143
Annual Report 2015
4 PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Impairment loss
Property, plant and equipment is tested for impairment whenever there is any objective evidence or indication that
the assets may be impaired. The recoverable amount of the property, plant and equipment has been subsequently
determined based on fair value in use. Based on the above assessment, the management made an impairment loss
of $1,723,000 for one of the resorts in Maldives, Jumeirah Dhevanafushi, as the estimated recoverable amount of the
cash-generating unit (the "
CGU
") was estimated to be lower than its carrying amount due to the challenging market
conditions in Maldives.
Assets under Jumeirah Dhevanafushi operating segment form the CGU which include buildings, plant and machinery
and prepaid land lease. The impairment loss of $1,723,000 is allocated to buildings, plant and machinery and prepaid
land lease proportionately based on carrying amount before impairment.
Key assumptions used in the estimation of value in use were as follows:
2015
%
Discount rate
13.5
Terminal yield rate
8.5
The discount rate was adopted after considering the rate of return of the market recent transactions, inflation
expectations and further allowance for the perceived risk of the operations and achievement of cash flows projections.
Ten years of cash flows were included in the discounted cash flow model. A long-term growth rate into perpetuity
had been determined based on nominal GDP rates for the countries in which the CGU operates and historicial hotel
transactions.
Following the impairment loss recognised in the Stapled Group’s CGU, the recoverable amount was equal to the
carrying amount. Therefore, any adverse movement in a key assumption would lead to further impairment.
5 INVESTMENT PROPERTIES
HBT Group
H-REIT Group
Stapled Group
2015
2014
2015
2014
2015
2014
$’000
$’000
$’000
$’000
$’000
$’000
At 1 January
–
– 2,288,455 2,238,770 2,206,423 2,161,693
Capital expenditure incurred
–
–
11,057
35,945
9,599
34,737
Translation differences
–
–
(3,887)
(4,238)
(9,137)
(7,646)
Fair value changes
–
–
(38,534)
17,978
(30,221)
17,639
At 31 December
–
– 2,257,091 2,288,455 2,176,664 2,206,423
NOTES TO THE FINANCIAL STATEMENTS
