TANJUNG OFFSHORE BERHAD

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NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 3. SIGNIFICANT ACCOUNTING POLICIES (continued) t) Signifi cant Accounting Estimates and Judgements (continued) Share-based payments to employees 81 TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 The cost of providing the share-based payments to the employees is charged to the income statement over the vesting period. The cost is based on the fair value of the options and the number of the options expected to vest. The fair value of the options is determined using Black Scholes pricing model. Amortisation of intangible assets The goodwill of patent and purchases are amortised on a straight line basis over their useful lives over 17 years and 10 years respectively. The Group assesses annually the useful lives of the intangible assets and if the expectation differs from the original estimate, such difference will impact the amortisation expenses in the period in which such estimate has been charged. 4. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES The operation of the Group and the Company is subject to a variety of fi nancial risks. The Group’s and the Company’s overall fi nancial risk management objective is to ensure that the Group and the Company creates value for its shareholders. The main areas of fi nancial risks faced by the Group and the Company are as follows: i) Credit risk The Group’s main exposure to credit risk is in respect of its trade and other receivables. The Group manages the exposure to credit risk by performing credit evaluation on the major customers and outstanding debts are being monitored and pursued for full recovery. ii) Liquidity and cash fl ow risk The Group and the Company actively manages its debts maturity profi le, operating cash fl ows and availability of funding so as to ensure that all repayment and funding needs are met. iii) Interest rate risk The Group and the Company have cash and bank balances and deposits placed with licensed banks. The Group and the Company manages its interest rate risks by placing such balances on varying maturities and interest rate terms. The Group and the Company are also exposed to interest rate risk through the impact of rate charges on its borrowings. To mitigate the interest rate risk, the management of the Group and the Company consistently monitors the interest rate exposure against the existing/potential income from operations. iv) Foreign currency exchange risk The Group and the Company imports a wide range of engineering equipment and spare parts for its business operations from various countries, subjecting its purchase costs to foreign exchange fl uctuations. In this aspect, the Group and the Company mitigates its exposure to foreign exchange fl uctuations through back-to-back purchase and selling arrangements between its customers and the foreign suppliers. As a result, the Group’s and the Company’s purchase costs and currencies transacted are matched to the revenues generated from the sale of the Group’s products, thus forming a natural hedge.
TANJUNG OFFSHORE BERHAD (662315-U) ANNUAL REPORT 2009 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 5. PROPERTY, PLANT AND EQUIPMENT Blasting and Equipment Vessels under Freehold land Leasehold land Furniture and Workshop Offi ce Motor painting under Vessels commissioning and building and building fi ttings Renovation tools equipments vehicles equipment commissioning Machinery Total RM RM RM RM RM RM RM RM RM RM RM RM RM At 31 December 2009 Cost or valuation Beginning of the year At cost 95,007,328 137,924,264 5,079,768 2,514,706 2,328,632 6,813,087 691,530 9,744,917 3,860,042 - - 8,027,323 271,991,596 At valuation 334,950,000 - - - - - - - - - - - 334,950,000 Acquisition of a subsidiary company - - - - 79,704 38,738 - 118,531 423,997 - - 10,477,093 11,138,063 Addition 21,671,760 164,527,026 874,454 549,487 212,796 993,012 197,082 957,970 403,740 943,641 2,927,202 1,130,458 195,388,628 Disposal/Writte off - - - - (109) (3,917) (794) (22,747) (11,847) - - (5,100) (44,514) Transfer (to)/from 209,752,312 (209,752,312) - - - - (59,000) - - - - 59,000 - Effects on the currency translation - - - 3,804 - - - 3,676 - - - 84,323 91,803 End of the year 661,381,400 92,698,978 5,954,222 3,067,997 2,621,023 7,840,920 828,818 10,802,347 4,675,932 943,641 2,927,202 19,773,097 813,515,576 Representing: At cost 326,431,400 92,698,978 5,954,222 3,067,997 2,621,023 7,840,920 828,818 10,802,347 4,675,932 943,641 2,927,202 19,773,097 478,565,576 At valuation 334,950,000 - - - - - - - - - - - 334,950,000 82 661,381,400 92,698,978 5,954,222 3,067,997 2,621,023 7,840,920 828,818 10,802,347 4,675,932 943,641 2,927,202 19,773,097 813,515,576 Accumulated depreciation Beginning of the year 8,771,469 - 416,969 185,304 631,622 1,847,416 99,001 1,709,036 2,015,667 - - 2,467,954 18,144,438 Charge for the year 21,568,497 - 131,780 112,765 238,046 729,293 156,619 1,576,407 955,142 136,702 - 1,057,909 26,663,160 Acquisition of a subsidiary company - - - - 46,050 - - 85,187 213,777 - - 3,335,428 3,680,442 Effects on the currency translation - - - 145 - - - - - - - 7,001 7,146 End of the year 30,339,966 - 548,749 298,214 915,718 2,576,709 255,620 3,370,630 3,184,586 136,702 - 6,868,292 48,495,186 Net Book Value At cost 320,103,809 92,698,978 5,405,473 2,769,783 1,705,305 5,264,211 573,198 7,431,717 1,491,346 806,939 2,927,202 12,904,805 454,082,765 At valuation 310,937,625 - - - - - - - - - - - 310,937,625 631,041,434 92,698,978 5,405,473 2,769,783 1,705,305 5,264,211 573,198 7,431,717 1,491,345 806,939 2,927,202 12,904,805 765,020,390 See accompanying notes to the fi nancial statements.
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TANJUNG OFFSHORE BERHAD

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