Annual Report 2021

102 Transport International Holdings Limited 2021 Annual Report FINANCIAL REVIEW Property Holdings and Development The Group’s Property Holdings and Development Division reported a profit after taxation of HK$48.1 million for 2021, representing a decrease of HK$4.7 million or 8.9% as compared with the profit after taxation (excluding a non-recurring net gain amounting to HK$1,495.5 million arising from the revaluation and disposal of 50% equity interest in TM Properties Investment Limited) of HK$52.8 million for 2020. A review of the Group’s investment properties is set out as follows: LCK Commercial Properties Limited (“LCKCP”) LCKCP, a wholly-owned subsidiary of the Group, is the owner of “Manhattan Mid-town”, the commercial complex of Manhattan Hill. The 50,000 square feet shopping mall has provided Manhattan Hill residents and other shoppers with high quality retail facilities since its opening in March 2009. As at 31 December 2021, the entire lettable area of the shopping mall was leased out, generating a stream of recurring rental income for the Group. As at 31 December 2021, the carrying value of the shopping mall (classified as investment property on the consolidated statement of financial position), stated at cost less accumulated depreciation, amounted to HK$71.0 million (2020: HK$73.5 million). LCK Real Estate Limited (“LCKRE”) LCKRE, a wholly-owned subsidiary of the Group, is the owner of a 17-storey commercial office building at 9 Po Lun Street, Lai Chi Kok, Kowloon, which has a total gross floor area of about 156,700 square feet. A portion of the gross floor area is used by the Group as headquarters with the remaining gross floor area leased out to offices, shops and restaurants. As at 31 December 2021, the carrying value of the building stated at cost less accumulated depreciation, amounted to HK$23.1 million (2020: HK$26.5 million). KT Real Estate Limited (“KTRE”) KTRE, a wholly-owned subsidiary of the Group, together with Turbo Result Limited (“TRL”), a subsidiary of Sun Hung Kai Properties Limited (“SHKP”), owns Kwun Tong Inland Lot No. 240, No. 98 How Ming Street, Kowloon, Hong Kong (the “Kwun Tong Site”) in equal shares as tenants in common. On 11 December 2009, KTRE, TRL, the Company and SHKP entered into an agreement to jointly develop the Kwun Tong Site for non-residential (excluding hotel) purposes (the “Development”). Sun Hung Kai Real Estate Agency Limited, a wholly-owned subsidiary of SHKP, has been appointed as the project manager to oversee the Development. The Group intends to hold the Development for long-term investment purposes. On 4 August 2016, KTRE and TRL accepted the offer from the Lands Department for the grant of lease modification for the Kwun Tong Site from industrial to non-residential use (excluding hotel, petrol filling station and residential care home) at a land premium of HK$4,305.0 million. 50% of such land premium, which amounted to HK$2,152.5 million, was borne by KTRE. On 20 December 2018, KTRE and TRL engaged Yee Fai Construction Company Limited, a wholly-owned subsidiary of SHKP, to carry out and perform construction works for the Development at a contract sum of approximately HK$4,436.0 million (i.e. approximately HK$2,218.0 million by each of KTRE and TRL) (the “Building Contract”), subject to adjustments in accordance with the Building Contract. The Building Contract was approved by independent shareholders of the Group on 1 February 2019. The two office towers have been topped out and the occupation permit is expected to be obtained in 2022. As at 31 December 2021, the carrying value of the Kwun Tong Site (classified as investment property under development on the consolidated statement of financial position) amounted to HK$3,844.6 million (2020: HK$3,005.4 million).