KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
76
NOTES
TO THE FINANCIAL STATEMENTS
6
SUBSIDIARIES (Cont’d)
In accordance with the terms of the SPA, the Vendors directed that the Consideration Shares be
allotted and issued to KHOMH and that KHOMH would in turn allot and issue 999,998 new shares
(“Restructuring Shares”) in the capital of the Company to the Vendors or any persons they may
nominate. Upon the completion of the Restructuring Exercise, KHOMH became the holding company
of KHOM and KHOM became the holding company of KHMO, KHM, KHT, KHSE and APS. KHOMH
had issued 845,453 Restructuring Shares in relation to the Restructuring Exercise.
Pursuant to an investment agreement dated 15 May 2013 as amended by an accession, amended
and restated agreement dated 6 June 2013 (the “Investment Agreement”), the balance 154,545
Restructuring Shares was issued to a shareholder on 24 December 2013.
7
INVENTORIES
Group
Company
2014
2013
2014
2013
$’000
$’000
$’000
$’000
Finished goods - at cost
2,979
1,955
–
–
Allowance for inventory obsolescence
(1,286)
(1,470)
–
–
1,693
485
–
–
Vessels under construction
539
206
–
–
2,232
691
–
–
Changes in inventories recognised in cost of sales in profit or loss amounted to $1,287,000 (2013:
$4,792,000).
Allowance for inventory obsolescence
A review is performed periodically on inventory to identify excess inventory, obsolescence and
declines in net realisable value below cost and an allowance is recorded against the inventory
balance for any such declines. These reviews require management to estimate future demand for
the Group’s products. Possible changes in these estimates could result in revisions to the valuation
of inventory. An increase in the Group’s allowance for inventory obsolescence would increase the
Group’s recorded other expenses and decrease current assets.
The write-back of allowance for inventory obsolescence to net realisable value amounted to $246,000
(2013: $3,998,000).
