3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY (CONTINUED) 3.2 Key sources of estimation uncertainty (Continued) Fair value measurement and valuation processes Some of the Group’s assets and liabilities are measured at fair value for financial reporting and disclosures purposes. In estimating the fair value of an asset or a liability, the Group uses market observable data to the extent it is available. The Group works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. For unquoted equity shares, the Group determines the fair value with reference to SFRS(I) 13 Fair Value Measurement to establish the appropriate valuation techniques and inputs to the model. Changes in assumptions on the inputs to the model could affect the reported fair value of the financial instruments. Information about the valuation techniques and inputs used in determining the fair values is included in Notes 17 and 38 to the financial statements. The carrying amounts of the Group’s assets measured at fair value as at 30 September 2024 are included in Notes 17 to the financial statements. Loss allowance on trade and other receivables, retention sum and contract assets Trade receivables, retention sum and contract assets Expected credit loss model is initially based on the Group’s historical observed default rates. The Group will calibrate the model to adjust historical credit loss experience with industry future outlook. At end of each financial year, historical default rates are updated and change in the industry future outlook is reassessed. The Group also evaluates expected credit loss on credit-impaired receivables separately at each reporting period. The aggregate carrying amount of the Group’s trade receivables, retention sum and contract assets as at 30 September 2024 was $51,783,000 (2023: $43,398,000). The Group’s credit risk exposure is set out in Note 36 to the financial statements. Non-trade receivables from subsidiaries, associates and joint ventures Management determines whether there is significant increase in credit risk of these subsidiaries, associates and joint ventures since initial recognition. Management assesses the financial performances of subsidiaries, associates and joint ventures to meet the contractual cash flows obligation. The carrying amount of the Company’s non-trade receivables from subsidiaries and associates as at 30 September 2024 and 2023 were disclosed in Notes 13, 14 and 19 respectively. The carrying amount of the Group’s non-trade receivables from associates and joint ventures as at 30 September 2024 and 2023 were disclosed in Note 14, 15 and 19 respectively. Measurement of lease liabilities Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term. The Group has determined the discount rate by reference to the Group’s incremental borrowing rate when the rate inherent in the lease is not readily determinable. The Group obtains the relevant market interest rate after considering the applicable geographical location where the lessee operates as well as the term of the lease. Management considers industry data available as well as any security available in order to adjust the market interest rate obtained from similar economic environment, term and value of the lease. The weighted average incremental borrowing rate applied to the Group’s lease liabilities as at 30 September 2024 was 4.6% (2023: 3.6%). The carrying amount of the Group’s lease liabilities as at 30 September 2024 was $4,755,000 (2023: $6,943,000) (Note 29). If the incremental borrowing rate had been 0.5% higher or lower than management’s estimates, the Group’s lease liabilities would have been lower or higher by $24,000 (2023: $34,000). 4. REVENUE Group 2024 2023 $’000 $’000 (Restated) Construction contracts – over time 172,597 199,248 Rental income from investment properties – 541 172,597 199,789 87 ANNUAL REPORT 2024 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2024
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