ENRA Group Berhad Annual Report 2018

72 E N R A G R O U P B E R H A D ( 2 3 6 8 0 0 - T ) NOTES TO THE FINANCIAL STATEMENTS 31 March 2018 cont’d 5. INVESTMENT PROPERTIES (Cont’d) (a) Investment properties are properties, which are held to earn rental yields or for capital appreciation or for both and are not occupied by the Group. Investment properties also include properties that are being constructed or developed for future use as investment properties. Investment properties are initially measured at cost, which includes transaction costs. After initial recognition, investment properties are stated at fair value. Fair values of investment properties are based on valuations by registered independent valuer with appropriate recognised professional qualification and have recent experience in the category of the investment properties being valued. (b) A detailed valuation exercise was carried out by independent professional valuer on the Group’s and the Company’s investment properties in Johor Bahru and in Cheras, Kuala Lumpur in the previous financial year. The professional valuer has adopted the Investment Method and Comparison Method, considering key factors such as net yields, gross rental rates of similar office space within the vicinity, average property expenses, average void for the last ten (10) years, recent evidence of values of comparable properties with adjustments to its values per square foot before arriving at the fair value as at 31 March 2017. The following table shows a reconciliation of balances of investment properties whose fair values have been classified in Level 3 of the fair value hierarchy: Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Balance as at 1 April - - - - Transfer into Level 3 - 170,400 - 169,863 Fair value adjustments (Note33(c)) - (79,076) - (79,288) Transfer to assets held for sale - (91,324) - (90,575) Balance as at 31 March - - - - (c) It was noted the following factors mainly attributed to the changes in the fair value of investment properties: (i) low rental yield from the investment properties with limited growth in view of increasing supply and competition of new retail and office spaces within the nearby vicinity. Future growth is dependent on extensive refurbishment and further investment as the investment properties are in a state of disrepair; and (ii) lacklustre and negative responses, while exploring option for sale, that the Group does not own the entire investment properties in Johor Bahru. 6. INVESTMENTS IN SUBSIDIARIES Company 2018 2017 RM’000 RM’000 At cost: - Unquoted equity shares 13,748 11,408 Less: Impairment losses (499) (499) 13,249 10,909