NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 8 INVESTMENTS IN AND BALANCES WITH ASSOCIATES (CONT’D) Measurement of fair values The valuation techniques used in measuring the fair values of the underlying significant assets and liabilities were as follows: Assets acquired and liabilities assumed Valuation technique Property, plant and equipment and investment properties Discounted cash flow, income capitalisation, and residual methods: The discounted cash flow method involved forecasting the properties’ income stream and discounting the income stream at the market rate of interest at the acquisition date. The income capitalisation method capitalised an income stream into a present value using revenue multipliers or single-year capitalisation rates. The residual method involved deducting the estimated costs to complete as of valuation date and other relevant costs from gross development value of a proposed development assuming satisfactory completion and accounting for developer profit. Interest-bearing borrowings The fair value was estimated as the present value of future principal and interest cash flows, discounted at the market rates of interest at the acquisition date. In relying on the valuation reports for the property, plant and equipment and investment properties, the Group had exercised its judgement and was satisfied that the valuation methods and estimates were reflective of prevailing market conditions. The fair value measurements were categorised as Level 3 in the fair value hierarchy based on the inputs in the valuation techniques used. The PPA exercise resulted in a negative goodwill of $18,003,000, which was recognised as part of the Group’s share of after-tax profit of associates in the consolidated statement of profit or loss. Immaterial associates The Group has interests in a number of individually immaterial associates. The following table summarises, in aggregate, the Group’s share of profit and other comprehensive income of these immaterial associates that are accounted for using the equity method: Group 2023 2022 $’000 $’000 Carrying amount of interests in individually immaterial associates 1,352,520 1,263,713 Group’s share of: – profit from continuing operations 3,415 86,832 – other comprehensive income (18,255) (55,147) – total comprehensive income (14,840) 31,685 9 INVESTMENTS IN AND BALANCES WITH JOINT VENTURES Group Company Note 2023 2022 2023 2022 $’000 $’000 $’000 $’000 Investments in joint ventures Investments in joint ventures 1,134,475 1,083,024 37,360 37,360 Impairment losses (12,105) – – – 1,122,370 1,083,024 37,360 37,360 Balances with joint ventures Amounts owing by joint ventures: – trade 9,743 10,317 242 46 – non-trade, interest-bearing 1,062,049 880,031 – – – non-trade, interest-free 491,606 475,220 199,415 237,614 1,563,398 1,365,568 199,657 237,660 Impairment losses (4,431) (4,431) (5,246) (5,246) 1,558,967 1,361,137 194,411 232,414 Receivable: – Within 1 year 16 1,266,133 1,086,805 194,411 232,414 – After 1 year 12 292,834 274,332 – – 1,558,967 1,361,137 194,411 232,414 Amounts owing to joint ventures payable within 1 year: – trade 13 428 – – – non-trade, interest-free 87,924 90,705 22,727 22,727 – non-trade, interest-bearing 753 – – – 30 88,690 91,133 22,727 22,727 (a) At the reporting date, included in the carrying amount of the Group’s investments in joint ventures is goodwill amounting to $26.7 million (2022: $27.2 million) relating to the Group’s interests in two (2022: two) joint ventures. (b) During the year, the Group assessed the carrying amount of its investments in joint ventures for indicators of impairment. Based on the assessment, the Group recognised an impairment loss of $12,279,000 (2022: Nil) on its investment in a joint venture as a result of its weak financial performance. The recoverable amount was estimated taking into account the fair values of the underlying assets and the liabilities of the joint venture. The fair value measurement was categorised as a Level 3 in the fair value hierarchy as it is derived from unobservable inputs. The movement in impairment losses in respect of investments in joint ventures are as follows: Group Company 2023 2022 2023 2022 $’000 $’000 $’000 $’000 At 1 January – – – – Impairment loss recognised 12,279 – – – Translation differences on consolidation (174) – – – At 31 December 12,105 – – – The impairment loss recognised was included in “Share of after-tax profit of joint ventures” in the consolidated statement of profit or loss and the investment properties segment. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 173 172
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