Financial statements
Section B: Notes to the Group financial statements for the year ended 30 June 2024
Section B: Notes to the Group financial statements for the year ended 30 June 2024
B15
Goodwill
2024
2023 $M $M
Cost
466 466
466 466
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 Impairment assessments are performed at the level of the Melbourne Network cash generating unit (CGU), Sydney Network CGU and Brisbane Network CGU. 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. 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 2024 2023 2024 2023 2024 2023 Long-term consumer price index (CPI) (% annual growth) 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% Long-term average weekly earnings (% annual growth) 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% Pre-tax discount rate (%) 8.2% 8.2% 8.2% 8.2% 8.2% 8.2%
The values assigned to each of the key assumptions have been determined 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.
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
Given the long term nature of the Group's concession intangible assets, a discount rate is determined, considering historical, current and forecast risk free rates. This results in a change to the discount rate when there is a change to long term trends in risk-free rates. A specific rate is selected for each CGU reflecting the term of the asset, the nature and risks inherent in the asset, and where appropriate, the implied discount rate on acquisition. 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.
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 2024.
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