234 Annual Report 2021 45. FAIR VALUE HIERARCHY (CONT’D) Investment method In the investment method of valuation, the projected net income and other benefits that the subject property can generate over the life of the property is capitalised at market derived term yields to arrive at the present market value of the property. Net income is the residue of gross annual rental less annual expenses (outgoings) required to sustain the rental with allowance for void. Cost method of valuation In the cost method of valuation, the market value of the subject property is the sum of the market value of the land and building. The value of the building is assumed to have a direct relationship with its cost of construction. The cost of construction is then adjusted to allow for cost of finance, profit and demand to reflect its profitable present market value. Valuation processes applied by the Group The fair value of land and buildings under property, plant and equipment in 2020 was determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The Group revalues its land and buildings every five years or at shorter intervals whenever the fair value of the said assets is expected to differ substantially from the carrying amounts. The fair value of investment properties is determined by external, independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The independent professional valuer provides the fair value of the Group’s investment property annually. The valuer’s report of certain investment properties amounting to RM63,085,000 for the year ended 30 September 2021 (2020: RM65,085,000) contained a ‘material uncertainty’ clause due to the disruption to the market at the date of valuation caused by COVID-19. The inclusion of this clause highlights and ensure transparency of the fact about unknown future impact that COVID-19 might have on the real estate market, where there is reduced certainty and a higher degree of caution is attached to the valuation than would normally be the case. These investment properties are as follows: - Metro Point Complex - 1 unit of 6-storey shop in MKH Avenue - 6 units of strata shops and office lots with 128 bays of car park in Saville@Melawati Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2021
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