NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 5 INVESTMENT PROPERTIES (CONT’D) (f) Determination of fair value The fair values for a majority of the Group’s investment properties are determined by independent external valuers who have appropriate recognised professional qualifications and recent experience in the location and category of the investment properties being valued. The fair values of certain investment properties located in Singapore are based on in-house valuations conducted by a licensed valuer who is also an officer of the Company. The internal valuer has appropriate recognised professional qualifications and experience in the location and category of the investment properties being valued. The fair values of the investment properties were estimated using the direct comparison, discounted cash flow, income capitalisation, standardised land value adjustment and residual methods. The direct comparison method involves an analysis of comparable sales of similar properties and adjusting the transacted prices to those reflective of the investment properties of the Group. The discounted cash flow method involves the estimation and projection of an income stream over a period and discounting the income stream with an internal rate of return to arrive at the market value. The income capitalisation method capitalises an income stream into a present value using revenue multipliers or single-year capitalisation rates. The standardised land value adjustment method considers the price of standard land in the current situation of development and utilisation, under normal market conditions within legal maximum use term as at a special date, that is assessed and approved by the local government. The residual method involves deducting the estimated cost to complete as of valuation date and other relevant costs from gross development value of the proposed development assuming satisfactory completion and accounting for developer’s profit. The fair value disclosure for the investment properties for the Group and the Company has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used. 6 ASSETS HELD FOR SALE Group 2023 2022 $’000 $’000 Assets held for sale Property, plant and equipment – 14,417 At 31 December 2022, assets held for sale related to the proposed disposal by an indirect subsidiary of the Group, Millennium & Copthorne Hotels Limited (M&C), of Millennium Harvest House Boulder (which is in the hotel operations segment), to a third party for a sale consideration of $94.4 million. The sale was completed on 29 December 2023 and the Group recognised a gain on disposal of $80.0 million. 7 INVESTMENTS IN AND BALANCES WITH SUBSIDIARIES Company Note 2023 2022 $’000 $’000 Investments in subsidiaries Unquoted shares, at cost 1,999,428 1,989,926 Impairment losses (11,618) (40,837) 1,987,810 1,949,089 Balances with subsidiaries Amounts owing by subsidiaries: – trade 18,110 17,241 – non-trade, interest-free 6,541,709 6,666,056 – non-trade, interest-bearing 7,894,407 6,230,689 14,454,226 12,913,986 Impairment losses (313,928) (257,245) 14,140,298 12,656,741 Receivable: – Within 1 year 16 6,498,901 6,228,009 – After 1 year 12 7,641,397 6,428,732 14,140,298 12,656,741 Amounts owing to subsidiaries: – trade 18,069 1,927 – non-trade, interest-free 478,442 1,578,494 – non-trade, interest-bearing 702,955 1,288,837 1,199,466 2,869,258 Repayable: – Within 1 year 30 1,199,466 2,119,114 – After 1 year 27 – 750,144 1,199,466 2,869,258 The Company assessed the carrying amount of its investments in subsidiaries for indicators of impairment. In 2022, based on the assessment, the Company recognised a net impairment loss of $10,277,000 on its investments in four 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 subsidiaries. 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 1.00% to 6.61% (2022: 1.00% to 4.98%) per annum and at 1.00% to 3.76% (2022: 1.00% to 3.00%) per annum respectively, as at 31 December 2023. 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. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 169 168
RkJQdWJsaXNoZXIy ODIwNTc=