109 FINANCIAL STATEMENTS & OTHERS ENRA GROUP BERHAD ANNUAL REPORT 2023 Notes To The Financial Statements 31 March 2023 (Cont’d) 4. PROPERTY, PLANT AND EQUIPMENT (CONT’D) (a) All items of property, plant and equipment are initially measured at cost. After initial recognition, property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. (b) Depreciation is calculated to write off the costs of the assets to their residual values on a straight line basis over their estimated useful lives. The principal depreciation rates and period are as follows: Furniture, fittings, renovation and office equipment 10% - 33.33% Computer hardware and software 20% - 33.33% Motor vehicles 20% Marine equipment 7% Plant and machinery 10% (c) Impairment assessment The Group assesses impairment of assets whenever the events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, i.e. the carrying amount of the asset is more than the recoverable amount. Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. In the previous financial year, the Group had recognised an impairment loss of RM9,006,000 on marine equipment, as a result of expiration and subsequent non-renewal of a service agreement with a customer subsequent to the financial year ended 31 March 2022 in a Cash Generating Unit (“CGU”) within the Energy Service operating segment. Recoverable amount was based on the higher of fair value less cost of disposal (“FVLCD”) or value in use (“VIU”), and determined at the CGU of each asset. i) Recoverable amount determined from VIU: In the previous financial year, the Group estimated the recoverable amount for impaired marine equipment of RM52,098,000 based on the assumptions that replacement service agreement with another customer will be secured within the financial year ended 31 March 2023 or on a worst case scenario, disposal of these marine equipment at its fair value less cost to sell within the same financial year. Due to inherent uncertainty arising from the outcome of contract tendering process currently undertaken, the VIU is determined based on the following scenarios: 2022 Worst case Base case Key assumptions Weightage 66% 34% Cash flow projections period 1 year 5 years Profit margin 48% 48% Discount rate 4.9% 4.9% ii) Recoverable amount determined from fair value less costs of disposal: The fair value of certain marine equipment was determined based on valuation performed by independent valuer based on comparable vessel and offshore floating assets. No impairment was recognised as the recoverable amount of these marine equipment were higher than its carrying amount as at the end of the period.
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