Note 10
10. Goodwill
| £m |
|---|---|
Cost |
|
At 31 March 2008 | 154.1 |
Acquisition – through business combination | 3.9 |
Disposals | (1.7) |
At 29 March 2009 | 156.3 |
|
|
At 31 March 2008 | 35.7 |
Impairment | 16.9 |
Disposals | (1.7) |
At 29 March 2009 | 50.9 |
| 105.4 |
Goodwill relates principally to the GMG Radio division.
During the year ended 29 March 2009, certain assets were tested for impairment in accordance with IAS 36 “Impairment of assets” and were found to be impaired. The recoverable amount of a CGU was determined based on a value-in-use calculation or market value. The value-in-use calculation used pre-tax cash flow projections based on the financial budgets approved by the Board for 2009/10 and formal business plans for a further two years. Cash flows beyond the three-year period were extrapolated using estimated growth rates. Management determine budgets and business plans based on past performance and its expectations of market development. The discount rates used were pre-tax and reflected specific risks relevant to the industry. Discount rates used ranged between 8.5% and 12% and were also benchmarked against comparable peers. An impairment charge of £16.9 million arose from these calculations.
During the year the Group completed the following non-material acquisitions:
– the acquisition of 100% of the ordinary share capital of ContentNext Media Inc.
– the acquisition of the remaining 50% of the ordinary share capital of Trafford Park Printers Limited.
Goodwill of £3.9 million resulted on acquisition as follows:
| Carrying values | Fair value | Fair value |
|---|---|---|---|
Net assets acquired |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 35.7 | (6.8) | 28.9 |
Intangible assets | – | 2.1 | 2.1 |
| 35.7 | (4.7) | 31.0 |
Current assets | 6.0 | – | 6.0 |
Current liabilities | (4.2) | – | (4.2) |
Deferred taxation | (1.0) | (1.2) | (2.2) |
Net current assets/(liabilities) | 0.8 | (1.2) | (0.4) |
Non-current – financial liabilities | (19.5) | – | (19.5) |
Non-current – retirement benefit liabilities | (2.6) | – | (2.6) |
Fair value of net assets | 14.4 | (5.9) | 8.5 |
Less: fair value of joint venture net assets – preacquisition, existing 50% of ordinary share capital held |
|
| (4.0) |
Fair value of net assets acquired |
|
| 4.5 |
Purchase consideration – net of cash acquired |
|
| 5.0 |
Purchase consideration – deferred |
|
| 0.5 |
Goodwill |
|
| 3.9 |
Negative goodwill credited to profit and loss account |
|
| (2.9) |
The fair values set out above contain certain provisional amounts which will be finalised no later than one year after the date of acquisition. Goodwill represents the synergies, assembled workforce, and future growth potential of the businesses acquired.
The fair value of the identifiable assets in respect of the acquisition of the remaining 50% of Trafford Park Printers Linited (TPP) have been stated at 100% of their value. An adjustment to reflect the 50% purchased has been made in the calculation of goodwill. Provisions of £19.2 million existed in respect of commitments to TPP in GMG subsidiary entities prior to its acquisition. These provisions have been reclassified to be consistent with full ownership of TPP on consolidation.
| £m |
|---|---|
Cost |
|
At 2 April 2007 | 144.4 |
Acquisitions – through business combinations | 9.7 |
At 30 March 2008 | 154.1 |
|
|
At 2 April 2007 | 9.1 |
Impairment | 26.6 |
At 30 March 2008 | 35.7 |
| 118.4 |
Goodwill relates principally to the GMG Radio division.
During the year ended 30 March 2008, certain GMG Radio assets were tested for impairment in accordance with IAS 36 “Impairment of assets” and were found to be impaired. The recoverable amount of a CGU was determined based on a value-in-use calculation or market value. The value-in-use calculation used pre-tax cash flow projections based on the financial budgets approved by the Board for 2008/09 and formal business plans for a further two years. Cash flows beyond the three-year period were extrapolated using estimated growth rates. Management determine budgets and business plans based on past performance and its expectations of market development. The discount rates used were pre-tax and reflected specific risks relevant to the industry. An impairment charge of £26.6 million arose from these calculations.
During the year the Group completed the following non-material acquisitions:
– the acquisition of 100% of the ordinary share capital of Kable Limited
– the acquisition of 100% of the ordinary share capital of Core Estates Limited
– the acquisition of 100% of the ordinary share capital of CFP Software Limited.
