2011 Annual Report - TOM Group

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72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 2 Financial risk management (Continued) (c) Fair value estimation (Continued) The financial instruments that are measured at fair value require disclosure of fair value measurements by level of the following fair value measurement hierarchy: • Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). • Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2). • Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The following table presents the Group’s assets and liabilities that are measured at fair value. At 31 December 2011 Assets Level 1 HK$’000 Available-for-sale financial assets – Equity securities 5,410 Total assets 5,410 Total liabilities – At 31 December 2010 Assets Available-for-sale financial assets – Equity securities 6,861 Total assets 6,861 Total liabilities – TOM Group Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 3 Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom exactly equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities related to defined benefit retirement obligations and fair value of share options granted are contained in notes 31 and 34 to the consolidated financial statements, respectively. Other key sources of estimation uncertainty are as follows: (i) Estimated impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(i). The recoverable amounts of the CGUs in the Internet Group have been determined based on the higher of fair value less costs to sell and value-inuse. The recoverable amounts of the CGUs of other segments have been determined based on value-in-use calculations. These calculations require the use of estimates (note 15). Impairment charges of HK$421,201,000 arose in CGUs of the Internet Group during the year (2010: HK$2,614,000 in the Outdoor Media Group), resulting in the carrying amounts of those CGUs being written down to their recoverable amounts. For sensitivity analysis, if a 1% annual sales growth rate is reduced from the original discounted cash flow assumption under both the value-in-use and fair value less cost to sell calculation, the Group would have recognised a further impairment of goodwill of HK$122,370,000. (ii) Income taxes The Group is subject to income taxes in various jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax assets and liabilities in the period in which such determination is made. Please refer to note 39 for details of the contingent liabilities on certain tax petitions/ appeals. Annual Report 2011 73
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CONTENTS CONTENTS 19 11 21 11 47 37
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2 CORPORATE PROFILE TOM Group Limit
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4 FINANCIAL HIGHLIGHTS For the year
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6 MANAGEMENT’S DISCUSSION AND ANA
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8 MANAGEMENT’S DISCUSSION AND ANA
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10 MANAGEMENT’S DISCUSSION AND AN
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12 DIRECTORS’ PROFILE Ip Tak Chue
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14 CORPORATE GOVERNANCE REPORT The
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18 CORPORATE GOVERNANCE REPORT Upon
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Page 24 and 25: 22 CORPORATE GOVERNANCE REPORT The
Page 26 and 27: 24 CORPORATE GOVERNANCE REPORT Corp
Page 28 and 29: 26 CORPORATE GOVERNANCE REPORT The
Page 30 and 31: 28 REPORT OF THE DIRECTORS Director
Page 32 and 33: 30 REPORT OF THE DIRECTORS (e) (f)
Page 34 and 35: 32 REPORT OF THE DIRECTORS Director
Page 36 and 37: 34 REPORT OF THE DIRECTORS Interest
Page 38 and 39: 36 REPORT OF THE DIRECTORS Li Ka-Sh
Page 40 and 41: 38 REPORT OF THE DIRECTORS (d) (e)
Page 42 and 43: 40 REPORT OF THE DIRECTORS During t
Page 44 and 45: 42 INDEPENDENT AUDITOR’S REPORT I
Page 46 and 47: 44 CONSOLIDATED INCOME STATEMENT Fo
Page 48 and 49: 46 CONSOLIDATED STATEMENT OF FINANC
Page 50 and 51: 48 STATEMENT OF FINANCIAL POSITION
Page 52 and 53: 50 CONSOLIDATED STATEMENT OF CHANGE
Page 54 and 55: 52 NOTES TO THE CONSOLIDATED FINANC
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122 NOTES TO THE CONSOLIDATED FINAN
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124 PRINCIPAL SUBSIDIARIES, JOINTLY
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2011 Annual Report - TOM Group

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