204 REDISCOVER | REBUILD | SUSTAIN Notes to the financial statements - 31 December 2015 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 2015 2014 RM’000 RM’000 Ships 2,431,768 1,904,807 Other property, plant and equipment 982 28,685 2,432,750 1,933,492 (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 RM331,096,000 (2014: RM358,917,000) and RM28,252,000 (2014: RM119,058,000) for the Group and the Corporation respectively, as disclosed in Note 5(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. (i) Recoverable amount determined from value-in-use The Group’s recoverable amount for impaired ships, offshore floating assets and other property, plant and equipment of RM1,160,465,000 (2014: RM636,635,000) was determined from the value-in-use calculations using cash flow projections discounted at rates between 6.50% to 10.30% (2014: 5.68% to 9.03%). Impairment losses of RM331,096,000 (2014: RM305,821,000) and RM28,252,000 (2014: RM Nil) for the Group and the Corporation respectively were recognised using this basis. In the previous financial year, the Group recognised a writeback of impairment losses on certain ships amounting to RM71,002,000. In arriving at the writeback of impairment losses, the carrying amount was compared with the recoverable amount of RM176,420,000. The recoverable amount was determined from the value-in-use calculations, using cash flow projections that are discounted at a rate of 7.80%. (ii) Recoverable amount determined from fair value less costs of disposal In the current financial year, there was no impairment recognised based on fair value less costs of disposal by the Group and the Corporation. In the previous year, 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.
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