Notes to the consolidated financial statements
30 June 2014
4 Critical accounting estimates and judgements
(a) Critical accounting estimates and assumptions
(i) Estimated impairment of cash generating units
(ii) Estimated percentage completion for major contracts
(iii) Equity accounting for Austin Engineering
(iv) Valuation of investment in Austin Engineering
(v) Intangibles
5 Segment information
(a) Description of segments
The Directors have assessed that the recoverable amount of the investment exceeds the carrying value of the investment using
a value in use calculation. The directors consider this methodolgy provides a better estimate of the recoverable value through the
business cycle.
The group values identifiable intangibles acquired in a business combination based on a combination of independent valuations
in some cases and management's estimate of the net present value of estimated future cash flows of the assets. Identifiable
intangible assets are amortised over their estimated useful lives. Given the estimates involved, management review the carrying
value of these assets annually for impairment.
Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision-maker has been identified as the Managing Director.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note
2(p). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These
calculations require the use of assumptions. Refer to note 16 for details of these assumptions and the potential impact of
changes to the assumptions.
The Group reviews the percentage of completion for its major contracts monthly including assessing costs to be incurred to
complete the project in accordance with the accounting policy stated in note 2(e) and note 2(l). These assessments require an
estimate of the remaining labour and material costs for the projects.
The Group has equity accounted the latest available published results of Austin Engineering Limited for the half year ending 31
December 2013 and extrapolated these to 30 June 2014 based on market conditions, market updates and analyst estimates.
Differences identified when Austin Engineering Limited publishes results for the 2014 financial period will be adjusted in Bradken
Limited's interim report for the half year ending 31 December 2014.
Segment revenues, expenses and results include transfers between segments. Sales of scrap between controlled entities are
made on an "arm's-length" basis and are eliminated on consolidation. All other transfers are made at variable cost and are
eliminated on consolidation. The Group manages income taxes on a Group basis and this measure is therefore not reported
internally at a segment level.
Segment revenues, expenses, assets and liabilities are those that are directly attributable to a segment. Segment assets include
all assets used by a segment and consist primarily of receivables, inventories and property, plant and equipment, net of related
provisions. Segment liabilities consist primarily of trade and other creditors, employee benefits and provision for service
The "all other" segment also represents other smaller businesses including Cast Metal Services.
Mining Products consists of design, supply and service of wear components for all types of earth moving in the Mining and
Quarry industries. Mineral Processing consists of design supply and service of mill liner components in the Mineral Processing
industries. Rail is a package provider of Freight Rollingstock products and services including freight wagons, bogies, drawgear,
inventory management, spare and renewed parts and the maintenance and refurbishment of rollingstock. Engineered Products,
based in North America, is a supplier of cast parts to the Energy, Power, Cement, Industrial and Rail Transport industries
specialising in large (greater than 4,500 kg) highly engineered steel castings.
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