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29 ESTIMATION OF FAIR VALUES (CONTINUED)
Investment properties
An external, independent valuation company, having appropriate recognised professional qualifications and experience
in the location and category of property being valued, values the Group’s investment properties at least once every
year. The fair values are based on market values, being the estimated amount for which a property could be exchanged
on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper
marketing wherein the parties had each acted knowledgeably and willingly.
In the absence of current prices in an active market, the valuations are prepared by considering the aggregate of the
estimated cash flows expected to be received from renting out the property. A yield that reflects the specific risks
inherent in the net cash flows then is applied to the net annual cash flows to arrive at the property valuation.
Valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease
commitments or likely to be in occupation after letting vacant accommodation, the allocation of maintenance and
insurance responsibilities between the Group and the lessee, and the remaining economic life of the property. When
rent reviews or lease renewals are pending with anticipated reversionary increases, it is assumed that all notices, and
when appropriate counter-notices, have been served validly and within appropriate time.
Available-for-sale financial assets
The fair values of available-for-sale financial assets in active markets are based on current bid prices.
In determining the fair value of financial assets with no active market, the Group makes certain estimates and
assumptions. These are continually evaluated and are based on historical experience, current information and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
Non-current financial assets and liabilities
Fair value is calculated using discounted cash flow models, with the discount rate determined based on benchmark
rates for instruments with similar maturity and repricing plus a credit spread. In determining the applicable credit spread,
reasonable efforts have been made to determine whether there has been a change in the credit risk associated with
the financial asset or financial liability.
Fair values versus carrying amounts
The carrying amounts of the Group’s financial instruments carried at cost or amortised cost are not materially different
from their fair values as at 31 December 2011.
The fair value of the interest-free deferred consideration (see Note 13) at 31 December 2011 is $13,593,000 (2010:
nil). Its carrying value is $13,950,000. The discount rate used to determine its fair value is 1.74% per annum.
SAR1112034_TCT_AR_().indb 111 3/23/2012