Carphone Warehouse 2006 Annual Report Download - page 56

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Notes to the Financial Statements continued
12 Goodwill and other intangible fixed assets
Goodwill
£’000
At 2 April 2005 452,023
Acquisition of subsidiaries (see note 14) 119,105
Adjustments to deferred consideration (4,531)
Goodwill expense (1,825)
Foreign exchange 3,858
At 1 April 2006 568,630
At 1 April 2006
Cost (gross carrying amount) 571,413
Accumulated goodwill expense (2,783)
Net carrying amount 568,630
At 2 April 2005
Cost (gross carrying amount) 452,981
Accumulated goodwill expense (958)
Net carrying amount 452,023
A goodwill expense of £1.8m has been recognised in the period in relation to previously acquired tax losses (2005 – £1.0m).
Subscriber Software and Acquisition Total other
acquisition costs licenses Key money intangibles intangibles
£’000 £’000 £’000 £’000 £’000
At 2 April 2005 18,930 21,664 21,255 7,520 69,369
Acquisition of subsidiaries (see note 14) – – – 68,641 68,641
Additions 51,598 48,937 4,175 – 104,710
Disposals – (81) – – (81)
Amortisation (36,931) (12,354) (1,842) (17,998) (69,125)
Accelerated amortisation (see note 4) – (12,957) – – (12,957)
Adjustments to deferred consideration – – – (1,900) (1,900)
Foreign exchange 583 14 20 – 617
At 1 April 2006 34,180 45,223 23,608 56,263 159,274
At 1 April 2006
Cost (gross carrying amount) 102,456 83,727 32,095 83,773 302,051
Accumulated amortisation (68,276) (38,504) (8,487) (27,510) (142,777)
Net carrying amount 34,180 45,223 23,608 56,263 159,274
At 2 April 2005
Cost (gross carrying amount) 49,983 37,123 27,888 17,032 132,026
Accumulated amortisation (31,053) (15,459) (6,633) (9,512) (62,657)
Net carrying amount 18,930 21,664 21,255 7,520 69,369
Goodwill has been allocated to cash-generating units (CGUs), which are generally based on geographical location. The carrying amount of goodwill by
geographical location is as follows:
2006 2005
£’000 £’000
UK 261,437 149,829
France 91,077 89,603
Germany 73,054 71,851
Spain 46,564 45,797
Other 96,498 94,943
568,630 452,023
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the
discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates
that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts.
Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. The Group prepares cash flow forecasts
derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following five years based on
an estimated growth rate averaging 2.5%. The average pre-tax rate used to discount the forecast cash flows is 10%.
The Carphone Warehouse Group PLC Annual Report 2006
52