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Intangible assets

12 Months Ended

Jun. 30, 2020

12. Intangible assets

Changes in the Group's intangible assets for the years ended June 30, 2020 and 2019 were as follows:

	Year ended June 30, 2020
	Goodwill			Trademarks			Licenses			Customer relations			Information systems and software			Contracts and others			Total
Balance at June 30, 2018		6,929			6,842			2,616			5,117			3,705			2,361			27,570
Costs		6,929			7,265			9,719			15,397			6,935			6,427			52,672
Accumulated amortization		-			(423	)		(7,103	)		(10,280	)		(3,230	)		(4,066	)		(25,102	)
Net book amount at June 30, 2018		6,929			6,842			2,616			5,117			3,705			2,361			27,570
Additions		-			-			-			16			1,516			2,190			3,722
Impairment		(184	)		-			-			-			-			-			(184	)
Disposals		-			-			-			-			(61	)		-			(61	)
Currency translation adjustment		(185	)		(202	)		(98	)		(312	)		(57	)		50			(804	)
Amortization charges (iii)		-			(123	)		(216	)		(1,670	)		(1,289	)		(1,342	)		(4,640	)
Balance at June 30, 2019		6,560			6,517			2,302			3,151			3,814			3,259			25,603
Costs		6,560			7,063			9,467			20,279			6,452			8,611			58,432
Accumulated amortization		-			(546	)		(7,165	)		(17,128	)		(2,638	)		(5,352	)		(32,829	)
Net book amount at June 30, 2019		6,560			6,517			2,302			3,151			3,814			3,259			25,603
Additions		-			-			-			-			1,543			2,965			4,508
Disposals		-			-			-			(18	)		(137	)		(64	)		(219	)
Deconsolidation		(3,259	)		-			-			-			(22	)		-			(3,281	)
Assets incorporated by business combination		-			-			-			38			19			-			57
Currency translation adjustment		2,342			1,233			397			432			682			691			5,777
Amortization charges (iii)		-			(122	)		(279	)		(1,128	)		(1,676	)		(1,456	)		(4,661	)
Balance at June 30, 2020		5,643			7,628			2,420			2,475			4,223			5,395			27,784
Costs		5,643			8,421			11,289			23,731			7,914			13,363			70,361
Accumulated amortization		-			(793	)		(8,869	)		(21,256	)		(3,691	)		(7,968	)		(42,577	)
Net book amount at June 30, 2020		5,643			7,628			2,420			2,475			4,223			5,395			27,784

(iii) Amortization charge was recognized in the amount of Ps. 352 and Ps. 1.052 under "Costs", in the amount of Ps. 1,636 and Ps. 1,349 under "General and administrative expenses" and Ps. 2,700 and Ps. 2,238 under "Selling expenses" as of June 30, 2020 and 2019, respectively in the Statements of Income (Note 24).

The goodwill allocated to telecommunication in Israel amounts to NIS 268 (Ps. 5,451 at the exchange rate at the end of the financial year 2020), the one assigned to supermarkets amounted to NIS 192 and the assigned to Israel real state amounted to NIS 113. The rest is goodwill that is allocated to the real estate segment of Argentina. The only remained goodwill is the one allocated to Telecomunication.

Goodwill impairment test

The Group performs an annual impairment test of the goodwill. For fiscal year 2020, the recoverable value obtained for said test corresponding to the CGUs where the goodwill is assigned (Israel's Telecommunications) was calculated based on the fair value (market value) minus the costs of sale.

For the fiscal year 2019, based on the significant decrease in the market value of Cellcom and its results in the last financial year, caused by the greater competition in the cell phone market in Israel as a result of the entry of new competitors, the Group calculated the recoverable value at the end of the year of the telecommunications CGU based on the value in use of the assets. This test resulted in the goodwill attributable to Cellcom for an amount of Ps. 4,569 (NIS 268) being recoverable.

The value in use as of June 30, 2019, was determined by an independent appraiser and was estimated at Ps. 84,159 (NIS 4,936). There was no impairment.

The cash flow was calculated based on the budgets approved by management covering a period of 5 years. Subsequent cash flows were estimated based on the long-term growth rate. The main data and assumptions used in the calculation of the value in use were the following:

	June 30, 2019 (NIS)
Net value of the CGU net of taxes	NIS 294
Value of the net operating assets of the telecommunications CGU of Israel (including brands and excluding goodwill)	NIS 3,668
Value of goodwill of the CGU	NIS 268
Annual discount rate after tax		8.5	%
Long-term growth rate		1.5	%
Long-term market share		25	%
ARPU (average monthly income per user) during the representative term (excludes income from international hosting and roaming)		NIS 55.50

The recoverable amount of the CGU would be equal to the book value in the scenarios in which the relevant variables are the following, in the event that the rest of the variables remain constant:

Annual net discount rate after taxes 9.20%

ARPU (average monthly income per user) during the representative term (excludes income from international hosting and roaming) NIS 53