119 / 248
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
CONTINUED
For the year ended 31 May 2015
117
BLUE LABEL INTEGRATED ANNUAL REPORT 2015
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 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.