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Goodwill | 12 Months Ended
--- | ---
Dec. 31, 2022
Disclosure of reconciliation of changes in goodwill [abstract] |
Goodwill |
13 | Goodwill
See accounting policies in notes 36(I) and (L)(ii).
|  | $ |
At January 1, 2021 |  |  | 3,993,007 |
Exchange differences |  |  | (14,942 | )
At December 31, 2021 and January 1, 2022 |  |  | 3,978,065 |
Additions from acquisition (note 33(D)) |  |  | 33,800,276 |
Impairment loss (note 8(c)) |  |  | (3,272,253 | )
Exchange differences |  |  | (705,812 | )
At December 31, 2022 |  |  | 33,800,276 |
Impairment tests for cash-generating units (“CGU”) containing goodwill The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. Prevention and Diagnostics services of Prenetics EMEA The goodwill balance arose from the acquisition of Prenetics EMEA in 2018 representing the excess of the purchase consideration over the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed. Cancer genetic testing services within the Diagnostics segment The goodwill associated with cancer genetic testing services within the Diagnostics segment arose when that business was acquired by the Group at December 30, 2022. It comprises of a group of CGUs responsible for the related operations based in Hong Kong, Taiwan and Thailand. Sales of medical diagnostics products within the Diagnostics segment The goodwill associated with sales of medical diagnostics products within the Diagnostics segment arose when that business was acquired by the Group at December 30, 2022. It represents a CGU responsible for the related operations based in the United Kingdom. Below is the summary of Prenetics EMEA and ACT Genomics goodwill balance allocated to the Group’s CGUs:
|  | 2022 |  |  | 2021 |
|  | $ |  |  | $ |
Prevention EMEA within the Prevention segment |  |  | — |  |  |  | 855,284 |
Diagnostics EMEA within the Diagnostics segment |  |  | — |  |  |  | 3,122,781 |
Cancer genetic testing services within the Diagnostics segment |  |  | 30,639,976 |  |  |  | — |
Sales of medical diagnostics products within the Diagnostics segment |  |  | 3,160,300 |  |  |  | — |
|  |  | 33,800,276 |  |  |  | 3,978,065 |
CGUs of cancer genetic testing services and sales of medical diagnostics products The recoverable amounts of the CGU of cancer genetic testing services and the CGU of sales of medical diagnostics products were determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a six-year period. Cash flows beyond the six-year period are extrapolated using the estimated average growth rates stated below. The key assumptions used in the estimation of the recoverable amounts of the two CGUs are set out below. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industries and are based on historical data from external and internal sources.
|  | 2022 |
CGU of cancer genetic testing services |  |  |  |
Pre-tax discount rate |  |  | 17.7 | %
Terminal value growth rate |  |  | 3.0 | %
Average revenue growth rate |  |  | 31.1 | %
CGU of sales of medical diagnostics products |  |  |  |
Pre-tax discount rate |  |  | 15.9 | %
Terminal value growth rate |  |  | 3.0 | %
Average revenue growth rate |  |  | 18.3 | %
Pre-tax discount rate represents the current market assessment of the risks specific to the relevant CGU, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the cash flow estimates. The pre-tax discount rate calculation is based on the specific circumstances of the Group and its operating segments and derived from its weighted average cost of capital (“WACC”). The WACC is calculated based on the weighted value of the cost of equity which is derived from the expected return on investment by the Group’s investors, and the cost of debt which is derived from the market lending rate for peer companies. At December 31, 2022, the recoverable amounts of the CGU of cancer genetic testing services and the CGU of sales of medical diagnostics products based on the estimated value-in-use calculations were higher than the carrying amounts of the respective CGUs. Accordingly, no provision for impairment loss for goodwill is considered necessary. Any reasonably possible changes in the key assumptions used in the value-in-use assessment model would not affect management’s view on impairment at December 31, 2022. CGUs Prevention EMEA and Diagnostics EMEA The recoverable amounts of the CGU Prevention EMEA and CGU Diagnostics EMEA were determined based on value-in-use calculations. As December 31, 2021, these calculations use cash flow projections based on financial budgets approved by management covering a ten-year period. Cash flows beyond the ten-year period are extrapolated using the estimated average growth rates stated below. In September 2022, the Group has implemented a restructuring plan in its UK business so as to streamline the resources on new business opportunity and to allow capacity to pursue other more sustainable business opportunities in the UK. The management considered this triggered indicators of impairment in the CGU Prevention EMEA and CGU Diagnostics EMEA and has performed the impairment assessment. The calculation of recoverable amounts of the CGU Prevention EMEA use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated average growth rates stated below. The calculation of recoverable amounts of the CGU Diagnostics EMEA use cash flow projections based on financial budgets approved by management covering the expected remaining period of the business. The key assumptions used in the estimation of the recoverable amounts of the two CGUs are set out below. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industries and are based on historical data from external and internal sources.
|  | 2022 |  |  | 2021 |
CGU Prevention EMEA |  |  |  |  |  |  |
Pre-tax discount rate |  | 16.8 | % |  |  | 16.0 | %
Terminal value growth rate |  | 3.2 | % |  |  | 3.0 | %
Average revenue growth rate |  | 25.1 | % |  |  | 24.4 | %
CGU Diagnostics EMEA |  |  |  |  |  |  |
Pre-tax discount rate |  | 16.8 | % |  |  | 13.7 | %
Terminal value growth rate |  | N/A |  |  |  | 3.0 | %
Average revenue growth rate |  | N/A |  |  |  | 18.4 | %
Pre-tax discount rate represents the current market assessment of the risks specific to the relevant CGU, regarding the time value of money and individual risks of the underlying assets which have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Group and its operating segments and derived from its WACC. The WACC is calculated based on the weighted value of the cost of equity which is derived from the expected return on investment by the Group’s investors, and the cost of debt which is derived from the market lending rate for peer companies. At December 31, 2021, the recoverable amounts of the CGU Prevention and the CGU Diagnostics based on the estimated value-in-use calculations were higher than the carrying amounts of the respective CGUs. Accordingly, no provision for impairment loss for goodwill was considered necessary. On September 30, 2022, the CGU Prevention EMEA and CGU Diagnostics EMEA were determined to be impaired and the related full amount of goodwill of $ 703,534 and $ 2,568,719 , were impaired, respectively. The impairment loss has been included in profit or loss under restructuring costs in relation to diagnostic business (see note 8(c)).

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