Star Properties Cayman Islands : INTERIM RESULT ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2017

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Star Properties Group (Cayman Islands) Limited

星 星 地 產 集 團（ 開 曼 群 島 ）有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1560)

INTERIM RESULT ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2017

The board of directors of Star Properties Group (Cayman Islands) Limited (the "Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2017 together with the comparative figures as follows:

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2017

Six months ended

NOTES	30.6.2017 HK$'000	30.6.2016 HK$'000
(Unaudited)	(Unaudited)
Revenue	3	596,408	17,414
Cost of sales and services	(422,922)	(6,684)
Gross profit	173,486	10,730
Other income	4	1,850	2,171
Gain on change in fair value of
investment properties	9,348	911
Selling expenses	(29,102)	(960)
Administrative expenses	(38,699)	(10,274)
Listing expenses	-	(16,438)
Finance costs	5	(1,861)	(3,473)

Six months ended

NOTES	30.6.2017 HK$'000	30.6.2016 HK$'000
(Unaudited)	(Unaudited)

Profit (loss) before tax	6	115,022	(17,333)
Income tax expense	7	(22,797)	(1,215)

Profit (loss) and total comprehensive

income (expense) for the period 92,225 (18,548)

Earnings (loss) per share

- Basic (HK cents) 9 33.42 (11.04)

- Diluted (HK cents) 9 33.09 N/A

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2017

NOTES	30.6.2017 HK$'000	31.12.2016 HK$'000
(Unaudited)	(Audited)
NON-CURRENT ASSETS
Plant and equipment	1,004	159
Investment properties	41,140	573,990
Deferred tax asset	-	1,051
Loan receivables	10	44,336	11,449
86,480	586,649
CURRENT ASSETS
Properties held for sale	1,195,924	691,529
Trade and other receivables	11	8,375	20,993
Deposits paid	249,600	33,998
Stakeholder's accounts	37,701	925
Pledged bank deposit	10,013	-
Bank balances and cash	74,588	31,809
1,576,201	779,254
CURRENT LIABILITIES Trade and other payables	12	143,265	171,259
Tax liabilities	22,033	2,324
Borrowings	13	996,513	741,663
1,161,811	915,246
NET CURRENT ASSETS (LIABILITIES)	414,390	(135,992)
TOTAL ASSETS LESS CURRENT
LIABILITIES	500,870	450,657
NON-CURRENT LIABILITY
Deferred tax liabilities	2,022	529
NET ASSETS	498,848	450,128
CAPITAL AND RESERVES Share capital	14	4,480	2,240
Reserves	494,368	447,888
TOTAL EQUITY	498,848	450,128

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2017

1. Basis of preparation

   The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange").

2. Principal accounting policies

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

   Except as described below, the accounting policies methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2017 are the same as those followed in the preparation of the Group's consolidated financial statements for the year ended 31 December 2016.

   Application of amendments to Hong Kong Financial Reporting Standards ("HKFRSs")

   In the current interim period, the Group has applied, for the first time, the following amendments to HKFRSs issued by the HKICPA that are relevant to the preparation of the Group's condensed consolidated financial statements:

   Amendments to HKAS 7 Disclosure Initiative

   Amendments to HKAS 12 Recognition of Deferred Tax Assets for Unrealised Losses Amendments to HKFRS 12 As part of the Annual Improvements to HKFRSs 2014-2016 Cycle

   The application of the above amendments to HKFRSs in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in theses condensed consolidated financial statements. Additional disclosures about changes in liabilities arising from financing activities, including both changes from cash flows and non-cash changes on application of amendments to HKAS 7 will be provided in the consolidated financial statements for the year ending 31 December 2017.

3. Revenue and segment information

   The Group's revenue represents the amount received and receivable for revenue arising on property development, property investment, provision of property management services and provision of finance.

   Six months ended

   30.6.2017 HK$'000	30.6.2016 HK$'000
   (Unaudited)	(Unaudited)
   Property development - sales of properties Property investment - rental income from leasing of investment properties	593,983 1,749	12,444 4,970
   Provision of property management services	438	-
   Provision of finance	238	-
   596,408	17,414

   Information reported to the Group's chief operating decision makers, who are the executive directors of the Company, for the purposes of resource allocation and assessment of performance is mainly focused on the property development, property investment, provision of property management services and provision of finance.

   Information relating to assets and liabilities in each segment is not included as there has been no material change from the amounts disclosed in the last annual financial statements for each segment.

   Specifically, the Group's reportable and operating segments under HKFRS 8 Operating Segments are as follows:

4. Property development - sales of properties

5. Property investment - rental income from leasing of investment properties

6. Provision of property management services - provision of property management services for the completed properties.

7. Provision of finance - provision of financing services to the property buyers

   During the year ended 31 December 2016, the Group had commenced its provision of property management services and finance business and operating segments regarding these businesses were reported starting from the six months ended 30 June 2017.

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

   Segment revenue Segment results

   Six months ended Six months ended 30.6.2017 30.6.2016 30.6.2017 30.6.2016 HK$'000 HK$'000 HK$'000 HK$'000

   (Unaudited) (Unaudited) (Unaudited) (Unaudited)

   Property development 593,983 12,444 121,199 3,716

   Property investment 1,749 4,970 6,210 711

   Provision of property management

   services 438 - 269 - Provision of finance 238 - 136 -

   Segment total 596,408 17,414 127,814 4,427

   Unallocated income	13	587
   Unallocated expenses	(12,485)	(5,909)
   Listing expenses	-	(16,438)
   Finance costs	(320)	-

   Profit (loss) before tax 115,022 (17,333)

   Segment profit (loss) represents the profit or loss earned by each segment without allocation of listing expenses, certain other income, administration expenses, and finance costs. This is the measure reported to the chief operating decision makers for the purposes of resource allocation and performance assessment.

   The following is an analysis of the Group's assets and liabilities by operating and reportable segments:

   30.6.2017 HK$'000	31.12.2016 HK$'000
   (Unaudited)	(Audited)
   Segment assets Property development	1,342,265	765,903
   Property investment	42,356	582,617
   Provision of property management services	408	-
   Provision of finance	49,497	13,284
   Total segment assets	1,434,526	1,361,804
   Unallocated assets	228,155	4,099
   Consolidated total assets	1,662,681	1,365,903
   Segment liabilities Property development	1,130,701	688,560
   Property investment	2,220	223,877
   Provision of property management services	101	-
   Provision of finance	22	2
   Total segment liabilities	1,133,044	912,439
   Unallocated liabilities	30,789	3,336
   Consolidated total liabilities	1,163,833	915,775

8. Other income

Six months ended

30.6.2017 HK$'000	30.6.2016 HK$'000
(Unaudited)	(Unaudited)
Interest income	113	30
Temporary rental income from properties held for sale	1,690	1,401
Properties management fees	-	467
Others	47	273
1,850	2,171
5.	Finance costs

Six months ended 30.6.2017 30.6.2016

HK$'000 HK$'000

(Unaudited) (Unaudited)

Interest on: Bank borrowings wholly repayable within five years	16,331	7,383
Loans from related parties	309	1,606
Total borrowing costs	16,640	8,989
Less: amount capitalised in cost of qualifying assets	(14,779)	(5,516)

1,861 3,473

Borrowing costs capitalised during the current period arose on the specific borrowing for the expenditure on each property development.

1. Profit (loss) before tax

   Six months ended 30.6.2017 30.6.2016

   HK$'000 HK$'000

   (Unaudited) (Unaudited)

   Profit (loss) before tax has been arrived at after (crediting) charging:

   Directors' emoluments	23,032	-
   Other staff costs	5,354	2,643
   Total staff costs Less: capitalised in properties held for sale and	28,386	2,643
   investment properties	(1,335)	(1,059)
   27,051	1,584
   Cost of inventories recognised as an expense	417,284	5,460
   Depreciation of property, plant and equipment	103	77
   Property agency commission (included in selling expenses)	29,086	117
   Loss on write-off of plant and equipment	94	212
   Legal and professional fees	1,868	4,310
   Gross rental income from investment properties Less: direct operating expenses incurred for investment properties	(1,749)	(4,970)
   that generated rental income (included in cost of sales and
   services)	841	1,224
   (908)	(3,746)

2. Income tax expense

   Six months ended

   30.6.2017 HK$'000	30.6.2016 HK$'000
   (Unaudited)	(Unaudited)
   Current tax: Hong Kong Profits Tax	20,253	1,215
   Deferred tax	2,544	-
   22,797	1,215

   The Group is subject to 16.5% of the estimated assessable profits under Hong Kong Profits Tax.

3. Dividend

   During the current period, final dividend of HK$0.22 per share in respect of the year ended 31 December 2016, totalling HK$49,280,000 (for the six months ended 30 June 2016: nil), was declared and paid on 19 May 2017.

4. Earnings (loss) per share

   The calculation of the basic and diluted earnings (loss) per share is based on the following data:

   Six months ended 30.6.2017 30.6.2016

   HK$'000 HK$'000

   (Unaudited) (Unaudited)

   Earnings

   Earnings (loss) for the purposes of basic and diluted (for the six

   months ended 30 June 2016: basic) earnings per share 92,225 (18,548)

   '000 '000

   Number of shares

   Weighted average number of ordinary shares for the purpose of

   basis earnings (loss) per share 275,978 168,000

   Effect of dilutive potential ordinary share in respect of

   outstanding share options 2,714

   Weighted average number of ordinary shares for the purpose of

   diluted earnings per share 278,692

   No diluted loss per share is presented for the six months ended 30 June 2016 as there were no dilutive potential ordinary shares outstanding during that period.

5. Loan receivables

   30.6.2017 31.12.2016

   HK$'000 HK$'000

   (Unaudited) (Audited)

   Variable-rate loan receivables (Note) 47,505 11,590

   Analysis as:

   • Non-current portion 44,336 11,449

   • Current portion (note 11) 3,169 141

   47,505 11,590

   Note:

   The balances include:

6. loan receivables amounting to HK$403,000 (31 December 2016: HK$790,000), which are secured by the property units of a borrower, interest bearing at Hong Kong Prime Rate plus 2% per annum; and

7. loan receivables amounting to HK$47,102,000 (31 December 2016: HK$10,800,000), which are secured by the property units of the borrowers and interest bearing at Hong Kong Prime Rate minus 1.75% per annum. The principal amounts will be fully repaid at the maturity dates respectively.

Loans are provided to borrowers at a range of 60 to 70% of sale consideration of the pledged property units. The directors of the Company consider that the fair values of the collaterals are higher than the carrying amount of loan receivables as at 30 June 2017 and 31 December 2016.

As at 30 June 2017 and 31 December 2016, all the loan receivables are neither past due nor impaired.