Financial statements
NOTES TO THE FINANCIAL STATEMENTS
14. Goodwill
|
£m |
|
|
Cost: |
|
|
At 1 April 2008 |
235.9 |
|
Recognised on acquisition of subsidiaries |
0.6 |
|
At 31 March 2009 |
236.5 |
|
Recognised on acquisition of subsidiaries (note 36) |
18.5 |
|
Disposal |
(0.6) |
|
Adjustment arising from sale of shares in subsidiary undertaking |
(12.3) |
|
At 31 March 2010 |
242.1 |
|
Carrying amount: |
|
|
At 31 March 2009 |
236.5 |
|
At 31 March 2010 |
242.1 |
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating unit (CGU) expected to benefit from that business combination. The Group is considered to be a single CGU as it is a fully integrated business, therefore there is no further allocation of goodwill acquired.
Goodwill is reviewed annually or when other events or changes in circumstances indicate that the carrying amount may not be recoverable.
The recoverable amount is determined from value in use calculations. The key assumptions in those calculations relate to discount rates, cash flows, price increases and for landfill, the compaction rate. Cash flow projections are based on approved budgets and plans for the next five years and beyond this period on long-term growth rates for the Group based on UK Gross Domestic Product. The cash flows have been discounted using a pre-tax nominal discount rate of 12.5% (2009 12.5%) which reflects the overall business risks associated with the Group's activities.
On 26 March 2010 the Group disposed of 5% of the equity in Viridor Waste Management Limited to the ultimate parent, Pennon Group Plc, resulting in the derecognition of £12.3m of goodwill applicable to the transaction.