Financial Statements - Mewah Group
Financial Statements - Mewah Group
Financial Statements - Mewah Group
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Building Capabilities<br />
Notes to the <strong>Financial</strong> <strong>Statements</strong><br />
For the financial year ended 31 December 2011<br />
21. Intangible asset<br />
<strong>Group</strong><br />
2011 2010<br />
US$’000 US$’000<br />
Composition:<br />
Goodwill<br />
Cost<br />
Beginning of the financial year 5,846 -<br />
Acquisition of subsidiaries, as previously stated - 5,205<br />
Finalisation of purchase price allocation - 641<br />
Acquisition of subsidiaries, restated - 5,846<br />
Currency translation differences (128) -<br />
End of the financial year 5,718 5,846<br />
Accumulated impairment<br />
Beginning of the financial year - -<br />
Impairment charge (2,717) -<br />
Currency translation differences 188 -<br />
End of the financial year (2,529) -<br />
Net book value 3,189 5,846<br />
Impairment test for goodwill<br />
As at 31 December 2011, goodwill was wholly allocated to the Molly CGU. Molly CGU consist of Molly Foods bvba, a company<br />
incorporated in Belgium which through its wholly owned subsidiary, Bloom Land Enterprises Limited (“Bloomland”), a company<br />
incorporated in Hong Kong, owns 100% of BeCe S.à.r.l. (“BeCe”), a company incorporated in Togo. Molly CGU is involved primarily<br />
in importing commodities, including edible oils and fats products produced by the <strong>Group</strong>, for sale in West Africa (Note 35).<br />
The recoverable amount of the Molly CGU has been determined based on value-in-use calculations using cash flow projection<br />
covering a five-year period. The projected operating margin ranged from US$39 to US$45 per metric tonne, the pre-tax discount<br />
rate applied to the cash flow projection was 12.0% and the forecasted growth used to extrapolate cash flow beyond the five-year<br />
period was 3.4%. The forecasted growth rate did not exceed the long term average growth rate for the industries in which the<br />
Molly CGU operates.<br />
Management determined the projected operating margin based on past performance and its expectations of the market<br />
developments. The forecasted growth rate used was consistent with forecasts included in published economic reports. The<br />
discount rate used was pre-tax and reflected specific risks relating to the Molly CGU.<br />
An impairment charge of US$2,717,000 (2010: US$Nil) was included in the income statement within “other operating gains”<br />
(Note 7). The impairment charge arose from the Molly CGU following tough market conditions and slowed demand resulting in<br />
high inventory carry cost and losses due to falling prices.<br />
89