12. INVESTMENT PROPERTIES (CONTINUED)
Valuation Processes of the Group
The Group’s finance department works with a team that oversees the valuations of investment properties by external
valuers required for financial reporting, including fair values. This Asset and Investment team (“valuation team”) reports
directly to the chief executive officer (“CEO”). Discussions of valuation processes and results are held between the CEO
and the valuation team.
The team engages external, independent and qualified valuers to determine the fair value of the Group’s properties at
the end of every financial year. For 2014, the firms of independent professional valuers engaged are mentioned above.
The main Level 3 inputs used by the Group are derived and evaluated as follows:
c
Discount rates
The discount rate has been determined using the valuers’ model to calculate a pre-tax rate that reflects current
market assessments of the time value of money and the risk specific to the asset.
c
Terminal growth rates
The terminal growth rate has been determined using the valuers’ model of the location, building quality, its
surrounding local market condition, the competitive positioning of the property, the perceived market conditions in
the future, estimated cash flow profile and the overall physical condition and age of the property.
c
Expected net rental cashflows
These are estimated by management based on existing lease agreements and market conditions as at 31 December
2014. The estimates are largely consistent with management’s knowledge of actual conditions and situations.
13. INVESTMENTS IN SUBSIDIARIES
The details of the subsidiaries are disclosed in Note 29 below.
NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2014
Trust
2014
2013
S$’000
S$’000
Cost at the beginning of the year
639,721
465,923
Additions at cost
65,996
193,691
Impairment allowance included in the statement of total return
–
(8,136)
Redemption of redeemable preference shares
(14,728)
(11,757)
Cost at the end of the year
690,989
639,721
Total cost comprising:
Unquoted equity shares at cost
353,357
347,020
Redeemable preference shares at cost
337,632
292,701
Total at cost
690,989
639,721
Movement in allowance for impairment:
Balance at beginning of the year
(8,136)
–
Impairment allowance included in the statement of total return
–
(8,136)
Balance at end of the year
(8,136)
(8,136)
74
FIRST REIT
ANNUAL REPORT 2014
