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Strategy Performance & Marketplace Operating review Financial review Governance
Financial statements
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93
Financial statements
14 Intangible assets
Goodwill
£m
Brands
£m
Computer
software
£m
Computer
software
under
development
£m
Total
£m
At 28 March 2009
Cost or valuation 119.2 80.0 102.9 178.8 480.9
Accumulated amortisation – (24.0) (56.6) – (80.6)
Net book value 119.2 56.0 46.3 178.8 400.3
Year ended 3 April 2010
Opening net book value 119.2 56.0 46.3 178.8 400.3
Additions 8.3 – 20.6 56.9 85.8
Transfers – – 115.7 (115.7) –
A
mortisation charge – (5.3) (28.4)
–
(33.7)
Exchange difference 0.4 – – – 0.4
Closing net book value 127.9 50.7 154.2 120.0 452.8
At 3 April 2010
Cost or valuation 127.9 80.0 239.2 120.0 567.1
Accumulated amortisation – (29.3) (85.0) – (114.3)
Net book value 127.9 50.7 154.2 120.0 452.8
Year ended 2 April 2011
Opening net book value 127.9 50.7 154.2 120.0 452.8
Additions – – 83.4 43.1 126.5
Transfers – – 104.9 (104.9) –
Disposals – – (0.3) – (0.3)
Amortisation charge – (5.3) (45.7) – (51.0)
Exchange difference (0.3) – – – (0.3)
Closing net book value 127.6 45.4 296.5 58.2 527.7
At 2 April 2011
Cost or valuation 127.6 80.0 427.1 58.2 692.9
A
ccumulated amortisation – (34.6) (130.6)
–
(165.2)
Net book value 127.6 45.4 296.5 58.2 527.7
Goodwill relates to the following business units:
per una
£m
Marks and
Spencer
Marinopoulos
B.V.
£m
Marks and
Spencer
Czech
Republic a.s.
£m
Supreme
Tradelinks
Private
Limited
£m
Total
£m
Cost and net book value at 3 April 2010 69.5 34.4 15.6 8.4 127.9
Exchange difference – – (0.1) (0.2) (0.3)
Cost and net book value at 2 April 2011 69.5 34.4 15.5 8.2 127.6
The valuations use cash flows based on detailed financial budgets prepared by management covering a three year period. Cash flows
beyond this three year period are extrapolated using a growth rate of 2% (last year 2%), which does not exceed the long-term average
growth rate for the Group’s retail businesses.
No goodwill impairment charges were recognised in 2010/11 or 2009/10. If discounted cash flows for any of the cash-generating units
should fall by 10%, or the discount rate was increased by a pre-tax rate of 2%, there would be no impairment.
Brands consist of the per una brand which is being amortised on a straight-line basis over a period of 15 years.
Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use
calculations. Goodwill has been allocated for impairment testing purposes to groups of cash-generating units (CGUs) which include the
combined retail and wholesale businesses. The key assumptions for the recoverable amount of all units are the long-term growth rate
and the discount rate. The long-term growth rate used is purely for the impairment testing of goodwill under IAS 36 – ‘Impairment of
Assets’ and does not reflect long-term planning assumptions used by the Group for investment proposals or for any other
assessments. The discount rate is based on the Group’s weighted average cost of capital, taking into account the cost of capital and
borrowings, to which specific market-related premium adjustments are made: per una discount rate 9.9% (last year 8.6%); Marks and
Spencer Marinopoulos B.V. 17.7% (last year 12.9%), Marks and Spencer Czech Republic a.s. 11.9% (last year 10.2%) and Supreme
Tradelinks Private Limited 13.3% (last year 12.6%).