Annual Report 2019

ANNUAL REPORT 2019 229 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 March 2019 26. CUSTOMERS’ DEPOSITS UNDER ESCROW The amount represents the portion of the sales proceeds that have been settled by the buyers of properties and are being held in the escrow accounts. During the construction period, the amount is earmarked for payment of certain properties under development and repayment of relevant bank loans. The fund are remitted to the Group upon the issuance of the relevant certificates by the relevant government authorities. 27. CONTRACT ASSETS Contract assets represent the unbilled amount resulting from sale of properties recognised over time. The contract assets relate to the Group’s right to consideration for work performance and not billed because the right is conditional on the Group’s future performance. The contract assets are transferred to trade debtors when the right becomes unconditional. Certain of the Group’s sales contracts include payment schedules which require stage payments over the construction period once certain specified milestones are reached. The Group requires certain customers to provide upfront deposits of certain percentage of total contract sum as part of its credit risk management policies. 28. CONTRACT COSTS Contract costs capitalised as at 31 March 2019 relate to the incremental sales commissions paid to property agents whose selling activities resulted in customers entering into sale and purchase agreements for the Group’s properties which are still under construction at the reporting date. Contract costs are recognised as part of selling and marketing expenses in the consolidated statement of profit or loss in the period in which revenue from the related property sales is recognised. The amount of capitalised costs recognised in profit or loss during the year was HK$94,781,000. There was no impairment in relation to the opening balance of capitalised costs or the costs capitalised during the year. The Group applies the practical expedient and recognises the incremental costs of obtaining contracts relating to the sale of completed properties and services as an expense when incurred if the amortisation period of the assets that the Group otherwise would have recognised is one year or less.