2014 — Page 79

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FIXED ASSETS (Continued)

13

(a)

(i)

Fair value hierarchy (Continued)

Fair value measurement of investment properties (Continued)

(ii)

During the year ended 31 December 2014, there were no transfers between Level 1 and Level 2, or transfers into or out of Level 3 (2013: Nil). The Group's policy is to recognise transfers between levels of fair value hierarchy as at the end of the reporting period in which they occur.

Valuation process

All the Group's investment properties were revalued as at 31 December 2014. The valuations were carried out by an independent firm of surveyors, DTZ Debenham Tie Leung Limited, who have among their staff Members of the Hong Kong Institute of Surveyors with recent experience in the location and category of property being valued, on a market value basis. The management has discussion with the surveyors on the valuation assumptions and valuation results when the valuation is performed at each interim and annual reporting date.

Information about Level 3 fair value measurements

The fair values of investment properties were determined using income capitalisation approach which capitalised the net income of the properties and taking into account the reversionary potential of properties after expiry of the current leases except for an investment property which was determined using market comparison approach by reference to recent sales price of comparable properties on a price per square foot basis using market data which is publicly available.

Below is a table which presents the significant unobservable inputs:

Income capitalisation approach

Retail

Car park

Market comparison approach

Godown

Range of capitalisation rates

2014

%

2013

Range of occupancy rates

2014

%

%

2013

%

4.25% - 5%

4.75% - 6.5%

4.25% - 5.5%

4.75% -6.5%

56% - 100%

57% - 99%.

60% - 100%

76% - 100%

Market unit

sales price

2014

HK$/sq. ft.

2013

HK$/sq. ft.

420-450

424-429

Hong Kong Ferry (Holdings) Company Limited Annual Report 2014

77