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74 Notes to the consolidated fi nancial statements Kingfi sher plc Annual Report and Accounts 2009/10 12 Goodwill continued The recoverable amounts of these groups of CGUs have been determined based on value-in-use calculations. The groups of CGUs for which the carrying amount of goodwill is deemed signifi cant are the UK and France. The key assumptions used for value-in-use calculations are set out below: Assumptions – The cash fl ow projections are based on fi nancial budgets and strategic plans approved by the Board covering a fi ve year period. These are based on both past performance and expectations for future market development. – Key drivers in the plans are like-for-like (‘LFL’) sales, margin and operating profi t percentage. LFL sales are based on the Group’s market expectations and the CGUs’ market shares. – Cash fl ows beyond this fi ve year period are calculated using a growth rate of 1.9% (2008/09: 1.9%) which does not exceed the long term average growth rate for retail businesses operating in the same countries as the CGUs. – Working capital movements are included in the model, building in anticipated movements due to the level of trading and including reductions across the Group as part of the Delivering Value programme over the fi rst three years. – The weighted average cost of capital, used to discount future cash fl ows, is calculated using a combination of the cost of debt and the cost of equity balanced according to the Group’s level of fi nancial gearing. A risk adjustment is then made for the country in which the CGU operates. United Kingdom – The risk-adjusted discount rate of 11.3% (2008/09: 12.0%) is pre-tax and refl ects the specifi c risks inherent in the UK market. A decrease in cash fl ows of 33% would result in the value-in-use of goodwill being equal to its carrying amount. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill based on this level of headroom. France – The risk-adjusted discount rate of 11.6% (2008/09: 13.4%) is pre-tax and refl ects the specifi c risks inherent in the French market. A decrease in cash fl ows of 55% would result in the value-in-use of goodwill being equal to its carrying amount. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill based on this level of headroom. Poland – The risk-adjusted discount rate of 13.2% (2008/09: 13.7%) is pre-tax and refl ects the specifi c risks inherent in the Polish market. A decrease in cash fl ows of 78% would result in the value-in-use of goodwill being equal to its carrying amount. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill based on this level of headroom. China – In the prior year, the goodwill relating to the China business was fully impaired. This arose due to a weak housing market following a rapid property market slowdown, the dependence of the business on new apartment fi t outs and increasing local competition.
Kingfi sher plc Annual Report and Accounts 2009/10 75 13 Other intangible assets £ millions Cost Computer software Other Total At 1 February 2009 225 14 239 Additions 36 – 36 Disposals (7) – (7) Exchange differences (3) (1) (4) At 30 January 2010 251 13 264 Amortisation At 1 February 2009 (162) (4) (166) Charge for the year (32) (2) (34) Disposals 4 – 4 Exchange differences 2 – 2 At 30 January 2010 (188) (6) (194) Net carrying amount At 30 January 2010 63 7 70 Cost At 3 February 2008 253 8 261 Additions 13 3 16 Disposals (50) – (50) Disposal of subsidiaries (1) – (1) Exchange differences 10 3 13 At 31 January 2009 225 14 239 Amortisation At 3 February 2008 (173) (3) (176) Charge for the year (34) – (34) Disposals 50 – 50 Disposal of subsidiaries 1 – 1 Exchange differences (6) (1) (7) At 31 January 2009 (162) (4) (166) Net carrying amount At 31 January 2009 63 10 73 None of the Group’s other intangible assets have indefi nite useful lives.
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