Investor Presentaiton
HKAS 1.51(a)
HKAS 1.49
HK Listco Ltd
Financial statements for the year ended 31 December 2023
HKFRS 15.126(c)
HKFRS 15.119(a) & (c)
HKFRS 15.119(b).
HKFRS 15.119(b),
126(a)
HKFRS 15.119(c)
HKFRS 15.119(a), 124.
HKFRS 15.126(a) &
(b)
(b)
(c)
the inventory less any expected costs to recover goods (including potential decreases in the
value of the returned goods).
If the products are a partial fulfilment of a contract covering other goods and/or services, then
the amount of revenue recognised is an appropriate proportion of the total transaction price
under the contract, allocated between all the goods and services promised under the contract
on a relative stand-alone selling price basis except when a variable consideration is allocated to
a specific performance obligation in the contract. Generally, the group establishes standalone
selling prices with reference to the observable prices of products or services sold separately in
comparable circumstances to similar customers.
Sale of properties 107
Revenue arising from the sale of properties developed for sale in the ordinary course of business is
recognised when legal assignment is completed, which is the point in time when the customer has
the ability to direct the use of the property and obtain substantially all of the remaining benefits of
the property.
When residential properties are marketed by the group while the property is still under
construction, the group may offer a discount compared to the listed sales price, provided the
customer agrees to pay the balance of the consideration early. Otherwise, the customer is required
to pay 10% of the contract value as a deposit upon signing the sale and purchase agreement ("SPA")
with the rest of the consideration being paid no later than on completion of the SPA. Deposits and
instalments received on properties sold prior to the date of revenue recognition are included in the
statement of financial position under contract liabilities (see note 1(p)).
To the extent that the advance payments from customers are regarded as providing a significant
financing benefit to the group, revenue recognised under that contract includes the interest
accreted on the contract liability under the effective interest method during the period between
the payment date and the completion date of legal assignment. The discount rate applied is
reflective of the rate in a separate financing transaction between the group and the customer at
contract inception. The interest is expensed as accrued unless it is eligible to be capitalised under
HKAS 23, Borrowing costs, in accordance with note 1(cc).
Construction contracts
The group's construction activities under construction contracts with customers for office premises
and residential buildings create or enhance real estate assets controlled by the customers.
When the outcome of a construction contract can be reasonably measured, revenue from the
contract is recognised over time during the construction process using the cost-to-cost method.
Under the cost-to-cost method, revenue is recognised based on the proportion of the actual costs
incurred relative to the estimated total costs to provide a faithful depiction of the transfer of those
services.
The likelihood of the group earning contractual bonuses for early completion or suffering
contractual penalties for late completion are taken into account in making these estimates, such
that revenue is only recognised to the extent that it is highly probable that a significant reversal in
the amount of cumulative revenue recognised will not occur. The group applies the most likely
amount approach to estimate such variable consideration by considering the single most likely
amount in a limited range of possible consideration amounts, taking into account the group's
current progress and future performance expectations compared to the agreed completion
timeline.
When the outcome of the contract cannot be reasonably measured, revenue is recognised only to
the extent of contract costs incurred that are expected to be recovered.
107
The wording of this accounting policy is only relevant where the nature of the entity's property development activities is such that
revenue is only recognised on the activity at a single point in time, rather than continuously as construction progresses, even when
the entity has entered into a pre-completion sales agreement. The wording should be tailored when the nature of an entity's
property development activities and contracts with customers indicate that a different recognition policy would be appropriate for
some or all of the property development activities. In addition, disclosure of the judgements made by the entity in applying such
different policies may be appropriate under paragraph 122 of HKAS 1 (for example, in the entity's equivalent of note 2(a)).
71
© 2023 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited ("KPMG International"),
a private English company limited by guarantee. All rights reserved.View entire presentation