NOTES TO THE FINANCIAL STATEMENTS
15. GOODWILL
£m |
|
At 1 April 2008 |
235.9 |
Recognised on acquisition of subsidiaries |
0.6 |
At 31 March 2009 |
236.5 |
Disposals |
(0.6) |
Recognised on acquisition of subsidiaries (note 38) |
18.5 |
At 31 March 2010 |
254.4 |
Carrying amount: |
|
At 31 March 2009 |
236.5 |
At 31 March 2010 |
254.4 |
Goodwill acquired in a business combination is allocated at acquisition to the cash-generating unit (CGU) expected to benefit from that business combination. All of the carrying amount of goodwill is allocated to the waste management segment which is considered to be a single CGU, as it is an integrated business.
Goodwill is reviewed annually or when other events or changes in circumstance indicate that the carrying amount may not be fully recoverable.
The recoverable amount of the waste management segment 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 based on growth rates and margins achieved historically and expectations for market development. Beyond this period long-term growth rates for the waste sector are based on UK Gross Domestic Product. The cash flows have been discounted using a pre-tax discount rate of 12.5% (2009 12.5%) which reflects the overall business risks associated with the waste management segment activities.