Carphone Warehouse 2008 Annual Report Download - page 70

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Notes to the Financial Statements continued
58 The Carphone Warehouse Group PLC Annual Report 2008
12 Goodwill and other intangible fixed assets (continued)
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The Group prepares cash flow forecasts derived from the
most recent financial budgets approved by management for the next five years and extrapolates cash flows for the following 15 years based
on a country-specific growth rate ranging from 1.6% to 2.3%. This rate does not exceed the average long-term growth rate for the relevant markets.
The average pre-tax rate used to discount the forecast cash flows is 10.0%.
The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and
direct costs during the period, all of which are based on historical patterns and expectations of future market developments. Management estimates
discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs.
The Directors have not identified any CGUs where it is considered likely that key assumptions may change to such an extent that it would lead to a
significant impairment loss.
Other intangible fixed assets are analysed as follows:
Operating intangibles
Subscriber Software and Acquisition Total other
acquisition costs licences Key money intangibles intangibles
£m £m £m £m £m
At 1 April 2007 54.8 114.6 25.9 318.3 513.6
Acquisition of subsidiaries –––2.0 2.0
Additions 146.8 85.4 8.0 – 240.2
Disposals – (0.6) (0.2) – (0.8)
Amortisation (89.3) (28.3) (3.1) (75.2) (195.9)
Foreign exchange 5.7 0.4 4.0 – 10.1
At 29 March 2008 118.0 171.5 34.6 245.1 569.2
At 29 March 2008
Cost (gross carrying amount) 218.6 251.0 45.3 363.7 878.6
Accumulated amortisation (100.6) (79.5) (10.7) (118.6) (309.4)
Net carrying amount 118.0 171.5 34.6 245.1 569.2
Operating intangibles
Subscriber Software and Acquisition Total other
acquisition costs licences Key money intangibles intangibles
£m £m £m £m £m
At 2 April 2006 34.1 45.2 23.7 56.2 159.2
Acquisition of subsidiaries – 10.3 – 334.4 344.7
Additions 71.8 74.6 5.7 – 152.1
Adjustments to contingent consideration –––(18.0) (18.0)
Amortisation (50.4) (15.5) (2.8) (54.3) (123.0)
Foreign exchange (0.7) – (0.7) – (1.4)
At 31 March 2007 54.8 114.6 25.9 318.3 513.6
At 31 March 2007
Cost (gross carrying amount) 123.4 168.7 37.5 400.0 729.6
Accumulated amortisation (68.6) (54.1) (11.6) (81.7) (216.0)
Net carrying amount 54.8 114.6 25.9 318.3 513.6
Software and licences includes assets with a cost of £60.0m (2007 – £30.3m) on which amortisation has not yet been charged as the assets have not
yet been brought into use.
Subscriber acquisition costs are amortised over the minimum contract term and are removed from cost in the analysis above after a period of two years.
Acquisition intangibles are removed from cost in the analysis above once fully amortised.