Corporate Report for the year ended 30 June 2022
Introduction and overview
Business performance
Governance and risk
Directors’ report
Remuneration report
Financial statements
Sustainability supplement
Security holder information
Section B: Notes to the Group financial statements for the year ended 30 June 2022
Section B: Notes to the Group financial statements for the year ended 30 June 2022
B16 Goodwill
2022
2021
$M 466 466
$M 466 466
Cost
Carrying amount
Goodwill primarily relates to the Group's Sydney Network cash generating unit (CGU) and Brisbane Network CGU and has arisen from the acquisition of Hills Motorway Group, Tollaust Pty Limited and the Sydney Roads Group in Sydney and the Queensland Motorways Group in Brisbane. Impairment testing of goodwill The Group assesses whether there is an indication of impairment at each reporting period and tests goodwill for impairment on an annual basis, regardless of whether an indicator of impairment exists. Impairment testing is undertaken by calculating the recoverable amount, which is the greater of fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (CGU). Where the carrying amount of an intangible asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount through the profit and loss. The decrement in the carrying amount is recognised as an expense in the profit and loss in the reporting period in which the impairment occurs. The recoverable amount of the Group’s CGUs has been determined based on value-in-use calculations. The following table sets out the key assumptions on which management have based their cash flow projections. The calculations use four-year cash flow projections based on financial plans reviewed by the Board which include management’s estimate of the impact to cash flows from inflation and to traffic volumes related to COVID-19. Management estimate a recovery in traffic volumes in the short to medium-term associated with the transition to a post COVID-19 environment and increased economic activity. Cash flows beyond this period are modelled using a consistent set of long-term assumptions up to the end of the applicable concession period:
Melbourne
Sydney
Brisbane
2022 2.5% 3.5% 8.2%
2021 2.5% 3.5% 8.2%
2022 2.5% 3.5% 8.2%
2021 2.5% 3.5% 8.2%
2022 2.5% 3.5% 8.2%
2021 2.5% 3.5% 8.2%
Long term consumer price index (CPI) (% annual growth) Long term average weekly earnings (% annual growth)
Pre-tax discount rate (%)
Management have determined the values assigned to each of the below key assumptions as follows:
Assumption
Approach used to determine values
Traffic volume
Forecasts are developed based on historical trends and the Group's long term forecasting models, inclusive of some expectation of industry changes. Short and medium-term forecasting models incorporate management's estimate of the recovery from COVID-19 impacts. In developing these forecasts, management utilised external observable data to benchmark current traffic performance against an estimated improvement in traffic profiles. The improvement in traffic reflects the transition to a post COVID-19 environment coupled with increased economic activity.
Long term CPI (% annual growth)
Based on independent external forecasts. Based on independent external forecasts.
Long term average weekly earnings (% annual growth)
Pre-tax discount rate
Discount rates consider specific risks relating to the CGU. In performing the value-in- use calculations for each CGU, the Group has applied pre-tax discount rates to discount the forecast pre-tax cash flows. The pre-tax discount rates are disclosed in the table above. Discount rates factor in the risk associated with possible variations in the forecast impact to traffic volumes due to COVID-19.
The impairment testing indicates the recoverable amount of each Group CGU to which goodwill has been allocated exceeds its carrying amount (after allocating goodwill). Therefore, there is no goodwill that is impaired as at 30 June 2022. Sensitivity analysis has been performed within each of the CGU valuation models to which goodwill has been allocated to determine whether it is feasible that the recoverable amount of the CGU could fall below its net carrying amount (after allocating goodwill) under reasonably possible scenarios of shifts in key assumptions. The results from the sensitivity analysis show that the recoverable amount of the CGU did not fall below its carrying amount (after allocating goodwill) under any of the sensitivity scenarios.
166 166
Made with FlippingBook Annual report maker