Peachtree 2015 Annual Report Download - page 129

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The Sage Group plc | Annual Report & Accounts 2015 127
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT
Goo w tsts
The following table shows the allocation of the carrying value of goodwill at the end of the reporting period by CGU:
£m
2014
£m
France 186.3 196.7
UK & Ireland 180.6 180.6
Spain 107.0 112.9
Sage Pay Europe 23.6 24.2
Germany 32.1 31.4
Switzerland 34.5 32.8
Poland 5.8 6.2
Portugal 4.7 4.9
North America
– Sage Business Solutions Division (SBS) 635.4 533.6
– Sage Payment Solutions Division (SPS) 165.0 154.1
Brazil – 76.8
South Africa 36.3 39.7
Australia 19.0 20.4
Malaysia 11.2 14.0
Singapore 4.5 4.7
1,446.0 1,433.0
The recoverable amounts of CGUs are determined as the higher of fair value less costs to sell and the value-in-use. In determining value-in-
use, estimated future cash flows are discounted to their present value.
In all cases, the 2016 budget and the approved Group plan for the five years following the current financial year form the basis for the cash
flow projections for a CGU. Beyond the five year plan these projections are extrapolated using an estimated long-term growth rate. The key
assumptions in the value-in-use calculations are the average medium term revenue growth rate, the long-term operating margin and the
long-term growth rate of net operating cash flows.
– The average medium-term revenue growth rate for the first five years is based on the 2016 budget and the approved Group 5-year plan.
The average medium-term revenue growth rate applied to CGUs reflects the specific rates for each territory.
– The long-term operating margin (before central costs) assumed for a CGU’s operations is based on the 2016 budget and the approved
Group 5-year plan. The long-term operating margin applied to CGUs reflects the specific rates for each territory.
– Long-term growth rates of net operating cash flows are assumed to be equal to the long-term growth rate in the gross domestic product
of the country in which the CGU’s operations are undertaken reflecting the specific rates for each territory.
Range of rates used across the different CGUs
2015 2014
– Average medium-term revenue growth rate* 0% - 20% 1% - 15%
– Long-term operating margin before central costs 12% - 63% 26% - 62%
– Long-term growth rates to net operating cash flows 1.1% - 4.2% 1.3% - 5.1%
* Average Medium-Term Revenue Growth Rate is calculated on value in use projections that exclude intercompany revenue.
In accordance with IAS 36, key assumptions for those CGUs where significant goodwill is held are disclosed. These are deemed by
management to be CGUs holding more than 10% of total goodwill. The discount rate, average medium-term revenue growth rate,
long-term operating margin (before central costs) and long-term growth rate assumptions used for the value-in-use calculation are
shown below:
2015
Local
Discount
Rate
Long-Term
Growth
Rate
Average*
Medium-Term*
Revenue*
Growth Rate*
Long-Term
Operating
Margin before
central costs
– UKI 9.1% 2.5% 6.7% 47.3%
– France 8.5% 2.1% 4.9% 30.2%
– North America − SBS 8.9% 2.3% 10.0% 31.6%
– North America − SPS 8.9% 2.3% 10.0% 30.7%