Marks and Spencer 2010 Annual Report Download - page 102

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Marks and Spencer Group plc Annual report and financial statements 2010 Financial statements 98
Notes to the financial statements continued
13 Intangible assets
Goodwill
£m
Brands
£m
Computer
software
£m
Computer
software
under
development
£m
Total
£m
At 29 March 2008
Cost or valuation 117.9 80.0 82.9 78.0 358.8
Accumulated amortisation – (18.7) (34.6) – (53.3)
Net book value 117.9 61.3 48.3 78.0 305.5
Year ended 28 March 2009
Opening net book value 117.9 61.3 48.3 78.0 305.5
Additions 1.3 – 1.9 118.8 122.0
Transfers – – 18.0 (18.0) –
Exchange difference – – 0.1 – 0.1
Amortisation charge – (5.3) (22.0) – (27.3)
Closing net book value 119.2 56.0 46.3 178.8 400.3
At 28 March 2009
Cost or valuation 119.2 80.0 102.9 178.8 480.9
Accumulated amortisation – (24.0) (56.6) – (80.6)
Net book value 119.2 56.0 46.3 178.8 400.3
Year ended 3 April 2010
Opening net book value 119.2 56.0 46.3 178.8 400.3
Additions 8.3 – 20.6 56.9 85.8
Transfers –– 115.7 (115.7) –
Exchange difference 0.4 – – –0.4
Amortisation charge –(5.3) (28.4) –(33.7)
Closing net book value 127.9 50.7 154.2 120.0 452.8
At 3 April 2010
Cost or valuation 127.9 80.0 239.2 120.0 567.1
Accumulated amortisation –(29.3) (85.0) –(114.3)
Net book value 127.9 50.7 154.2 120.0 452.8
Goodwill relates to the following business units:
per una
£m
Marks and
Spencer
Marinopoulos
B.V.
£m
Marks and
Spencer
Czech
Republic a.s.
£m
Supreme
Tradelinks
Private
Limited
£m
Total
£m
Cost and net book value at 28 March 2009 69.5 34.4 15.3 – 119.2
Additions – – 0.1 8.2 8.3
Exchange difference – – 0.2 0.2 0.4
Cost and net book value at 3 April 2010 69.5 34.4 15.6 8.4 127.9
Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use calculations.
The key assumptions for the value in use calculations are those regarding the discount rate, growth rates and changes in income and costs.
The Group prepares discounted cash flow forecasts based on financial forecasts approved by management covering a three year period,
which takes account of both past performance and expectations for future market developments. Cash flows beyond this three year period
are extrapolated using a growth rate of 2%, which does not exceed the long-term average growth rate for the Group’s retail businesses.
The Group’s pre-tax weighted average cost of capital is used to discount the future cash flows. A risk adjustment is then made for the
countries in which the business unit operates: per una discount rate 8.6% (last year 10.2%); Marks and Spencer Marinopoulos B.V. 12.9%
(last year 12.2%), Marks and Spencer Czech Republic a.s. 10.2% (last year 13.2%) and Supreme Tradelinks Private Limited 12.6%. Based
on the discounted cash flows the valuations indicate sufficient headroom that any reasonably possible change in the assumptions is unlikely
to result in an impairment.
Brands consist of the per una brand which is being amortised on a straight-line basis over a period of 15 years.