Annual Report 2021

ANNUAL REPORT 2021 167 34. OTHER NON-CURRENT LIABILITIES (CONTINUED) Notes: (a) Amount represents the liabilities arising from the concession arrangements for a port located in Brazil with the local port authority due by the TCP Group (the “TCP Concession Liabilities”). The relevant concession arrangement allows for operations in the relevant port for up to 2048. Pursuant to the said concession arrangements, including the amendments thereto, with the relevant authority, concession payment is payable on a monthly basis and is adjusted from time to time, among other conditions, with reference to an official inflation index in Brazil. The TCP Concession Liabilities are designated as FVTPL at initial recognition and subsequently measured at fair value, with any gains or losses arising on remeasurement (other than those attributable to changes in credit risks of these liabilities) recognised in profit or loss. The current portion of the TCP Concession Liabilities amounting to HK$82 million (2020: HK$80 million) is included in creditors and accruals under current liabilities. In September 2021, TCP has entered into supplemental agreement to the concession agreement by changing the inflation index from General Market Price Index (“IGP-M”) to IPCA. The modification was assessed to be substantial modification and was accounted for as an extinguishment of the existing TCP Concession Liabilities and the recognition of a new financial liability. The gain on modification of contract terms amounted to HK$944 million has been included in other income and other gains, net. (b) Amount represents the minimum guaranteed royalty and premium provision (the “Royalty Provision”) under a Build-Operate-Transfer Agreement (the “BOT Agreement”) with Sri Lanka Ports Authority (“SLPA”) due by a non-wholly-owned subsidiary, Colombo International Container Terminals Limited, to SLPA. The BOT Agreement was entered into in 2011 for the right to construct, operate, manage and develop Colombo South Container Terminal for 35 years. The current portion of the Royalty Provision amounting to HK$87 million (2020: HK$79 million) is included in creditors and accruals under current liabilities. The initial recognition of the Royalty Provision is determined by discounting the future annual guaranteed cash flows at the then market rate. (c) Amount represents the net defined benefit obligations for defined benefit plans. The present value of the defined benefit plan liabilities is calculated by reference to the best estimate of the mortality rate of plan participants both during and after their employment and future salaries of plan participants. An increase in the life expectancy and future salaries of the plan participants will both increase the plan’s liability. The most recent actuarial valuations of plan assets and the present value of the defined benefit obligations were carried out as at 31 December 2021 by an independent qualified professional valuer. The present value of the defined benefit obligations, and the related current service cost and past service cost, were measured using the Projected Unit Credit Method. Of the expense for the year, HK$27 million (2020: HK$24 million) has been included in administrative expenses. The remeasurement of the net defined benefit liabilities is included in other comprehensive income.