Review of Operations Six months ended Year ended 30th June 31st December Underlying Profit Reconciliation 2023 2022 2022 Note HK$M HK$M HK$M Restated Profit Attributable to the Company’s Shareholders per Financial Statements 2,223 4,348 7,980 Adjustments in respect of investment properties: Valuation losses/(gains) in respect of investment properties (a) 1,648 (755) (1,726) Deferred tax on investment properties (b) 347 213 1,402 Valuation gains realised on sale of interests in investment properties (c) 29 299 915 Depreciation of investment properties occupied by the Group (d) 11 11 22 Non-controlling interests’ share of valuation movements less deferred tax (14) 75 144 Movement in the fair value of the liability in respect of a put option in favour of the owner of a non-controlling interest (e) 4 20 49 Remeasurement gains on interests in joint venture companies which became subsidiary companies after completion of acquisition (f) (306) – – Less amortisation of right-of-use assets reported under investment properties (g) (41) (42) (80) Underlying Profit Attributable to the Company’s Shareholders 3,901 4,169 8,706 Profit from divestment (9) (497) (1,530) Recurring Underlying Profit Attributable to the Company’s Shareholders 3,892 3,672 7,176 Notes: (a) This represents the net valuation movements as shown in the Group’s consolidated statement of profit or loss and the Group’s share of net valuation movements of joint venture companies. (b) This represents deferred tax movements on the Group’s investment properties, plus the Group’s share of deferred tax movements on investment properties held by joint venture companies. These comprise deferred tax on valuation movements on investment properties in the Chinese Mainland and the U.S.A., and deferred tax provisions made in respect of investment properties held for the long term where it is considered that the liability will not reverse for some considerable time. It also includes certain tax adjustments arising from transfers of investment properties within the Group. (c) Prior to the implementation of HKAS 40, changes in the fair value of investment properties were recorded in the revaluation reserve rather than the consolidated statement of profit or loss. On sale, the valuation gains/(losses) were transferred from the revaluation reserve to the consolidated statement of profit or loss. (d) Prior to the implementation of HKAS 40, no depreciation was charged on investment properties occupied by the Group. (e) The value of the put option in favour of the owner of a non-controlling interest is calculated principally by reference to the estimated fair value of the portion of the underlying investment property in which the owner of the non-controlling interest is interested. (f) The remeasurement gains on interests in joint venture companies were calculated principally by reference to the estimated market value of the underlying properties portfolio of the joint venture companies, netting off with all related cumulative exchange difference. (g) HKFRS 16 amends the definition of investment property under HKAS 40 to include properties held by lessees as right-of-use assets to earn rentals or for capital appreciation or both, and requires the Group to account for such right-of-use assets at their fair value. The amortisation of such right-of-use assets is charged to underlying profit. 18 Swire Properties Limited Interim Report 2023