Goodwill that is significant in comparison to the Group’s total carrying amount of goodwill with a carrying value of R106.4 million (2014: R106.4 million) relates to the cash-generating unit trading as Boxer. This cash-generating unit has no other intangible assets with indefinite useful lives. The value in use was determined based on cash flow projections based on financial budgets (informed by past experience and the expected performance on the retail market in the relevant areas) approved by management covering a three-year reporting period. Cash flows beyond these planning periods are extrapolated using an estimated growth rate of 5.0% (2014: 5.9%) which is derived from the retail industry sales growth. This growth rate does not exceed the long-term average growth rate for the business in which the cash-generating unit operates. The pre-tax discount rate applied to cash flow projections is 10.5% (2014: 9.6%) and reflects the specific risks for this cash-generating unit. The remaining goodwill relates to various acquisitions or conversions of franchise stores to owned stores, none of which is significant in comparison to the Group’s total carrying amount of goodwill.

During the previous period under review the Group completed the centralisation of its buying and operational and finance support functions. As a result, systems and reporting tools previously developed to support the decentralised business operation became obsolete indicating that certain intangible assets had to be assessed for impairment. Management estimated the recoverable amount (calculated as the higher of the value in use and the fair value less costs of disposal) of the related intangible assets as zero and an impairment of R104.1 million was recognised in profit or loss in the previous reporting period. This impairment, net of the related tax effect, has been added back in the calculation of headline earnings of the previous period, refer to note 7.