Notes to the accounts
- 01. New Accounting Standards
- 02. Segmental Analysis and Results Presentation
- 03. Other Operating Income
- 04. Operating Costs
- 05. Directors and Employees
- 06. Disposals, Re-measurements and Impairments
- 07. Finance Income and Costs
- 08. Taxation
- 09. Dividends
- 10. Earnings Per Ordinary Share
- 11. Goodwill
- 12. Other Intangible Assets
- 13. Property, Plant and Equipment
- 14. Investments
- 15. Business Combinations
- 16. Inventories
- 17. Trade and Other Receivables
- 18. Cash and Cash Equivalents
- 19. Assets Held for Sale
- 20. Borrowings
- 21. Financial Instruments
- 22. Trade and Other Payables
- 23. Provisions for Other Liabilities and Charges
- 24. Deferred Tax
- 25. Called Up Share Capital
- 26. Statement of Changes in Shareholders’ Equity
- 27. Commitments and Contingencies
- 28. Related Party Transactions
- 29. Pensions and Post-retirement Benefits
- 30. Notes To The Consolidated Cash Flow Statement
- 31. Principal Subsidiary Undertakings, Joint Ventures and Associates
11 GOODWILL
| THE GROUP | 2007 £m |
2006 £m |
|---|---|---|
| Cost and net book value as at 1 January | 328 | 342 |
| Currency translation adjustments | 57 | (14) |
| Cost and net book value as at 31 December | 385 | 328 |
As at 31 December 2007, the majority of the goodwill recognised related to Comgas, which is classified within the Transmission and Distribution (T&D) segment and was defined as a cash generating unit (CGU) for impairment testing purposes. The Group tests goodwill annually for impairment or more frequently if there are indications that it might be impaired. No goodwill impairment has been recognised.
The recoverable amount of the CGU is determined from the value in use calculations, using cash flow projections based on approved financial plans covering a five year period. The growth rate assumptions used in the plans were based on past performance and management’s expectations of market development. The annual growth rates in the business plan used to determine cash flows beyond the five year period are between 5% and 9% and do not exceed the average long‑term growth rate for the relevant markets.
The projected cash flows were discounted using a nominal rate of 8% to arrive at value in use. The discount rate used is pre-tax and reflects risks relating to the T&D segment.