NOTES TO FINANCIAL STATEMENTS
30 June 2015
Annual Report 2015
Karin Technology Holdings Limited
89
13. GOODWILL
(continued)
At the beginning and end of the financial year, the carrying amounts of goodwill allocated to each of the cash-
generating units are as follows:
HK$’000
Components distribution
1,901
IT infrastructure
197
Total
______
IMPAIRMENT ASSESSMENT
The recoverable amounts of these cash-generating units have been determined based on a value in use calculation
using cash flow projections which are based on financial budgets approved by Management covering a period
of five years and cash flows for the following five years are extrapolated based on an estimated average growth
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Assumptions were used in the value in use calculation of the relevant cash-generating units for 30 June 2015 and
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to undertake impairment testing of goodwill:
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The basis used to determine the budgeted revenue is with reference to the expected growth rate of the
market in which the assessed cash-generating unit operates.
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The basis used to determine the value assigned to the budgeted gross margins is the average gross margins
achieved in the year immediately before the budget year, increased for expected efficiency improvements.
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There will be no major changes in the existing political, legal and economic conditions in Hong Kong,
Mainland China and Singapore in which the assessed entities within the cash-generating units carry on
their businesses.
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The discount rates used are before tax and reflect specific risks relating to the relevant units.
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/JM
