Full Annual Report 2006 - Singapore Technologies Engineering

173
Notes to the Financial Statements 31 DECEMBER 2006
(Currency – Singapore dollars unless otherwise stated)
12. LONG-TERM RECEIVABLES (continued)
(b) Included in the loans to third parties are:
(i) an amount of $2,010,000 (2005: $2,954,000) which is secured by the third party’s investment in a unit trust and
the loan is repayable over a period of 12 years commencing from 1996. Interest is chargeable at 15% per annum
calculated on the reducing balance basis.
(ii) an amount of approximately $8,312,000 (2005: $8,312,000) secured by intellectual property rights of that entity
and is not expected to be repaid within the next 12 months. Interest is repriced every month and chargeable at the
US dollar prime rate plus 2% (2005: 2%) per annum, which is also the effective interest rate. The loan is convertible
to shares of that entity, subject to certain terms and conditions. In the prior year, a notice was given to that entity to
convert the loan to shares of that entity but the conversion has not been effected as at the end of the year.
No interest income has been accrued for this financial year for the loans stated due to the uncertainty over the
collectibility of the interest income.
(iii) a bridging loan of $768,150 (US$500,000) (2005: $830,650 (US$500,000)) extended to a third party. The bridging
loan is secured by way of a Deed of Debenture which creates a floating charge over the assets of the third party.
This loan is treated as a net investment in the third party and is not expected to be repaid and is fully provided since
financial year 2005. The loan is stated at cost and has been fully provided for due to uncertainty of collectibility.
Therefore, it is not practicable to determine its fair value.
13. DEFERRED TAX ASSETS
GROUP
2006 2005
$’000 $’000
(Restated)
At beginning of the year 110,872 84,843
(Write-back of provision)/provision during the financial year (4,613) 631
Acquisition of subsidiaries in prior year, as previously reported – 4,905
Finalisation of purchase price allocation – 15,523
Acquisition of subsidiaries in prior year, as restated – 20,428
Acquisition of subsidiaries in current year 18,783 –
Translation differences (3,158) (219)
Transfer (to)/from provision for taxation (3,190) 4,804
Changes in fair value of available-for-sale financial assets (1,218) –
Changes in fair value of derivative financial instruments designated in cash flow hedges 161 385
At end of the year 117,637 110,872
The deferred tax assets arise as a result of:
Unabsorbed capital allowances and unutilised tax losses 39,257 23,698
Allowance for doubtful debts and stock obsolescence 24,585 23,955
Provision for warranties 32,561 29,982
Provision for liquidated damages 1,879 1,579
Provision for foreseeable losses 7,804 9,834
Intangible assets (19,109) –
Other temporary differences 30,257 21,368
Changes in fair value of derivative financial instruments designated in cash flow hedges 403 456
117,637 110,872