CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 FINANCIALS 192 193 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021 YEAR ENDED 31 DECEMBER 2021 25 EMPLOYEE BENEFITS (CONT’D) The assets of each scheme have been taken at market value and the liabilities have been calculated using the following principal assumptions: 2021 2021 2021 2020 2020 2020 UK South Korea Taiwan UK South Korea Taiwan Inflation rate 3.5% – – 3.0% 2.0% – Discount rate 1.7% 2.8% 0.5% 1.3% 2.0% 0.5% Rate of salary increase 4.0% – 3.0% 3.5% – 3.0% Rate of pension increases 3.3% – – 2.9% – – Rate of revaluation 3.0% – – 2.5% – – The methodology for computing the discount rate is the yield range method. The assumptions used by the actuaries are the best estimates chosen from a range of possible actuarial assumptions, which due to the timescale covered, may not be necessarily be borne out in practice. The present values of the schemes’ liabilities are derived from cash flow projections over long periods and are inherently uncertain. Sensitivity analysis The calculation of the defined benefit obligation is sensitive to the assumptions set out above. The following table summarises how the impact on the defined benefit obligation at the end of the reporting period would have increased/(decreased) as a result of a change in one of the relevant actuarial assumptions by one percent, holding other assumptions consistent. Defined benefit obligation 1 percent increase 1 percent decrease $’000 $’000 Group 2021 Discount rate (21,686) 27,650 Rate of salary increase 1,389 (1,272) 2020 Discount rate (23,130) 28,312 Rate of salary increase 1,806 (1,664) 26 LEASE LIABILITIES Group Company 2021 2020 2021 2020 $’000 $’000 $’000 $’000 Lease liabilities 265,327 252,041 15,922 20,002 Non-current 246,003 237,854 9,600 14,152 Current 19,324 14,187 6,322 5,850 265,327 252,041 15,922 20,002 The incremental borrowing rates of the Group’s and the Company’s lease liabilities ranges from 0.90 % to 14.55% (2020: 0.90% to 14.55%) per annum during the year. Information about the Group’s and the Company’s exposure to foreign currency and liquidity risk is included in note 41. 27 OTHER LIABILITIES Group Company Note 2021 2020 2021 2020 $’000 $’000 $’000 $’000 Deferred income 122,124 122,713 – – Rental deposits 49,653 59,381 8,041 7,445 Non-current retention sums payable 26,625 29,032 – – Derivative financial liabilities 41 1,295 14,552 346 845 Miscellaneous (principally deposits received and payables) 18,213 17,921 – – 217,910 243,599 8,387 8,290 Deferred income includes the following: (i) $7,030,000 (2020: $7,030,000) relating to the deferred gain on the sale of cash flows as disclosed in footnote (a) of note 44; (ii) $6,635,000 (2020: $6,635,000) relating to the deferred gain arising from the Group’s exit of its entire interest in Summervale, an indirect wholly-owned subsidiary of the Group in October 2016. Although the Group lost control in Summervale, the Group assessed that it maintains some continuing involvement through its investment in secured fixed rate notes issued by Summervale (note 10). Accordingly, a portion of the gain on disposal of Summervale by reference to the extent of the amount of continuing involvement retained in Summervale is deferred; and (iii) $105,406,000 (2020: $105,406,000) relating to the deferred gain arising from the sale of Novotel Singapore Clarke Quay previously owned by CDLHT, to a joint venture.
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