Page 168 - KPJ_2011

19. Intangible assets
Goodwill
20. Impairment of assets
Impairment tests for goodwill
The purchase price allocation (“PPA”) exercise on the acquisition of Sibu Medical Centre Corporation Sdn Bhd, Sibu
Geriatric Health & Nursing College Sdn Bhd and Jeta Gardens Waterford Trust is still being carried out by the Group.
The results of this independent valuation had not been received at the date of this report. Accordingly, the resultant
goodwill above represents a provisional amount pending the completion of the PPA exercise. In accordance with
Paragraph 45 of FRS 3, Business Combinations, the Group has a grace period of twelve months from the acquisition
date to complete the PPA exercise.
Recoverable amount based on value-in use
The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax
cash now projections based on mnancial budgets approved by the directors covering a mve-year period. Cash nows
beyond the mve-year period are extrapolated using the estimated growth rates stated below. The growth rate does
not exceed the long-term average growth rate for the relevant CGUs.
The key assumptions used in value-in-use calculations are as follows;
Assumptions:
1 Budgeted gross margin
2 Weighted average growth rate used to extrapolate cash nows beyond the budget period
3 Pre-tax discount rate applied to the cash now projections
The directors have determined budgeted gross margin based on past performance and expectations of market
development. The discount rates used are pre-tax and renect specimc risks relating to the relevant segments.
Cost
At 1 January 136,317 115,591
Acquisitions of subsidiaries (Note 16) 31,513 20,726
At 31 December 167,830 136,317
Group
2011
RM’000
2010
RM’000
Hospitals
- Malaysia 146,059 131,139
- Indonesia 1,060 1,060
Aged care facility 16,145 -
Support services 4,566 4,118
167,830 136,317
Group
2011
RM’000
2010
RM’000
Gross margin1 30 29
Growth rate2 7 7
Discount rate3 12 12
Terminal growth rate 5 5
2011 2010
% %
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2011 (continued)
163 ANNUAL REPORT 2011