Experian 2014 Annual Report Download - page 138

Financial statements • Notes to the Group financial statements
Notes to the Group financial statements
for the year ended 31 March 2014 continued
134
20. Goodwill continued
(b) Goodwill by CGU
2014
US$m
2013
US$m
North America 2,537 1,810
Latin America 1,142 1,214
UK and Ireland 733 660
EMEA 288 255
Asia Pacific 107 118
At 31 March 4,807 4,057
(c) Key assumptions for value-in-use calculations by CGU
2014 2013
Pre-tax
WACC
%
Long-term
growth rate
%
Pre-tax
WACC
%
Long-term
growth rate
%
North America 12.7 2.3 11.4 2.3
Latin America 16.6 4.7 12.4 4.7
UK and Ireland 9.9 2.3 9.0 2.3
EMEA 12.6 3.1 10.7 3.1
Asia Pacific 12.4 5.3 11.6 5.3
Further details of the principles used in determining the basis of allocation by CGU and annual impairment testing are given in note 6.
In the case of the EMEA CGU, the annual impairment review as at 31 March 2014 indicated that the recoverable amount exceeded
the carrying value by US$79m and that any decline in estimated value-in-use in excess of that amount would be liable to result in
an impairment. The sensitivity, which would result in the recoverable amount equalling the carrying value, is an absolute increase
of 2.0% in the pre-tax weighted average cost of capital from 12.6% to 14.6%. The decreases in both the long-term growth rate and
EBIT margin that would be required to result in an impairment are not considered to be reasonably possible.
In the case of the Asia Pacific CGU, the annual impairment review as at 31 March 2014 indicated that the recoverable amount
exceeded the carrying value by US$48m and that any decline in estimated value-in-use in excess of that amount would be liable to
result in an impairment. The sensitivities, which result in the recoverable amount equalling the carrying value, can be summarised
as follows:
• an absolute increase of 1.6% in the pre-tax weighted average cost of capital from 12.4% to 14.0%; or
• an absolute reduction of 2.0% in the long-term growth rate from 5.3% to 3.3%; or
• a reduction of 1.9% in the forecast terminal profit margin. This is forecast to improve to a high single-digit margin in the terminal
period but is below management’s expectations for a mature region. In addition a reduction in the annual margin improvement
of approximately 0.4% per year over the five-year forecast period would also reduce the recoverable amount to the carrying value.
The recoverable amount of the other CGUs exceed their carrying value on the basis of the respective assumptions shown above and
any reasonably possible changes thereof.