RFG Annual Report 2007 - Retail Food Group

14. Other intangible assets (continued)
Significant intangible assets
Retail Food Group Limited holds a signifi cant number of registered trademarks for both the Donut King and bb’s café franchise systems. Since
inception, all of the trademarks have demonstrated signifi cant growth and the Company forecasts this growth to continue. It is noted that the
trademark registrations have a fi nite legal life however renewal of the registrations is simple with little cost involved. Retail Food Group Limited
management oversee the registration of the trademarks as well as the protection of these trademarks. Retail Food Group Limited intends to
renew all marks as they expire and has the infrastructure and allocated resources to ensure this occurs.
None of the assets have a foreseeable limit as to when they will stop generating net cash infl ows for Retail Food Group Limited in the future.
Therefore, consistent with of AASB 138 ‘Intangible Assets’, Retail Food Group Limited will treat each of its various trademarks and brand names
as having an indefi nite useful life. All such assets are tested for impairment annually.
Brand names and intellectual property have been allocated for impairment testing purposes to two individual cash-generating units as follows:
• Donut King system;
• bb’s café system.
The carrying amount of brand names and intellectual property allocated to the Donut King cash-generating unit and the bb’s café cash-generating unit is
signifi cant in comparison with the total carrying amount of brand names and intellectual property.
The carrying amount of brand names and intellectual property allocated to cash-generating units that are signifi cant individually or in aggregate is as follows:
• Donut King system—$38,645 thousand;
• bb’s café system—$8,482 thousand;
The recoverable amount of both the cash-generating units is determined based on a value in use calculation which uses cash fl ow projections
based on fi nancial budgets approved by management covering a fi ve-year period, and a discount rate of 9%p.a.
Cash fl ow projections during the forecast period (and extrapolated cash fl ow projections) for both cash-generating units are based on growth in
franchise revenue as a direct result from
(i) growth in average weekly sales for the Donut King and bb’s café systems of between 3%–10% and 1%–4% respectively, and
(ii) new outlet commissionings.
New store growth during the forecast period refl ects past experience. Management believes that the planned new store growth per year for the
next fi ve years is reasonably achievable.
15. Other assets
47
Retail Food Group Annual Report
2007
$’000
Consolidated
2006
$’000
2007
$’000
Company
2006
$’000
Current
Prepayments 109 59 – –
Prepaid tax installments 67 – – –
Other—due diligence costs 9 – – –
184 59 – –
16. Trade and other payables
2007
$’000
Consolidated
2006
$’000
2007
$’000
Company
2006
$’000
Trade payables (i) (ii) 1,514 1,392 176 358
Goods and services tax (GST) payable 43 133 – –
(i)
(ii)
1,557 1,525 176 358
Includes Accrued Wages and Salaries
The average credit period on purchases is 30 days. No interest is charged on the trade payables. The Group has fi nancial risk management policies in place to ensure that all payables are
paid within the credit timeframe.