Annual Report 2023

Notes to the Consolidated Financial Statements For the year ended 31 December 2023 150 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 17. RIGHT-OF-USE ASSETS (CONTINUED) 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 with 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 2023, 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 2023, right-of-use assets with a net book value of HK$34 million (2022: HK$37 million) were pledged as security for the Group’s bank borrowings (note 30(a)). 18. INVESTMENT PROPERTIES The Group leases out various offices, residential and other commercial properties under operating leases with rentals payable monthly. Lease contracts run for an initial period of 1 month to 15 years. The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in the respective functional currencies of group entities. The lease contracts do not contain residual value guarantee and/or lessee’s option to purchase the property at the end of lease term. 2023 2022 HK$’million HK$’million As at 1 January 8,265 9,034 Exchange adjustments (118) (776) (Decrease)/increase in fair value (note 7) (7) 7 Addition 1 — Transfer from right-of-use assets 7 — Transfer from property, plant and equipment 81 — As at 31 December 8,229 8,265 The investment properties were revalued at the end of each reporting period by independent and professional qualified valuers not connected to the Group. In determining the fair value of the relevant properties, the management of the Company determine the appropriate valuation techniques and inputs for fair value measurements.