Cathay Pacific 2008 Annual Report Download - page 67

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Notes to the Accounts STATEMENT OF FINANCIAL POSITION
12. Intangible assets
Group Company
Goodwill
HK$M
Computer
systems
HK$M
Total
HK$M
Computer
systems
HK$M
Cost
At 1st January 2008 7,666 682 8,348 642
Additions – 26 26 –
Disposals – (16) (16) 25
At 31st December 2008 7,666 692 8,358 667
At 1st January 2007 7,666 636 8,302 597
Additions – 46 46 45
At 31st December 2007 7,666 682 8,348 642
Accumulated amortisation
At 1st January 2008 – 566 566 526
Charge for the year – 26 26 25
Disposals – (16) (16) –
At 31st December 2008 – 576 576 551
At 1st January 2007 – 553 553 514
Charge for the year – 13 13 12
At 31st December 2007 – 566 566 526
Net book value
At 31st December 2008 7,666 116 7,782 116
At 31st December 2007 7,666 116 7,782 116
The carrying amount of goodwill allocated to the airline operation is HK$7,627 million (2007: HK$7,627 million). In
accordance with HKAS 36 “Impairment of Assets” the Group completed its annual impairment test for goodwill
allocated to the Group’s various cash generating units (“CGUs”) by comparing their recoverable amounts to their
carrying amounts as at the reporting date. The recoverable amount of a CGU is determined based on
value-in-use calculations. These calculations use cash flow projections based on five-year financial budgets, with
reference to past performance and expectations for market development, approved by management. Cash flows
beyond the five-year period are extrapolated with an estimated general annual growth rate which does not exceed
the long-term average growth rate for the business in which the CGU operates. The discount rates used of
approximately 10% (2007: 9%) are pre-tax and reflect specific risk related to the relevant segments. Management
believes that any reasonably foreseeable change in any of the above key assumptions would not cause the carrying
amount of goodwill to exceed the recoverable amount.
Cathay Pacific Airways Limited Annual Report 2008 65