Plant and Equipment Valuations

Your business is more than just staff and buildings. The value of a business consists of a combination of all the individual pieces that generate income, and this includes plant and equipment/ machinery.

Plant and machinery are company assets that hold the key to the business function.

Accurate plant and equipment valuations are often overlooked when considering the value of a business and its assets for financial statement purposes. While there is always a keen interest in establishing the value of the land and buildings, our experience has shown that the plant, equipment and machinery can exceed the value of the property assets. Therefore, there is an increasing need for businesses to ensure that these assets are correctly reflected in their asset register. This also applies to assets with a zero balance on the asset register, but which are still used on the site. We assist with the market value and replacement cost value of these movable assets.

What does a plant and equipment valuation include?

Plant and equipment, also called tangible fixed assets, are defined as physical assets which generate economic benefit for a company for a period of a year or more.

These can take the form of vehicles, machinery, office furniture, network infrastructure or computers.

A valuation company would consider the initial purchase cost of an asset and any costs associated with bringing it into use. For example, the value of a piece of heavy-duty mining equipment would also have to include the transport costs, setup and commissioning. This historical cost provides the starting point, but adjustments need to be made to factor in depreciation. Assets depreciate at different rates, therefore, it takes a keen eye to note these differing values and how they impact the final valuation report.

A multitude of factors affect these figures. For example, a specialised piece of machinery may only be available offshore, therefore the current exchange rate would factor in to establish an accurate replacement value.

A careful check of the assets, their use and expected lifespan, their condition, general maintenance and location of use are all carefully considered when a plant and equipment valuation is requested. A good report from a qualified valuation company will offer full motivation for all of their findings.

Who needs a plant and equipment valuation?

Considering the cost of machinery – especially imported products – all plant intensive industries would benefit from a plant and equipment valuation.

The value of a manufacturing business lies in its ability to create a product, and therefore, it would be wise to consider an in-depth valuation service for the machinery and equipment in use. Likewise, for the mining industry whose asset register is traditionally made up of heavy-duty, highly specialised and costly equipment. Transport systems, refineries, mills and assembly plants, equally would benefit from an accurate valuation, both from a ‘Market Value in Situ’ purpose and a replacement cost valuation.

Other movable assets in a business include its office equipment, network infrastructure or computers and other administrative equipment.

Our expert valuations assist companies in various stages of operation. From a simple asset register reconciliation to the value of the plant for financial statement purposes, for tax or insurance purposes, legal disputes, mergers or takeovers; or simply to assist with accurate forecasting and planning.

Valuation methods for plant and machinery

Various valuation methods can be applied when conducting a plant and equipment valuation.

Our experience over the years has found that the purpose of the valuation dictates to a larger or lesser degree, the valuation method used. However, whatever the requirements of the client, we always ensure that our reports are motivated and based on accurate and correct market information.

Plant and equipment valuations for commercial, industrial and agricultural sectors are very often prepared for the purpose of investment value/ balance sheet purposes. Establishing the replacement cost of the asset for insurance purposes is another key area that we focus on, as well as determining the market value in the event of sale/ finance purposes; or a loss adjustment.

Property, plant and machinery valuations often go hand-in-hand. Our dedicated and professional team are able to discuss your requirements further. Having an accurate insight into the value of the business assets assists in managing risks and making informed decisions.

Please feel free to Contact Us for your plant and equipment valuation requirements.

Contact The Property Partnership East Rand today on 0860 999 440 or Email: office@tpp.co.za