2011 Annual Report - TOM Group

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90 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15 Goodwill (Continued) (a) Impairment tests for goodwill (Continued) Due to the changing environment in which the CGUs are operating, a number of assumptions have to be made in order to sufficiently support the concluded value of the CGUs. The major assumptions adopted were: – there will be no major changes in the existing political, legal, fiscal and economic conditions in countries in which the CGU will carry on its business; – there will be no major changes in the current taxation law in countries in which the CGU operates; – future exchange rates and interest rates will not differ materially from those prevailing market expectations; – the availability of finance will not be a constraint on the future growth of the CGU’s operation; – the CGU will retain and have competent management, key personnel, and technical staff to support its ongoing operation; and – industry trends and market conditions for related industries will not deviate significantly from economic forecasts. The recoverable amounts of all other CGUs are determined based on value-in-use calculations. These calculations use pre-tax 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 growth rates stated below. The growth rate does not exceed the long-term average growth rate for the business segments in which the CGUs operate. TOM Group Limited
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 15 Goodwill (Continued) (a) Impairment tests for goodwill (Continued) The key assumptions used for the fair value less cost to sell calculation of the CGUs in the Internet Group and the value-in-use calculations for the other CGUs were: Publishing Group Internet Group CGUs in Outdoor Television and Wireless value- E-Commerce Mainland CGUs in Media Entertainment added services Other CGUs Group China Taiwan Group Group Gross margin 1 9%-24% -81%-84% 2%-8% 38%-51% 47% 15%-61% 14%-55% Growth rate 2 5% 5% 5% 1% 1% 1% 1% Discount rate 3 22% 17%-19% 17% 7% 7% 7% 8% Sales multiples 4 1.15-1.83 1.45-3.10 – – – – – EBIT multiples 4 13.20-14.70 5.00-24.00 – – – – – 1 Budgeted gross margin 2 Weighted average growth rate used to extrapolate cash flows beyond the five-year budget period 3 Pre-tax discount rate applied to the cash flow projections 4 Multiples are used to derive for the entity’s indicated value of each CGU under Market Approach in the Internet Group These assumptions have been used for the analysis of each CGU within the respective business segments. Management determined budgeted gross margin based on past performance and its expectations for the market development. The weighted average growth rates used are consistent with the forecasts. The discount rates used are pre-tax and reflect specific risks relating to the relevant segments and the sales and EBIT multiples used were derived with reference to the other comparable companies/transactions in the industry. Annual Report 2011 91
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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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24 CORPORATE GOVERNANCE REPORT Corp
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28 REPORT OF THE DIRECTORS Director
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30 REPORT OF THE DIRECTORS (e) (f)
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32 REPORT OF THE DIRECTORS Director
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34 REPORT OF THE DIRECTORS Interest
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36 REPORT OF THE DIRECTORS Li Ka-Sh
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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
Page 102 and 103: 100 NOTES TO THE CONSOLIDATED FINAN
Page 126 and 127: 124 PRINCIPAL SUBSIDIARIES, JOINTLY
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2011 Annual Report - TOM Group

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