NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
125
Annual Report 2014
28.
Provisions
(continued)
(b)
Movements in provision for warranties are as follows:
The Group
2014
2013
$’000
$’000
Beginning of financial year
43,449
44,057
Provision made during the financial year
11,621
15,456
Provision utilised during the financial year
(2,758)
(19,315)
Currency translation differences
1,499
3,251
End of financial year
53,811
43,449
The Group provides one to two-year warranties on certain ship building and marine engineering
contracts and undertakes to repair or rectify defects that fail to perform satisfactorily. A provision
is recognised at the balance sheet date for expected warranty claims based on an estimate by
technical engineers and past experience of the possible repairs and rectifications.
(c)
Movements in provision for legal claims are as follows:
The Group
2014
2013
$’000
$’000
Beginning of financial year
9,482
8,868
Currency translation difference
(110)
571
Provision made during the financial year
642
43
Provision written back during the financial year
(9,131)
–
Provision utilised during the financial year
(42)
–
End of financial year
841
9,482
The provision for legal claims is in respect of certain legal claims brought against the Group by
customers. During the financial year, a portion of such legal claims were written back as the
outcome of a litigation case was favourable to a subsidiary within the Group.
(d)
Movements in provision for an onerous contract are as follows:
The Group
2014
2013
$’000
$’000
Beginning of financial year
144
–
Provision made during the financial year
25
144
Provision utilised during the financial year
(179)
–
Currency translation differences
10
–
End of financial year
–
144
The provision for an onerous contract is in respect of a charter hire contract where the costs of
meeting the obligation under the contract exceed the expected revenue for the remaining
contractual period.
