FRONTLINE COVER FA 070606 CR2.indd

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62 frontline technologies corporation ltd annual report 2006 > notes to the financial statement for the year ended 31 march 2006 3. Significant accounting estimates and judgements (cont’d) (i) Impairment of goodwill and other intangibles The Group determines whether goodwill and other intangibles are impaired at least on an annual basis. This requires an estimation of the value-in-use of the cash generating units to which the goodwill and other intangibles are allocated. Estimating the value-in-use requires the Group to make an estimate of the expected future cash flows from the cash generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill and other intangibles at 31 March 2006 was $21,325,893 (2005: $19,963,432). (ii) (iii) Depreciation of property, plant and equipment Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these property, plant and equipment to be within 3 to 21 years. The carrying amount of the Group’s property, plant and equipment at 31 March 2006 was $9,358,976 (2005: $8,629,480). Changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation charges could be revised. Income taxes The Group has exposure to income taxes in numerous jurisdictions. Significant judgement is involved in determining the Group-wide provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The carrying amount of the Group’s tax payable at 31 March 2006 was $977,448 (2005: $890,723). 4. Revenue Revenue represents contract revenue and invoiced value of sales, services income, outsourcing income, training income and commission recognised in the normal course of business as follows: Group 2006 2005 $ $ IT Infrastructure 90,579,965 95,836,223 IT Outsourcing 61,542,902 44,022,223 IT Consulting and Implementation 16,939,916 7,605,145 169,062,783 147,463,591 Intra-group transactions have been excluded from Group turnover.
frontline technologies corporation ltd annual report 2006 63 > notes to the financial statement for the year ended 31 march 2006 5. Financial income Group 2006 2005 $ $ Interest income – bank balances 220,965 156,887 – fixed deposits 118,643 71,897 – others (mainly finance lease income) 875,953 202,302 1,215,561 431,086 6. Financial expenses Group 2006 2005 $ $ Interest expense – short term loans and overdraft 1,124,939 1,884,803 – notes payable 96,436 324,189 – hire purchase 715,477 9,783 – bills payable 134,483 130,517 Bank charges 75,574 195,056 Foreign exchange loss, net 236,075 175,740 2,382,984 2,720,088 7. Share of results of associated companies Group 2006 2005 $ $ Share of profit before tax of associated companies 3,963,106 2,689,829 Share of tax of associated companies (830,883) (555,779) 3,132,223 2,134,050
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