ANNUAL REPORT
2016
.95
NOTES TO THE
FINANCIAL STATEMENTS
23.
ACQUISITION OF SUBSIDIARY (CONT¡¯D)
The results of AE for the period between the date of acquisition and the end of the reporting year 2015 were as
follows:
2015
$¡¯000
Revenue
5,295
Loss before income tax
(1,222)
The goodwill was tested for impairment at the end of the reporting year 2015. In view of the unfavourable market
conditions for luxury cars and the challenging business environment, full impairment of the goodwill was made. The
amount was charged to statement of profit and loss in other charges in reporting year ended 2015.
The value in use was measured by a firm of independent financial advisers. The key assumptions for the value in use
and the quantitative information about the value in use measurement using significant unobservable inputs (Level 3)
for the cash generating unit were as follows:
Valuation techniques and Unobservable inputs
Discounted cash flow method
2015
Estimated discount rates using pre-tax rates that reflect current market assessments at the risks
specific to the CGU.
18.5%
Growth rates based on industry growth forecasts and not exceeding the average long-term growth
rate for the relevant markets.
3%
Cash flow forecasts derived from the most recent financial budgets and plans approved by
management.
5 years
The impairment test was carried out using a discounted cash flow model covering a 5-year period. Cash flows
projections were based on the next five year budgets and plans approved by management. The discount rate applied
(weighted average cost of capital ¡°WACC¡± gross of tax effect) was 18.5%.
