Subsidiaries in the Services and Automotive segments recorded impairments against portions of their ERP systems in the current year. Certain of the IT implementation project costs, previously appropriately capitalised under IFRS, have been impaired because management has taken a decision to curtail the use of the software resulting in an impairment. The Group tests intangible assets for impairment where there are indicators of potential impairment and determines a recoverable amount based on the value in use of the intangible asset. Based on the fact that portions of these ERP systems have limited further value in use, they have been impaired to the future value in use.

Indefinite life intangibles

Included in patents, trademarks, tradenames and other intangibles arising on the acquisition of businesses are multiple indefinite life intangibles totalling R580 million, R285 million relating to Bidvest Commercial Products and R295 million to Bidvest Services. These intangibles were subject to review for impairment, together with the goodwill relating to these cash-generating units (CGUs) (refer note 16). Significant surpluses were identified over the carrying values of the CGUs and thus the Directors believe that a reasonably possible change in the multiples, would not result in an impairment of the carrying value of these intangibles. The valuation method used is considered a Level 3 type valuation in accordance with IFRS 13 Fair Value Measurement.

The amortisation and impairment charges are included in operating expenses in the consolidated income statement.