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Financial Statements 89
14. Goodwill
Group
2008 2007
£m £m
Cost at 1 April 71.0 43.1
Additions (note 15) 9.1 30.0
Disposals (17.5) –
Difference on exchange 0.8 (2.1)
Cost at 31 March 63.4 71.0
Aggregate impairment at 1 April 6.2 7.5
Impairment charge for the year – –
Difference on exchange 0.5 (1.3)
Aggregate impairment at 31 March 6.7 6.2
Net book value at 31 March 56.7 64.8
Goodwill is tested for impairment in accordance with IAS 36, Impairment of assets at least annually.
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to their business segment. The goodwill allocation
by CGU, summarised at segmental level, is disclosed in note 3.
The recoverable amount of goodwill for each CGU has been based on value in use as represented by the net present value of future
cash flows. Cash flows are projected forward for five years based on approved budgets and plans, beyond which they are inflated by a
GDP-based growth factor. They are then discounted using a discount rate based on the Group’s pre-tax discount rate based on nominal
weighted average cost of capital. The pre-tax discount rate used was 12.5% per annum.
The key assumptions used for each CGU are as follows:
Group
2008 2007
£m £m
5-year growth rate 8% – 15% 9% – 17%
Post-5-year growth rate 4% 4%
Taxation rate 12.5% – 40% 12.5% – 40%
As at 31 March 2008, based on these internal valuations, the recoverable value of goodwill required no impairment.
Introduction Reviews Governance Financial Statements Investor Information
WS Atkins plc Annual Report 2008