Urban Renewal Authority 2018-19 Annual Report

152 (expressed in Hong Kong Dollars) NOTES TO THE FINANCIAL STATEMENTS 9. Properties under development As at 31 March 2019, the properties under development are analysed as follows: 2019 2018 $’000 $’000 Cost, including Home Purchase Allowance (“HPA”) (Note (i)) At 1 April 25,769,250 19,087,066 Add: Additions during the year 5,628,405 9,546,641 Less: Charged to profit or loss during the year (1,788,898) (2,864,457) At 31 March* 29,608,757 25,769,250 Provision for impairment at 31 March (1,180,465) (1,980,300) Balance as at 31 March 28,428,292 23,788,950 * The amount includes accumulated interest and other borrowing costs capitalised of $317,892,000 (31 March 2018: $278,418,000). As at 31 March 2019, the properties under development are analysed as follows: 2019 2018 $’000 $’000 Non-current portion 25,930,743 23,788,950 Current portion (development for sale) 2,497,549 – 28,428,292 23,788,950 Notes: (i) In March 2001, the Finance Committee of the Legislative Council approved, inter alia, the revised basis for calculating the HPA payable to owners of domestic properties and ex-gratia allowances payable to owners and owner-occupiers affected by land resumption. The relevant policies governing the Authority’s payment of HPA and ex-gratia allowances for properties acquired/resumed and the clearance of occupiers are based on the above framework which have resulted in a high cost base for the Group’s redevelopment projects. In respect of domestic properties, the assessment of HPA is based on a notional replacement flat of 7 years old which is assumed to be in a comparable quality building, situated in a similar locality in terms of characteristics and accessibility, being at the middle floor with average orientation not facing south or west, and without seaview. The HPA paid to the owner-occupiers represents the difference between the assessed value of the notional 7-year-old flat and estimated market value of the acquired property at the offer date. The owner will also receive the estimated market value of his flat in addition to the HPA. As at 31 March 2019, the Group’s estimated cash outflow in respect of project under acquisition and resumption as well as construction cost for self-developed projects was $9.1 billion (31 March 2018: $17.1 billion), without accounting for any future cash inflow for the projects. (ii) The Group launched the Flat-for-Flat (“FFF”) Scheme to provide domestic owner-occupiers affected by the Group’s redevelopment projects commenced after 24 February 2011 with an alternative option to cash compensation. The owner-occupier taking the option of FFF will have to top up if the price of the new flat is higher than the cash compensation for his old flat. The domestic owner-occupiers could have a choice of “in-situ” flats on the lower floors of the new development or flats in an FFF Scheme at Kai Tak.