| |
|
2006
Rm |
2005
Rm |
| 28. |
Goodwill |
|
|
| |
Cost |
2
137 |
2 182 |
| |
Accumulated impairment |
(46) |
(28) |
| |
Carrying value |
2
091 |
2 154 |
| |
Carrying value |
|
|
| |
Opening carrying value |
2
154 |
2 000 |
| |
Movement during year: |
|
|
| |
Additions as a result of subsidiaries
and businesses acquired |
52 |
259 |
| |
Adjustment to deferred consideration
in respect of subsidiaries
and businesses acquired in prior years |
10 |
(51) |
| |
Disposals |
—
|
(31) |
| |
Impairment charge through income
statement |
(16) |
(28) |
| |
Foreign subsidiaries exchange
differences |
(109) |
5 |
| |
Closing carrying value |
2
091 |
2 154 |
| |
Analysis of goodwill
balances |
|
|
| |
An analysis of goodwill balances
by principal business segment is
presented below: |
|
|
| |
Africa |
822 |
781 |
| |
Risk &
Insurance Services |
131 |
85 |
| |
Financial
Services |
37 |
42 |
| |
Multi-manager
investment (Investment Solutions) |
654 |
654 |
| |
International |
1
269 |
1 373 |
| |
Risk Services |
507 |
556 |
| |
Financial
Services |
728 |
780 |
| |
Multi-manager
investment (Investment Solutions) |
15 |
16 |
| |
Direct marketing
entity in run-off |
19 |
21 |
 |
|
|
|
| |
|
2
091 |
2 154 |
| |
Valuation of goodwill
balances |
|
|
| |
Goodwill is allocated to cash-generating
units (“CGUs”) in accordance with
the group’s accounting policies. The recoverable
amount of a CGU is determined based on value-in-use
calculations. These calculations use cash flows
projections based on financial budgets approved
by the board of the directors for the forthcoming
year and forecasts for up to five or 10
years which are based on assumptions of the business,
industry and economic growth. Cash flows
beyond this period are extrapolated using terminal
growth rates, which do not exceed the expected
long-term economic growth rate for the geographic
segment. Terminal growth rates of 3% have been
applied to the International businesses and rates
of between 3% and 5% have been applied to the
Africa businesses.
The discount rate used was the weighted average
cost of capital for the specific segment,
adjusted for specific risks relating to
that segment. Discount rates, before adjustment
for specific risks relating to the segment,
of 10% and 14% have been applied in the valuations
of the United Kingdom and South African businesses
respectively.
The valuation of the goodwill balances resulted
in a goodwill impairment charge of R16 million
for the year (2005: R28 million). R4 million of
this amount relates to the write-offof various
small goodwill balances held from historical acquisitions
in respect of the African region and R12 million
relates to the disposal of the specialist Bloodstock
division of the International Risk Services business. |
|
|
