Vodafone Group Plc Annual Report for the year ended 31 March 2012

Vodafone Group Plc
Annual Report 2012 116
Notes to the consolidated financial statements (continued)
10. Impairment (continued)
Sensitivity to changes in assumptions
Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the
carrying value of any cash generating unit to exceed its recoverable amount.
31 March 2012
The estimated recoverable amounts of the Group’s operations in Italy, Spain, Greece and Portugal equalled their respective carrying values and,
consequently, any adverse change in key assumption would, in isolation, cause a further impairment loss to be recognised. The estimated
recoverable amounts of the Group’s operations in India and Romania exceeded their carrying values by approximately £2,060 million and £66
million respectively.
The table below shows the key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Germany Italy Spain Greece Portugal India Romania
% % % % % % %
Pre-tax adjusted discount rate 8.5 12.1 10.6 22.8 16.9 15.1 11.5
Long-term growth rate 1.5 1.2 1.6 1.0 2.3 6.8 3.0
Budgeted EBITDA 1 2.3 (1.2) 3.9 (6.1) 0.2 15.0 0.8
Budgeted capital expenditure 2 8.5–11.8 10.1–12.3 10.3–11.7 9.3–12.7 12.5–14.0 11.4–14.4 12.0–14.3
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial five years for all cash generating units of the plans used for impairment testing.
The table below shows, for India and Romania, the amount by which each key assumption must change in isolation in order for the estimated
recoverable amount to be equal to its carrying value.
Change required for carrying value to equal the recoverable amount
Pre-tax adjusted discount rate 1.1 0.3
Long-term growth rate (1.6) (0.4)
Budgeted EBITDA 1 (3.3) (0.6)
Budgeted capital expenditure 2 3.6 1.0
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as a percentage of revenue in the initial five years for all the cash generating units of the plans used for impairment testing.
The changes in the following table to assumptions used in the impairment review would, in isolation, lead to an (increase)/decrease to the aggregate
impairment loss recognised in the year ended 31 March 2012:
India
pps
Romania
pps
Italy Spain Greece Portugal
Increase Decrease Increase Decrease Increase Decrease Increase Decrease
by 2pps by 2pps by 2pps by 2pps by 2pps by 2pps by 2pps by 2pps
£bn £bn £bn £bn £bn £bn £bn £bn
Pre-tax adjusted discount rate (2.22) 2.45 (1.42) 0.90 (0.03) 0.06 (0.23) 0.25
Long-term growth rate 2.45 (2.16) 0.90 (1.31) 0.04 (0.01) 0.25 (0.18)
Budgeted EBITDA 1 1.70 (1.64) 0.30 (0.28) 0.04 (0.01) 0.22 (0.20)
Budgeted capital expenditure 2 (1.00) 0.94 (0.93) 0.90 (0.05) 0.07 (0.13) 0.14
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial five years for all cash generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as a percentage of revenue in the initial five years for all cash generating units of the plans used for impairment testing.
31 March 2011
The estimated recoverable amounts of the Group’s operations in Italy, Spain, Greece, Ireland and Portugal equalled their respective carrying values
and, consequently, any adverse change in key assumptions would, in isolation, cause a further impairment loss to be recognised. The estimated
recoverable amounts of the Group’s operations in Turkey, India and Ghana exceeded their carrying values by approximately £1,481 million,
£977 million and £138 million, respectively.
The table below shows the key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Italy Spain Greece Ireland Portugal Turkey India Ghana
% % % % % % % %
Pre-tax adjusted
discount rate 11.9 11.5 14.0 14.5 14.0 14.1 14.2 20.8
Long-term growth rate 0.8 1.6 2.0 2.0 1.5 6.1 6.3 6.3
Budgeted EBITDA 1 (1.0) – 1.2 2.4 (1.2) 16.8 16.5 41.4
Budgeted capital
expenditure 2 9.6–11.3 7.8–10.6 10.7–12.3 9.4–11.6 12.4–14.1 10.0–16.6 12.9–22.7 7.3–41.3
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans used for impairment testing.
2 Budgeted capital expenditure is expressed as the range of capital expenditure as a percentage of revenue in the initial ten years for Turkey and Ghana and the initial five years for all other cash generating units of the plans
used for impairment testing.