11. Intangible assets
| |
Goodwill |
|
Telecommunication
licences and other
|
|
Brands, customer
relationships and
technology |
|
Computer
software
|
a
|
Total |
|
| |
£m |
|
£m |
|
£m |
|
£m |
|
£m |
|
| Cost |
|
|
|
|
|
|
|
|
|
|
| At 1 April 2006 |
543 |
|
206 |
|
106 |
|
1,784 |
|
2,639 |
|
| Additions |
– |
|
– |
|
– |
|
807 |
|
807 |
|
| Disposals and adjustments |
– |
|
(15 |
) |
– |
|
(104 |
) |
(119 |
) |
Acquisitions through
business combinations |
296 |
|
4 |
|
12 |
|
12 |
|
324 |
|
| Exchange differences |
(20 |
) |
(10 |
) |
– |
|
(12 |
) |
(42 |
) |
|
|
|
|
|
|
|
|
|
|
|
| At 1 April 2007 |
819 |
|
185 |
|
118 |
|
2,487 |
|
3,609 |
|
| Additions |
– |
|
– |
|
– |
|
826 |
|
826 |
|
| Disposals and adjustments |
(62 |
) |
36 |
|
62 |
|
(181 |
) |
(145 |
) |
Acquisitions through
business combinations |
320 |
|
6 |
|
68 |
|
2 |
|
396 |
|
| Exchange differences |
11 |
|
39 |
|
– |
|
43 |
|
93 |
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 March
2008 |
1,088 |
|
266 |
|
248 |
|
3,177 |
|
4,779 |
|
|
|
|
|
|
|
|
|
|
|
|
| Amortisation |
|
|
|
|
|
|
|
|
|
|
| At 1 April 2006 |
|
|
62 |
|
11 |
|
658 |
|
731 |
|
| Charge for the
year |
|
|
11 |
|
13 |
|
360 |
|
384 |
|
| Disposals and adjustments |
|
|
(8 |
) |
– |
|
(73 |
) |
(81 |
) |
Acquisitions through
business combinations |
|
|
1 |
|
– |
|
7 |
|
8 |
|
| Exchange differences |
|
|
(7 |
) |
– |
|
(10 |
) |
(17 |
) |
|
|
|
|
|
|
|
|
|
|
|
| At 1 April 2007 |
|
|
59 |
|
24 |
|
942 |
|
1,025 |
|
| Charge for the
year |
|
|
12 |
|
43 |
|
424 |
|
479 |
|
| Disposals and adjustments |
|
|
31 |
|
– |
|
(164 |
) |
(133 |
) |
Acquisitions through
business combinations |
|
|
2 |
|
– |
|
2 |
|
4 |
|
| Exchange differences |
|
|
17 |
|
– |
|
32 |
|
49 |
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 March
2008 |
|
|
121 |
|
67 |
|
1,236 |
|
1,424 |
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying
amount |
|
|
|
|
|
|
|
|
|
|
| At 31 March
2008 |
1,088 |
|
145 |
|
181 |
|
1,941 |
|
3,355 |
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 March 2007 |
819 |
|
126 |
|
94 |
|
1,545 |
|
2,584 |
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Includes additions in 2008 of £720
million (2007: £741 million) in respect of internally developed computer
software. |
Impairment tests of goodwill
The group performs an annual goodwill impairment test,
based on cash generating units (CGUs). BT Global Services is a CGU. BT Retail
comprises four CGUs: Consumer; Business; Enterprises; and BT Ireland. These
are the smallest identifiable groups of assets that generate cash inflows that
have goodwill and are largely independent of the cash inflows from other groups
of assets. The group has made a number of acquisitions in recent years, all
of which have been fully integrated into the relevant line of business and CGU.
The group’s reorganisation has not impacted the group’s CGUs or the
allocation of goodwill.
Goodwill is allocated to the group’s CGUs
as follows:
| |
|
|
BT Retail |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
BT Global
Services £m |
|
Consumer
£m |
|
Business
£m |
|
Enterprises
£m |
|
BT Ireland
£m |
|
Total
£m |
|
| At 1 April 2006 |
488 |
|
– |
|
– |
|
39 |
|
16 |
|
543 |
|
Acquisition through business
combinations |
223 |
|
57 |
|
– |
|
16 |
|
– |
|
296 |
|
| Exchange differences |
(20 |
) |
– |
|
– |
|
– |
|
– |
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 1 April 2007 |
691 |
|
57 |
|
– |
|
55 |
|
16 |
|
819 |
|
Acquisition through business
combinations |
273 |
|
13 |
|
34 |
|
– |
|
– |
|
320 |
|
| Disposals and adjustments |
(39 |
) |
(23 |
) |
– |
|
– |
|
– |
|
(62 |
) |
| Exchange differences |
11 |
|
– |
|
– |
|
– |
|
– |
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At
31 March 2008 |
936 |
|
47 |
|
34 |
|
55 |
|
16 |
|
1,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The recoverable amount
of each 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 an estimated terminal
growth rate of 0%. This rate has been determined with regard to projected growth
rates for the specific markets in which the CGUs participate and is 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, adjusted for the different risk profile of
the individual CGUs. The discount rates applied were 10% and 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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