Goodwill |
Rights |
Software |
Total |
|
Consolidated |
$000 |
$000 |
$000 |
$000 |
Cost |
||||
Balance at 1 January 2006 |
33,130 |
4,778 |
44,255 |
82,163 |
Acquisitions through business combinations |
17,345 |
– |
– |
17,345 |
Additions |
– |
– |
2,188 |
2,188 |
Disposals |
– |
(1,326) |
– |
(1,326) |
Balance at 31 December 2006 |
50,475 |
3,452 |
46,443 |
100,370 |
Cost |
||||
Balance at 1 January 2005 |
20,578 |
1,325 |
37,137 |
59,040 |
Acquisitions through business combinations |
12,552 |
3,452 |
– |
16,004 |
Additions |
– |
1 |
7,118 |
7,119 |
Balance at 31 December 2005 |
33,130 |
4,778 |
44,255 |
82,163 |
Amortisation and impairment losses |
||||
Balance at 1 January 2006 |
(11,166) |
– |
(29,341) |
(40,507) |
Amortisation for the year |
– |
(660) |
(4,345) |
(5,005) |
Impairment losses for the year |
(225) |
– |
– |
(225) |
Balance at 31 December 2006 |
(11,391) |
(660) |
(33,686) |
(45,737) |
Amortisation and impairment losses |
||||
Balance at 1 January 2005 |
(11,134) |
– |
(26,242) |
(37,376) |
Amortisation for the year |
– |
– |
(3,099) |
(3,099) |
Impairment losses for the year |
(32) |
– |
– |
(32) |
Balance at 31 December 2005 |
(11,166) |
– |
(29,341) |
(40,507) |
Carrying amount |
||||
At 1 January 2006 |
21,964 |
4,778 |
14,914 |
41,656 |
At 31 December 2006 |
39,084 |
2,792 |
12,757 |
54,633 |
At 1 January 2005 |
9,444 |
1,325 |
10,895 |
21,664 |
At 31 December 2005 |
21,964 |
4,778 |
14,914 |
41,656 |
Amortisation and impairment losses
The amortisation and impairment charge of $5,230,000 (2005: $3,131,000) is recognised in refining and supply expenses, marketing expenses, and other expenses on the income statement.
Impairment tests for cash-generating units containing goodwill
Goodwill acquired through business combinations has been tested for impairment as follows.
Consolidated |
Parent Entity |
|||
2006 $000 |
2005 $000 |
2006 $000 |
2005 $000 |
|
Distributor businesses |
39,084 |
21,964 |
– |
– |
Distributor businesses
The recoverable amount of goodwill with distributor businesses has been determined based on a “value in use” calculation. This calculation uses cash flow projections based on an extrapolation of the year end cash flows and available budget information, over 10 years. The cash flows have been discounted using the pre-tax discount rate of 14.6% p.a. No growth rate has been factored in. Management believes that any reasonably possible change in the key assumptions on which the recoverable amount is based would not cause the carrying amount of goodwill recorded to exceed its recoverable amount.
Key assumptions used in “value in use” calculations
Key assumption |
Basis for determining value in use assigned to key assumption |
| Gross profit | Earnings before interest, tax, depreciation and amortisation (EBITDA) |
| Estimated long-term average growth rate | No forecasted growth |
| Discount period | Represents expected payback period of acquisitions |
| Discount rate | The risk specific to the asset |