NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2023 36 LEASES (CONT’D) Extension options Leases as lessee (cont’d) Some property leases contain extension options up to 30 years (2022: 30 years) exercisable by the Group before the end of the non-cancellable contract period. Where practicable, the Group seeks to include extension options in new leases to provide operational flexibility. The extension options held are exercisable only by the Group and not by the lessors. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The Group reassesses whether it is reasonably certain to exercise the options if there is a significant event or significant changes in circumstances within its control. The Group has estimated that the potential future lease payments, should it exercise the extension options, would result in an increase in lease liabilities of $37.8 million (2022: $32.5 million). Leases as lessor The Group leases out its investment properties consisting of its owned properties as well as leased properties (see note 5). All leases are classified as operating leases from a lessor perspective. Operating lease The Group and the Company lease out some of their investment properties and development properties. The Group has classified these leases as operating leases, because they do not transfer substantially all of the risks and rewards incidental to the ownership of the assets. Note 5 sets out information about the operating leases of investment properties. Rental income from investment properties and property subleases recognised by the Group during 2023 was $436,380,000 (2022: $328,830,000). Contingent rents generally determined based on a percentage of tenants’ revenue, of $14,760,000 (2022: $2,533,000) has been recognised as revenue by the Group, in profit or loss during the year. The following table sets out a maturity analysis of lease rental receivables, showing the undiscounted lease payments to be received after the reporting date. Group Company 2023 2022 2023 2022 $’000 $’000 $’000 $’000 Less than one year 272,875 253,196 8,361 52,908 One to two years 193,978 189,243 4,974 35,071 Two to three years 128,925 125,151 1,993 14,159 Three to four years 82,308 79,738 317 2,171 Four to five years 62,975 55,657 44 499 More than five years 149,164 117,699 – – Total 890,225 820,684 15,689 104,808 36 LEASES (CONT’D) Leases as lessor (cont’d) Included in the non-cancellable operating lease rental receivables above are commitments with related parties which are set out below. Group Company 2023 2022 2023 2022 $’000 $’000 $’000 $’000 Non-cancellable operating lease rentals receivable from: – associates 27,921 27,309 – 333 – joint ventures 169 259 – – – a fellow subsidiary 277 625 – 625 – subsidiaries – – – 1,294 28,367 28,193 – 2,252 37 COMMITMENTS AND CONTINGENT LIABILITIES (i) Commitments The Group and the Company have the following commitments as at the reporting date: Group Company 2023 2022 2023 2022 $’000 $’000 $’000 $’000 Development expenditure contracted but not provided for in the financial statements 743,324 578,002 – – Capital expenditure contracted but not provided for in the financial statements 608,868 59,860 – – Commitments in respect of purchase of properties for which deposits have been paid 121,780 3,401 – – Commitments in respect of investments in a joint venture and associates 95,810 114,881 – – Commitments in respect of capital contribution to investments in financial assets in: – related parties 21,758 88,799 – – – third parties 16,628 19,969 – – (ii) Contingent liabilities The Group has claims arising in the ordinary course of business which are being contested, the outcome of which are not presently determinable. At the reporting date, the Group has considered the probability of outflows of economic benefits pertaining to these claims to be remote. The Group continues to monitor the status of the claims. FINANCIALS FINANCIALS ANNUAL REPORT 2023 CITY DEVELOPMENTS LIMITED 207 206
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