Annual Report 2019

187 ANNUAL REPORT 2019 17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Notes: (a) Included in assets under construction is capitalised interest of HK$70 million (2018: HK$75 million). (b) Others comprise vessels and ships, motor vehicles and leasehold improvements with net book values of HK$780 million (2018: HK$812 million), HK$50 million (2018: HK$48 million) and HK$193 million (2018: HK$93 million) respectively as at 31 December 2019. (c) Depreciation expenses charged for the year are included in the consolidated statement of profit or loss as follows: 2019 2018 HK$’million HK$’million Cost of sales 1,200 1,391 Administrative expenses 43 43 1,243 1,434 (d) As at 31 December 2019, harbour works, buildings and dockyard and assets under construction with aggregate net book value of HK$417 million (2018: HK$413 million) were pledged as security for the Group’s bank borrowings (note 33(a)). 18. RIGHT-OF-USE ASSETS Harbour Plant, Leasehold works, machinery, Land land and buildings furniture and use rights buildings and dockyard equipment Others Total HK$’million HK$’million HK$’million HK$’million HK$’million HK$’million As at 1 January 2019 Carrying amount 10,973 164 6,037 159 731 18,064 As at 31 December 2019 Carrying amount 8,575 148 5,882 136 694 15,435 For the year ended 31 December 2019 Depreciation charge (252) (15) (164) (19) (32) (482) Expenses relating to short-term leases and other leases with lease terms end within 12 months of the date of initial application of HKFRS 16 45 Total cash outflow for the leases 432 Additions to right-of-use assets 266 For both years, the Group leases various items of assets as set out above for its operations. Lease contracts are entered into for fixed term of 12 months to 99 years, but may have extension and termination options as described below. Certain leases of leasehold land and buildings, harbour works, buildings and dockyard and plant, machinery, furniture and equipment were accounted for as finance leases during the year ended 31 December 2018 and carried interest ranging from 4.18% to 4.66%. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. In determining the lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and determines the period for which the contract is enforceable.