135 SWIRE PROPERTIES ANNUAL REPORT 2024 Key Audit Matter How our audit addressed the Key Audit Matter Valuation of investment properties Refer to note 16 to the Group’s consolidated financial statements The fair value of the Group’s investment properties amounted to HK$271,617 million at 31st December 2024, with a fair value loss of HK$5,996 million recorded in the consolidated statement of profit or loss for the year. Valuations were obtained from third party valuers (the “valuers”) in respect of 98% of the investment properties as at 31st December 2024. The valuations are dependent on certain key assumptions that require significant management judgement and estimates, including capitalisation rates and market rents. The valuations of investment properties under development are also dependent upon the estimated costs to complete and expected developer’s profit margin. We focused on the valuation of investment properties due to the significant judgement and estimates involved in determining the valuation. Our procedures in relation to management’s valuation of investment properties included: • Understanding management’s controls and processes for determining the valuation of investment properties and assessing the inherent risk of material misstatement by considering the degree of estimation uncertainty and the judgement involved in determining assumptions to be applied; • Evaluating the valuers’ competence, capabilities, independence and objectivity; • Reviewing the external valuation reports to assess the appropriateness of methodologies used; • Meeting the valuers to discuss and challenge the valuations and key assumptions used; • Comparing the capitalisation rates, market rents and expected developer’s profit margin used by the valuers to an estimated range, determined by reference to publicly available information and recent lettings of the subject properties on a sample basis by our in-house valuation experts; • Checking, on a sample basis, the accuracy and completeness of the rental data provided by management to the valuers by agreeing them to the Group’s records; and • For investment properties under development, comparing the estimated construction costs to complete with the Group’s budgets and testing, on a sample basis, the construction costs to supporting documentation such as quantity surveyor reports and signed contracts, where applicable. We found the key assumptions were supported by the available evidence. We found the disclosures in note 16 to be appropriate.