For the financial year ended 31 December 2015
72
HAW PAR CORPORATION LIMITED
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
(a) Investment in Hua Han Health Industry Holdings Limited (formerly known as “Hua Han Bio-
Pharmaceutical Holdings Limited”)
During the financial year ended 31 December 2015, the Group diluted its ownership interest in Hua Han Health
Industry Holdings Limited (“HHHI”) from 14.4% to below 10% through disposal of shares. After the reduction
of the Group’s ownership interest, its representation on HHHI’s board of directors was reduced from two out
of nine members to one out of nine members. As a result, management assessed that the Group ceased to
have significant influence over the major decisions relating to the relevant activities of HHHI. Consequently,
this investment has been reclassified to available-for-sale financial assets as set out in Note 14.
As a result of the reclassification to available-for-sale financial assets, the difference between the carrying amount
of the retained interest at the date when significant influence ceased and its fair value, was recognised in profit
or loss on that date as follows:
Other
Income comprehensive
statement
income
$’000
$’000
Transfer of previously recognised translation reserve
4,543
(4,543)
Gain from difference between carrying amount
and fair value on date of loss of significant influence
2,487
–
In addition to the above, the Group’s previously recognised share of HHHI’s share option reserve of approximately
$3,658,000 was credited directly to retained profits on the same date.
The retained interest in HHHI measured at fair value of approximately $154,451,000 was reclassified as available-
for-sale financial assets on the same date (Note 14).
(b) Impairment of property, plant and equipment
The Group reviews annually whether there is any objective evidence or indication that its property, plant and
equipment may be impaired in accordance with the accounting policy stated in Note 2(h)(2). Where required,
the recoverable amounts of these assets or cash-generating units, have been determined based on value-in-use
calculations. These calculations require the use of assumptions and estimates. The value-in-use calculation is
based on discounted cash flow model. The estimated future cash flows are discounted to their present values
using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the property, plant and equipment.
Based on the calculations, the estimated recoverable amount of certain property, plant and equipment in
a subsidiary of the Group within the Leisure division was determined to be lower than the carrying amount (Note
10). Consequently, an impairment charge of approximately $4,601,000 was recognised (Note 5).
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
