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|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. INTANGIBLE ASSETS
|
| |
|
|
|
|
Brands, |
|
|
|
|
|
| |
|
|
|
|
customer |
|
|
|
|
|
| |
|
|
Telecommunication |
|
lists,
and |
|
Computer |
a |
|
|
| |
Goodwill |
|
licences
and other |
|
relationships |
|
software |
Total |
|
| |
£m |
|
£m |
|
£m |
|
£m |
|
£m |
|
|
| Cost |
|
|
|
|
|
|
|
|
|
|
| At
1 April 2004 |
202 |
|
9 |
|
– |
|
713 |
|
924 |
|
| Additions |
– |
|
– |
|
– |
|
319 |
|
319 |
|
| Disposals |
– |
|
(5 |
) |
– |
|
(81 |
) |
(86 |
) |
| Exchange
differences |
(3 |
) |
1 |
|
– |
|
3 |
|
1 |
|
| Acquisitions
through business combinations |
205 |
|
192 |
|
84 |
|
81 |
|
562 |
|
|
|
| At
1 April 2005 |
404 |
|
197 |
|
84 |
|
1,035 |
|
1,720 |
|
| Additions |
– |
|
– |
|
– |
|
449 |
|
449 |
|
| Disposals |
– |
|
– |
|
– |
|
8 |
|
8 |
|
| Exchange
differences |
18 |
|
8 |
|
– |
|
8 |
|
34 |
|
| Acquisitions
through business combinations |
121 |
|
1 |
|
22 |
|
16 |
|
160 |
|
|
|
| At
31 March 2006 |
543 |
|
206 |
|
106 |
|
1,516 |
|
2,371 |
|
|
|
| Amortisation |
|
|
|
|
|
|
|
|
|
|
| At
1 April 2004 |
|
|
7 |
|
– |
|
289 |
|
296 |
|
| Acquisitions |
|
|
38 |
|
– |
|
45 |
|
83 |
|
| Disposals |
|
|
– |
|
– |
|
(65 |
) |
(65 |
) |
| Charge
for the year |
|
|
6 |
|
– |
|
144 |
|
150 |
|
| Exchange
differences |
|
|
– |
|
– |
|
2 |
|
2 |
|
|
|
| At
1 April 2005 |
|
|
51 |
|
– |
|
415 |
|
466 |
|
| Charge
for the year |
|
|
9 |
|
11 |
|
229 |
|
249 |
|
| Acquisitions |
|
|
– |
|
– |
|
15 |
|
15 |
|
| Disposals |
|
|
– |
|
– |
|
(8 |
) |
(8 |
) |
| Exchange
differences |
|
|
2 |
|
– |
|
6 |
|
8 |
|
|
|
| At
31 March 2006 |
|
|
62 |
|
11 |
|
657 |
|
730 |
|
|
|
| Carrying
amount |
|
|
|
|
|
|
|
|
|
|
| At
31 March 2006 |
543 |
|
144 |
|
95 |
|
859 |
|
1,641 |
|
|
|
| At
31 March 2005 |
404 |
|
146 |
|
84 |
|
620 |
|
1,254 |
|
|
|
| a |
Includes additions in 2006 of £401 million (2005: £265 million) in respect of internally developed computer software. |
| |
Impairment tests of goodwill |
Goodwill is not amortised but tested for impairment at least annually. For the purpose of impairment testing the group’s cash generating units are considered to be the business segments. Goodwill has been allocated to cash generating units as follows:
| |
2006 |
|
2005 |
|
| |
£m |
|
£m |
|
|
|
|
BT
Global Services
|
488 |
|
360 |
|
|
BT
Retail
|
55 |
|
44 |
|
|
|
| |
543 |
|
404 |
|
|
|
The recoverable amount of each cash generating unit (CGU) is based on value in use calculations. These are determined using cash flow projections derived from financial budgets approved by the board covering a five year period. They reflect management’s expectation of revenue growth, operating costs
and margin for each CGU based on past experience. Cash flows beyond the five year period have been extrapolated using estimated terminal growth rates ranging from 0% to 2%. These rates have been determined with regard to projected growth rates for the specific markets in which the CGU participates
and are not considered to exceed the long term average growth rates for those markets. Discount rates applied to the cash flow forecasts are derived from the group’s pre-tax weighted average cost of capital for non-regulated products of 11.4%.
The forecasts are most sensitive to changes in projected revenue growth rates in the first five years of the forecast period. However there is significant headroom and based on the sensitivity analysis performed we have concluded that no reasonably possible changes in the base case assumptions would
cause the carrying amount of the CGUs to exceed their recoverable amount.
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