Notes to the Condensed Interim Financial Statements 2. Basis of Preparation (continued) (c) The Group has applied the following accounting policies during the period ended 30th June 2023 as follows: Goodwill Goodwill represents the excess of the consideration transferred over the fair value of the Group’s share of the assets transferred, the liabilities incurred to the former owners of the acquired asset and the equity interests issued by the Group. Goodwill is treated as an asset of the entity acquired and, where attributable to a foreign entity, is translated at the period-end closing rate. Goodwill is stated at cost less accumulated impairment. Goodwill is allocated to cash-generating units (“CGUs”) for the purpose of impairment testing, which is performed annually, or more often if an impairment indicator exists. Impairment charges recognised in respect of goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Net investment hedges Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of a hedge is recognised in equity; the gain or loss relating to the ineffective portion is recognised immediately in the consolidated statement of profit or loss. Gains and losses accumulated in equity are transferred to the consolidated statement of profit or loss when the foreign operation is disposed of. (d) The preparation of the condensed interim financial statements in conformity with HKFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgements in the process of applying the Group’s accounting policies. Those areas involving a higher degree of judgements or complexity and areas where assumptions and estimates are significant to the Group’s consolidated financial statements are detailed in the 2022 annual financial statements. (e) The Group has changed its accounting policy with respect to the IASB agenda decision on “Lessor Forgiveness of Lease Payments (IFRS 9 and IFRS 16)” in October 2022. Details of the change were disclosed in the Group’s 2022 annual financial statements. 60 Swire Properties Limited Interim Report 2023