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 2016 2015 RM’000 RM’000 Ships 2,344,116 1,715,763 Other property, plant and equipment – 982 2,344,116 1,716,745 (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 RM358,657,000 (2015: RM331,096,000) and RM9,433,000 (2015: RM28,252,000) 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 determined at the cash-generating-unit (“CGU”) of each asset. 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 RM2,174,531,000 (2015: RM1,160,465,000) was determined from the value-in-use calculations using cash flow projections discounted at rates between 6.50% to 10.30% (2015: 6.50% to 10.30%). Impairment losses of RM354,564,000 (2015: RM331,096,000) and RM9,433,000 (2015: RM28,252,000) for the Group and the Corporation respectively were recognised using this basis. The key assumptions used in the value-in-use calculations are as follows: (i) Ships - The value-in-use for certain ships were calculated using cash flow projections for the remaining lease period and discounted at a rate of 6.80% (2015: 6.80%). (ii) Offshore floating assets - The value-in-use for certain offshore floating assets were calculated using cash flow projections for the remaining lease period and discounted at a rate of 6.50% (2015: 6.50%). MISC BERHAD • Annual Report 2016 230 notes to the financial statements - 31 december 2016
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