64
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
5 INTANGIBLEASSETS (CONT’D)
Impairment test (cont’d)
(ii) TEHOWater & Envirotec Pte. Ltd. (cont’d)
The recoverable amount for this subsidiary was based on its value in use,
determined by discounting the future cash flows to be generated from the business
of the subsidiary. In 2016, as a result of the impact of fluctuations in crude oil
prices on the outlook of the offshore oil & gas industry, the carrying amount of the
subsidiary was determined to be higher than its recoverable amount of $1,876,373
and an impairment loss on the goodwill of $844,364 (2015: Nil) was recognised. The
impairment loss was included in other operating expenses. In 2015, the estimated
recoverable amount of the subsidiary exceeded its carrying amount by $886,822.
Following the recognition of the impairment loss, the recoverable amount
was equal to the carrying amount. Therefore, any adverse movement in a key
assumption would lead to further impairment.
(iii) TIEC Holdings Pte. Ltd.
The recoverableamountforthis subsidiarywasbasedon itsvalue inuse, determined
by discounting the future cash flows to be generated from the development
projects of the subsidiary. In 2016, as a result of the cooling measures implemented
by the Singapore government, the property market in Singapore continued to
soften. Consequently, the carrying amount of the subsidiary was determined to
be higher than its recoverable amount of $4,859,137 (2015: $7,994,561) and an
impairment loss on the goodwill of $2,211,110 (2015: $2,209,048) was recognised.
The impairment loss was included in other operating expenses.
2016
2015
Estimated discount rates using post-tax rates that
reflect current market assessments at the risks
6.4%
9.5%
specific to the CGUs
Estimated selling price
$1,044 psf $1,126 psf
Cash flow forecasts derived from the most recent
financial budgets and plans approved by
1.5 years
2 years
management
5 INTANGIBLEASSETS (CONT’D)
Impairment test (cont’d)
(iii) TIEC Holdings Pte. Ltd. (cont’d)
The cash flow forecasts were based on the subsidiary’s remaining property
development projects which were expected to be completed within the following
1.5 years. Revenue was based on the gross development value estimated by an
independent professional valuer, adjusted to account for a foreseeable decline in
property prices in Singapore’s luxury property market.
Following the recognition of the impairment loss, the recoverable amount
was equal to the carrying amount. Therefore, any adverse movement in a key
assumption would lead to further impairment.
(iv) ECG Property Services Pte. Ltd. and its subsidiaries
2016
2015
Estimated discount rates using pre-tax rates that
reflect current market assessments at the risks
n.a.
10.2%
specific to the CGUs
Estimated selling price
n.a.
$398 psf
Cash flow forecasts derived from the most recent
n.a.
4 years
financial budgets and plans approved by management
The acquisition of ECG Property Services Pte. Ltd. (“ECG Property Services”) had
given rise to goodwill due to the synergies expected from the acquired business
and the Group’s property development project “The Bay” in Cambodia. In this
respect, the Group has attributed the goodwill arising from the acquisition of ECG
Property Services to “The Bay” project as part of the impairment assessment.
