New World Development Company Limited
160
Financial Section
20 Intangible Assets
(continued)
Impairment test for goodwill
An operating segment level summary of the goodwill allocation is presented below:
2016
Hong Kong
Mainland
China
Total
HK$m
HK$m
HK$m
Property development
2.5
14.2
16.7
Property investment
–
263.4
263.4
Service and infrastructure
849.3
–
849.3
Hotel operations
–
9.2
9.2
Department stores
–
1,071.0
1,071.0
Others
96.7
–
96.7
948.5
1,357.8
2,306.3
2015
Hong Kong
Mainland
China
Total
HK$m
HK$m
HK$m
Property development
–
14.2
14.2
Property investment
–
285.1
285.1
Service and infrastructure
849.3
–
849.3
Hotel operations
–
9.2
9.2
Department stores
–
1,169.4
1,169.4
Others
96.7
–
96.7
946.0
1,477.9
2,423.9
Goodwill is allocated to the Group’s cash generating units identified according to country of operation and business
segment.
For the purpose of impairment test for goodwill, the recoverable amount of the business unit is determined based on either
fair value less costs of disposal or value in use calculations whichever is higher. The key assumptions adopted on growth
rates and discount rates used in the value in use calculations are based on management best estimates and past
experience.
For the segment of property investment, growth rates are determined by considering both internal and external factors
relating to the relevant segments. Discount rates used also reflect specific risks relating to the relevant segment, which was
12.7% (2015: 13.6%).
For the segment of service and infrastructure, growth rates being 0% (2015: 0%) are determined by considering both internal
and external factors relating to the relevant segment. Discount rates used also reflect specific risks relating to the relevant
segment, which were 5.0% (2015: 6.3%).
For the segment of department stores, estimated long-term growth rates of 5% (2015: 5%) are determined by considering
both internal and external factors relating to the relevant segment. Discount rates used are post-tax and reflect specific
risks relating to the relevant segment, which were 12.7% (2015: 13.6%).
