Telstra 2010 Annual Report Download - page 166

Telstra Corporation Limited and controlled entities
151
Notes to the Financial Statements (continued)
Cash generating units
For the purposes of undertaking our impairment testing, we
identify cash generating units (CGUs). Our CGUs are determined
according to the smallest group of assets that generate cash
inflows that are largely independent of the cash inflows from other
assets or groups of assets. The carrying amount of our goodwill
and intangible assets with an indefinite useful life are detailed
below:
(a) As at 30 June 2010, the carrying value of our assets in the CSL
New World Group CGU were tested for impairment based on value
in use. This test resulted in an impairment charge of $168 million
being recognised in the Telstra Group financial statements. The
impairment arose as a result of insufficient growth in market share
in the highly competitive market in Hong Kong resulting in a weaker
outlook of future cash flows. As a result of the impairment and
foreign exchange rate movements, the carrying amount of the CSL
New World Group goodwill is $932 million which is equal to its
recoverable amount.
(b) Our assessment of the Sensis Group CGU excludes Location
Navigation Group, Adstream Group, SouFun Group, Sequel Group
and Dotad Group that form part of the Sensis reportable segment.
These CGUs are assessed separately.
(c) The SouFun Group has been classified as held for sale as at 30
June 2010, and we have reclassified the SouFun Group goodwill
balance of $326 million as part of this reclassification. Refer to note
12 for details on non-current assets held for sale.
(d) As at 30 June 2010, the carrying value of our assets in the
Octave Group were tested for impairment based on value in use.
During fiscal 2010 there were significant changes in the regulatory
environment in China in which the Octave Group operates. These
changes are industry wide and it is not yet known with any
certainty whether the changes are permanent or temporary, and it
is uncertain as to whether or when these changes will be reversed.
The future cash flow assumptions used in determining the
recoverable amount of the Octave Group CGU incorporate our
assessment of the risk that 50% of estimated future cash flows
may not eventuate as a result of these regulatory changes. If this
assumption is not correct and the future cash flows decline by a
further 3% then the carrying value will equal the recoverable
amount. Written confirmation is being sought from authorities in
China as to the likely regulatory position as well as with the
relevant contracting party regarding future possibilities.
(e) On 23 February 2010, our controlled entity Telstra Robin
Holdings Limited acquired 67% of the issued capital of Dotad Media
Holdings Limited (Dotad) for a total consideration of $105 million.
Refer to note 20 for further details.
(f) The Telstra Entity CGU consists of our ubiquitous
telecommunications infrastructure network in Australia, excluding
the hybrid fibre coaxial (HFC) cable network that we consider not
to be integrated with the rest of our telecommunications network.
Assets that form part of the ubiquitous telecommunications
network are considered to be working together to generate our net
cash flows. No one item of telecommunications equipment is of any
value without the other assets to which it is connected in order to
achieve delivery of our products and services.
(g) From 1 July 2009, the Trading Post mastheads have been
assigned a finite life and are being amortised over a period of 5
years. As such, they are no longer subject to impairment testing
unless an indication of impairment exists and are therefore
excluded from the table above.
21. Impairment
Goodwill
Intangible assets
with indefinite
useful lives
As at 30 June As at 30 June
2010 2009 2010 2009
$m $m $m $m
CGUs
CSL New World Group (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 932 1,160 --
TelstraClear Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 134 --
Telstra Europe Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 93 --
Sensis Group (b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215 215 --
Location Navigation (formerly Location Publishing Group). . . . . . . . . . . . 14 15 810
Adstream Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 --
SouFun Group (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -342 --
1300 Australia Pty Ltd . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 16 12 12
Sequel Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 126 --
Octave Group (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 158 --
Dotad Group (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 ---
Telstra Entity CGU (f)(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 63 -337
1,802 2,346 20 359