Carphone Warehouse 2009 Annual Report Download - page 70
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Notes to the Financial Statements – continued
13 Goodwill and other intangible assets
a) Goodwill
2009 2008
£m £m
Opening net book value 677 626
Acquisition of subsidiaries (see note 15) 11 11
Adjustments to contingent consideration – 4
Disposal of subsidiaries (see notes 4 and 15) (383) (14)
Goodwill expense – (1)
Foreign exchange (1) 51
Closing net book value 304 677
Closing
Cost (gross carrying amount) 304 681
Accumulated goodwill expense – (4)
Net carrying amount 304 677
Following the disposal of 50% of the Group’s retail and distribution business the Group’s goodwill is associated with only two
CGUs, being TalkTalk Group and Best Buy Europe. Goodwill relating to Best Buy Europe is included in the Group’s interests in
joint ventures and associates (see note 16).
The cash ows of TalkTalk Group are not separable into individual CGUs as its cash ows are derived from shared assets and
infrastructure.
2009 2008
£m £m
UK TalkTalk Group 304 299
UK retail and distribution – 39
France – 95
Germany – 83
Spain – 69
Other – 92
Total 304 677
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 ow forecasts
derived from the most recent nancial budgets approved by management for the next three years and extrapolates cash ows
in perpetuity based on a country-specic growth rate for the UK, where all goodwill is now located, of 1.8%. The average pre-tax
rate used to discount the forecast cash ows is 9.7% (2008: 10.0%).
The key assumptions for the value in use calculations are those in relation to 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 reect current market assessments
of the time value of money and the risks specic to the CGUs.
Due to the substantial headroom provided by TalkTalk Group’s cash ow forecasts, the Directors do not consider it likely that key
assumptions may change to such an extent that it would lead to a signicant impairment loss.