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90 Vodafone Group Plc Annual Report 2009
10. Impairment
Impairment losses
The impairment losses recognised in the consolidated income statement, as a separate line item within operating profit, in respect of goodwill and licences and spectrum
fees are as follows:
2009 2008 2007
Cash generating unit Reportable segment £m £m £m
Spain Spain 3,400 – –
Turkey Other Africa and Central Europe 2,250 – –
Ghana Other Africa and Central Europe 250 – –
Germany Germany – – 6,700
Italy Italy – – 4,900
5,900 – 11,600
Year ended 31 March 2009
The impairment losses were based on value in use calculations. The pre-tax adjusted discount rate used in the most recent value in use in the year ended 31 March 2009
calculation are as follows:
Pre-tax adjusted
discount rate
Spain 10.3%
Turkey(1) 19.5%
Ghana 26.9%
Note:
(1) The pre-tax adjusted discount rate used in the value in use calculation at 30 September 2008 was 18.6%.
Spain
During the year ended 31 March 2009, the goodwill in relation to the Group’s operations in Spain was impaired by £3,400 million following a fall in long term cash flow
forecasts resulting from the economic downturn.
The pre-tax risk adjusted discount rate used in the previous value in use calculation at 31 January 2008 was 10.6%.
Turkey
During the year ended 31 March 2009, the goodwill and other intangible assets in relation to the Group’s operations in Turkey was impaired by £2,250 million.
At 30 September 2008, the goodwill was impaired by £1,700 million following adverse movements in the discount rate and adverse performance against previous plans.
During the second half of the 2009 financial year, impairment losses of £300 million in relation to goodwill and £250 million in relation to licences and spectrum resulted
from adverse changes in both the discount rate and a fall in the long term GDP growth rate. The cash flow projections within the business plans used for impairment testing
were substantially unchanged from those used at 30 September 2008.
The pre-tax risk adjusted discount rate used in the previous value in use calculation at 31 January 2008 was 16.2%.
Ghana
During the year ended 31 March 2009, the goodwill in relation to the Group’s operations in Ghana was impaired by £250 million following an increase in the discount rate.
The cash flow projections within the business plan used for impairment testing was substantially unchanged from the acquisition business case.
Year ended 31 March 2007
Germany
During the year ended 31 March 2007, the goodwill in relation to the Group’s mobile operation in Germany was impaired by £6,700 million following an increase in long term
interest rates and increased price competition in the German market along with continued regulatory pressures.
The impairment loss was based on a value in use calculation using a pre-tax risk adjusted discount rate at 31 March 2007 of 10.6% (31 January 2008: 10.2%; 31 January 2007: 10.5%;
30 September 2006: 10.4%; 31 January 2006: 10.1%).
Italy
During the year ended 31 March 2007, the goodwill in relation to the Group’s mobile joint venture in Italy was impaired by £4,900 million. During the second half of the 2007
financial year, £3,500 million of the impairment loss resulted from the estimated impact of legislation cancelling the fixed fees for the top up of prepaid cards and the related
competitive response in the Italian market. At 30 September 2006, the goodwill was impaired by £1,400 million, following an increase in long term interest rates.
The impairment loss was based on a value in use calculation using a pre-tax risk adjusted discount rate at 31 March 2007 of 11.5% (31 January 2008: 11.5%; 31 January 2007: 11.2%;
30 September 2006: 10.9%; 31 January 2006: 10.1%).
Goodwill
The carrying value of goodwill at 31 March was as follows:
2009 2008
£m £m
Germany 12,786 10,984
Italy 15,361 13,205
Spain 10,561 12,168
38,708 36,357
Other 15,250 14,979
53,958 51,336
Notes to the consolidated nancial statements continued