Annual Report 2020

Operating and Other Expenses During the economic downturn, the Group continued to strictly control costs and improve operating efficiency. During the year, general recurring operating costs were reduced by approximately HK$83.3 million compared with last year. In addition, according to relevant accounting standards, the Group is required to conduct regular assessments of their leased right-of-use assets and other property, plant and equipment. Due to the epidemic, the operating income generated from these assets is expected to decline, an impairment loss of HK$34.2 million in the leased right-of-use assets and other property, plant and equipment was recorded during the year. As a result, overall operating costs dropped by HK$49.1 million to HK$165.8 million compared to last year (2019: HK$214.9 million). Treasury Management and Financial Condition As to the exchange-rate, interest-rate, liquidity and financing risks generated in the course of our daily operations, the Group has managed them in accordance with pre-established policies and closely monitored our financial condition and financing needs to ensure solvency and fulfillment of commitments. In terms of foreign-exchange risk, the majority of it came from assets and business operations in mainland China, and RMB and USD bank deposits, and equity denominated in USD and EUR as the Group mainly operates business in Hong Kong with related cash flow, assets and liabilities denominated in Hong Kong dollars. In terms of interest-rate risk, the Group’s funding arrangements are mainly in EUR, and bank borrowing interests are mainly priced at a fixed interest rate. The Group has a strong liquidity position and hence liquidity risk is minimal. As of 31 December 2020, the consolidated net cash was approximately HK$5 billion (31 December 2019: HK$5.2 billion), and bank loans were HK$2.99 million (31 December 2019: HK$2.73 million). As for financing risk, as of 31 December 2020, the total banking facilities granted to the Group was approximately HK$1 billion (31 December 2019: HK$1.3 billion), of which 0.30% (31 December 2019: 0.21%) has been used. Accordingly, the gearing ratio (calculated by dividing the total consolidated borrowings by the total consolidated shareholders’ equity) was only 0.02% (31 December 2019: 0.04%). The Group pursues a conservative and steady financial policy with sufficient funds and credit lines, which are adequate for us to cope with the uncertain economic environment in the foreseeable future, and to carry out business development plans that offer good investment yield. STAY PRUDENT AND VIGILANT 025 Miramar Hotel and Investment Company, Limited Annual Report 2020 Management Discussion and Analysis