Revenue and Profit Recognition

For Singapore trading properties, profit recognition upon signing of sales contracts is 20% of the total estimated profit attributable to the actual contracts signed. Subsequent profit recognition is based on the stage of physical completion. For overseas trading properties, profit recognition during development is the direct proportion of total expected project profit attributable to the actual sales contracts signed, but only to the extent that is related to the stage of completion.

The more conservative percentage of completion basis for overseas trading properties is appropriate as the markets there are less matured and risks are greater.

Asset Impairment

At each balance sheet date, a review is made of the following assets to assess whether or not their carrying values will be recoverable:

• freehold and long leasehold investment properties
• trading properties
• fixed assets

If any indication exists to suggest that their carrying values exceed the estimated recoverable amounts, the assets are written down appropriately.

Investment properties and trading properties are valued based on the advice of external professional valuers or inhouse valuers. In assessing value in use for fixed assets (eg hotels), the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the assets.

Reversal of impairment loss recognised previously is made to the extent that there is an indication that the impairment loss no longer exists or has decreased.

In implementing the above accounting policy for asset impairment, the Company is mindful that the assessment of asset values calls for very careful judgement.

Leasehold Properties

The applicable accounting standard requires all leases to be depreciated over their lives. However, the Group does not depreciate leasehold properties with unexpired tenures of over 20 years. These leasehold properties are instead valued by professional valuers or in-house valuers at each balance sheet date, and are assessed as to whether there is an impairment in their carrying values. The impairment, if any, is treated in manner explained above. This accounting policy is considered more appropriate in reflecting their values and any declines in the Group’s accounts.