nex-ar2015-full

Financial Statements
Notes to the Consolidated Accounts continued
For the year ended 31 December 2015
13 Intangible assets continued
The calculation of value in use for each group of cash-generating units is most sensitive to the assumptions over discount rates and the
growth rate used to extrapolate cash flows beyond the three-year period of the management plan.
The key assumptions used for the cash-generating units are as follows:
Pre-tax discount
rate applied to
cash flow projections
Growth rate used to
extrapolate cash flows
beyond five-year period of
management plan
2015 2014 2015 2014
UK Coach 8.2% 8.5% 2.2% 2.0%
North America 8.1% 8.6% 2.8% 2.5%
Spain and Morocco 8.2% 8.5% 2.2% 2.0%
The value in use of the North America division exceeds its carrying amount by £455.1m (2014: £169.4m). Sensitivity analysis has been
completed on each key assumption in isolation, and this indicates that the value in use of the division will be equal to its carrying
amount following an increase in the pre-tax discount rate of 290 basis points (2014: 140 basis points) or a reduction in the growth rates
used to extrapolate cash flows beyond the three-year period of the management plan of 340 basis points (2014: 160 basis points).
The value in use of the Spain and Morocco division exceeds its carrying amount by £121.9m (2014: £107.1m). Sensitivity analysis
has been completed on each key assumption in isolation, and this indicates that the value in use of the division will be equal to its
carrying amount following an increase in the pre-tax discount rate of 80 basis points (2014: 70 basis points) or a reduction in growth
rates used to extrapolate cash flows beyond the three-year period of the management plan of 80 basis points (2014: 70 basis points).
For both Spain and Morocco and North America the headroom has increased as the increase in the asset base is more than offset
by future profit projections.
It is believed that any reasonably possible movement on key assumptions will not lead to an impairment of goodwill allocated to UK Coach.
Sensitivities to other assumptions
In North America, a reduction in operating profit margin of 320 basis points (2014: 160 basis points) will result in the value in use
of the division being equal to its carrying amount. In Spain and Morocco, a reduction in operating profit margin of 140 basis points
(2014: 110 basis points) will also result in the value in use of the division being equal to its carrying amount.
The Directors consider the assumptions used to be consistent with the historical performance of each cash-generating unit and
to be realistically achievable in light of economic and industry measures and forecasts.
134 National Express Group PLC Annual Report and Accounts 2015
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