Tag Archive for: valuation

Theory plus Experience

Theory plus Experience are essential with the valuation of Plant and Machinery

Prime Objective considerations “In-situ Plant and Machinery”

  • Is the machine relevant for the current industry?
  • New improved machines and their replacement cost
  • Remaining functional lifespan
  • Major Capex for the plant to remain functional
  • Quality of ongoing maintenance, records
  • View plant in operational status
  • Physical/Functional and Economical obsolescent
  • Is the plant being overextended with the current production rate
  • Future relevancy for the specific manufacturing

It is essential for the Professional Valuer to spend time with the Plant Manager and require information on the backdown history and the reasons for these defaults. Note that all plant and machinery have a limited economical lifespan, for which a Risk factor is applicable. Any uncertainty with the supply of the Raw materials and demand for the Final product, to be highlighted and included in the Gross Risk allowance. The age-old principle of supply and demand in the open market, tested by a willing buyer, a willing seller is eminent.

Plant and Machinery Valuations

More notes on Plant and Machinery Valuations;

Machinery are often leased for the following reasons:

A lease is “the right to use” an asset rented for a period for predetermined production etc.

Specialised maintenance is more economical as per lease contract!

A lease offers a more predictable lifespan of a machine and further the renewal options and at the end of lease the options are to a greater extent.  Read more