Explanation of Goodwill Impairment Test
Question 2(5): Based on the operating performance, future profit forecasts, and impairment testing process of the goodwill-related asset groups, explain the reasonableness of not having recognized goodwill impairment. Please explain the basis for selecting key parameters (such as revenue growth rate, discount rate, etc.) used in the impairment test and conduct a comparative analysis with comparable companies in the same industry.
Company Reply:
(I) Goodwill-Related Asset Group of Yao Mei (Guangdong) Technology Development Co., Ltd.
1. Operating Performance of the Related Asset Group
The goodwill-related asset group of Yao Mei (Guangdong) Technology Development Co., Ltd. (hereinafter referred to as "Yao Mei Technology") includes long-term assets (i.e., fixed assets, prepaid amortization, and right-of-use assets) and goodwill, with specific details as follows:
| Item | Book Value (RMB) |
|---|---|
| Long-term assets | 189,456.42 |
| Of which: Fixed assets | 9,933.37 |
| Prepaid amortization | 41,087.23 |
| Right-of-use assets | 138,435.82 |
| Goodwill | 14,565,765.28 |
| Of which: Goodwill attributable to equity holders of the parent company | 7,719,855.60 |
| Goodwill attributable to minority equity holders | 6,845,909.68 |
| Total asset group including goodwill | 14,755,221.70 |
Yao Mei Technology is primarily a brand e-commerce integrated service provider. Its core business involves operating domestic household paper brands and daily necessities. The company's main sales channels include self-operated stores on major e-commerce platforms such as Douyin, Pinduoduo, Meituan, JD.com, and Taobao. The company's main products are the full range of Jieshuo products and co-branded Jieshuo paper products. The company obtains authorization from well-known brands to procure products or design products for委托生产 (consigned production). After the products are stored in the company's warehouse, they are retailed through mainstream e-commerce platforms. The historical operating performance of Yao Mei Technology is as follows:
| Item | December 31, 2024 | December 31, 2025 |
|---|---|---|
| Total assets | 2,081.15 | 2,025.68 |
| Total liabilities | 2,940.59 | 3,194.32 |
| Owners' equity | -859.44 | -1,168.64 |
| Item | 2024 | 2025 |
|---|---|---|
| Operating revenue | 2,582.55 | 11,185.75 |
| Total profit | -660.60 | -845.62 |
| Net profit | -506.05 | -669.20 |
The main reason for the significant increase in Yao Mei Technology's operating revenue in 2025 is the expansion of store scale, driven by the growth of its existing sales network, leading to a substantial increase in sales revenue in 2025. In 2025, Yao Mei Technology achieved sales revenue of approximately 110 million RMB.
2. Goodwill-Related Asset Group Impairment Test Process and Future Profit Forecast
The impairment test for the goodwill-related asset group primarily uses the present value of future cash flows for measurement. The specific measurement process and思路 (thinking/approach) are as follows:
① Valuation Basic Idea
The valuation is based on the operating conditions of the enterprise within the asset group, using the discounted cash flow method. The discounted cash flow method is a valuation approach that estimates the recoverable amount of an asset group including goodwill by discounting the present value of future cash flows that can be expected within its remaining useful life under the enterprise's current management and operating model.
The discounted cash flow method is a valuation method that forecasts the future cash flows of the asset group including goodwill and their associated risks, selects a matching discount rate, and sums up the discounted future cash flows.
Discounted Cash Flow Method Valuation Formula
P = Σ [Ri / (1+r)i] + [Rn+1 / (r(1+r)n)] - Z
Where: P: Value of the asset group including goodwill Ri: Expected cash flow of the asset group including goodwill in year i of the forecast period. The forecast period refers to the time from the valuation base date until the expected cash flows stabilize. Rn+1: Expected cash flow of the asset group including goodwill in the first year after the forecast period ends. r: Discount rate n: Duration of expected future cash flows for the asset group including goodwill Z: Initial working capital