NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 5. PROPERTY, PLANT AND EQUIPMENT (continued) 83 <strong>TANJUNG</strong> <strong>OFFSHORE</strong> <strong>BERHAD</strong> (662315-U) ANNUAL REPORT 2009 GROUP Freehold Leasehold Vessels under land land Furniture and Workshop Offi ce Motor Vessels commissioning and building and building fi ttings Renovation tools equipments vehicles Machinery Total RM RM RM RM RM RM RM RM RM RM RM At 31 December 2008 Cost or Valuation Beginning of the year At cost 249,102,595 54,191,553 4,041,366 2,478,000 1,319,023 5,124,191 400,234 4,392,920 2,958,403 6,636,120 330,644,405 Addition 1,350,000 177,390,040 1,038,402 36,706 1,009,609 2,156,884 291,296 5,425,597 967,821 1,445,065 191,111,420 Revaluation 85,847,404 - - - - - - - - - 85,847,404 Disposal - - - - - (9,420) - (73,600) (66,183) (53,862) (203,065) Write off - - - - - (458,568) - - - - (458,568) Tranfer (to)/from 93,657,329 (93,657,329) - - - - - - - - - End of the year 429,957,328 137,924,264 5,079,768 2,514,706 2,328,632 6,813,087 691,530 9,744,917 3,860,041 8,027,323 606,941,596 Representing: 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 3,860,041 8,027,323 271,991,596 At valuation 334,950,000 - - - - - - - - - 334,950,000 Accumulated Depreciation 429,957,328 137,924,264 5,079,768 2,514,706 2,328,632 6,813,087 691,530 9,744,917 3,860,041 8,027,323 606,941,596 Beginning of the year 13,079,455 - 317,127 133,533 451,941 1,336,219 42,798 935,183 1,185,214 1,759,516 19,240,986 Reversal of depreciation due to revaluation (19,307,020) - - - - - - - - - (19,307,020) Charge for the year 14,999,034 - 99,842 51,771 179,681 605,488 56,203 801,069 835,209 767,060 18,395,357 Effects of movements in exchange rates - - - - - - - (1,604) - (10,242) (11,846) Disposal - - - - - - - (25,612) (4,756) (48,380) (78,748) Write off - - - - - (94,291) - - - - (94,291) End 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 Net Book Value At cost 92,252,277 137,924,264 4,662,799 2,329,402 1,697,010 4,965,671 592,529 8,035,881 1,844,374 5,559,369 259,863,576 At valuation 328,933,582 - - - - - - - - - 328,933,582 421,185,859 137,924,264 4,662,799 2,329,402 1,697,010 4,965,671 592,529 8,035,881 1,844,374 5,559,369 588,797,158 a) Included in the property, plant and equipment are motor vehicles and offi ce equipment which is acquired by means of hire purchase and lease arrangements with a net book value of RM854,809 (2008: RM1,424,833) and RM840,445 (2008: RM1,103,348) respectively. b) Borrowing costs amounting to RM3,515,940 (2008: RM6,859,487) from various fi nancier entered into for new vessels under construction and commissioning were capitalised. c) Freehold and leasehold land and building have been pledged to secure the Group’s bank overdraft as disclosed in Note 16 to the fi nancial statements. d) Certain vessels have been pledged to secure the relevant borrowings from the banks and Bonds Programme as disclosed in Notes 20 and 21 to the fi nancial statements respectively. e) On 17 July 2008, an independent professional valuer, Matthews Daniel International Pte. Ltd. has revalued seven (7) vessels within the Group on an open market value basis. Had the revalued vessels been carried at historical cost, the net book value of the vessels that would have been included in the fi nancial statements of the Group as at 31 December 2009 would have been recorded as follows: 2009 2008 RM RM Vessels 211,697,376 224,151,005
<strong>TANJUNG</strong> <strong>OFFSHORE</strong> <strong>BERHAD</strong> (662315-U) ANNUAL REPORT 2009 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2009 6. INTANGIBLE ASSETS GROUP Goodwill patent and Development Goodwill on purchases Costs Consolidation Total RM RM RM RM Cost Beginning of the year 7,308,588 - - 7,308,588 Additions - 86,988 350,688 437,676 Acquisition of a subsidiary company - 3,149,314 - 3,149,314 Effect on movements in exchange rates 757,282 - - 757,282 8,065,870 3,236,302 350,688 11,652,860 Accumulated Amortisation Beginning of the year 216,104 - - 216,104 Amortised during the year 660,800 - - 660,800 Effect on movements in exchange rates 34,284 - - 34,284 End of the year 911,188 - - 911,188 Net book value As at 31 December 2009 7,154,682 3,236,302 350,688 10,741,672 As at 31 December 2008 7,092,484 - - 7,092,484 i) The goodwill of patent and purchases are amortised on a straight line basis over their useful lives over 17 years and 10 years respectively. ii) Goodwill is allocated to the Group’s cash-generating units (“CGU”) identifi ed according to business segment. The recoverable amount of a CGU is determined based on value in use and was determined by discounting the future cash fl ows generated from the continuing use of the unit and was based on the following key assumptions: a) The cash fl ow projections were approved by the management covering a seven year period. b) The subsidiary will continue its operation indefi nitely. c) The gross profi t margin was based on past performance and its expectations of market development. d) The growth rate used is based on expected growth rates for sales. e) The discount rate used is pretax and refl ect specifi c risks relating to the relevant segments. There is no impairment loss for the fi nancial year recognised because the value in use exceeded the carrying amount (including the goodwill allocated) of each CGU at balance sheets date. 84
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