Barclays 2006 Annual Report Download - page 192

Notes to the accounts
For the year ended 31st December 2006
Barclays PLC
Annual Report 2006
188
23 Goodwill
2006 2005
£m £m
Net book value
At beginning of year 6,022 4,518
Acquisitions 390 1,417
Disposals (14) –
Exchange and other adjustments (306) 87
At end of year 6,092 6,022
Goodwill is reviewed annually for impairment, or more frequently when there are indications that impairment may have occurred. There was no
impairment identified in 2006 (2005: £nil).
2006 2005
£m £m
UK Banking 2,820 2,824
Barclaycard 403 418
International Retail and Commercial Banking 1,481 1,725
Barclays Capital 72 89
Barclays Global Investors 673 322
Barclays Wealth 629 629
Head office functions and other operations 14 15
Goodwill 6,092 6,022
Goodwill is allocated to business operations. The recoverable amount of each operation’s goodwill is based on value-in-use calculations using an
appropriate pre-tax cost of equity for the market and associated risk. The principal goodwill relating to UK Banking and International Retail and
Commercial Banking are Woolwich and Absa respectively.
Woolwich and Absa future cash flows are based on approved budgets and plans. Woolwich has applied a growth factor of 3% (proxy for inflation) to
cash flows for the period 2010 to 2020. Absa has applied a growth rate of 8% to cash flows for the four years from 2010 to 2013 and a rate of 4% for
the years from 2014 to 2020.
Both businesses justify the use of longer cash flow projections due to the long-term nature of these businesses within the Barclays Group.