Full Report - Fraser and Neave Limited

NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 September 2006
20. IMPAIRMENT TESTS FOR GOODWILL
The carrying value of the Group’s goodwill arising from acquisitions of subsidiary and joint venture companies were
assessed for impairment during the financial year.
Carrying value of capitalised goodwill
based on cash generating units
Basis on which
As at recoverable Terminal Pre-tax
30 Sep 2006 values are growth Discount
($’000) determined rate rate
Subsidiary companies:
Printing and Publishing Group 21,425 Value-in-use 0% 7.0% – 7.8%
Soft Drinks Group 17,642 Fair value less – –
costs to sell
39,067
Joint venture companies:
Breweries Group 208,891 Value-in-use
and
Fair value less
costs to sell
2% 8.6% – 16.8%
Carrying value of capitalised goodwill
based on cash generating units
247,958
Basis on which
As at recoverable Terminal Pre-tax
30 Sep 2005 values are growth Discount
($’000) determined rate rate
(Restated)
Subsidiary companies:
Printing and Publishing Group 13,338 Value-in-use 0% 7.0% – 7.4%
Dairies Group 631 Value-in-use 0% 7.1%
Soft Drinks Group 17,642 Fair value less – –
costs to sell
31,611
Joint venture companies:
Breweries Group 54,355 Value-in-use 2% 9.0% – 11.9%
85,966
Goodwill is allocated for impairment testing purposes to the individual entity which is also the cash generating unit.
The value-in-use calculations apply a discounted cash flow model using cash flow projections based on financial
budgets and forecasts approved by management covering 3 to 5 year periods. Cash flows beyond these periods are
extrapolated using the estimated growth rates stated in the table above. The fair value less costs to sell calculations
are based on quoted market prices obtained from active markets.
The terminal growth rate used does not exceed the long term average growth rate of the respective industry and
country in which the entity operates.
The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk
premium at the date of assessment of the respective cash generating units.
No impairment loss was required for the financial years ended 30 September for the goodwill assessed as their
recoverable values were in excess of their carrying values.
Fraser and Neave, Limited & Subsidiary Companies Annual Report 2006 137