92 / 170
15.
GOODWILL
(continued)
Goodwill acquired through business combinations is allocated for impairment testing purposes to CGUs which reflect how it is monitored
for internal management purposes, namely the various segments of the group. The carrying amount of goodwill was subject to an annual
impairment test using either the fair value less costs to sell method or the discounted cash flow basis. The recoverable amount was
determined by using the higher of the fair value less costs to sell and the discounted cash flow for each CGU.
Fair value less costs to sell method
The calculations used projected annualised earnings based on actual operating results. A price earnings multiple was applied to obtain the
recoverable amount for each business unit. The earnings yields are considered to be consistent with similar companies within the industry
and geographic segments. An average price earnings multiple of 12,7 (2015: 12,8) was used in the valuation of Foodservice Europe,
12,9 (2015: 12,8) for Foodservice United Kingdom, 13,0 (2015: 13,0) for Foodservice Australasia, and 14,1 (2015: 11,6) for Foodservice
Emerging Markets.
Discounted cash flow method
The table below illustrates the weighted average cost of capital (WACC), cash flow growth, and terminal growth rates that were used in the
discounted cash flow valuations for each of the CGUs.
WACC rate
Cash flow growth rate
Terminal growth rate
2016
2015
2016
2015
2016
2015
Foodservice Australasia
10%
10%
3 – 5%
3 – 5%
2%
2%
Foodservice United Kingdom
10%
10%
3 – 5%
3 – 5%
2%
2%
Foodservice Europe
5% – 10%
4% – 10%
0 – 10%
0 – 10%
2 – 3%
2 – 3%
Foodservice Emerging Markets
7% – 10%
10%
5 – 10%
1 – 7%
2 – 5%
2 – 5%
The valuations resulted in significant surpluses over carrying values of the CGUs and thus the directors believe that a reasonably possible
change in these multiples would not result in an impairment of the carrying value of goodwill. The valuation method is consistent with that
used in the prior years and is considered a level 3 type valuation in accordance with IFRS 13
Fair Value Measurement
.
No impairment was identified for the current financial year (2015: nil).
2016
R’000
2015
R’000
16.
DEFERRED TAXATION
Deferred taxation assets
491 766
338 932
Deferred taxation liabilities
(524 243)
(254 971)
Net deferred taxation liability
(32 477)
83 961
Movement in net deferred taxation assets and liabilities
Balance at beginning of year
83 961
181 979
Per consolidated statement of profit or loss
(48 953)
32 061
Items recognised directly in equity and other comprehensive income
39 838
6 741
On acquisition of businesses
5 695
(100 482)
On disposal of businesses
(1 514)
–
Transfer as a result of unbundling
(163 926)
–
Exchange rate adjustments
52 422
(36 338)
Balance at end of year
(32 477)
83 961
Notes to the consolidated financial statements
for the year ended June 30
Page 88
| Bidcorp Limited Annual integrated report 2016