CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 FINANCIALS 160 161 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021 YEAR ENDED 31 DECEMBER 2021 6 ASSETS HELD FOR SALE Group 2021 2020 $’000 $’000 Assets held for sale Property, plant and equipment 334,190 45,884 Investment properties 1,052,271 – Trade and other receivables 41,132 – Cash and cash equivalents 18,166 – 1,445,759 45,884 Liabilities directly associated with the assets held for sale Trade and other payables 16,882 – Other liabilities 4,381 – Provision for taxation 5,979 – Deferred tax liabilities 107 – 27,349 – At 31 December 2021, assets held for sale and liabilities directly associated with the assets held for sale relate to the following proposed divestments: (a) At 31 December 2020, an indirect subsidiary of the Group, Millennium & Copthorne Hotels Limited (M&C), had entered into sale and purchase agreements to sell two hotels, Copthorne Orchid Penang and Millennium Harvest House Boulder (which are in the hotel operations segment), to third parties for sales consideration of $24.3 million and $97.3 million respectively. The agreement entered into for the sale of Copthorne Orchid Penang was terminated in December 2021 and the Group continues to explore the sale of the property with other prospective buyers. The sale of both properties are expected to be completed within the next one year. (b) The Group applied for an initial public offering (IPO) of a real estate investment trust (REIT) that will own commercial assets located in the UK during 2021. The Group plans to dispose of the subsidiaries which hold two commercial properties in the UK, namely Aldgate House and 125 Old Broad Street (which are in the investment properties segment), to the REIT. The sale is expected to be completed within the next one year. (c) A wholly-owned subsidiary of the Group, Singapura Developments (Private) Limited, has entered into a share sale agreement to sell its interest in an industrial warehouse in Singapore (which is in the investment properties segment) for a sale consideration of $82 million. The sale was completed on 7 March 2022 and the gain on disposal is not material to the Group. (d) M&Centered intoa sale andpurchase agreement to sell ahotel,MillenniumHiltonSeoul (which is in thehotel operations segment), for a sale consideration of KRW1.1 trillion (S$1.25 billion). The sale was completed on 24 February 2022 and the gain on disposal is estimated to be $499.3 million, net of estimated taxes and related transaction costs. At 31 December 2020, assets held for sale were related to the following proposed divestments: (a) The abovementioned proposed divestments of Copthorne Orchid Penang and MillenniumHarvest House Boulder by M&C. The sale was expected to be completed within the next one year. (b) The proposed disposal by M&C of the land held at the property of Copthorne Hotel Christchurch (which was in the hotel operations segment) to a third party. The sale was completed in May 2021 for sales consideration of NZ$18.0 million and the Group recognised a gain of $14.9 million on the sale. (c) The proposed disposal by M&C of its interest in the Copthorne Hotel Birmingham (which was in the hotel operations segment) on the exercise of a put option to sell. The sale was completed in August 2021 for a consideration of $31.7 million and the Group recognised a gain of $15.6 million on the sale. 7 INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES Company Note 2021 2020 $’000 $’000 Investments in subsidiaries Unquoted shares, at cost 2,028,374 2,058,682 Impairment losses (32,287) (33,663) 1,996,087 2,025,019 Balances with subsidiaries Amounts owing by subsidiaries: – trade 16,481 18,777 – non-trade, interest-free 6,489,376 5,945,358 – non-trade, interest-bearing 5,868,079 6,264,642 12,373,936 12,228,777 Impairment losses (183,563) (125,600) 12,190,373 12,103,177 Receivable: – Within 1 year 15 5,985,134 5,585,340 – After 1 year 11 6,205,239 6,517,837 12,190,373 12,103,177 Amounts owing to subsidiaries: – trade 968 3,589 – non-trade, interest-free 2,006,511 2,163,953 – non-trade, interest-bearing 490,579 451,849 2,498,058 2,619,391 Repayable: – Within 1 year 30 2,498,058 2,619,391 The Company assessed the carrying amount of its investments in subsidiaries for indicators of impairment. Based on the assessment, the Company recognised an impairment loss of $17,270,000 (2020: $1,727,000) on its investments in three wholly-owned subsidiaries, following a decline in their financial position. The recoverable amounts of the subsidiaries were estimated taking into consideration the fair values of the underlying assets and the liabilities of the companies. The fair value measurement was categorised as a Level 3 in the fair value hierarchy based on the inputs in the valuation techniques used. The non-trade amounts owing by and to subsidiaries are unsecured. In respect of interest-bearing amounts owing by and to subsidiaries, interest was charged at rates ranging from 0.39% to 4.18% (2020: 0.32% to 3.95%) per annum and at rates ranging from 1.00% to 3.00% (2020: 2.74% to 3.00%) per annum respectively. The non-trade balances with subsidiaries that are presented as receivable or repayable within one year are receivable or repayable on demand. The non-trade amounts owing by subsidiaries receivable after one year are loans to subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future. These amounts are, in substance, a part of the Company’s net investments in subsidiaries. Information about the Company’s exposure to credit risk on the amounts owing by subsidiaries is included in note 41.
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