Coca-Cola Amatil 2007 Annual Report
Next
Previous
Jump to content
Note 15. Intangible Assets continued
The useful life of customer lists is finite and amortisation is on a straight
line basis over five to ten years.
In assessing the useful life of SPCA brand names, due consideration is given
to the existing longevity of SPCA brands, the indefinite life cycle of the
industry in which SPCA operates and the expected usage of the brand names
in the future. In light of these considerations, no factor could be identified
that would result in the brand names having a finite useful life and accordingly
SPCA brand names have been assessed as having an indefinite useful life.
Other brand names have been assessed as having finite useful lives and are
amortised on a straight line basis over ten years.
Intellectual property has a finite useful life and amortisation is on a straight
line basis over five years.
Software development assets represent internally generated intangible assets
with finite useful lives and are amortised on a straight line basis from one
to
seven years depending on the specific intangible asset.
All intangible assets with finite useful lives were assessed for impairment
and all intangible assets with indefinite useful lives were tested for impairment
at 31 December 2007. Refer to Note 16 for further details on impairment testing
of intangible assets with indefinite lives.
Note 16. Impairment Testing of Intangible Assets with Indefinite Lives
Intangible assets deemed to have indefinite lives are allocated to the Group's
cash generating units (CGUs).
A business CGU-level summary of the intangible assets deemed to have indefinite
lives is presented below –
CCA Group
Total
intangible
Investments assets with
in bottlers’ Brand indefinite
agreements names Goodwill lives
$M $M $M $M
Year ended 31 December 2007
Beverage business
Food & Services business
Total
928.8 – 36.2 965.0
– 98.3 340.5 438.8
928.8 98.3 376.7 1,403.8
Year ended 31 December 2006
Beverage business1 1,505.6 – 27.7 1,533.3
Food & Services business1 – 98.3 346.8 445.1
Total 1,505.6 98.3 374.5 1,978.4
2006 comparative information has been restated in accordance with the amended
segment reporting in 2007. Refer to Note 2 for further details.
a) Impairment tests for investments in bottlers’ agreements and goodwill
Impairment testing is carried out by CCA by determining an asset’s recoverable
amount as compared to its carrying amount. The recoverable amount is
determined, for the continuing operations, as the maximum of fair value less
cost to sell and value in use. Value in use is calculated using a discounted
cash flow methodology covering a fifteen year period with an appropriate residual
value at the end of that period, for each segment and country in which
the Group operates. The methodology utilises cash flow forecasts that are based
primarily on business plans presented to and approved by the Board.
The following describes each key assumption on which management has based
its cash flow projections to undertake impairment testing of investments in
bottlers’ agreements and goodwill –
i) Cash flow forecasts
Cash flow forecasts are based primarily on three year business plans presented
to and reviewed by the Board, extrapolated out to fifteen years using
forecast growth rates;
ii) Residual value
Residual value is calculated using a perpetuity growth formula based on the
forecast for year fifteen, weighted average cost of capital (after tax) and
forecast growth rate;
iii) Forecast growth rates
Forecast growth rates are based on past performance and management's expectations
for future performance in each segment and country; and
iv) Discount rates
Discount rates used are the weighted average cost of capital (after tax) for
the Group in each country, risk adjusted where applicable.
Go to top
