/ . 9 4
E U R O S P O R T S G L O B A L L I M I T E D
Notes to
the F iNaNci al statemeNts
3 1 ma r ch 2 0 1 5
22 .
acqu i s i t i on o f Sub s i d i a r y ( Con t ’ d )
goodwill arising on acquisition:
The goodwill arising on acquisition is as follows:
2015
$’000
Consideration transferred
1,500
Non-controlling interest at fair value
1,000
Fair value of identifiable net assets acquired
(530)
Goodwill arising on acquisition
1,970
The non-controlling interest of 40% in the acquiree at the acquisition date was measured based on the non-controlling
interest’s proportionate share of the acquiree’s net identifiable assets.
The results of AE for the period between the date of acquisition and the end of the reporting year were as follows:
2015
$’000
Revenue
5,295
Loss before income tax
(1,222)
The goodwill was tested for impairment at the end of the reporting year. In view of the unfavourable market conditions
for luxury cars and the challenging business environment, full impairment of the goodwill was made. The amount is
charged to statement of profit and loss in other charges.
The value in use was measured by a firm of independent financial advisers. The key assumptions for the value in
use calculations are as follows. The quantitative information about the value in use measurement using significant
unobservable inputs (Level 3) for the cash generating unit are as follows:
Valuation techniques and unobservable inputs
Discounted cash flow method
31 march
2015
Estimated discount rates using pre-tax rates that reflect current market assessments
at the risks specific to the CGU.
18.5%
Growth rates based on industry growth forecasts and not exceeding the average long-term growth
rate for the relevant markets.
3%
Cash flow forecasts derived from the most recent financial budgets and plans approved
by management.
5 years
The impairment test has been carried out using a discounted cash flow model covering a 5-year period. Cash flows
projections are based on the next five year budgets and plans approved by management. The discount rate applied
(weighted average cost of capital “WACC” gross of tax effect) is 18.5%.
