New Image Annual Report 2012 concept.indd - NZX

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Notes to and forming part of the financial statements (continued) For the year ended 30 June 2012 The transferred Capitalised Work in Progress represented the costs to date at 30 June 2011 to construct the dairy spray drier plant at Paerata. The costs have been transferred from Capitalised Work in Progress to Plant & Equipment as the construction of the Paerata plant was completed on 31 March 2012. Included in Plant & Equipment is $143,000 (2011: $50,000 included in Capitalised Work in Progress) of borrowing costs, which represents 100% of the borrowing costs directly incurred to fund the Paerata spray drier plant until its completion on 31 March 2012. The average interest rate on the Paerata related borrowing’s was 6.65% p.a. 14 Intangible Assets and Goodwill Goodwill Group Patents & Trademarks Software Total In the prior year there was an impairment charged to Plant & Equipment assets as a result of the write-down of the Plant & Equipment used exclusively to produce the Col+ beverage. The impairment to the Plant & Equipment was a result of the sales for the Col+ beverage falling significantly short of forecast and the minimum sales required to keep the Plant & Equipment operating at breakeven. The prior year impairment loss was recognised to reduce the Plant & Equipment carrying amount to recoverable amount, based on fair value less costs to sell. An independent valuation was obtained to determine fair value, which was based on market evidence for prices obtained for similar assets within the same industry. Included in Other Expenses is $Nil (2011: $2,000) net loss on disposal of Property, Plant & Equipment. $’000 $’000 $’000 $’000 Cost Balance at 1 July 2011 5,315 850 162 6,327 Additions - 145 422 567 Balance at 30 June 2012 5,315 995 584 6,894 Balance at 1 July 2010 2,365 580 - 2,945 Additions through Business Acquisitions 2,950 150 - 3,100 Additions - 120 162 282 Balance at 30 June 2011 5,315 850 162 6,327 Company 44 The Company does not hold any Property, Plant and Equipment (2011: Nil) Accumulated Amortisation/Impairment Balance at 1 July 2011 150 612 - 762 Amortisation Charge for Year - 133 94 227 Impairment 1,200 - - 1,200 Balance at 30 June 2012 1,350 745 94 2,189 45 Balance at 1 July 2010 118 269 - 387 Amortisation Charge for Year - 146 - 146 Impairment 32 197 - 229 Balance at 30 June 2011 150 612 - 762 Carrying Amounts As at 30 June 2012 3,965 250 490 4,705 As at 30 June 2011 5,165 238 162 5,565 Acquired patents and trademarks are considered fixed life intangible assets. The current year impairment charged to Goodwill is a result of the write-down of the Goodwill paid on the purchase of the Sleeptime business. The prior year impairment charged to Patents & Trademarks is a result of the write-down of the international trademarks associated with the Col+ beverage for countries that will not be pursued for market opportunities. NEW IMAGE GROUP ANNUAL REPORT NEW IMAGE GROUP ANNUAL REPORT
Notes to and forming part of the financial statements (continued) For the year ended 30 June 2012 Impairment Tests for Cash-generating Units containing Goodwill The following units have significant carrying amounts of goodwill: Group 2012 2011 $’000 $’000 Symbiotics (sub group) 1,440 1,440 Food Contractors (sub group) 775 775 Sleeptime (sub group) 1,750 2,950 Balance 30 June 3,965 5,165 achievable market penetration rates for sales of the product through targeted wholesale and retail channels. After the revenue budgeted for 2013, the revenue growth management have assumed for year 2 is 48% (2011: 225%), with year 3 assuming further growth of 2% (2011: 53%), year 4 assuming growth of 2% (2011: 24%) and year 5 assuming growth of 2% (2011: 18%). The forecast revenues have been revised downwards to reflect changed expectations with respect to type of channel to market and expected future market conditions. A pre-tax discount rate of 10% (2011: 10%) has been used in discounting the projected cash flows. Company The Company does not hold any intangible assets and goodwill. Goodwill acquired through business combinations have been allocated to and are tested at the level of their respective cash generating units for impairment testing as follows: Symbiotics & Food Contractors Sub Groups 15Investments and Intercompany Loans 46 The recoverable amount of each unit is based on value in use calculations. These calculations use cash flow projections based on forecasts for the five years ended 30 June 2017. The forecast discounted cash flows significantly exceed the carrying value of goodwill and the related assets for the units listed above. The forecasts do not include a terminal value for cash flows past five years. In order for the units’ goodwill and related fixed assets to be impaired, actual cash flows for the forecast periods would need to fall below the actual achieved for the 2012 financial year. Intercompany Loans Company 2012 2011 $’000 $’000 Intercompany Loans (5,656) (4,658) 47 The cash flow projections used to establish value in use are based on actual operating results for 2012 the approved 2013 budget and forecasts approved by management covering a further 4 year period to 30 June 2017. In preparing the forecasts, management have assumed 5% revenue growth per annum (2011: 5% p.a.), which is the same as the long term average growth rate for the industry. Management estimates discount rates using rates that reflect current market assessments of the time value of money and the risks specific to the business. A pre-tax discount rate of 10% (2011: 10%) has been used in discounting the projected cash flows. Sleeptime Sub Group The Company has loans payable to New Image International Limited, the holding company. These loans are interest free and repayable on demand, however they are not expected to be called upon within the next 12 months. Investments Company 2012 2011 $’000 $’000 Investment in Associates - 3,220 Investment in Subsidiaries 9,637 8,689 Total Investment 9,637 11,909 Goodwill arose on the acquisition of the Somnaceutics Limited business of developing, manufacturing and selling a sleep-enhancing formula branded as Sleeptime. The Sleeptime business has been absorbed as a separate operating division of New Image International Limited. The recoverable amount of this unit is based on value in use calculations. These calculations use cash flow projections based on forecasts for the five years ended 30 June 2017. The forecast does not include a terminal value for cash flows past five years. The units goodwill was assessed to be impaired, as forecasted sales and cashflows were not achieved in the 2012 financial year. The revised forecast discounted cash flows indicated a carrying value of goodwill of $1,750,000 (2011: $2,950,000). Cash flow projections used to confirm value in use are based on the operating budgets established for the 2013 financial year and forecasts approved by management covering a further 4 year period to 30 June 2017. The budgets and forecasts are based on previous experience in achieving new product sell through in the direct sales channel of the Group and the results of market research into projections of The movement in Investment in Associates for the year is as follows: Investment in Associates Company 2012 2011 $’000 $’000 Opening Balance 3,220 - Investment in Associate - 3,220 Transfer to Investment in Subsidiary (3,220) - Closing Balance - 3,220 NEW IMAGE GROUP ANNUAL REPORT NEW IMAGE GROUP ANNUAL REPORT
Page 2 and 3: To enhance the health and well-bein
Page 4 and 5: Executive Chairman’s Review 2012
Page 6 and 7: NEW IMAGE GROUP LIMITED Annual Repo
Page 8 and 9: Statement of Changes in Equity (con
Page 10 and 11: Notes to and forming part of the fi
Page 44 and 45: Audit Report 84 Independent Auditor
Page 46 and 47: Statutory Information (continued) F
Page 48 and 49: Statutory Information (continued) F
Page 50: Company Directory For the year ende

New Image Annual Report 2012 concept.indd - NZX

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