Annual Report 2010 in PDF - BBA Aviation

8. Intangible assets – continued
The £1.0 million change to goodwill in 2009 on acquisitions in prior years arose as a result of the fnalisation of fair value exercises.
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to beneft
from the business combination. The carrying amount of goodwill had been allocated as follows:
2010 2009
£m £m
Flight Support:
ASIG (US, Europe and rest of world) 106.0 103.6
Signature US 222.0 216.5
Other – (several CGUs) 34.1 34.7
Aftermarket Services & Systems:
Dallas Airmotive 53.3 52.0
Ontic Engineering & Manufacturing 26.7 26.0
Other – (several CGUs) 42.9 42.1
485.0 474.9
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are
those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management
estimates discount rates using pre-tax rates that refect current market assessments of the time value of money and any risks specifc to the CGUs.
The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations
of future changes in the market.
The key assumptions in constructing the 2011-2013 plans were that:
— Signature, ASIG and ERO continue their gradual recovery in 2011 and beyond ;
— Legacy Support remains stable with modest revenue growth and operational improvements; and
— APPH will be relatively stable in 2011 with no further weakening followed by a gradual recovery, commencing during 2012.
The Group prepares cash fow forecasts derived from the most recent fnancial budgets approved by management for the next three years. Cash
fow projections beyond three years are based on internal management forecasts over the long-term business cycle and assume a growth rate
not exceeding gross domestic product for the respective countries. The rate used to discount the forecast cash fows for all CGUs is 10.3% and this
approximates to the Group’s weighted average cost of capital which is deemed applicable for all CGU’s, given the similarity of risk prof les.
Consolidated Financial Statements — 101