MISC BERHAD - Annual Report 2014 p 220 12. Ships, offshore floating assets and other property, plant and equipment (cont’d.) (a) The net carrying amounts of ships and other property, plant and equipment pledged as security for borrowings (Note 18(c)) are as follows: Group 2014 2013 RM’000 RM’000 Ships 1,904,807 1,875,757 Other property, plant and equipment 28,685 29,336 1,933,492 1,905,093 (b) The Group and the Corporation have performed a review of the recoverable amount of their ships, offshore floating assets and other property, plant and equipment during the financial year. The review led to the recognition of net impairment losses of RM358,917,000 (2013: RM24,779,000) and RM119,058,000 (2013: RM5,026,000) for the Group and the Corporation respectively, as disclosed in Note 5(a). Impairment losses from discontinued operations recorded in prior year amounts to RM11,952,000 and RM10,709,000 for the Group and Corporation respectively, as disclosed in Note 40(a). The recoverable amount was based on the higher of fair value less costs of disposal or value-in-use and was determined at the cash-generating-unit (“CGU”) of each asset. The following table summarises the recoverable amount and the impairment loss recognised under each basis of recoverable amount. Basis of recoverable Group Corporation amount Recoverable Impairment Recoverable Impairment amount loss amount loss 2014 2014 2014 2014 RM’000 RM’000 RM’000 RM’000 Value-in-use (i) 636,635 305,821 – – Fair value less costs of disposal (ii) 155,910 124,098 139,780 119,058 (i) The value-in-use for certain ships and offshore floating assets were calculated using cash flow projections for the remaining lease period and discounted at a rate between 5.68% to 9.03%. (ii) Certain ships and plant and machinery of the Group were impaired based on the fair value less costs of disposal. The fair values of ships were determined based on the valuation performed by independent ship valuers taking into consideration the type, size and age of the ships and the assumptions that the ships are in good and seaworthy condition, to be transacted between willing buyer and willing seller. The fair value of the plant and machinery was estimated using a recent selling price offered by a potential buyer. The fair value measurement was categorised as a Level 3 fair value based on inputs in the valuation technique used as defined in Note 2.3(aa). NOTESTOTHE FINANCIAL STATEMENTS - 31 December 2014
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