Annual Report 2021

CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 144 Notes to the Consolidated Financial Statements For the year ended 31 December 2021 17. RIGHT-OF-USE ASSETS (CONTINUED) 2021 2020 HK$’million HK$’million Expenses relating to short-term leases 53 54 Total cash outflow for the leases 152 220 Additions to right-of-use assets 1,340 515 Lease terms are negotiated by the Group on an individual basis and contain a wide range of different terms and conditions. The terms are fixed various period, from 12 months to 99 years. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and determines the period for which the contract is enforceable. The Group regularly entered into short-term leases mainly for plant, machinery, furniture and equipment. As at 31 December 2021, the portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term lease expense disclosed above. As at 31 December 2021, right-of-use assets with a net book value of HK$230 million (2020: HK$230 million) were pledged as security for the Group’s bank borrowings (note 32(a)). 18. INVESTMENT PROPERTIES The Group leases out various offices, residential and other commercial properties under operating leases with rentals payable monthly. Lease contracts run for an initial period of 1 month to 15 years. The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in the respective functional currencies of group entities. The lease contracts do not contain residual value guarantee and/or lessee’s option to purchase the property at the end of lease term. 2021 2020 HK$’million HK$’million As at 1 January 8,918 8,246 Exchange adjustments 271 539 Increase in fair value (note 7) 21 149 Additions 2 — Transfers from right-of-use assets 9 — Transfers to property, plant and equipment (281) — Transfers from property, plant and equipment 94 — Transfers to non-current assets held for sale — (16) As at 31 December 9,034 8,918