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Financial statements Marks and Spencer Group plc Annual report and financial statements 2012 94
Notes to the financial statements continued
14 Intangible assets
Goodwill
£m
Brands
£m
Computer
software
£m
Computer
software under
development
£m
Total
£m
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
Year ended 2 April 2011
Opening net book value 127.9 50.7 154.2 120.0 452.8
Additions – – 83.4 43.1 126.5
Transfers – – 104.9 (104.9) –
Disposals – – (0.3) – (0.3)
Amortisation charge – (5.3) (45.7) – (51.0)
Exchange difference (0.3) – – – (0.3)
Closing net book value 127.6 45.4 296.5 58.2 527.7
At 2 April 2011
Cost or valuation 127.6 80.0 427.1 58.2 692.9
Accumulated amortisation – (34.6) (130.6) – (165.2)
Net book value 127.6 45.4 296.5 58.2 527.7
Year ended 31 March 2012
Opening net book value 127.6 45.4 296.5 58.2 527.7
Additions – 32.4 72.9 52.9 158.2
Transfers – – 37.0 (37.0) –
Disposals – – (1.0) – (1.0)
Impairment (34.4) – – – (34.4)
Amortisation charge – (5.3) (60.0) – (65.3)
Exchange difference (0.6) – (0.3) – (0.9)
Closing net book value 92.6 72.5 345.1 74.1 584.3
At 31 March 2012
Cost 127.0 112.4 535.4 74.1 848.9
Accumulated amortisation and impairment (34.4) (39.9) (190.3) – (264.6)
Net book value 92.6 72.5 345.1 74.1 584.3
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 2 April 2011 69.5 34.4 15.5 8.2 127.6
Impairment – (34.4) – – (34.4)
Exchange difference – – (0.1) (0.5) (0.6)
Cost and net book value at 31 March 2012 69.5 – 15.4 7.7 92.6
Goodwill is not amortised, but tested annually for impairment with the recoverable amount being determined from value in use
calculations. Goodwill has been allocated for impairment testing purposes to groups of cash-generating units (CGUs) which
include the combined retail and wholesale businesses. The key assumptions for the recoverable amount of all units are the
long-term growth rate and the discount rate. The long-term growth rate used is purely for the impairment testing of goodwill
under IAS 36 – ‘Impairment of Assets’ and does not reflect long-term planning assumptions used by the Group for investment
proposals or for any other assessments. The pre-tax discount rate is based on the Group’s weighted average cost of capital,
taking into account the cost of capital and borrowings, towhich specific market-related premium adjustments are made: per una
discount rate 10.6% (last year 9.9%), Marks and Spencer Marinopoulos B.V. 16.2% (last year 17.7%), Marks and Spencer Czech
Republic a.s. 12.3% (last year 11.9%) and Supreme Tradelinks Private Limited 12.7% (last year 13.3%).
The valuations use cash flows based on detailed financial budgets prepared by management covering a three year period. Cash
flows beyond this three year period are extrapolated for Marks and Spencer Czech Republic a.s. at a growth rate of 1.5% (last
year 2.0%) and Supreme Tradelinks Private Limited at a growth rate of 1.5% (last year 2.0%). To stress test, nil growth has been
assumed for per una and Marks and Spencer Marinopoulos B.V. These rates do not exceed the long-term average growth rate
for the Group’s retail businesses.