Notes to the Financial Statements FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 11 INVESTMENT IN JOINT VENTURES Group 2023 2022 RM’000 RM’000 Unquoted shares 170,625 167,977 Share of post-acquisition results and reserves (128,393) (113,619) 42,232 54,358 Less: Accumulated impairment loss (22,052) (21,658) 20,180 32,700 Share of net assets of joint ventures 20,180 32,700 Unquoted shares – Alam-PE Holdings (L) Inc. For the financial year ended 31 December 2023 and 2022, the Group reviewed the recoverable amount of its investment in a joint venture, Alam-PE Holdings (L) Inc. as impairment indicator exist due to ALAM-PE’s low vessel utilisation in the current financial year resulted in ALAM-PE continuing to incur losses and the significant shortfall of its actual loss and the budgeted profits for the current financial year indicated that the investment may be impaired. The Group has determined the recoverable amount of the investment by assessing the individual vessels, each of which is a single CGU by itself. The recoverable amount of each vessel are ascertained by using higher of respective fair value less cost to sell and value-in-use. The fair values of the vessels were based on the valuation report issued by an independent professional valuer on the basis that the vessels are in sound sea-going condition and have undergone the required regular dry dock. Due to the time approximation to the next dry dock, the fair valuation of the vessels were reduced by the estimated dry docking cost the buyer will need to dry dock the vessels within a year after purchase. As value-in-use was determined by using the discounted cash flows derived from pre-tax cash flow projections based on financial budgets approved by the Group covering a period of 3 years (2022: 5 years) based on past performance of each vessel and expectations of the market development. Due to the uncertainty of the future economic condition, management developed the base case and worst case scenario of cash flow projections. Probabilities of occurrence were assigned to each scenario to arrive at a single set of cash flow projection. The assumptions used in both scenarios and the probabilities of occurrence assigned required management’s judgement. The key assumptions used in the cash flow projections for the investment are as follows: (a) (i) An average vessel utilisation rate for 3 years of 23% in current financial year; (ii) An average vessel utilisation rate for 5 years of 51% was applied to both the base case and worst case scenario in previous financial year. The average utilisation rate is affected by the timing of vessels completing their dry docking; (b) Pre-tax discount rate of 14% (2022: 12.1%) was applied, benchmarked against comparable companies at the date of assessment; and (c) No terminal growth rate was applied in the current and previous financial year. Based on management’s impairment assessment, no impairment loss is deemed necessary to be recognised for the financial year ended 31 December 2023. The Group had recognised an impairment loss of RM8,989,000 for the financial year ended 31 December 2022. 225 Wasco Berhad
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