Review of Operations Six months ended Year ended 30th June 31st December Underlying Profit Reconciliation 2024 2023 2023 Note HK$M HK$M HK$M Profit Attributable to the Company’s Shareholders per Financial Statements 1,796 2,223 2,637 Adjustments in respect of investment properties: Fair value losses in respect of investment properties (a) 831 1,648 4,392 Deferred tax on investment properties (b) 660 347 461 Fair value gains realised on sale of interests in investment properties (c) 527 29 4,398 Depreciation of investment properties occupied by the Group (d) 10 11 22 Non-controlling interests’ share of fair value movements less deferred tax 47 (14) 8 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) 36 4 39 Remeasurement gains on interests in joint venture companies which became subsidiary companies after completion of acquisition (f) – (306) (306) Reversal of impairment loss on a hotel held as part of a mixed-use development (g) (11) – – Less amortisation of right-of-use assets reported under investment properties (h) (39) (41) (81) Underlying Profit Attributable to the Company’s Shareholders 3,857 3,901 11,570 Profit from divestment (287) (9) (4,285) Recurring Underlying Profit Attributable to the Company’s Shareholders 3,570 3,892 7,285 Notes: (a) This represents the fair value movements as shown in the Group’s consolidated statement of profit or loss and the Group’s share of fair value movements of joint venture and associated 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 and associated companies. These comprise deferred tax on fair value 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, fair value 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) Under HKAS 40, hotel properties are stated in the accounts at cost less accumulated depreciation and any provision for impairment losses, rather than at fair value. If HKAS 40 did not apply, wholly-owned and joint venture hotel properties held for the long term as part of mixed-use property developments would be accounted for as investment properties. Accordingly, any increase or decrease in their values would be recorded in the revaluation reserve rather than in the consolidated statement of profit or loss. (h) 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 2024