112
CIMIC Group Limited Annual Report 2016 |
Financial Report
Notes continued
for the 12 months to 31 December 2016
15. INTANGIBLES
CONTINUED
December 2016
$m
December 2015
$m
Impairment tests for cash-generating units containing goodwill
Goodwill is attributable to cash generating units in the following segments:
Construction
455.4
334.6
Mining & mineral processing
98.1
35.8
Services
360.5
-
Balance at reporting date
914.0
370.4
As disclosed in Note 29:
Acquisitions and Disposals of controlled entities and businesses
, a portion of goodwill arising on the acquisition of
UGL is attributable to existing construction and services businesses. The goodwill has been provisionally allocated to the cash-generating
units that will benefit from the synergies. Of the total goodwill acquired of $480.7 million, $120.2 million has been allocated to cash-
generating units within the Construction segment and $360.5 million has been allocated to cash-generating units within the new segment
Services, refer to Note 31:
Segment information.
The recoverable amount of all cash-generating units is based on value in use calculations, using five year cash flow projections based on
forecast operating results and the CIMIC Group Business Plan. The recoverable amount of each cash-generating unit exceeds its carrying
amount.
The key assumptions used in the value in use calculations and the approach to determining the recoverable amount of all cash-generating
units in the current and previous period are:
Market / segment growth:
Economic forecasts, taking into account the Group’s participation in each market
Commodity price stability:
Analysis of price forecasts, adjusted for actual experience
Inflation / CPI rates and foreign currency
rates:
Economic forecasts
Discount Rate:
Risk in the industry and country in which each unit operates
Growth Rate:
Relevant to the market conditions and business plan
Cash-generating units
Discount rate
range
Growth rate
range
Construction
11-17%
3-5%
Mining and mineral processing
11-20%
3%
Services
11%
3%
Sensitivity to changes in assumptions
The recoverable amount of intangible assets exceeds their carrying values at 31 December 2016. The Group considers that for the carrying
value to equal the recoverable amount, there would have to be unreasonable changes to key assumptions. The Group considers the
chances of these changes occurring as unlikely.
112
