Wah Seong Corporation Berhad Annual Report 2020

121 ANNUAL REPORT 2020 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 4 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Impairment of building, plant and equipment (continued) The recoverable amount of the building is determined using the fair value less costs of disposal based on the sales and purchase agreement transacted on arm’s length basis, which is RM7,183,000. Accordingly, RM3,362,000 of impairment loss was recognised for the building in the profit or loss. The building was disposed before 31 December 2020. Due to the poor market outlook as a result of Covid-19 pandemic, management has also assessed the recoverable amount of other plant and equipment with carrying value of RM27,977,000. The recoverable amount is determined to be nil as there are no future projects available to utilise these plant and equipment and there are no resale value. Accordingly, an impairment loss of RM27,977,000 was recognised in the profit or loss. The impairment losses on building, plant and equipment are presented as part of the Oil & Gas segment in Note 43. Assets pledged as security During the financial year ended 31 December 2019, the net book value of the Group’s property, plant and equipment amounting to RM226,152,000 were pledged as security for a pipe coatings project. The pledge on the assets was released during the financial year ended 31 December 2020 upon completion of the project. 5 LEASES (a) Right-of-use assets Group Note Land and buildings Plant and machineries Motor vehicles Total RM’000 RM’000 RM’000 RM’000 2020 Cost At 1 January 348,338 - 1,154 349,492 Additions - 1,677 569 2,246 Disposal of a subsidiary 37 (13,031) - - (13,031) Transfer to assets held for sale 23 (32,806) - - (32,806) Derecognition (21,278) - - (21,278) Increase due to remeasurement 5,485 - - 5,485 Effect of exchange rate changes 631 126 139 896 At 31 December 287,339 1,803 1,862 291,004 Accumulated depreciation At 1 January 34,985 - 79 35,064 Depreciation charge for the financial year 21,173 30 501 21,704 Disposal of a subsidiary 37 (1,340) - - (1,340) Transfer to assets held for sale 23 (5,827) - - (5,827) Derecognition (1,256) - - (1,256) Effect of exchange rate changes (291) 2 44 (245) At 31 December 47,444 32 624 48,100 Carrying amount at 31 December 239,895 1,771 1,238 242,904