Vodafone 2014 Annual Report Download - page 118

4. Impairment losses (continued)
Sensitivity analysis
Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the
carrying value of any cash-generating unit to exceed its recoverable amount.
The estimated recoverable amounts of the Group’s operations in Germany, Italy, Spain, Portugal, Czech Republic, Romania and Greece are equal
to, or not materially greater than, their carrying values; consequently, any adverse change in key assumptions would, in isolation, cause a further
impairment loss to be recognised.
The changes in the following table to assumptions used in the impairment review would, in isolation, lead to an (increase)/decrease to the aggregate
impairment loss recognised in the year ended 31 March 2014.
Germany Spain Portugal
Increase Decrease Increase Decrease Increase Decrease
by 2pps by 2pps by 2pps by 2pps by 2pps by 2pps
£bn £bn £bn £bn £bn £bn
Pre-tax risk adjusted discount rate (7.1) 4.9 (0.9) 0.8 (0.3) 0.4
Long-term growth rate 4.9 (5.2) 0.8 (0.8) 0.4 (0.2)
Budgeted EBITDA10.8 (0.8) 0.2 (0.2) 0.1 (0.1)
Budgeted capital expenditure2(2.4) 2.4 (0.8) 0.8 (0.2) 0.2
Czech Republic Romania
Increase Decrease Increase Decrease
by 2pps by 2pps by 2pps by 2pps
£bn £bn £bn £bn
Pre-tax risk adjusted discount rate (0.2) 0.2 (0.2) 0.2
Long-term growth rate 0.2 (0.2) 0.2 (0.2)
Budgeted EBITDA1– – 0.1 (0.1)
Budgeted capital expenditure2– – – –
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ve years for all cash-generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as a percentage of revenue in the initial ve years for all cash-generating units of the plans used for impairment testing.
Year ended 31 March 2013
During the year ended 31 March 2013 impairment charges of £4,500 million and £3,200 million were recorded in respect of the Group’s investments
in Italy and Spain respectively. The impairment charges relate solely to goodwill. The recoverable amounts of Italy and Spain were £8.9 billion and
£4.2 billion respectively. The impairment charges were driven by a combination of lower projected cash ows within business plans, resulting from
our reassessment of expected future business performance in light of current trading and economic conditions and adverse movements in discount
rates driven by the credit rating and yields on ten year government bonds.
The table below shows the key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Italy Spain Germany Greece Portugal Romania
% % % % % %
Pre-tax risk adjusted discount rate 11.3 12.2 9.6 23.9 11.2 11.2
Long-term growth rate 0.5 1.9 1.4 1.0 0.4 3.0
Budgeted EBITDA1(0.2) 1.7 2.5 0.4 (1.5) 0.8
Budgeted capital expenditure29.9–15.2 11.2–15.2 11.3 –12.6 7.8–11.0 10.0–18.9 10.1–15.5
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ve years for all cash-generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ve years for all cash-generating units of the plans used for impairment testing.
The pre-tax adjusted discount rate used for Czech Republic was 5.6%.
Notes to the consolidated nancial statements (continued)
Vodafone Group Plc
Annual Report 2014116