Summary of Significant Accounting Policies

Revaluation surpluses arising on annual valuations of the Group’s investment properties are credited direct to capital reserves. Revaluation deficits are taken to the profit and loss account in the absence of or to the extent that they exceed any surpluses held in reserves relating to previous revaluations.

Profits or losses on disposal of all investment properties are included in the profit and loss account. Any surpluses held in capital reserves in respect of previous revaluations of investment properties disposed of during the year are regarded as having become realised and are transferred to the profit and loss account.

h.   Properties Held for Development

Properties held for development are stated at cost, which includes cost of land and construction, related overhead expenditure and financing charges and other net costs incurred during the period of development. They are considered completed and are transferred to investment properties or fixed assets when they are ready for their intended use as defined in Statement of Accounting Standard 19.

Each property under development is accounted for as a separate project. Where a project comprises more than one component, each component is treated as a separate project, and interest and other net costs are apportioned accordingly.

i.   Properties Held for Sale

Development properties held for sale are stated at the lower of cost and net realisable value. Upon receipt of temporary occupation permits, they are transferred to completed properties held for sale.

Profit recognised on partly completed projects which are held for sale is based on the percentage of completion method as follows:

1. For Singapore trading properties under development, the profit recognition upon the signing of sales contracts is 20% of the total estimated profit attributable to the actual contracts signed. Subsequent recognition of profit is based on the stage of development completion;

2. For overseas trading properties under development, the profit recognition upon the signing of sales contracts is the direct proportion of total expected project profit attributable to the actual sales contracts signed, but only to the extent that it relates to the stage of physical completion at the end of the financial year.

When losses are expected, full provision is made in the accounts after adequate allowance has been made for estimated costs to completion. Any expenditure incurred on abortive projects is written off in the profit and loss account for the year.

Profit on partly completed projects which are held for sale less any provision to reduce cost to estimated realisable value as well as the profit or loss on sale of completed properties are included in the operating results for the year.

Completed properties held for sale are stated at the lower of cost and net realisable value. Cost includes cost of land and construction, and interest incurred during the period of construction.