Vodafone 2005 Annual Report Download - page 97

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Financials |95
11.Intangible fixed assets
Licence and
spectrum
Goodwill fees Total
£m £m £m
Cost:
1 April 2004 130,377 15,063 145,440
Exchange movements 2,737 244 2,981
Acquisitions (note 25) 1,757 – 1,757
Additions – 124 124
Disposals (52) –(52)
31 March 2005 134,819 15,431 150,250
Accumulated amortisation and impairment:
1 April 2004 51,597 221 51,818
Exchange movements 1,323 7 1,330
Amortisation charge for the year 12,929 412 13,341
Impairment 315 – 315
Disposals (18) –(18)
31 March 2005 66,146 640 66,786
Net book value:
31 March 2005 68,673 14,791 83,464
31 March 2004 78,780 14,842 93,622
For acquisitions prior to 1 April 1998, the cumulative goodwill written off to reserves, net of the goodwill attributed to business disposals, was £723 million at 31 March 2005
(2004: £723 million).
In accordance with accounting standards, the Group regularly monitors the carrying value of its fixed assets. A review was undertaken at 31 March 2005 to assess whether
the carrying value of assets was supported by the net present value of future cash flows derived from assets using cash flow projections for each asset in respect of the
period to 31 March 2015.
The Group prepares and internally approves formal ten year plans for its businesses and uses these as the basis for its impairment reviews. The plans include cash flow
projections for the mobile businesses which reflect continuing investment in network infrastructure to provide enhanced voice and data products and services, which are
forecast to be significant drivers of future revenue growth. Capital expenditure is heaviest in the early years of the projections but is forecast to fall to 10% of revenue at
Group level by the year ending 31 March 2008. Revenue growth is forecast from a combination of new customers and enhanced customer propositions. Data revenue is
forecast to grow strongly throughout the ten year plan period. Voice revenue is forecast to benefit in the longer term from enhanced service offerings and traffic moving from
fixed networks to mobile networks following a period of stabilisation reflecting the impact of price declines.
Accordingly, the directors believe that it is appropriate to use projections in excess of five years. For the years beyond 1 April 2015, forecast growth rates for mobile
businesses do not exceed nominal GDP, using rates from independent sources, and are below nominal GDP for non-mobile businesses. The discount rates for the major
markets reviewed were based on company specific pre-tax weighted average cost of capital percentages and ranged from 8.3% to 11.6%.
The results of the review undertaken at 31 March 2005 indicated that an impairment charge of £315 million was necessary in respect of goodwill held in relation to Vodafone
Sweden (see note 4).