262 YINSON HOLDINGS BERHAD ACCOUNTABILITY NOTES TO THE FINANCIAL STATEMENTS (CONT’D) For the financial year ended 31 January 2022 5. Critical accounting estimates and judgements (continued) (d) Useful life and residual value of FPSOs and OSVs The Group reviews the residual value and useful life of FPSOs and OSVs 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 and OSVs would increase the recorded depreciation and decrease the carrying value of FPSOs and OSVs. The net book value of FPSOs and OSVs as at 31 January 2022 was RM3,310 million in Note 16. For the financial year ended 31 January 2022, 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 and OSVs 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 3,375 147 - Decrease by 5 years 3,230 266 Residual value - Increase by 10% 3,315 206 - Decrease by 10% 3,306 216 (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 The salient terms and conditions of the LTIP are set out in Note 29(b). The final number of Yinson Shares or cash performance bonuses to be awarded will depend on the achievement of pre-determined target points for daily share price and Award Conditions over a four-year performance period, and is subject to approval by the Employees’ Share Scheme Committee and the Board of Directors of the Company. No Yinson Shares or cash performance bonuses will be awarded if the share price targets and Award Conditions are not met at each annual assessment date within the performance period. Significant judgment is required to determine whether the target points for daily share price and Award Conditions are expected to be achieved at each annual assessment date within the performance period, and correspondingly, the number of Yinson Shares or cash performance bonuses to be awarded. Based on the above, compensation costs of the Group’s LTIP of RM35 million (Note 29(c)), reflecting the benefits accruing to the employees over the service period to which the performance criteria relate, were recognised in the current financial year.
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