
	Subscription, licensing and smart music learning business		Music events and performances business		Total
	RMB’000		RMB’000		RMB’000

Cost and net carrying amount at January 1, 2020		—		—		—
Acquisition from business combinations (Note 8)		1,610		235,615		237,225

Cost and net carrying amount at December 31, 2020, January 1, 2021, and December 31, 2021		1,610		235,615		237,225

Impairment testing of goodwill

Goodwill acquired through business combinations is

allocated

to the following CGUs for impairment testing:

•

Subscription, licensing and smart

music learning

business; and

•

Music events and performances business

Subscription, licensing and smart

music learning

business

The recoverable amount of the CGU is determined based on a value-in-use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The pre-tax discount rate applied to the cash flow projections is

19.7%

. The growth rate used to extrapolate the cash flows beyond the

five-year

period is

The following describes management’s key assumptions in its subscription, licensing and smart

music learning business CGU’s

cash flow projections:

Budgeted cash flows – the basis used to determine the budgeted cash flows is based on management’s expectation of the business development.

Discount rate – the discount rate used is before tax and reflects specific risks relating to the relevant unit.

Terminal growth rate – the growth rate is based on management’s expectation of the long-term forecast growth rate of the business.

Based on the result of the impairment testing of goodwill, in the opinion of the directors, no impairment provision was considered necessary for the Group’s goodwill allocated to the subscription, licensing and smart music learning business CGU as at December 31, 2021.

Music events and performances business

The recoverable amount of the CGU is determined based on a

value-in-use

calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The

pre-tax

discount rate applied to the cash flow projections is 21.7%. The terminal growth rate used to extrapolate the cash flows beyond the five-year period is 3%.

The following describes management’s key assumptions in its music events

and performances CGU’s

cash flow projections:

Budgeted cash flows – the basis used to determine the budgeted cash flows is based on management’s expectation of the business development.

Discount rate – the discount rate used is before tax and reflects specific risks relating to the relevant unit.

Terminal growth rate – the growth rate is based on management’s expectation of the long-term forecast growth rate of the business.

Based on the results of the impairment testing of goodwill, in the opinion of the directors, no impairment provision was considered necessary for the Group’s goodwill allocated to the music events and performances business CGU as at December 31, 2021.