Yinson Annual Report 2021

231 ANNUAL REPORT 2021 NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 31 January 2021 5. Critical accounting estimates and judgements (continued) (c) Impairment of FPSOs, OSVs and tankers (continued) The Group has evaluated the carrying amounts of OSVs and tankers against their recoverable amounts and recorded an impairment charge to the carrying value of OSVs and tankers of RM33 million (2020: RM5 million). The key assumptions and basis used to determine the recoverable amounts of the OSVs are disclosed in Note 16(g). (d) Useful life and residual value of FPSOs, OSVs and tankers The Group reviews the residual value and useful life of FPSOs, OSVs and tankers at each reporting date based on factors such as business plans and strategies, expected level of usage and future technological developments. A reduction in the residual value and estimated useful life of FPSOs, OSVs and tankers would increase the recorded depreciation and decrease the carrying value of FPSOs, OSVs and tankers. The net book value of FPSOs, OSVs and tankers as at 31 January 2021 was RM3,477 million in Note 16. For the financial year ended 31 January 2021, the impact of the sensitivity resulting from a 5 years increase/decrease in the estimated useful life and a 10% increase/decrease in estimated residual value of FPSOs, OSVs and tankers on the expected carrying value of property, plant and equipment and the depreciation expense charged to profit or loss annually are analysed as follows: Carrying value of property, plant and equipment Depreciation expense Group Group RM million RM million Useful life - Increase by 5 years 3,537 155 - Decrease by 5 years 3,389 281 Residual value - Increase by 10% 3,483 209 - Decrease by 10% 3,474 219 (e) Income taxes Judgement is involved in determining the Group's provision for income taxes as there are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. (f) Share-based compensation plans On 26 June 2019, the Board of Directors of the Company approved an Employees’ Long-term Incentive Plan (“LTIP”). Under the LTIP, either performance bonuses in cash or ordinary shares in the Company (“Yinson Shares”) are awarded to eligible employees and executive director of the Group. On 25 March 2020, the terms and conditions of the LTIP were finalised and approved by the Board of Directors. On 3 August 2020, the LTIP was granted to the eligible employees and executive director of the Group. The salient terms and conditions of the LTIP are set out in Note 29(b).