annual report - Tenaga Nasional Berhad

Notes To The Financial Statements13 PROPERTY, PLANT AND EQUIPMENT (CONT’D.)Had the revalued property, plant and equipment been included in the financial statements at cost less depreciation, thenet book value of the revalued property, plant and equipment would have been as follows:groupCompany2008 2007 2008 2007RM’million RM’million RM’million RM’millionFreehold land 50.6 50.7 43.7 43.8Buildings and civil works 103.5 110.5 103.5 110.5154.1 161.2 147.2 154.3The valuations of freehold land, buildings and civil works of the Company was based on an independent valuation bya professional firm of valuers on the open market value basis in 1994. The net surplus on revaluation was incorporatedinto the financial statements at 31 August 1996 and transferred to revaluation reserve.The valuations of buildings of a subsidiary were carried out in 1982 and 1984 respectively based on independentvaluations by professional firms of valuers on the open market value basis. The net surplus on revaluation was transferredto revaluation reserve.The title deeds of certain land are in the process of being registered in the name of the Company and certainsubsidiaries.Included in transfers/reclassification in 2008 for the Group and the Company was RM20.4 million being the carryingamount of land and building reclassified as non-current assets held for sale (see Note 19).Interest capitalised during the financial year in capital project-in-progress amounted to RM301.8 million (2007: RM309.5million) for the Group and the Company.[ Tenaga Nasional Berhad ] [ Annual Report 2008 ]216The capitalisation rate used to determine the amount of borrowing cost eligible for capitalisation is 5.34% (2007: 5.63%)for the Group and the Company.Impairment test for property, plant and equipmentDuring the year, two subsidiary companies undertook annual impairment test for property, plant and equipment. Theresults of the test are as follows:-a) TNB Liberty Power Limited has recognised in prior years, a provision for impairment totalling RM440.2 million.The assessment showed that no further impairment loss is required for the carrying amount of property, plant andequipment assessed, including where realistic variations are applied to key assumptions. The carrying value of theproperty, plant and equipment at balance sheet date is RM520.1 million (2007: RM725.2 million).b) For Sabah Electricity Sdn Bhd (SESB), no impairment loss was required for the carrying amount of property, plant andequipment assessed based on certain assumptions applied for the test, which includes the company’s expectationof revenue growth, operating costs and cost of funds, drawing on from past experience and current assessment ofthe market and industry growth as well as the maximum capacity available. The carrying value of the property, plantand equipment at balance sheet date is RM2,269.8 millionn (2007: RM2,101.6 million).