Tropicana Corporation Berhad Annual Report 2020

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 2020 2019 RM'000 RM'000 Freehold land and buildings 407,959 321,477 Leasehold land and buildings 313,802 253,434 Golf course 31,800 32,379 Construction in-progress – 214,644 753,561 821,934 (b) Finance costs capitalised during the financial year under property, plant and equipment of the Group amounted to RM3,358,000 (2019: RM1,812,000). (c) During the financial year, two subsidiaries of the Group, Tropicana Residences Sdn Bhd and Tropicana Macalister Avenue (Penang) Sdn Bhd, carried out a review of the recoverable amount of its hotel buildings (" Hotels ") as the economic performance of the Hotels fell below expectations. Total impairment losses of RM33,650,000 (2019: RM50,536,000), representing the write-down of the hotel buildings to the recoverable amount were recognised and disclosed under "Other-expenses" line item of the statements of comprehensive income for the financial year ended 31 December 2020. The recoverable amount of the hotel buildings of RM485,000,000 was determined based on its fair value less costs to sell. The fair value was determined based on valuations performed by accredited independent valuers who are specialists in valuing hotel buildings. Description of valuation techniques used and key inputs to determine the fair value of the hotel buildings: Valuation techniques Significant unobservable inputs Range 2020 2019 Hotel buildings Income approach Gross operating profit 6.2% to 34.1% 28% to 34% Occupancy rate 45% to 84.5% 68% to 75% Capitalisation rate 6% 6% Average monthly income RM1,000,000 RM1,500,000 to RM1,425,000 (d) During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM nil (2019: RM346,000) by means of hire purchase. The cash outflow on acquisition of property, plant and equipment of the Group and of the Company amounted to RM40,659,000 (2019: RM49,638,000) and RM45,000 (2019: RM964,000) respectively. At the end of the previous financial year, the carrying amounts of the Group's and of the Company's property, plant and equipment held under hire purchase were RM1,481,000 and RM276,000 respectively. 16. INVENTORIES Group 2020 2019 RM'000 RM'000 Cost Non-current Land held for property development 6,517,540 6,154,933 Current Completed development properties 202,300 192,625 Consumable stores and spares 1,843 2,161 Property development costs 366,644 423,377 Land held for sales 20,318 131,350 591,105 749,513 Total inventories 7,108,645 6,904,446 (a) Land held for property development Group 2020 2019 RM'000 RM'000 Cost At 1 January Freehold land 3,318,529 970,478 Leasehold land 2,836,404 1,668,529 6,154,933 2,639,007 Additions 468,317 118,394 Acquisition of subsidiaries – 3,251,016 Transfer (to)/from property development costs (Note 16(b)) (9,896) 389,031 Transfer to investment properties (Note 17) (34,433) – Adjustment (13,507) (114,575) Transfer to land held for sales (Note 16(c)) (38,987) (69,950) Disposals (Note 5) (8,887) (57,990) At 31 December 6,517,540 6,154,933 Finance costs capitalised during the financial year under land held for property development amounted to RM50,393,000 (2019: RM59,184,000). NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2020 ANNUAL REPORT 2020 TROPICANA CORPORATION BERHAD FINANCIAL STATEMENTS AND OTHER INFORMATION 216 217