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NOTE 18: INTANGIBLE ASSETS (cont.)
(b) Intangible assets with indefinite useful lives (cont.)
The remaining timber access rights with an initial cost of $2.0 million are amortised over the life of the supply agreement, which
was 8 years from acquisition.
The timber access rights have been allocated to the timber products Cash Generating Unit (CGU), which forms part of the building
products segment.
(c) Impairment of Goodwill
Goodwill has been allocated for impairment testing purposes to the timber products CGU, the concrete masonry CGU and to a
group of CGU’s comprising the clay products operations. Combined, these CGUs represent the building products segment. The
carrying amount of goodwill allocated to the clay products group of CGUs is significant, representing $239.5 million of the total
balance of $264.5 million.
The recoverable amount of a CGU is determined based on value in use calculations. These calculations use cash flow projections
based on financial budgets approved by management covering a five year period. These budgets use a combination of historical
weighted average growth rates and externally sourced forecast housing approval data to project revenue. Costs are calculated
taking into account historical gross margins, known cost increases (such as negotiated wage increases) as well as estimated
weighted average inflation rates over the period that are consistent with inflation rates applicable to the locations in which the
segments operate. Estimates beyond five years are calculated based on the projected five year average, with a growth rate of
3.5% (2007 1.0%). This growth rate is considered reasonable having regard to current inflation rates, and the position at the
bottom of a cycle within the building industry. Discount rates are pre-tax and are adjusted to incorporate risks associated with a
particular segment. For the 2008 financial year the discount rate was 12.84% (2007 12.58%).
Management’s assessment of the appropriateness of the carrying value of goodwill is based on key assumptions which may vary.
Specifically, these are the discount rate (WACC) and the long term growth rate (LTGR). Given current volatility within financial
markets generally, and the state of the Australian building industry, it is difficult to predict how these variables may move. At
balance date, the CGU’s recoverable value exceeded its carrying amount by $5.0 million. If the WACC was to increase by 0.06%,
or the LTGR was to reduce by 0.10%, the carrying amount would equal its recoverable value.
CONSOLIDATED PARENT ENTITY
NOTE 31 JULY 08 31 JULY 07 31 JULY 08 31 JULY 07
$000 $000 $000 $000
NOTE 19: PAYABLES
(a) Current
Trade payables and accruals 56,051 58,922 2,297 5,491
Deposits received on land sale agreements 17,019 8,828 - -
73,070 67,750 2,297 5,491
(b) Non-Current
Deposits received on land sale agreements 2,047 - - -
Amounts owing to wholly owned
subsidiaries 36 - - 511 483
2,047 - 511 483
Payables have carrying amounts that reasonably approximate fair value. Average terms on trade payables are 30 days from
statement. Terms on land deposits generally match settlement terms on final sale.
NOTE 20: INTEREST BEARING LIABILITIES
(a) Current
Commercial bills 31 98,000 106,000 98,000 106,000
Redeemable preference shares 164,865 - 164,865 -
262,865 106,000 262,865 106,000

 

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