Annual Report 2012, PDF - Axiata Group Berhad - Investor Relations

Axiata Group Berhad (242188-H) Annual Report 201224. INTANGIBLE ASSETS (CONTINUED)(a) Impairment tests for goodwill (continued)(i)Key assumptions used in the VIU (continued)Cash flows beyond the third (3 rd ) year for the mobile business in Malaysia and tenth (10 th ) for mobilebusiness and television business in Sri Lanka are extrapolated in perpetuity using estimated terminalgrowth rate which takes into consideration the current Gross Domestic Product, inflation and averagegrowth rate for the telecommunication industry. These rates have been determined with regards toproject growth rates for the market in which the CGU participates and are not expected to exceedthe long term average growth rates for this market.Pre-tax adjusted discount rate applied to the cash flow forecasts are derived from the CGU pre-taxplus a reasonable risk premium at the date of the assessment of the respective CGU to reflect the riskof the CGU.The following assumptions have been applied in the VIU calculations:MalaysiaSri Lanka31.12.2012 31.12.2011 1.1.2011 31.12.2012Pre-tax adjusted discount rate 9.8% 10.0% 10.9% 15.0%Terminal growth rate – – – 3.0%Revenue growth rate 4.0% to 5.7% 3.2% to 4.8% 4.6% to 7.3% 7.9% to 14.2%over 3 years over 3 years over 3 years over 10 yearsBased on the above test, the Malaysia and Sri Lanka CGUs’ goodwill are not impaired as the recoverableamounts exceeds the carrying amounts included in the financial statements.The Group’s review includes an impact assessment of changes in key assumptions. Based on thesensitivity analysis performed, the Board of Directors concluded that no reasonable change in the basecase assumptions would cause the carrying amounts of the CGUs to exceed its recoverable amounts.(ii) Key assumptions used in FVLCSThe recoverable amount of the Indonesia CGUs including goodwill is determined based on FVLCScalculations.The FVLCS calculations are made based on the CGU’s securities market price less the costs of disposalof the securities. The market price as at end of reporting period was used for the calculations.Based on the above test, the Indonesia CGUs’ goodwill are not impaired as the recoverable amountexceeds the carrying amount included in the financial statements.257