Trinidad Cement Limited
Annual Report 2012
64
Notes to the Consolidated Financial Statements (continued)
For the year ended 31 December, 2012
(Expressed in Thousands of Trinidad and Tobago Dollars, except where otherwise stated)
9. Goodwill
2012
2011
$
$
Cost
269,147
269,147
Accumulated impairment
(53,316)
(53,316)
Net book amount
215,831
215,831
Net book amount
1 January
215,831
215,831
Impairment charge for the year
–
–
31 December
215,831
215,831
Based on the results of impairment tests in 2012, no impairment charge is required.
Impairment testing of goodwill
Goodwill was acquired through business combinations with Caribbean Cement Company Limited and subsidiaries of
Readymix (West Indies) Limited. The recoverable amount of business units has been determined using pre-tax cash flow
projections approved by the Board of Directors and applying sensitivity analysis to the data.
The recoverable amount of the cash generating units was determined using value in use calculations. The calculation of
value in use is most sensitive to assumptions regarding market share, gross margins and discount rates:
Market share -
It is assumed that the respective business units will at least maintain their current levels of market
share on the local market over the projection period. Continued growth is projected on the local and
export markets.
Gross margins - It is assumed that the business units will be able to at least maintain their current gross margins over
the projection period with the ability to adjust selling prices to compensate for increasing price of
inputs which are reliably supplied.
Discount rates - Discount rates represents the currentmarket assessment of the risks specific to each cash generating
unit (CGU), regarding the time value of money and individual risks of the underlying assets. The
discount rate calculation is derived from the weighted average cost of capital (WACC) of the relevant
CGU.
The following highlights the goodwill and impairment information for each cash-generating unit:
Caribbean Cement
Subsidiary of Readymix
Company Limited
(West Indies) Limited
Carrying amount of goodwill
$214 million
$1.8 million
Basis for recoverable amount
Value in use
Value in use
Discount rate
24.13%
13.4%
Discount rate (extrapolation period)
24.13%
13.4%
Cash flow projection term
5 years
5 years
Growth rate (extrapolation period)
1.5%
1%
