CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 FINANCIALS 194 195 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021 YEAR ENDED 31 DECEMBER 2021 28 PROVISIONS Beijing indemnity Capital expenditure Legal provisions Cash flow support Interest support Financial guarantee Korea provision Others Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group At 1 January 2020 16,257 611 4,878 3,479 30,055 – – – 55,280 Provision made – 17 – – – 283,000 – 314 283,331 Provision utilised – – – – (6,998) – – – (6,998) Unwinding of discount – – – – 412 – – – 412 Translation differences on consolidation (324) (11) (97) – – – – 6 (426) At 31 December 2020 15,933 617 4,781 3,479 23,469 283,000 – 320 331,599 Non-current 24,554 Current 307,045 331,599 At 1 January 2021 15,933 617 4,781 3,479 23,469 283,000 – 320 331,599 Acquisition of subsidiary – – 4,108 – – – – – 4,108 Provision made/(written back) – 11 1,688 – (6,036) – 70,773 (328) 66,108 Provision utilised – (18) – – (3,479) (286,132) – – (289,629) Unwinding of discount – – – – 256 – – – 256 Translation differences on consolidation 319 10 146 – – 3,132 – 8 3,615 At 31 December 2021 16,252 620 10,723 3,479 14,210 – 70,773 – 116,057 Non-current 22,129 Current 93,928 116,057 The provision for Beijing indemnity relates to tax indemnity provided to the former shareholders of Grand Millennium Beijing in which the Group acquired an additional 40% interest in 2010. The provision for capital expenditure relates to the Group’s obligations to incur capital expenditure under the terms of certain hotel operating agreements. The legal provisions relate to provisions made in relation to disputes in several hotels. The provision for cash flows support relates to the Group’s obligation to Sunbright Holdings Limited (refer to footnote (a) of note 44), to fund any shortfall for interest payments and/or annual/daily operational costs. The interest support relates to the Group’s obligation as the asset manager of Summervale to provide support for the coupon payments on fixed rate notes subscribed by third party investors and the Group as well as interest payments for bank borrowings taken up by Summervale (note 10). The provision for financial guarantee relates to the Group’s financial guarantee extended to a financial institution in connection with the loan taken up by the HCP Group (note 9). During the year, the Group had fully settled the obligation to the financial institution in connection with the financial guarantee for an aggregate sum of $286,132,000, and the provision previously made was fully utilised during the year. The Korea provision relates to the Group’s obligations under certain contracts in respect of Millennium Hilton Seoul and represents the estimated costs to be incurred arising from the proposed sale of Millennium Hilton Seoul. The provision is based on management’s best estimate of the expenditure required to settle its obligations under the relevant contracts based on its negotiation with the counterparties to-date. The estimated amount may be revised upon finalisation of the negotiations. The Group will be fully reimbursed by the buyer of MillenniumHilton Seoul for the amounts incurred in respect of its obligations under the relevant contracts (note 15). The estimated costs of $70.8 million (2020: $Nil) has been netted against the corresponding reimbursement from the buyer in the consolidated statement of profit or loss. 29 DEFERRED TAX LIABILITIES Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as follows: At 1 January 2021 Recognised in profit or loss (note 33) Recognised in the statement of comprehensive income (note 33) Acquisition of subsidiaries (note 39) Transfer to liabilities directly associated with the assets held for sale (note 6) Translation differences on consolidation At 31 December 2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group Deferred tax liabilities Property, plant and equipment 155,847 1,804 – 1,206 – 9,797 168,654 Investment properties 33,865 (1,646) – 28,621 (97) 1,214 61,957 Development properties 41,208 (36,713) – 51,835 – 1,881 58,211 Employee benefits 895 351 130 – – (225) 1,151 Unremitted earnings 55,908 12,503 – – – (32) 68,379 Others 14,205 (1,087) – – (10) 1,323 14,431 301,928 (24,788) 130 81,662 (107) 13,958 372,783 Deferred tax assets Property, plant and equipment (4,819) 1,163 – – – – (3,656) Tax losses (159,402) (13,426) – – – (2,734) (175,562) Development properties (38,992) (1,397) – – – (971) (41,360) Trade and other payables (16,522) (2,103) – (1,581) – (38) (20,244) Others (5,166) (4,935) – – – 4,906 (5,195) (224,901) (20,698) – (1,581) – 1,163 (246,017) Total 77,027 (45,486) 130 80,081 (107) 15,121 126,766
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