1. BASIS OF PREPARATION (CONTINUED) (d) Use of estimates and judgements There are no significant areas of estimation of uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements, other than as follows: (i) Revenue The Group’s contract for the implementation of National Single Window (“NSW”) will be ending in August 2024. Thus, there can be no assurance that the Group will be able to continue to enjoy similar level of revenue when the NSW contract expires. (ii) Depreciation of property, plant and equipment and amortisation of intangible assets The estimates for the residual values, useful lives and related depreciation charges for the property, plant and equipment and amortisation charges for the intangible assets are based on commercial factors which could change significantly as a result of technical innovations and competitors’ actions in response to the market conditions. Changes in the expected level of usage and technological development could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges and amortisation charges could be revised. The carrying amounts of property, plant and equipment and intangible assets as at the reporting date are disclosed in Notes 3 and 6 to the financial statements respectively. (iii) Impairment of property, plant and equipment, right-of-use assets and intangible assets The Group determines whether an item of its property, plant and equipment, right-of-use assets and intangible assets is impaired by evaluating the extent to which the recoverable amount of the asset is less than its carrying amount. This evaluation is subject to changes such as market performance, economic and political situation of the country. A variety of methods is used to determine the recoverable amount such as discounted cash flows. For discounted cash flows, significant judgement is required in the estimation of the present value of future cash flows generated by the assets, which involve uncertainties and are significantly affected by assumptions used and judgements made regarding estimates of future cash flows and discount rates. The carrying amounts of property, plant and equipment, right-of-use assets and intangible assets as at the reporting date are disclosed in Notes 3, 4 and 6 to the financial statements respectively. (iv) Estimation of oil and gas reserves Oil and gas reserves are key elements in the Group’s investment decision making process. They are also an important element in testing for impairment. Changes in proved and probable developed oil and gas will affect unit–of–production depreciation charges to profit or loss. Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs under existing economic and operating conditions, i.e. prices and costs as of the date the estimate is made. Proved developed reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Estimates of oil and gas reserves are inherently imprecise, require the application of judgement and are subject to future revision. Accordingly, financial and accounting measures (such as the discounted cash flows, depreciation, depletion and amortisation charges, and decommissioning provisions) that are based on proved reserves are also subject to change. Financial Statements DAGANG NeXCHANGE BERHAD 200 NOTES TO THE FINANCIAL STATEMENTS
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