NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 4 PROPERTY, PLANT AND EQUIPMENT (CONT’D) Leasehold land and buildings Furniture, fittings, plant and equipment and improvements Total $’000 $’000 $’000 Group Balance at 1 January 2024 702,280 3,207 705,487 Additions to right-of-use assets 12,821 1,034 13,855 Termination of lease (109) (111) (220) Depreciation charge for the year (33,944) (1,566) (35,510) Translation differences on consolidation (789) (10) (799) Balance at 31 December 2024 680,259 2,554 682,813 Buildings $’000 Company Balance at 1 January 2023 31,348 Depreciation charge for the year (6,270) Balance at 31 December 2023 25,078 Balance at 1 January 2024 25,078 Depreciation charge for the year (6,269) Balance at 31 December 2024 18,809 (a) Included in property, plant and equipment are certain hotel properties of the Group with carrying amount totalling $338,760,000 (2023: $263,675,000) which are mortgaged to certain financial institutions to secure credit facilities (refer to notes 22, 23 and 24 for more details of the facilities). (b) The Group undertook its annual review of the carrying amounts of hotels and property assets for indicators of impairment. Where indicators of impairment were identified, the recoverable amounts were estimated based on internal or external valuations undertaken by the Group. The cash generating units (CGU) are individual hotels. The recoverable amounts of the individual hotels, being the higher of the fair value less costs to sell and the value-in-use, were predominantly determined using the fair value less costs to sell approach and were estimated using the discounted cash flow method and income capitalisation method (2023: discounted cash flow method). Under the discounted cash flow method, the fair value measurement reflects current market expectations about an efficient third party operator’s future cash flows. The discounted cash flow method involves estimating each hotel’s future cash flows and discounting the cash flows with an internal rate of return to arrive at the market value, taking into consideration the assumptions in respect of revenue growth (principally factoring in room rate and occupancy growth) and major expense items for each hotel. The future cash flows are based on assumptions about competitive growth rates for hotels in that area, as well as the internal business plan for the hotel in the relevant market. These plans and forecasts include management’s most recent view of trading prospects for the hotel in the relevant market. The income capitalisation method involves capitalising the projected net operating income of the hotel in its stabilised trading year using a single year capitalisation rate, while factoring in allowances for the income shortfall up to stabilisation and any capital expenditures incurred. Where appropriate, the Group sought guidance on the fair values of the hotels from independent external valuers with appropriate professional qualifications and recent experience in the location and category of the properties being valued. In relying on the valuation reports, the Group has exercised its judgement and is satisfied that the valuation method and estimates are reflective of current market conditions. FINANCIALS CITY DEVELOPMENTS LIMITED 126
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