| |
| NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED |
| for the year ended 30 June 2007 |
| |
All monetary amounts are expressed
in millions of Rands |
|
2007 |
Restated
2006 |
| 3. |
GOODWILL |
|
|
|
| 3.1 |
Cost |
|
|
|
|
At beginning of year |
|
146,6 |
47,8 |
|
Acquisition of businesses (note 34)* |
|
66,7 |
98,7 |
|
Refund of investment purchase price |
|
(13,2) |
– |
|
IFRS3 adjustments to Concor goodwill** |
|
6,0 |
– |
|
Exchange rate adjustment |
|
– |
0,1 |
| |
|
|
206,1 |
146,6 |
|
Goodwill is allocated to the Group's cash-generating units identified
according to the business segments that are expected to benefit from that
business combination. The carrying amount of goodwill has been allocated
to the following business segments: |
|
|
|
|
Construction* |
|
101,2 |
38,2 |
|
Mining |
|
34,7 |
47,9 |
|
Construction materials & services |
|
70,2 |
60,5 |
| |
|
|
206,1 |
146,6 |
|
| * |
The acquisition accounting for Wade Walker (Proprietary) Limited is still on a provisional basis |
| ** |
The R6 million adjustment relates to contractually higher wage rates in respect of contracts existing at acquisition. |
|
|
|
| 3.2 |
Impairment testing |
|
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. |
|
|
|
Construction |
|
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash
flow projections based on financial budgets approved by management covering a three year period. Cash flows beyond the three
year period are extrapolated using an estimated growth rate of 2,0%. The growth rate does not exceed the long-term average
growth rate for the relevant market.The discount rate used of 15,2% is pre-tax and reflects the aquiree's weighted average cost
of capital adjusted for relevant risk factors. |
|
|
|
Mining |
|
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash
flow projections based on financial budgets approved by management covering a three year period. Cash flows beyond the three
year period are extrapolated using an estimated growth rate of 2,0%. The growth rate does not exceed the long-term average
growth rate for the relevant market. The discount rate used of 12,1% is pre-tax and reflects the aquiree's weighted average cost
of capital adjusted for relevant risk factors. |
|
|
|
Construction materials & services |
| |
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash
flow projections based on financial budgets approved by management covering a three year period. Cash flows beyond the three
year period are extrapolated using an estimated growth rate of 2,0%. The growth rate does not exceed the long-term average
growth rate for the relevant market. The discount rate used of 15,5% is pre-tax and reflects the aquiree's weighted average cost
of capital adjusted for relevant risk factors. |
|
| |
| |
|
|
