Tsui Properties Limited		85

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Allocation of total comprehensive income and expense to non-controlling interests

Total comprehensive income and expense of a subsidiary is attributed to the Company's shareholders and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Goodwill

Goodwill arising on acquisitions prior to 1st January, 2005

Goodwill arising on an acquisition of net assets and operations of another entity for which the agreement date is before 1st January, 2005 represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of the relevant acquiree at the date of acquisition.

For previously capitalised goodwill arising on acquisitions of net assets and operations of another entity after 1st July, 2001, the Group has discontinued amortisation from 1st July, 2005 onwards, and such goodwill is tested for impairment annually, and whenever there is an indication that the cash generating unit to which the goodwill relates may be impaired.

Goodwill arising on acquisitions on or after 1st January, 2005

Goodwill arising on an acquisition of a business is carried at cost less accumulated impairment losses, if any, and is presented separately in the consolidated statement of financial position.

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. Any impairment loss recognised for goodwill is not reversed in subsequent periods.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Investments in associates and joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

86		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Investments in associates and joint ventures (Continued)

The results and assets and liabilities of associates and joint ventures are incorporated in these consolidated financial statements using the equity method of accounting. The financial statements of associates and joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for like transactions and events in similar circumstances. Under the equity method, an investment in an associate or a joint venture is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other comprehensive income of the associate or joint venture. Changes in net assets of the associate/joint venture other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group's share of losses of an associate or joint venture exceeds the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate or joint venture), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an associate or a joint venture, any excess of the cost of the investment over the Group's share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.

The Group assess whether there is an objective evidence that the interest in an associate or a joint venture may be impaired. When any objective evidence exists, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with HKAS 36 "Impairment of Assets" as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with HKAS 36 to the extent that the recoverable amount of the investment subsequently increases.

Annual Report 2020	Tsim Sha Tsui Properties Limited		87

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Investments in associates and joint ventures (Continued)

The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or a joint venture, or when the investment (or a portion thereof) is classified as held for sale. When the Group retains an interest in the former associate or joint venture and the retained interest is a financial asset, the Group measures the retained interest at fair value at that date and the fair value is regarded as its fair value on initial recognition in accordance with HKFRS 9. The difference between the carrying amount of the associate or joint venture at the date the equity method was discontinued, and the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture is included in the determination of the gain or loss on disposal of the associate or joint venture. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate or joint venture on the same basis as would be required if that associate or joint venture had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate or joint venture would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued.

The Group continues to use the equity method when an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate. There is no remeasurement to fair value upon such changes in ownership interests.

When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.

When a group entity transacts with an associate or a joint venture of the Group (such as a sale or contribution of assets), profits and losses resulting from the transactions with the associate or joint venture are recognised in the Group's consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Group.

Where the accounting year end dates of the associates and joint ventures are different from the Group's accounting year end date, their results are accounted for in the Group's financial statements based on their management accounts made up to 30th June each year.

Goodwill arising on acquisitions prior to 1st January, 2005

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets and liabilities of the associate recognised at the date of acquisition is recognised as goodwill. From 1st July, 2005 onwards, the Group has discontinued amortisation of goodwill and such goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment.

88		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Investments in associates and joint ventures (Continued)

Goodwill arising on acquisitions on or after 1st January, 2005

Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets and liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is used for impairment as part of the investment. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment in the associate. Any reversal of impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

Any excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Interests in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the joint arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control.

When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its interest in a joint operation:

• its assets, including its share of any assets held jointly;
• its liabilities, including its share of any liabilities incurred jointly;
• its revenue from the sale of its share of the output arising from the joint operation;
• its share of the revenue from the sale of the output by the joint operation; and
• its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the HKFRSs applicable to the particular assets, liabilities, revenues and expenses.

When a group entity sells or contributes assets to a joint operation in which a group entity is a joint operator, the Group is considered to be selling or contributing assets to the other parties to the joint operation, and gains and losses resulting from the sale or contribution are recognised in the Group's consolidated financial statements only to the extent of other parties' interests in the joint operation.

When a group entity purchases assets from a joint operation in which a group entity is a joint operator, the Group does not recognise its share of the gains and losses until it resells those assets to a third party.

Annual Report 2020	Tsim Sha Tsui Properties Limited		89

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation including investment properties under redevelopment for such purposes.

Investment properties are initially measured at cost, including any directly attributable expenditure. Subsequent to initial recognition, investment properties are measured at fair value, adjusted to exclude any prepaid or accrued operating lease income.

Gains or losses arising from changes in the fair value of investment properties are included in profit or loss for the period in which they arise.

Investment properties under redevelopment are measured at fair value at the end of the reporting period. Construction costs incurred for investment properties under redevelopment are capitalised as part of the carrying amount of the investment properties under redevelopment. Any difference between the fair value of the investment properties under redevelopment and their carrying amounts is recognised in profit or loss in the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the profit or loss in the period in which the item is derecognised.

Hotel properties and property, plant and equipment

Hotel properties and property, plant and equipment including leasehold land (classified as finance lease) (prior to application of HKFRS 16) and buildings held for use in the production or supply of goods or services, or for administrative purposes are stated in the consolidated statement of financial position at cost less subsequent accumulated amortisation and depreciation and accumulated impairment losses, if any.

Amortisation and depreciation are recognised so as to write off the cost of items of property, plant and equipment and hotel properties over their estimated useful lives and after taking into account their estimated residual value, using the straight-line method. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of hotel properties and property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the profit or loss in the period in which the item is derecognised.

Ownership interests in leasehold land and building

When the Group makes payments for ownership interests of properties which includes both leasehold land and building elements, the entire consideration is allocated between the leasehold land and the building elements in proportion to the relative fair values at initial recognition.

90		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Hotel properties and property, plant and equipment (Continued)

Ownership interests in leasehold land and building (Continued)

To the extent the allocation of the relevant payments can be made reliably, interest in leasehold land is presented as "right-of-use assets" (upon application of HKFRS 16) or "prepaid lease payments" (before application of HKFRS 16) in the consolidated statement of financial position except for those that are classified and accounted for as investment properties under the fair value model. When the consideration cannot be allocated reliably between non-lease building element and undivided interest in the underlying leasehold land, the entire properties are classified as hotel properties or property, plant and equipment.

Impairment losses on hotel properties, property, plant and equipment and right- of-use assets

At the end of the reporting period, the Group reviews the carrying amounts of its hotel properties, property, plant and equipment and right-of-use assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.

Properties under development and stocks of completed properties

Properties under development which are developed in the ordinary course of business and stocks of completed properties are classified as current assets. Except for the leasehold land element which is measured at cost model in accordance with the accounting policies of right-of-use assets upon the application of HKFRS 16, properties under development and stocks of completed properties are carried at the lower of cost and net realisable value. Cost is determined on a specific identification basis including allocation of the related development expenditure incurred and where appropriate, borrowing costs capitalised. Net realisable value represents the estimated selling price for the properties less estimated cost to completion and costs necessary to make the sales.

Hotel inventories

Hotel inventories are stated in the consolidated statement of financial position at the lower of cost and net realisable value. Cost is calculated using the weighted average cost method.

Annual Report 2020	Tsim Sha Tsui Properties Limited		91

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised as an expense in the year in which they are incurred.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

The benefit of a government loan at a below-market rate of interest is treated as a government grant, measured as the difference between proceeds received and the fair value of the loan based on prevailing market interest rates.

Leases

Definition of a lease (upon application of HKFRS 16 in accordance with transitions in Note 2)

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

For contracts entered into or modified on or after the date of initial application, the Group assesses whether a contract is or contains a lease based on the definition under HKFRS 16 at inception or modification date. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed. As a practical expedient, leases with similar characteristics are accounted on a portfolio basis when the Group reasonably expects that the effects on the financial statements would not differ materially from individual leases within the portfolio.

92		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Leases (Continued)

The Group as a lessee (upon application of HKFRS 16 in accordance with transitions in Note 2) Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

Non-lease components are separated from lease component on the basis of their relative stand-alone prices.

Short-term leases

The Group applies the short-term lease recognition exemption to leases of premises that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.

Right-of-use assets

The cost of right-of-use asset includes:

• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any lease incentives received; and
• any initial direct costs incurred by the Group.

Except for those that are classified as investment properties and measured under the fair value model, right- of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities.

Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.

The Group presents right-of-use assets that do not meet the definition of investment property or inventory as a separate line item on the consolidated statement of financial position. Right-of-use assets that meet the definition of investment property and inventory are presented within "investment properties" and "properties under development"/"stock of completed properties" respectively.

Refundable rental deposits

Refundable rental deposits paid are accounted for under HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments and included in the cost of right-of-use assets.

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at the present value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable.

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Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Leases (Continued)

The Group as a lessee (upon application of HKFRS 16 in accordance with transitions in Note 2)

(Continued)

Lease liabilities (Continued)

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use assets) whenever the lease term has changed, in which case the related lease liability is remeasured by discounting the revised lease payments using a revised discount rate at the date of reassessment.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

• the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
• the consideration for the leases increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the relevant right-of-use asset. When the modified contract contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Group as a lessee (prior to 1st July, 2019)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Operating lease payments, including the cost of acquiring land held under operating leases, are recognised as an expense on straight-line basis over the term of relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis.

The Group as a lessor

Classification and measurement of leases

Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of an underlying asset to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

Rental income from operating leases is recognised in profit or loss on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset, and such costs are recognised as an expense on a straight- line basis over the lease term except for investment properties measured under fair value model. Upon application of HKFRS 16 on 1st July, 2019, variable lease payments that do not depend on an index or a rate are recognised as income when they arise.

94		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Leases (Continued)

The Group as a lessor (Continued)

Classification and measurement of leases (Continued)

When a lease contract contains a specific clause that provides for rent reduction or suspension of rent in the event that the underlying assets (or any part thereof) are affected by adverse events beyond the control of the Group and the lessee so as to render the underlying assets unfit or not available for use, the relevant rent reduction or suspension of rent resulting from the specific clause is accounted for as part of the original lease and not as a lease modification. Such rent reduction or suspension of rent is recognised in profit or loss in the period in which the event or condition that triggers those payments to occur.

Rental income which are derived from the Group's ordinary course of business are presented as revenue.

The Group as a lessor (upon application of HKFRS 16 in accordance with transitions in Note 2) Allocation of consideration to components of a contract

When a contract includes both leases and non-lease components, the Group applies HKFRS 15 to allocate consideration in a contract to lease and non-lease components. Non-lease components are separated from lease component on the basis of their relative stand-alone selling prices.

Refundable rental deposits

Refundable rental deposits received are accounted for under HKFRS 9 and initially measured at fair value. Adjustments to fair value at initial recognition are considered as additional lease payments from lessees.

Lease modification

The Group accounts for a modification to an operating lease as a new lease from the effective date of the modification, considering any prepaid or accrued lease payments relating to the original lease as part of the lease payments for the new lease.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place.

Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising from contracts with customers which are initially measured in accordance with HKFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognised immediately in profit or loss.

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Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Financial instruments (Continued)

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Dividend income and interest income from loans receivable which are derived from the Group's ordinary course of business are presented as revenue.

Financial assets

Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

• the financial asset is held within a business model whose objective is to collect contractual cash flows; and
• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are subsequently measured at FVTOCI:

• the financial asset is held within a business model whose objective is achieved by both selling and collecting contractual cash flows; and
• the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at FVTPL, except that at the date of initial recognition of a financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if that equity investment is neither held for trading nor contingent consideration recognised by an acquirer in a business combination to which HKFRS 3 "Business Combinations" applies.

A financial asset is held for trading if:

• it has been acquired principally for the purpose of selling in the near term; or
• on initial recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-termprofit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument.

96		Tsim Sha Tsui Properties Limited Annual Report 2020

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Classification and subsequent measurement of financial assets (Continued)

1. Amortised cost and interest income
   Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost and debt instruments subsequently measured at FVTOCI. Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset from the beginning of the reporting period following the determination that the asset is no longer credit impaired.
2. Equity instruments designated as at FVTOCI
   Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve; and are not subject to impairment assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, and will be transferred to retained profits.
   Dividends from these investments in equity instruments are recognised in profit or loss when the Group's right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the "revenue" line item in profit or loss.
3. Debt instruments classified as at FVTOCI
   Subsequent changes in the carrying amounts for debt instruments classified as at FVTOCI as a result of interest income calculated using the effective interest method and foreign exchange gains and losses are recognised in profit or loss. All other changes in the carrying amount of these debt instruments are recognised in other comprehensive income and accumulated under the heading of investment revaluation reserve. Impairment allowances are recognised in profit or loss with corresponding adjustment to other comprehensive income without reducing the carrying amounts of these debt instruments. When these debt instruments are derecognised, the cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss.
4. Financial assets at FVTPL
   Financial assets that do not meet the criteria for being measured at amortised cost or designated as FVTOCI are measured at FVTPL.
   Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset.

Annual Report 2020	Tsim Sha Tsui Properties Limited		97

Notes to the consolidated financial statements (Continued)

For the year ended 30th June, 2020

3. Significant accounting policies (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets and other items subject to impairment assessment under HKFRS 9

The Group performs impairment assessment under expected credit loss ("ECL") model on financial assets (including trade and other receivables, advances to associates/joint ventures, debt instruments at FVTOCI, loans receivable, amounts due from associates/joint ventures/non-controlling interests, restricted bank deposits, time deposits and bank balances) and financial guarantee contracts which are subject to impairment under HKFRS 9. The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expected life of the relevant instrument. In contrast, 12-month ECL ("12m ECL") represents the portion of lifetime ECL that is expected to result from default events that are possible within 12 months after the reporting date. Assessment are done based on the Group's historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current conditions at the reporting date as well as the forecast of future conditions.

The Group always recognises lifetime ECL for trade receivables. The ECL on these assets are assessed individually for debtors with significant balances and/or collectively using a provision matrix with appropriate groupings.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there has been a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in the likelihood or risk of a default occurring since initial recognition.

98		Tsim Sha Tsui Properties Limited Annual Report 2020