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BUSINESS MODEL
AND STRATEGIC
OBJECTIVES
LEADERSHIP
GOVERNANCE
OPERATING
PERFORMANCE
SHAREHOLDERS’
INFORMATION AND
ADMINISTRATION
FINANCIAL
PERFORMANCE
BLUE LABEL INTEGRATED ANNUAL REPORT 2014
137
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2014
2.
CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
(a) Assessment of goodwill for impairment
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting
policy. The recoverable amounts of cash-generating units have been determined based on value-in-use
calculations. These calculations require the use of estimates. Refer to note 5 for details on these estimates.
(b) Equity compensation benefit
In determining the number of forfeitable shares that will vest due to performance conditions being met,
management assesses the attrition rates of staff based on the grades of staff that have been granted awards
as well as the historic staff turnover.
(c)
Income taxes
As with any enterprise, the Group faces uncertainties in the markets in which it operates and over which it
has little or no control. The Group is subject to income tax in numerous jurisdictions and judgement is
required in determining the provision for tax.
There are transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. Amounts accrued are based on management’s interpretation of country-specific
tax law and the likelihood of settlement. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the current income tax and deferred tax
provisions in the period in which such determination is made.
Deferred tax assets are recognised to the extent that it is probable that taxable income will be available in the future
against which these can be utilised. Future taxable profits are estimated based on business plans which include
estimates and assumptions regarding economic growth, interest rates, inflation and competitive forces.
Changes in the estimates of the consideration could result in the recognition of material adjustments in
future periods.
(d) Valuation of intangible assets acquired as part of a business combination
The fair values of all of the identifiable intangible assets acquired as part of a business combination are
determined using recognised valuation techniques. Such techniques often rely on forecasts of future cash
flows and the use of appropriate discount rates that reflect the risk factors associated with the cash flows.