Our response Our procedures included challenging the Group’s assessment of the properties at risk of being impaired or impairment reversal. These include comparing the actual asset performance to previous forecasts and to market data, and assessing the quantum of available headroom from previous valuations. For a sample of properties selected for a detailed impairment review, we considered the valuation methods used against those applied by valuers for similar property types. We evaluated the key assumptions applied in the valuations, particularly those assumptions relating to occupancy rates, average room rate growth, discount rates and terminal rates, by comparing them to available industry data, taking into consideration comparability and market factors. Our findings The Group has a structured process in identifying hotel assets with impairment indicators. We found that the valuation method used was in line with generally accepted market practices and the key assumptions applied were generally comparable to currently observable market data. Valuation of development properties (Refer to note 13 to the financial statements) Risk The Group has significant residential development properties held for sale in Singapore, China and the United Kingdom (UK). Development properties held for sale are stated at the lower of cost and net realisable value. The determination of the estimated net realisable value is highly dependent on the Group’s expectations of future selling prices of unsold development properties. In estimating the future selling prices of unsold development properties, the Group has taken into account real estate price trends, local market conditions, its development plans and sale strategies for the properties and selling prices estimated by external valuers when necessary. Our response We focused our work on development properties with low margins. In assessing the reasonableness of the Group’s estimated future selling prices for its development projects, we considered recently transacted prices of units under development sold and/or prices of comparable properties located in the vicinity of the development projects, taking into account prevailing market trends and the Group’s development and selling plans for the properties. Where applicable, we made enquiries of the external valuers to understand the approach adopted in estimating the future selling prices of the development properties and performed sensitivity analysis. Our findings We found the Group’s estimated future selling prices, which are used in determining net realisable values and resultant allowance for foreseeable losses on its development projects, to be comparable to currently available market data and have taken into consideration prevailing market conditions. INDEPENDENT AUDITORS’ REPORT Members of the Company City Developments Limited ANNUAL REPORT 2024 FINANCIALS 87
RkJQdWJsaXNoZXIy ODIwNTc=