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| Bidcorp Limited Annual integrated report 2016
35.
ACCOUNTING ESTIMATES AND JUDGEMENTS
(continued)
Goodwill and indefinite life intangible assets
The group has assessed the carrying value of goodwill and indefinite life intangible assets to determine whether any of the amounts have
been impaired. The carrying values were assessed using a combination of discounted cash flow and price earnings methods and the actual
results and forecasts for future years.
Deferred taxation
Deferred taxation assets are recognised to the extent it is probable that the taxable income will be available against which they can be
utilised. Future taxable profits are estimated based on business plans which include estimates and assumptions regarding economic growth,
interest, inflation and taxation rates and competitive forces.
Investments
The group reflects its held-for-trading and available-for-sale investments at fair value. The directors’ value of unlisted investments was
determined using a combination of discounted cash flow, net asset value and price earnings methods. Certain investments are of a long-
term nature and uncertainty surrounds their valuation, which may result in a significant change in value over time.
Inventories
Impairment allowances are raised against inventory when it is considered that the amount realisable from such inventory’s sale is considered
to be less than its carrying amount. The impairment allowances are made with reference to an inventory age analysis.
Trade receivables
Management identifies possible impairment of trade receivables on an ongoing basis. An impairment allowance in respect of doubtful debts
is raised against the receivable when their collectability is considered to be doubtful. Management believes that the impairment adjustment
is conservative and there are no significant receivables that are doubtful and have not been impaired or provided for. In determining
whether a particular receivable could be doubtful, the age, customer current financial status and disputes with the customer are taken into
consideration.
Provisions
Refer to note 29 for disclosure on the onerous contracts, provision for cost of dismantling and site restoration and customer loyalty
programmes.
Post-retirement obligations
The group provides retirement benefits for its permanent employees through pension funds with defined benefit and defined contribution
categories. Actuarial valuations are based on assumptions which include the discount rate, inflation rate, salary increase rate, expected
return on plan assets and the pension increase allowance rate.
Puttable non-controlling interest liabilities
The group has entered into put arrangements where non-controlling interests are entitled to sell certain of their holdings in subsidiaries to the
group at future contracted dates. The puttable non-controlling interest liability is calculated as the present value of the expected redemption
value, discounted from the expected redemption date to the reporting date. There are two main assumptions used in the calculation of the
liability: the expected redemption value at the expected redemption date and the discount rate used to discount the expected redemption
value to the reporting date.
The discount rate is derived from an applicable government bond yield curve in the country in which the subsidiary operates and is applied
over the number of years between the reporting date and the redemption date, plus an appropriate credit spread.
Logistics United Kingdom
Management irregularities were identified and investigated during the year, some of which relate to a recent acquisition and others to
operational activities, all of which significantly impacted the division. These irregularities are subject to ongoing legal processes. Any impact
on non-current assets is continually being monitored by management. In respect of the net operating assets, management has provided
for the worst case scenario based on management’s best estimate for the year then ended, notwithstanding potential recoveries from legal
action and insurance claims.
Notes to the consolidated financial statements
for the year ended June 30