Annual Report - QuamIR
Annual Report - QuamIR
Annual Report - QuamIR
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Notes to the Consolidated Financial Statements (Continued)<br />
<br />
4 Critical accounting estimates and judgements (Continued)<br />
(b) Toll Road – Estimated impairment of<br />
concession right<br />
The Group tests annually whether intangible assets have suffered<br />
any impairment in accordance with the accounting policy. The<br />
calculations use pre-tax cash flow projections based on financial<br />
budgets approved by management.<br />
4 <br />
(b) <br />
<br />
<br />
<br />
<br />
<br />
The unit prices used for the analysis are determined by<br />
management making reference to the agreements approved by<br />
the government authorities. The weighted average growth rates<br />
used are consistent with the forecasts expected in the industry.<br />
The discount rates used are pre-tax and reflect specific risks<br />
relating to the relevant segments.<br />
<br />
<br />
<br />
<br />
<br />
If the discount rate used in the value-in-use calculation had<br />
been 10% higher or lower than management’s estimates at 31<br />
December 2011, the profit for the year arising from the Group’s<br />
concession right (toll road) would have been decreased by<br />
HK$101.1 million or increased by HK$224.8 million (2010: loss<br />
for the year arising from the Group’s concession right (toll road)<br />
would have been increased by HK$50.7 million or decreased by<br />
HK$294.8 million).<br />
<br />
<br />
10%<br />
<br />
101,100,000224,800,000<br />
<br />
<br />
50,700,000 294,800,000<br />
<br />
The Group has performed impairment assessment by using the<br />
discounted cash flow model with the assumptions that traffic<br />
flow would increase by 11% every year on average, the tariff<br />
rate would increase by 7.5% every five years and the discount<br />
rate is 10.48%. According to the impairment assessment, the<br />
recoverable amount of Guilin Tollroad is RMB1,012.8 million,<br />
which is barely higher than the carrying value as at 31 December<br />
2011. Considering the recoverable amount is approximate to<br />
the carrying value, the Group has performed sensitivity test on<br />
the discounted cash flow model. If all other assumptions remain<br />
unchanged, each of the changes of the following assumptions<br />
on a stand-alone basis would cause the recoverable amount of<br />
Guilin Tollroad to reduce to its carrying amount:<br />
<br />
<br />
11%7.5%<br />
10.48%<br />
<br />
1,012,800,000<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
– Average traffic flow decreases by 2.7%,<br />
– 2.7%<br />
– Tariff growth rate decreases to 6.09% every five years,<br />
– <br />
6.09%<br />
– Discount rate increases to 10.8%.<br />
– 10.8%<br />
•<br />
119