NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2022 29 PROVISIONS (CONT’D) The Korea provision relates to the Group’s obligations under certain contracts in respect of Millennium Hilton Seoul and represents the estimated costs to be incurred arising from the proposed sale of Millennium Hilton Seoul. As at 31 December 2021, the provision was based on management’s best estimate of the expenditure required to settle its obligations under the relevant contracts based on its negotiation with the counterparties to-date. The estimated amount might be revised upon finalisation of the negotiations. The sale of Millennium Seoul Hilton was completed during the current financial year. As at 31 December 2022, further provision was provided as the amount was finalised. The Group has settled part of the costs in 2022 and has settled the remaining amount subsequent to the reporting date. The Group would be fully reimbursed by the buyer of Millennium Hilton Seoul for the amounts incurred in respect of its obligations under the relevant contracts (note 16). The estimated costs recognised during the year of $11.0 million (2021: $70.8 million) has been netted against the corresponding reimbursement from the buyer in the consolidated statement of profit or loss. 30 DEFERRED TAX LIABILITIES Movements in deferred tax assets and liabilities of the Group (prior to offsetting of balances) during the year are as follows: At 1 January 2021 Recognised in profit or loss (note 34) Recognised in the statement of comprehensive income (note 34) Acquisition of subsidiaries (note 40) Transfer to liabilities directly associated with the assets held for sale (note 6) Translation differences on consolidation At 31 December 2021 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group Deferred tax liabilities Property, plant and equipment 151,028 2,967 – 1,206 – 9,797 164,998 Investment properties 33,865 (1,646) – 28,621 (97) 1,214 61,957 Development properties 2,216 (38,110) – 51,835 – 910 16,851 Employee benefits 895 351 130 – – (225) 1,151 Unremitted earnings 55,908 12,503 – – – (32) 68,379 Others 9,039 (6,022) – – (10) 6,229 9,236 252,951 (29,957) 130 81,662 (107) 17,893 322,572 Deferred tax assets Tax losses (159,402) (13,426) – – – (2,734) (175,562) Trade and other payables (16,522) (2,103) – (1,581) – (38) (20,244) (175,924) (15,529) – (1,581) – (2,772) (195,806) Total 77,027 (45,486) 130 80,081 (107) 15,121 126,766 29 PROVISIONS Beijing indemnity Capital expenditure Legal provisions Cash flow support Interest support Financial guarantee Korea provision Others Total $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Group At 1 January 2021 15,933 617 4,781 3,479 23,469 283,000 – 320 331,599 Acquisition of subsidiary – – 4,108 – – – – – 4,108 Provision made/(written back) – 11 1,688 – (6,036) – 70,773 (328) 66,108 Provision utilised – (18) – – (3,479) (286,132) – – (289,629) Unwinding of discount – – – – 256 – – – 256 Translation differences on consolidation 319 10 146 – – 3,132 – 8 3,615 At 31 December 2021 16,252 620 10,723 3,479 14,210 – 70,773 – 116,057 Non-current 22,129 Current 93,928 116,057 At 1 January 2022 16,252 620 10,723 3,479 14,210 – 70,773 – 116,057 Disposal of subsidiary – (9,242) – – – – – – (9,242) Provision made/(written back) – 14,978 14,915 (3,479) (10,489) – 11,013 – 26,938 Provision utilised – (4,107) – – – – (18,917) – (23,024) Unwinding of discount – – – – 179 – – – 179 Translation differences on consolidation (105) (9) (833) – – – (3,364) – (4,311) At 31 December 2022 16,147 2,240 24,805 – 3,900 – 59,505 – 106,597 Non-current 16,147 Current 90,450 106,597 The provision for Beijing indemnity relates to tax indemnity provided to the former shareholders of Grand Millennium Beijing in which the Group acquired an additional 40% interest in 2010. The provision for capital expenditure relates to the Group’s obligations to incur capital expenditure under the terms of certain hotel operating agreements. The legal provisions relate mainly to provisions made in relation to disputes in several hotels. The provision for cash flows support relates to the Group’s obligation to Sunbright Holdings Limited (refer to footnote (a) of note 45), to fund any shortfall for interest payments and/or annual/daily operational costs. The interest support relates to the Group’s obligation as the asset manager of Summervale to provide support for the coupon payments on fixed rate notes subscribed by third party investors and the Group as well as interest payments for bank borrowings taken up by Summervale (note 10). During the year, the Group’s obligation in connection with the interest support has been discharged following the redemption of the fixed rate notes. The provision for financial guarantee related to the Group’s financial guarantee extended to a financial institution in connection with the loan taken up by the HCP Group. During 2021, the Group had fully settled the obligation to the financial institution in connection with the financial guarantee for an aggregate sum of $286,132,000, and the provision was fully utilised. The mortgage on the investment property of the Group that was previously secured for this loan was released by the financial institution in 2021. CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2022 FINANCIALS 192 193
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