IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

416

Wiley IFRS: Practical Implementation Guide and Workbook

12.4 BARLOWORLD Notes to the Consolidated Annual Financial Statements for the Year Ended September 30 3. Goodwill 2006 2005 2004 Rm Rm Rm 2006 COST At I October 2,899 3.294 1.935 Accumulated amortisation neued against cost per IFRS 3 (47 1) Additions 226 138 1,410 Disposals (II ) (17) Translation differences 382 -ID) ----ill) At 30 September 3 496 2,899 3294 ACCUMULATED IMPAIRMENT LOSSES At I October 414 86 1 627 Accumulated amortisationnelled against cost per IFRS 3 (471) Charge for the year 148 Additions 2 Disposals Impairment 13 24 III Translation differences -.M - ill) At 30 September 12.l 414 861 CARRYING AMOUNT At 30 September 3,005 2,485 2,433

Per business segment: Continuing operations Equipment Industrial distribution

232 328

188 261

195 279

1,446

1,228

Motor Cement Coatings Scientific

1,191

384

382

369

43

3 1

31

326 248

255

265

Corporate and other

-ill 2,485 __0 2485

---..lill 2,433 __0 2433

3,005 _ _0 3.Q(li

Total continuing operations Discontinued operation-Steel tube

Total group

The impairments relate to the following: Finaltair joint venture

13

Truck Center (Freightliner)

24

80 27

Barloworld motor dealerships in Australia

__4

Other items

-- --

24

13 Jll Goodwill is alloca ted to groups of cash-generating units based on gro up business segme nts (re– fer to note I). The group has not recognised any significan t intangible assets with indefinite useful lives . During the current year, all significant recoverable amounts were based on value in use. A dis– counted cash flow valuation model is applied using three-year strategic plans as approved by man– agement. The financial plans are the quantification of strateg ies derived from the use of a common strategic plannin g proce ss followed across the group . The process ensures that all significant risks and sensitivities are appropriately considered and factored into strateg ic plans. Key assumptions are based on industry spec ific performance levels as well as eco nomic indicators approved by the ex– ecutive. These assumptions are generally consistent with ex ternal sources of information. Cash flows for the terminal value beyo nd the explicit forecast period of three years is estimated by using eco nomic returns (CFROI)®, asse t base, growth rate, and fade princ iples . Growth rates are aligned to the long-term sustainable level of grow th in the economic region in which cash– generating units operate. Discount rates applied to cash flow projections are based on a country- or region-specific rea l cost of capital, depend ent upon the location of cash-ge nera ting segment operations. The cos t of capital is adju sted for size and leverage and other known risks.