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Notes to the Financial Statements 2018
22. Intangible assets continued
Brands
Brands for which all relevant factors indicate that there is no limit to the foreseeable net cash flows are considered to have an indefinite useful life and are held at cost and are not amortised but are subject to an annual impairment test. Brands are considered to have an indefinite useful life as there are no factors which indicate that there is a limit on their capacity to generate foreseeable cash flows. Factors considered before arriving at this conclusion are whether the businesses which own the brands are going concerns, whether there is any evidence of obsolescence due to changes in either technology or regulatory conditions, whether the businesses are trading profitably and whether there are any other market based indications.
Assessing the carrying value of indefinite life brands requires management to estimate future cash flows to be generated by the related brand. The key assumptions used in the value in use models include the expected rate of growth of revenues and earnings, the terminal growth rate and the appropriate discount rate to apply.
June 2018 NZ$M
June 2017 NZ$M
Fletcher Building Group
461
Brands at the beginning of the year
478
Acquired during the year
21
(30)
Impairments in the income statement (Note 4)
(36)
20
Currency translation
(2)
451 461 Brands have been tested for impairment in June 2018. Each CGU which carries a brand value, and determined to be not separately identifiable, has prepared a discounted cash flow of the CGU on a value in use or fair value less costs of disposal basis as described in note 21. The impairment review confirmed that, for all intangible assets (excluding certain goodwill, brands and other intangibles for which impairments are disclosed in this note and note 21), the recoverable amounts exceed carrying values as at 30 June 2018. Sensitivity analysis was performed on the key assumptions used in the value in use and fair value less costs of disposal calculations and further disclosure has been made for certain CGUs in note 21. The following significant brand assets account for 71% (2017: 66%) of the total carrying value of brands. The remaining 'other' brand assets are each less than 9% of total carrying value (2017: 9%).
June 2018 NZ$M
June 2017 NZ$M
Brands
145 124
Formica Corporation Laminex Australia
134 120
52
Tradelink
51
130 451
Other
156 461
Other intangible assets Other intangible assets at cost
298
264
(2)
Currency translation
(8)
(146)
Accumulated amortisation
(100)
Other intangible assets at the end of the year
150
156
156
Other intangible assets at the beginning of the year
154
34
Additions
34
(20) (26)
Impairments in the income statement (Note 4)
(15) (17)
Amortisation expense Currency translation
6 150
156
As at 30 June 2018 other intangible assets includes $23 million of assets being developed (June 2017: $22 million).
90 Fletcher Building Limited Annual Report 2018
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