Annual Reports & Accounts 2011

18 Intangible assets

	Goodwill USD’000	Trade name USD’000	Customer relationships USD’000	Leasehold rights USD’000	Work-in- progress USD’000	Total USD’000
Cost
At 1 January 2010 and 31 December 2010	–	–	–	1,534	1,191	2,725
Acquired through a business combination (Note 35)	180,539	22,335	19,323	8,338	–	230,535
Additions	–	–	–	–	1,800	1,800
At 31 December 2011	180,539	22,335	19,323	9,872	2,991	235,060
Amortisation
At 1 January 2010	–	–	–	224	–	224
Charge for the year	–	–	–	88	–	88
At 31 December 2010	–	–	–	312	–	312
Charge for the year (Note 10)	–	1,303	2,214	370	–	3,887
At 31 December 2011	–	1,303	2,214	682	–	4,199
Net book value
At 31 December 2011	180,539	21,032	17,109	9,190	2,991	230,861
At 31 December 2010	–	–	–	1,222	1,191	2,413

Trade name represents the expected future economic benefit to be derived from the continued use of the MIS trade name acquired on acquisition of MIS.

Customer relationships represent the expected future economic benefits to be derived from the existing relationship with key customers resulting in recurring revenue from these customers in the future.

Leasehold right represents a favourable operating right acquired upon the acquisition of JIL and LE FZCO in 2008. This also includes the leasehold rights acquired on acquisition of MIS and existing lease hold rights in the books of MIS on acquisition of Rig Metals LLC in 2008. The value of the intangible assets have been determined by calculating the present value of the expected future economic benefits to arise from the favourable lease terms (five to 17 years).

Work-in-progress represents the cost incurred towards the implementation of an Enterprise Resource Planning software.

Management reviews the business performance based on the type of business (Note 5). Goodwill is monitored by the management at the operating segment level. Goodwill of USD 180.5m arising due to the acquisition of MIS (Note 35) has been allocated to the CGU within Segment A.

The recoverable amount of all CGUs has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by management covering a three-year period. Cash flows beyond the three-year period are extrapolated using the estimated growth rate of 4.3% for Segment A. A discount rate of 9% has been used to discount the pre-tax cash flows projection to the present value. The growth rate does not exceed the long term average growth rate for the business in which the CGU operates.