NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 5 INVESTMENT PROPERTIES (CONT’D) (a) Investment properties comprise commercial, residential, hotel and industrial properties that are leased to external customers. Generally, each of the leases is fixed for a period of 1 to 16 years (2021: 1 to 29 years), and subsequent renewals are negotiated at prevailing market rates and terms. (b) During 2022, the Group transferred a portion of an investment property to development properties for redevelopment as residential units for sale. In addition, the Group transferred a development property to investment properties arising from inception of an operating lease for the property. The Group also disposed of certain investment properties arising from the deconsolidation of CDLHT following the distribution in specie of CDLHT units during the current financial year (note 40). During 2021, the Group transferred two hotel properties located in Australia held by CDLHT to property, plant and equipment, when CDLHT became both the owner and operator of the properties. In addition, the Group transferred an industrial warehouse to non-current assets held for sale (note 6). (c) As at 31 December 2022, investment properties of the Group with a total carrying amount of $1,236,481,000 (2021: $1,453,630,000) were mortgaged to certain financial institutions to secure credit facilities (refer to notes 23 and 24 for more details of the facilities). (d) The Group undertook its annual review of the carrying amounts of investment properties for indicators of impairment. Where indicators of impairment were identified, the recoverable amounts were estimated based on internal or external valuations undertaken. The cash generating units (CGU) are individual properties. The recoverable amounts of the investment properties, being the higher of the fair value less costs to sell and value-in-use, were predominantly determined using the fair value less costs to sell approach, and were estimated using the income capitalisation, standardised land value adjustment and residual methods (2021: discounted cash flow and income capitalisation). Based on the impairment assessment undertaken in 2022, the Group recognised an impairment loss of $35,728,000 on one commercial property in the United Kingdom (UK), one purpose-built student accommodation in UK and one commercial project in China. The aforesaid commercial project in China is undergoing phased construction. The impairment loss recognised during the year was mainly due to the increase in capitalisation rates arising from higher interest rates in UK and the subdued real estate market in China, along with higher than expected development costs incurred on the property in China. In 2021, the Group recognised a net impairment loss of $2,064,000 on its investment properties, comprising reversal of impairment losses of $3,416,000 on one hotel in Maldives and one hotel in Italy, both of which are held by CDLHT, and impairment loss of $5,480,000 on one commercial property in the UK. The impairment losses reversed mainly arose from the improved trading performances, following the progressive recovery of the hospitality sector in the countries in which these hotels are located. The impairment loss recognised was due to the decrease in recoverable amount by the amount of stamp duty and land tax payable by the Group, which would not be payable had the Group proceeded with the initial public offering of a real estate investment trust (note 47). The impairment loss reversed or recognised was recognised in “other operating expenses” and the investment properties segment. 5 INVESTMENT PROPERTIES Note Group Company $’000 $’000 Restated* Cost At 1 January 2021 5,760,958 603,648 Acquisition of subsidiaries 40 341,753 – Additions 279,723 3,099 Disposal/Written off (59,630) (797) Transfers to property, plant and equipment 4 (60,402) – Transfers to non-current assets held for sale (55,839) – Translation differences on consolidation 8,470 – At 31 December 2021 6,215,033 605,950 At 1 January 2022 6,215,033 605,950 Acquisition of subsidiaries, including acquisition costs 40 387,791 – Additions 532,671 4,973 Disposal/Written off (111,747) – Transfers to development properties (90,685) – Transfers from development properties 8,179 – Transfers from property, plant and equipment 4 5,884 2,570 Disposal of subsidiaries 40 (496,882) – Translation differences on consolidation (312,865) – At 31 December 2022 6,137,379 613,493 Accumulated depreciation and impairment losses At 1 January 2021 1,192,261 178,693 Charge for the year 107,457 14,886 Disposal/Written off (51,403) (781) Transfers to property, plant and equipment 4 (12,755) – Transfers to non-current assets held for sale (2,001) – Impairment loss recognised 2,064 – Translation differences on consolidation (3,436) – At 31 December 2021 1,232,187 192,798 At 1 January 2022 1,232,187 192,798 Charge for the year 115,954 14,204 Disposal/Written off (91,924) – Transfers to development properties (38,758) – Disposal of subsidiaries 40 (63,561) – Impairment loss recognised 35,728 – Translation differences on consolidation (19,261) – At 31 December 2022 1,170,365 207,002 Carrying amounts At 1 January 2021 4,568,697 424,955 At 31 December 2021 4,982,846 413,152 At 31 December 2022 4,967,014 406,491 Fair value At 1 January 2021 8,901,489 1,114,435 At 31 December 2021 10,966,900 1,662,892 At 31 December 2022 10,899,043 1,820,028 * Refer to Note 47 CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 FINANCIALS 160 161
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