Notes to the consolidated financial statements – Note 15

    2014
R’000		     2013
R’000		  
15. Goodwill          
  Carrying value at beginning of year 8 853 973     7 449 997  
  Acquisition of businesses 1 731 787     450 456  
  Disposal of businesses –     (4 605)  
  Impairment of goodwill –     (29 328)  
  Exchange rate adjustments 1 137 416     987 453  
  Carrying value at end of year 11 723 176     8 853 973  
  Goodwill acquired through business combinations is allocated for impairment testing purposes to cash-generating units (CGU), which reflect how it is monitored for internal management purposes, namely the various segments of the Group. The carrying amount of goodwill was subject to an annual impairment test as at March 31 using either the fair value less costs to sell method or the discounted cash flow basis.          
  The carrying amount of goodwill was allocated to cash-generating units as follows: 229 132     229 132  
  Bidvest Automotive 117 253     –  
  Bidvest Consumer Products 39 577     35 977  
  Bidvest Electrical 33 811     33 811  
  Bidvest Financial Services 40 133     40 133  
  Bidvest Freight 34 520     5 859  
  Bidvest Industrial 71 201     71 201  
  Bidvest Office Products 142 529     130 812  
  Bidvest Paperplus 110 714     84 984  
  Bidvest Rental and Products 952 670     165 586  
  Bidvest Services 62 897     62 897  
  Bidvest Travel and Aviation 2 608 511     1 718 803  
  Bidvest Foodservice Asia Pacific 7 041 810     6 087 981  
  Bidvest Foodservice Europe 63 482     63 482  
  Bidvest Foodservice Southern Africa 123 042     123 042  
  Bidvest Namibia 142     142  
  Bidvest Properties 51 752     131  
  Bidvest Corporate and Investments 11 723 176     8 853 973  
  The most significant portion of the Group’s goodwill relates to the Bidvest Foodservice Europe, Bidvest Foodservice Asia Pacific and Bidvest Services CGUs. The recoverable amount of each of these CGUs was determined using the fair value less costs to sell method. The calculations used projected annualised earnings based on actual operating results. A price to earnings ratio was applied to obtain the recoverable amount for each business unit. The earnings yields are considered to be consistent with similar companies within the industry and geographic segments. A price to earnings ratio of 12,5 (2013:12,4) was used in the valuation of Bidvest Foodservice Europe, 13,3 (2013:13,2) for Bidvest Foodservice Asia Pacific and 8,6 (2013:10,0) for Bidvest Services. The valuations resulted in significant surpluses over their carrying values and thus the directors believe that a reasonably possible change in these ratios would not result in an impairment of the carrying value of goodwill. The valuation method is consistent with that used in the prior years and is considered a level 3 type valuation in accordance with IFRS 13 Fair Value Measurement.

The remaining goodwill of R1,1 billion (2013: R0,9 billion) is allocated across multiple CGUs. The recoverable amount for these remaining units was calculated on the aforementioned basis. No impairment was identified for the current financial year (2013: R29 million).

Notes to the consolidated financial statements – Note 15