Tropicana Corporation Berhad Annual Report 2019

15. PROPERTY, PLANT AND EQUIPMENT (CONT’D.) (a) The carrying amounts of property, plant and equipment pledged as securities for borrowings as disclosed in Note 32 are as follows: Group 2019 2018 RM’000 RM’000 Freehold land and buildings 321,477 388,955 Leasehold land and buildings 283,468 289,306 Golf course 32,379 33,030 Construction in-progress 214,644 – 851,968 711,291 (b) Finance costs capitalised during the financial year under construction in-progress of the Group amounted to RM1,812,000 (2018: RM6,257,000). (c) The Group’s construction in-progress relates mainly to expenditure for: (i) a proposed hotel located at Jalan Macalister, Penang which is expected to be completed in 2020; and (ii) a proposed office tower located at Persiaran Surian, Tropicana, Petaling Jaya, Selangor which is expected to be completed in 2020. (d) During the financial year, a subsidiary of the Group, Tropicana Residences Sdn Bhd, carried out a review of the recoverable amount of its hotel building as the economic performance of the Hotel fell below expectations. An impairment loss of RM50,536,000 (2018: RM nil), representing the write-down of the hotel building to the recoverable amount was recognised and disclosed under “Other-expenses” line item of the statements of comprehensive income for the financial year ended 31 December 2019. The recoverable amount of the hotel building was determined based on its fair value less costs to sell. Description of valuation techniques used and key inputs to determine the fair value of the hotel building: Valuation techniques Significant unobservable inputs Range Hotel building Income approach Gross operating profit 28% to 34% Occupancy rate 68% to 75% Discount rate 6% Average monthly income RM1,500,000 (e) During the financial year, the Group and the Company acquired property, plant and equipment with an aggregate cost of RM346,000 (2018: RM365,000) and RM nil (2018: RM365,000) by means of hire purchase respectively. The cash outflow on acquisition of property, plant and equipment of the Group and of the Company amounted to RM49,638,000 (2018: RM96,250,000) and RM964,000 (2018: RM317,000) respectively. The carrying amounts of the Group’s and of the Company’s property, plant and equipment held under hire purchase at the end of the financial year were RM1,481,000 (2018: RM1,456,000) and RM276,000 (2018: RM455,000) respectively. pg 171 Tropicana Corporation Berhad Annual Report 2019 Sustainability at Tropicana What We’ve Governed Financial Statements & Other Information