NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 10 FINANCIAL ASSETS (CONT’D) (a) Unquoted debt investments in non-related company stated at FVTPL at nil value (2022: $20,011,000) represents the Group’s investment in property-link notes issued for the development of a luxury retirement village in New South Wales, Australia. (b) Unquoted debt investment at amortised cost with gross carrying amount of $304,405,000 (US$230 million) (2022: $309,488,000 (US$230 million)) relates to the Group’s investment in a US$ bond issued by Chongqing Sincere Yuanchuang Industrial Co., Ltd and its subsidiaries (Sincere Property Group). As at 31 December 2023 and 31 December 2022, the issuer remained under bankruptcy reorganisation, and the bond remained unpaid and was fully impaired. The Group has no collateral in respect of this investment. The movement in the allowance for impairment for debt investments at amortised cost during the year was as follows: Lifetime ECL credit-impaired 2023 2022 $’000 $’000 Balance as at 1 January 309,488 293,769 Impairment loss recognised – 18,015 Translation differences on consolidation (5,083) (2,296) Balance as at 31 December 304,405 309,488 The Group undertook an impairment assessment of the investment in the bond. 2023 During 2023, discussions between the bankruptcy administrator, creditors of Sincere Property Group and potential investors were held. As at 31 December 2023, Sincere Property Group remained under bankruptcy reorganisation and no concrete reorganisation plan has been approved by the Chongqing No 5 Intermediate People’s Court. As at 31 December 2023, the Group assessed that the investment in the bond continued to be credit-impaired. The Group assessed the lifetime ECL to be recognised, taking into consideration the latest developments on bankruptcy reorganisation of Sincere Property Group based on available information, prevailing market conditions and price trends of corporate bonds issued by other China real estate developers that face similar debt and liquidity challenges as those faced by Sincere Property Group. Based on the assessment undertaken, the investment in the bond remained fully impaired as at 31 December 2023. 10 FINANCIAL ASSETS (CONT’D) 2022 During 2022, certain subsidiaries within Sincere Property Group entered into consolidated bankruptcy reorganisation in addition to Sincere Property which entered into bankruptcy reorganisation in 2021. As at 31 December 2022, discussions between the bankruptcy administrator, creditors of Sincere Property Group and potential investors were ongoing. The Group had filed its claims against Sincere Property with the bankruptcy administrator. As at 31 December 2022, the Group assessed that the investment in the bond continued to be credit-impaired. The Group assessed the lifetime ECL to be recognised, taking into consideration the latest developments of Sincere Property Group based on available information, prevailing market conditions and price trends of corporate bonds issued by other China real estate developers with credit ratings similar to that of Sincere Property Group and face similar debt and liquidity challenges as those faced by Sincere Property Group. The key parameter applied in estimating the ECL to be recognised include assuming a loss given default (“LGD”) of 100% which was estimated based on the range of decline in trading prices of bonds issued by other China real estate developers with credit ratings similar to that of Sincere Property Group and face similar debt and liquidity challenges as those faced by Sincere Property Group. The Group also considered the increased uncertainty surrounding the complex bankruptcy reorganisation with the passage of time, which posed challenges to the recovery of the investment in the bond. Based on the assessment undertaken, the Group recognised an additional impairment of $18 million on the investment in the bond during 2022. As at 31 December 2022, the investment in the bond was fully impaired. As the bankruptcy reorganisation for Sincere Property Group is ongoing, its outcome is uncertain and evolving. Changes to circumstances and estimates may impact the ECL recognised on the investment in the bond. The ECL on the investment in the bond is also sensitive to the assumptions used. As the investment in bond has been fully impaired, any decrease in LGD in isolation would result in a higher recoverable amount. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 177 176
RkJQdWJsaXNoZXIy ODIwNTc=