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Property, Plant and Equipment
 12 Months Ended
Dec. 31, 2013
Property, Plant and Equipment  
Property, Plant and Equipment

6.                                      Property, Plant and Equipment

 

 

 

December 31, 2012

 

December 31, 2013

 

Cost

 

 

 

 

 

Construction in progress

 

1,646

 

424

 

Plant and buildings

 

34,230

 

35,259

 

Machinery and equipment

 

39,359

 

42,851

 

Motor vehicles

 

1,831

 

1,884

 

Equipment and furniture

 

2,480

 

2,620

 

Leasehold improvements

 

9,692

 

12,386

 

Total cost

 

$

89,238

 

$

95,424

 

 

 

 

 

 

 

Less: Accumulated depreciation

 

 

 

 

 

Construction in progress

 

—

 

—

 

Plant and buildings

 

4,603

 

6,455

 

Machinery and equipment

 

11,922

 

15,658

 

Motor vehicles

 

1,423

 

1,653

 

Equipment and furniture

 

1,253

 

1,546

 

Leasehold improvements

 

866

 

2,149

 

Total accumulated depreciation

 

$

20,067

 

$

27,461

 

 

 

 

 

 

 

Property, plant and equipment net

 

$

69,171

 

$

67,963

 

 

The land use rights and buildings of the Changping facilities of Sinovac Beijing with a net book value of $7,760 (RMB 47 million) were pledged as collateral (note 9) for a bank loan from China Construction Bank.

 

The land use rights and building of Sinovac Beijing with a net book value of $20,893 (RMB 126.5 million) were pledged as collateral (note 9) for a bank loan from Bank of Beijing.

 

The land use rights and building of Sinovac Dalian with a net book value of $9,911 (RMB 60 million) were pledged as collateral (note 9) for a bank loan from Bank of China. The loan was partially drawn down in March 2013.

 

Depreciation expense for the years ended December 31, 2011, 2012, and 2013 was $4,272, $3,961 and $5,998, respectively.

 

Loss on disposal of equipment in 2011, 2012 and 2013 were $36, $14 and $31, respectively.

 

In 2012, Sinovac Beijing decided to move the packaging line from its Shangdi site to the Changping site. The equipment not being relocated to Changping and the leasehold improvements for the packaging line production area at Shangdi site were impaired as a consequence. The Company recorded an impairment charge of $679 (RMB 4.1 million) and $57 (RMB 0.3 million) in the year ended December 31, 2012, and 2013, respectively.

 

Tangshan Yian incurred a loss in 2012 and was expected to continue to incur losses in the future. The Company performed a recoverability test of Tangshan Yian’s property, plant and equipment by comparing the forecasted undiscounted cash flow to be generated from continuous use of the property, plant and equipment to their carrying value. As the discounted cash flows over the remaining useful life of the assets were negative, the Company measured the impairment amount by estimating the fair value of the property, plant and equipment.  The Company determined the fair value of Tangshan Yian’s land use rights and plant and buildings using the market approach by obtaining quoted prices for similar assets in the principal resale market. The Company determined the fair value of Tangshan Yian’s machinery and equipment using the cost approach by estimating the amount that currently would be required to construct or purchase substitute machinery and equipment of comparable utility. The estimate considered the condition of the assets which include the physical deterioration and economic obsolescence.

 

It was determined the fair value of Tangshan Yian’s property, plant and equipment and land use rights was $2,923 compared to the carrying value of $4,420 as at December 31, 2012. The impairment of $1,497 was allocated on a pro-rata basis to the land use rights, plant and buildings, and machinery and equipment based on their relative carrying value. As the fair value of the land use rights exceeded their carrying value, the impairment amount of $1,497 was allocated to plant and buildings and machinery and equipment based on their relative carrying values.