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The above Tax Ruling does not apply to gains from sale of real properties, if considered to be trading gains derived
from a trade or business carried on by the Trust. Tax on such gains or profits will be assessed, in accordance with
Section 10(1)(a) of the Income Tax Act, Chapter 134 and collected from the Trustee. Where the gains are capital gains,
it will not be assessed to tax and the Trustee and the Manager may distribute the capital gains without tax being
deducted at source.
3.14 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses including revenues and expenses that relate to transactions with any of the Group’s other
components. All operating segments’ operating results are reviewed regularly by the Group’s Chief Operating Decision
Maker to make decisions about resources to be allocated to the segment and assess its performance, and for which
discrete financial information is available.
4.
Investment properties
Group
$’000
Trust
$’000
At 1 July 2015
3,116,155
2,071,500
Additions of investment property
1,070
471
Divestment
(29,182)
–
Change in fair value of investment properties
77,973
69,029
Translation differences
(29,412)
–
At 30 June 2016
3,136,604
2,141,000
Additions and straight-line rental adjustments
12,860
2,507
Divestment
(4,137)
–
Change in fair value of investment properties
(16,321)
3,493
Translation differences
7,309
–
At 30 June 2017
3,136,315
2,147,000
Investment properties are stated at fair value based on valuations performed by independent professional valuers having
appropriate recognised professional qualifications and experience in the location and category of property being valued.
The Group has a framework with respect to the measurement of fair values of its investment properties, which is regularly
reviewed by the Manager.
In determining the fair value, the valuers have used valuation techniques which involve certain estimates. In relying on the
valuation reports, the Manager has exercised its judgement and is satisfied that the valuation methods and estimates are
reflective of current market conditions. The valuation reports are prepared in accordance with recognised appraisal and
valuation standards. The estimates underlying the valuation techniques in the next financial year may differ from current
estimates, which may result in valuations that may be materially different from the valuations as at balance sheet date.
The valuers have considered the capitalisation approach and/or discounted cash flows in arriving at the open market
value as at the balance sheet date. The capitalisation approach capitalises an income stream into a present value
using single-year capitalisation rates. The income stream used is adjusted to market rentals currently being achieved
within comparable investment properties and recent leasing transactions achieved within the investment property. The
discounted cash flow method involves the estimation and projection of an income stream over a period and discounting
the income stream with an internal rate of return to arrive at the market value. The discounted cash flow method requires
the valuer to assume a rental growth rate indicative of market and the selection of a target internal rate of return
consistent with current market requirements.
At 30 June 2017, investment properties with a carrying value of approximately $843.7 million (2016: $831.8 million) are
mortgaged to secure credit facilities for the Group (Note 12).