NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the period ended 28 July 2018 C2 INTANGIBLE ASSETS Brand names Lease Goodwill and trademarks Software rights Total $’000 $'000 $'000 $'000 $'000 At 30 July 2016 Cost 492,131 429,958 247,759 25,786 1,195,634 Accumulated amortisation - (3,691) (146,486) (25,786) (175,963) Net book amount 492,131 426,267 101,273 - 1,019,671 Period ended 29 July 2017 Carrying amount at beginning of period 492,131 426,267 101,273 - 1,019,671 Additions1 - 7,400 23,220 - 30,620 Transfer between classes - - 134 - 134 Assets written off – cost - - (2,632) - (2,632) Assets written off – accumulated amortisation - - 2,312 - 2,312 Impairment2 (27,097) (11,714) - - (38,811) Amortisation charge3 (25,602) (25,602) - - - Exchange differences - - (35) - (35) Carryingamount at end of period 465,034 421,953 98,670 - 985,657 At 29 July 2017 Cost 492,131 437,358 268,445 25,786 1,223,720 Accumulated amortisation (27,097) (15,405) (169,775) (25,786) (238,063) Net book amount 465,034 421,953 98,670 - 985,657 Period ended 28 July 2018 Carrying amount at beginning of period 465,034 421,953 98,670 - 985,657 Additions - - 37,899 - 37,899 Transfer between classes - - 10,637 - 10,637 Assets written off – cost - - (7,200) - (7,200) Assets written off – accumulated amortisation - - 7,108 - 7,108 Impairment2 (465,034) (50,315) (4,322) - (519,671) Amortisation charge3 (29,318) (29,318) - - - Exchange differences - - 39 - 39 Carryingamount at end of period - 371,638 113,513 - 485,151 At 28 July 2018 Cost 492,131 437,358 309,820 25,786 1,265,095 Accumulated amortisation and impairment (492,131) (65,720) (196,307) (25,786) (779,944) Net book amount - 371,638 113,513 - 485,151 1. In 2017, additions included the acquisition of the Marcs and David Lawrence brand names. 2. Impairment of the Myer goodwill and brand name (2017: impairment of the sass & bide goodwill and brand name). Refer below for more information. 3. Amortisation of $29.3 million (2017: $25.6 million) is included in administration and selling expenses in the income statement. Impairment of non-financial assets The goodwill arising on the acquisition of the Myer business amounting to $465 million (2017: $465 million) cannot be allocated to the Group’s individual cash generating units (CGU’s) (the Group’s stores), and hence has been allocated to the Myer business as a whole. Similarly, brand names which have an indefinite useful life and amounting to $402.8 million (2017: $402.8 million) have been allocated to the Myer business as a whole. AASB 136 Impairment of Assets requires goodwill and intangible assets with an indefinite useful life to be assessed at the end of each reporting period where there is any indication that an asset may be impaired. A review of indicators of impairment using both external and internal sources of information has been undertaken. During the period, there were indicators of impairment due to changes in market conditions and operating performance of Myer, and the current market capitalisation position. As a result, the recoverable amount of the assets relating to this CGU were assessed using a value-in-use discounted cash flow model. This model uses cash flow projections based on financial forecasts approved by management covering a five-year period. Cash flows beyond five-year periods are extrapolated using a terminal growth rate. At the interim reporting period the carrying value exceeded the recoverable amount and an impairment charge of $515.3 million was recognised in respect of goodwill ($465.0 million) and the Myer brand name ($50.3 million). This has been included within restructuring and store exit costs, onerous lease expense and impairment of assets in the consolidated income statement. 60 Myer Annual Report 2018