Vodafone 2016 Annual Report Download - page 104

Vodafone Group Plc
Annual Report 2016
102
Notes to the consolidated nancial statements (continued)
4. Impairment losses (continued)
Sensitivity analysis
Other than as disclosed below, management believes that no reasonably possible change in any of the above key assumptions would cause the
carrying value of any cash-generating unit to materially exceed its recoverable amount.
The estimated recoverable amounts of the Group’s operations in Romania, Germany and Spain are equal to, or not materially greater than, their
carrying values; consequently, any adverse change in key assumptions would, in isolation, cause a further impairment loss to be recognised.
The estimated recoverable amounts of the Group’s operations in Germany and Spain exceed their carrying values by £1.6 billion and
£0.8 billion respectively.
Change required for carrying value to equal the recoverable amount
Germany Spain
pps pps
Pre-tax risk adjusted discount rate 0.5 0.6
Long-term growth rate (0.5) (0.8)
Budgeted EBITDA1(0.9) (1.2)
Budgeted capital expenditure24.4 4.8
The changes in the following table to assumptions used in the impairment review would have, in isolation, led to an (increase)/decrease to the
aggregate impairment loss recognised in the year ended 31 March 2016.
Romania
Increase by 2pps Decrease by 2pps
£bn £bn
Pre-tax risk adjusted discount rate (0.2) 0.3
Long-term growth rate 0.3 (0.1)
Budgeted EBITDA1 0.2 (0.2)
Budgeted capital expenditure2 – –
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ve years for all cash-generating units of the plans used for impairment testing.
2 Budgeted capital expenditure, which excludes licences and spectrum, is expressed as the range of capital expenditure as a percentage of revenue in the initial ve years for all cash-generating
units of the plans used for impairment testing.
Year ended 31 March 2015
During the year ended 31 March 2015, no impairment charges were recorded in respect of the Group’s goodwill balances.
The table below shows key assumptions used in the value in use calculations.
Assumptions used in value in use calculation
Germany Italy Spain
% % %
Pre-tax risk adjusted discount rate 8.2 10.5 9.8
Long-term growth rate 0.5 1.0 1.5
Budgeted EBITDA13.2 0.8 11.0
Budgeted capital expenditure211.6–21.7 12.5–25.6 11.5–23.3
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ve years for all cash-generating units of the plans used for impairment testing.
2 Budgeted capital expenditure, which excludes licences and spectrum, is expressed as the range of capital expenditure as a percentage of revenue in the initial ve years for all cash-generating
units of the plans used for impairment testing.
Sensitivity analysis
Other than as disclosed below, management believed that no reasonably possible change in any of the above key assumptions would cause the
carrying value of any cash-generating unit to materially exceed its recoverable amount.
The estimated recoverable amounts of the Group’s operations in Germany, Italy and Spain exceeded their carrying values by £2.2 billion, £1.3 billion
and £0.3 billion respectively.
Change required for carrying value to equal the recoverable amount
Germany Italy Spain
pps pps pps
Pre-tax risk adjusted discount rate 0.8 1.6 0.3
Long-term growth rate (0.9) (1.8) (0.3)
Budgeted EBITDA1(7.3) (7.5) (2.6)
Budgeted capital expenditure22.1 2.9 0.7
Notes:
1 Budgeted EBITDA is expressed as the compound annual growth rates in the initial ve years for all cash-generating units of the plans used for impairment testing.
2 Budgeted capital expenditure, which excludes licences and spectrum, is expressed as a percentage of revenue in the initial ve years for all cash-generating units of the plans used for
impairment testing.