Bidvest Services

Southern African projected future cashflows were determined using growth rates of between 6.5% to 7.5% over a five year period with a terminal growth rate of 6.5%, and applying a pre-tax discount rate of 15.75%. International projected future cashflows were determined using growth rates of between 2.0% and 7.8% with terminal rates of 2.0% and 3.5%, and applying a discount rate of 5.9%. The resulting recoverable amount is substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of goodwill. R11 685 million goodwill was provisionally recognised on the acquisition of the PHS Group (refer note 13 Acquisition of businesses, subsidiaries and associates). The goodwill recognised for the PHS Group was tested at 30 June 2020 by applying the value-in-use method using the following inputs: A divisional pre-tax WACC of 9.26%; growth range of between 3.5% and 7.8%; a terminal growth rate of 3.5%; forecasted net working capital increased with estimated growth rates per year; and capital expenditure to maintain current capacity Recoverable value exceeded carrying value and no impairment was recognised (refer note 13 Acquisition of businesses, subsidiaries and associates.)

Bidvest Freight

Projected future cash flows were calculated using growth rates of between 4.2% and 5.7% over a five year period with a terminal growth rate of 4.2% and applying a pre-tax discount rate of 15.34% resulting in a recoverable amount substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of goodwill.

Bidvest Branded Products

Projected future cashflows were determined using growth rates of between 2.5% and 5.5% over five years with a terminal growth rates of 2.5% and 4.5% and applying a pre-tax discount rate of 19.85% resulting in a recoverable amount substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of goodwill. R1 653 million goodwill was raised on the recognition of Adcock Ingram as a subsidiary (refer note 28 Subsidiaries).

Bidvest Commercial Products

Projected future cashflows were determined using growth rates of between 4.5% and 5.5% over five years with a terminal growth rate of 4.5% and applying a pre-tax discount rate of 20.42% resulting in a recoverable amount substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of the goodwill.

Bidvest Automotive

The Automotive segment's operations in particular were the most exposed to economic uncertainty as a result of the COVID-19 pandemic which commenced during the 2020 financial year, and significant judgement was required in assessing the goodwill impairment calculation. Management's assessment of the Automotive segment indicated that goodwill may be impaired. Projected future cashflows were determined using growth rates of between 5.3% and 5.8% over five years with a terminal growth rate of 5.3% and applying a pre-tax discount rate of 14.47% resulting in a recoverable amount lower than the carrying value. A R427 million impairment of goodwill was recognised.

Bidvest Financial Services

Projected future cashflows were determined using growth rates of between 6.5% and 7.5% over five years with a terminal growth rate of 6.5% and applying a pre-tax discount rate of 13.15% resulting in a recoverable amount substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of goodwill.

Bidvest Properties

Projected future cashflows were determined using growth rates of between 2.5% and 3.5% over five years with a terminal growth rate of 2.5% and applying a pre-tax discount rate of 12.92% resulting in a recoverable amount substantially higher than the carrying value. A 1% change in the five year growth rates, terminal growth rate and discount rate would not have a significant impact on the recoverable amount and would not result in an impairment of the carrying value of goodwill.

Bidvest Corporate and Investments

Projected future cashflows were determined using growth rates of between 2.0% and 3.0% over five years with a terminal growth rate of 2.5% and applying a pre-tax discount rate of 15.7% resulting in a recoverable amount which is lower than the carrying value. A R70 million impairment of goodwill was recognised.