Page 118 - HRC_AR2020

116 I 2020 ANNUAL REPORT I financial reports

NOTES TO THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 (CONTINuED)

13 propertY, plant anD eQUipMent (continued)
reversal of impairment in the previous financial year
In financial year ended 31 December 2014, the company recognised an impairment of its plant, machinery and equipment.
The impairment recognised was triggered by the declining trend in refining margins and the announcement by the relevant
regulatory bodies of its intention to implement E4M and Euro 5 compliant fuel by 2019 and 2020 respectively. Assessment
of the asset’s recoverable amount was made, and this resulted in the partial reversal of impairment in the previous
financial years. Management and the Directors had assessed impairment for reversal after taking into consideration the
successful completion of Clean Air Regulation (“CAR”) unit and higher certainty on the progress of the other key regulatory
driven projects, namely Euro 5 Diesel and Hydrogen Generation (“H2GEN”) units. The recoverable amount of the refinery
assets, being defined as a cash-generating-unit, was determined using the FVLCTS method based on management’s
assessment adjusted for market conditions to reflect market participants’ perspective. The FVLCTS is the net present value
of the projected future cashflow derived from the asset discounted at an appropriate discount rate. Refer Note 3(a) for the
key assumptions used.

14 intanGiBle assets

2020 2019
rM’000 rM’000
cost
At 1 January 63,767 58,864
Additions 1,068 5,588
Effect of exchange rate changes - (685)

At 31 December 64,835 63,767

accumulated amortisation
At 1 January 49,697 35,832
Amortisation for the financial year 2,694 14,405
Effect of exchange rate changes - (540)
At 31 December 52,391 49,697

carrying amount
At 31 December 12,444 14,070

Intangible assets mainly relate to costs incurred by the Company in setting up its standalone IT systems.
The useful life of IT development and software is between 3 and 10 years (2019: 3 and 10 years).
The amortisation of IT development and software costs are included in the “depreciation and amortisation” line item in the
profit or loss.