12 Intangibles (continued)
The Group tests goodwill for impairment on an annual basis, or more frequently if there are indications that the goodwill may be impaired. The recoverable amounts of the cash generating units are determined from value in use calculations. The key assumptions for the value in use calculations are the discount rate used for future cash flows and the anticipated future changes in revenue, direct costs and indirect costs. The assumptions used reflect the past experience of management and future expectations.
The Group prepares cash flow forecasts based on the most recent financial budgets approved by management and extrapolates these forward for the next five years with a residual value at the end of the five years. Changes in revenue and direct costs are based on past experience and expectations of future changes in the market.
The revenue growth rate used for impairment tests at 27 June 2015 was 3% (2014: 3%) for all cash generating units. This inflation rate of 3% (2014: 3%) has been applied to the 2016 budget and for the following five years on costs of sales, variable costs and indirect costs. The five year cashflow is taken along with a residual value at the end of the five year period.
A pre-tax discount rate of 10% (2014: 10%) has been used in these calculations. The Group has considered the economic environment and higher level of return expected by equity holders due to the perceived risk in equity markets when selecting the discount rate.
The discount rate used for each cash generating unit has been kept constant as the market risk is deemed not to be materially different between the different segments of the bakery sector, nor over time.
Sensitivity analyses have been carried out by the Directors and they are comfortable that at reasonable discount levels there are no indications of impairment. 13 Property, Plant and Equipment
buildings equipment £000
£000 Cost
Balance at 30 June 2013 Exchange adjustments Additions Transfers Disposals
Balance at 28 June 2014 Balance at 29 June 2014
Exchange adjustments
Assets acquired with subsidiary Additions Transfers Disposals
Balance at 27 June 2015
Depreciation and impairment Balance at 30 June 2013 Exchange adjustments
Depreciation charge for the financial period Disposals
Balance at 28 June 2014 Balance at 29 June 2014
Exchange adjustments Assets acquired with subsidiary
Depreciation charge for the financial period Disposals
Balance at 27 June 2015
Net book value At 29 June 2013 At 28 June 2014 At 27 June 2015
10,046 21,034 -
894 - -
5,050 226
(185)
10,940 26,125 10,940 26,125
-
(261) (22)
-
4,592 40,742 11
6,592 -
(316) 15,260 73,143
(3,106) (11,208) -
-
(233) -
(2,390) 185
-
2,240 194
2,301 2,301
(16) -
446 261
(139) 2,853
(1,717) 12
(211) 120
(3,339) (13,413) (1,796) (3,339) (13,413) (1,092) (21,659)
-
(333) 22
6,940 -
(4,801) 316
9,826
7,601 12,712 10,518 33,586
(1,796) 9 -
(299) 139
(4,742) (39,557) (1,947)
523 505 906
(11) - (122)
920 34,240 -
29
(226) -
(11)
6,167 -
(307)
723 40,089 723 40,089
-
305 - -
(16)
- 45,334 7,354 -
(477) 1,028 92,284
- (16,031) - - -
12
(2,834) 305
- (18,548) - (18,548) - (22,751) -
- -
9
(5,433) 477
- (46,246)
920 18,209 723 21,541 1,028 46,038
Land and
Plant and Fixtures and Assets under fittings construction £000
£000
Total £000
58
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