Integrated report 2020
Exxaro report selector 2020
Exxaro Resources Limited
Group and company annual financial statements for the year ended 31 December 2020
REPORT SELECTOR
10.2 |
INTANGIBLE ASSETS10.2.1 ACCOUNTING POLICIES RELATING TO INTANGIBLE ASSETS Patents, licences and customer contracts Patents, licences and customer contracts are Intangible assets with a finite useful life and are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of the finite useful life assets from the date it is available for use. The amortisation method, useful lives and residual values are reviewed at each reporting date and adjusted where appropriate. The estimated useful lives of intangible assets with a finite useful life are: |
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Impairment testing is undertaken when circumstances indicate that the carrying amount may not be recoverable. Refer note 8.1.3. Goodwill Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. Refer note 8.1.1 for the policy on the measurement of goodwill at initial recognition. Goodwill is carried at cost less accumulated impairment losses and is not subject to amortisation, but rather is tested annually for impairment or more frequently if events or changes in circumstances indicate a potential impairment. For purposes of impairment testing, goodwill acquired in a business combination is allocated to each CGU, or group of CGUs, that is expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. The carrying value of the CGU containing goodwill is compared to its recoverable amount, which is the higher of value in use or the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed. 10.2.2 SIGNIFICANT JUDGEMENTS AND ASSUMPTIONS MADE BY MANAGEMENT IN APPLYING THE RELATED ACCOUNTING POLICIES Impairment testing of goodwill In allocating goodwill, the Cennergi group of companies has been identified as a single CGU to which goodwill of R521 million has been allocated. The Cennergi CGU was assessed for impairment at 31 December 2020 as a result of the requirement to test goodwill annually for impairment. There were no other indicators of impairment for the Cennergi CGU during the reporting period. No impairment charge was required as the recoverable amount, determined using fair value less costs of disposal, exceeded the carrying amount on 31 December 2020. The recoverable amount was derived using a DCF model which is a Level 3 valuation technique in terms of the fair value hierarchy. The valuation has been performed in South African rand using the following information:
The key assumptions made by management (expressed in nominal terms) and management's approach to determining these key assumptions is summarised as follows:
Management has considered and assessed reasonably possible changes to the key assumptions and has not identified any instances that could cause the carrying amount of the Cennergi CGU to exceed its recoverable amount. 10.2.3 INTANGIBLE ASSETS COMPOSITION AND ANALYSIS
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