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TEHO INTERNATIONAL INC LTD Annual Report 2012 48
Notes to the
Financial Statements
30 June 2012
15. Property, Plant and Equipment
Group
Leasehold
buildings
Plant and
machinery
Motor
vehicles Total
$ $ $ $
Cost:
At 1 July 2010 8,617,230 2,246,576 522,479 11,386,285
Additions – 475,261 – 475,261
Disposals – (240,063) – (240,063)
At 1 July 2011 8,617,230 2,481,774 522,479 11,621,483
Acquisition of subsidiary – 12,025 – 12,025
Additions – 875,375 96,271 971,646
Disposals – (200,000) – (200,000)
At 30 June 2012 8,617,230 3,169,174 618,750 12,405,154
Accumulated depreciation:
At 1 July 2010 2,602,081 2,150,757 443,647 5,196,485
Depreciation for the year 530,143 154,044 44,494 728,681
Disposals – (238,113) – (238,113)
At 1 July 2011 3,132,224 2,066,688 488,141 5,687,053
Acquisition of subsidiary – 9,132 – 9,132
Depreciation for the year 530,143 191,289 27,539 748,971
Disposals – (200,000) – (200,000)
At 30 June 2012 3,662,367 2,067,109 515,680 6,245,156
Net book value:
At 1 July 2010 6,015,149 95,819 78,832 6,189,800
At 30 June 2011 5,485,006 415,086 34,338 5,934,430
At 30 June 2012 4,954,863 1,102,065 103,070 6,159,998
The leasehold buildings are pledged as security for banking facilities (Note 24).
The depreciation expense is charged as other operating expenses.
Fully depreciated plant and equipment still in use has a cost of $2,166,453 (2011:
$2,095,178).
16. Intangible Assets
Group
2012
$
2011
$
Goodwill (Note 16A) 2,515,562 –
Other intangible assets (Note 16B) 2,137,000 –
Total 4,652,562 –
16A. Goodwill
Group
2012
$
2011
$
Arising from acquisition of subsidiary (Note 26) 2,515,562 –
Balance at end of the year 2,515,562 –
The goodwill arose from acquisition of a subsidiary towards the end of the fnancial period
(Note 26). The value of the goodwill is determined through a purchase price allocation
valuation carried out by an independent professional valuer.
Goodwill is allocated to cash-generating units (“CGU”) for the purpose of impairment
testing. This CGU represents the group’s investment in the subsidiary, TEHO Engineering
Pte Ltd (see Notes 17 and 26) and is allocated to the offshore oil and gas segment.
The goodwill was tested for impairment at the end of the year. An impairment loss is the
amount by which the carrying amount of an asset or a CGU exceeds its recoverable
amount. The recoverable amount of an asset or a CGU is the higher of its fair value less
costs to sell or its value in use. The recoverable amounts of CGU have been determined
based on the value in use method. The value is regarded as the lowest level for fair
value measuremen t as the valuation includes inputs for the asset that are not based on
observable market data (unobservable inputs).
In this case no impairment charges were recognised because the carrying amount of the
CGU was lower than its recoverable amount.
The value in use was determined by management. The key assumptions for the value in
use calculations are those regarding the discount rate, growth rate and expected changes
to selling prices and direct costs during the period. Management estimates discount rate
using pre-tax rate that refect current market assessments of the time value of money
and the risks specifc to the CGU. The growth rate is based on industry growth forecasts.
Changes in selling prices and direct costs are based on past practices and expectations
of future changes in the market.