Annual Report and Accounts 2006 - DCC plc

68notes to the financial statements3. Critical accounting estimates and judgementsThe Group’s main accounting policies affecting its results of operations and financial condition are set out on pages 58 to66. Judgements and assumptions have been made by management in applying the Group’s accounting policies in certainareas. Actual results may differ from the estimates calculated using these judgements and assumptions. Key sources ofestimation uncertainty and critical accounting judgements are as follows:GoodwillThe Group has capitalised goodwill of €234.7 million at 31 March 2006. Goodwill is required to be tested for impairmentat least annually or more frequently if changes in circumstances or the occurrence of events indicating potential impairmentexist. The Company uses the present value of future cash flows to determine implied fair value. In calculating the impliedfair value, management judgement is required in forecasting cash flows of reporting units, in estimating terminal growthvalues and in selecting an appropriate discount rate. No impairment resulted from the annual impairment test in 2006.Post-retirement benefitsThe Group operates a number of defined benefit retirement plans. The Group’s total obligation in respect of definedbenefit plans is calculated by independent, qualified actuaries, updated at least annually and totals €88.0 million. TheGroup also has plan assets totalling €67.3 million giving a net pension liability of €20.7 million for the Group. The size ofthe obligation is sensitive to actuarial assumptions. These include demographic assumptions covering mortality andlongevity, and economic assumptions covering price inflation, benefit and salary increases together with the discount rateused. The size of the plan assets is also sensitive to asset return levels and the level of contributions from the Group.4. Segment informationAnalysis by business segment and by geographyThe Group is analysed into five main business segments: DCC Energy, DCC SerCom, DCC Healthcare, DCC Food &Beverage and DCC Environmental.> DCC Energy markets and sells liquefied petroleum gas and oil products for commercial/industrial, transport anddomestic use in Britain and Ireland. DCC Energy also includes a fuel card services business.> DCC SerCom markets and sells a broad range of IT and entertainment products in Britain, Ireland and ContinentalEurope to computer resellers, high street retailers, computer superstores, on-line retailers and mail order companies.DCC SerCom also includes a supply chain management business.> DCC Healthcare markets and sells medical, surgical, laboratory, intravenous pharmaceutical, rehabilitation andindependent living products to the acute care, community care and laboratory sectors in Britain and Ireland. DCCHealthcare is also a leading provider of contract manufacturing services to the health and beauty industry in Europe.> DCC Food & Beverage markets and sells food and beverages in Ireland and wine in Britain. These include healthyfoods, snackfoods, fresh coffee and wine to a broad range of catering, convenience store, food service and multiplegrocer customers. DCC Food & Beverage is also a leading provider of frozen food distribution in Ireland.> DCC Environmental provides a broad range of waste management services to the industrial/commercial sectors inBritain and Ireland.Intersegment revenue is not material and thus not subject to separate disclosure.