Annual Report 2019

188 CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED Notes to the Consolidated Financial Statements For the year ended 31 December 2019 18. RIGHT-OF-USE ASSETS (CONTINUED) The Group regularly entered into short-term leases mainly for plant, machinery, furniture and equipment. As at 31 December 2019, the portfolio of short-term leases is similar to the portfolio of short-term leases to which the short-term lease expense disclosed above. As at 31 December 2019, right-of-use assets with a net book value of HK$356 million were pledged as security for the Group’s bank borrowings and a loan from a fellow subsidiary (note 33(a)). 19. INVESTMENT PROPERTIES The Group leases out various offices, residential and other commercial properties under operating leases with rentals payable monthly. The lease contracts run for an initial period up to 15 years. The Group is not exposed to foreign currency risk as a result of the lease arrangements, as all leases are denominated in the respective functional currencies of group entities. The lease contracts do not contain residual value guarantee and/or lessee’s option to purchase the property at the end of lease term. 2019 2018 HK$’million HK$’million As at 1 January 8,332 8,411 Exchange adjustments (184) (396) Increase in fair value (note 8) 105 376 Additions 1 1 Transfers to non-current assets held for sale (8) — Acquisition of assets through acquisition of a subsidiary (note 41) — 13 Disposal of subsidiaries (note 39) — (73) As at 31 December 8,246 8,332 The investment properties were revalued at the end of each reporting period by independent and professional qualified valuers not connected to the Group. In determining the fair value of the relevant properties, the Board of Directors of the Company determine the appropriate valuation techniques and inputs for fair value measurements.