Are the write-downs completed?
The write-downs in our reported results are driven by the annual requirement to determine the fair value of the goodwill carried on our balance sheet in accordance with US GAAP. The results of this testing can, and did, also trigger an evaluation of the fair value of our fixed assets. Our Q3 results reflected write-downs specific to goodwill, while our Q4 write-downs reflect a combination of write-downs to goodwill and the fixed assets of farms that are being closed. The value of our assets, both tangible and intangible, is intended to reflect the fair values at which these assets could be bought or sold in a current transaction between willing parties, all in accordance with US GAAP. Simply, they are market-driven values, which are subject to an annual assessment. As stated in our press release, our CFO commented, “We have worked closely with outside consultants, auditors and our new management team to thoroughly assess the long-term viability and profitability of our legacy Chinese hog farms, and based on current market conditions, believe that our asset values are appropriate and present a long-term picture of the value of our legacy farms."