GCS ANNUAL REPORT 2014

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2014
q. Intangible assets
i. Goodwill
Goodwill represents the excess of the purchase consideration
over the fair value of the identifiable net assets at the time of
acquisition of a combination. Goodwill is not amortised but is
assessed at least twice a year for impairment or more frequently
where events or changes in circumstances indicate that the
carrying value may be impaired.
Goodwill is measured at cost less any accumulated impairment
losses. Gains and losses on the disposal of an entity include
the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to each of the cash-generating units
expected to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable
amount of the cash-generating unit to which the goodwill
relates. Impairment losses on goodwill cannot be reversed.
ii. Identifiable intangible assets
Intangible assets acquired separately or in a business
combination are initially measured at the lower of cost
or fair value cost at the time of acquisition. The Group
assesses identifiable intangible assets as having either
finite or indefinite useful lives.
Intangible assets with finite lives are amortised over the
useful life and assessed for impairment at least twice a year
or whenever there is an indication that the intangible asset may
be impaired. The amortisation period and amortisation method
are reviewed at least each financial year end. Changes in the
expected useful life or flow of economic benefits intrinsic in the
asset are an accounting estimate. The amortisation charge on
intangible assets with finite lives is recognised in the statement
of profit or loss and other comprehensive income. The Group
amortises identifiable intangible assets with finite lives for
periods between one and twenty years.
Intangible assets with indefinite useful lives are not amortised
but assessed for impairment at least twice a year or whenever
there is an indication that the intangible asset may be impaired.
The assets are assessed either individually or at cash generating
unit level. The expected useful life or flow of economic benefits
intrinsic in the asset are reviewed at least each financial year
end to ascertain whether the indefinite useful life continues to
be supportable.
If the indefinite useful life does not continue to be supportable
the asset is reclassified as an intangible asset with a definite
useful life and will be amortised on a prospective basis. This
change is an accounting estimate.
iii. Customer contracts
Customer contracts acquired as part of a business
combination are recognised separately from goodwill.
The customer contracts are carried at their fair value at the
date of acquisition less accumulated amortisation and any
impairment losses. Where customer contracts useful lives
are assessed as finite, the customer contracts are amortised
over their estimated useful lives.
r. Borrowings
All loans and borrowings are initially recognised at fair
value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the
redemption amount is recognised in the statement of
financial performance over the period of the loans and
borrowings using the effective interest method.
All borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting date.
s. Borrowing costs
Borrowing costs incurred for the construction of a qualifying
asset are capitalised during the period of time that it is required to
complete and prepare the asset for its intended use or sale. Other
borrowing costs are expensed in the period they are incurred.
The capitalisation rate used to determine the amount of borrowing
costs to be capitalised is the weighted average interest rate on the
Group’s borrowings outstanding during the year.
t. Trade and other payables
Liabilities for trade creditors and other payables are initially
measured at fair value and subsequently carried at amortised
cost which is the amount of the consideration to be paid in the
future for goods and services received, whether or not billed
to the consolidated entity. The amounts are unsecured and are
usually paid within 30 days. Payables to related parties are
carried at the principal amount.
u. Provisions
Provisions for legal claims are recognised when the Group has
a present legal or constructive obligation as a result of a past
event. It is probable that an outflow of economic resources
will be required to settle the obligation and the amount can
be reliably estimated. Provisions are not recognised for future
operating losses.
Provisions are measured at the present value of management’s
best estimates where the effect of the time value of money is
material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and, where appropriate,
the risks specific to the liability.
GLOBAL CONSTRUCTION SERVICES LIMITED ANNUAL REPORT 2014
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