Financial Statements - Mewah Group

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