47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 163
Strategic Report
Corporate Governance
Accounts
Impairment tests for goodwill and brands
For impairment testing, goodwill and brands are allocated to the cash-generating unit (CGU) representing the lowest level at which goodwill is monitored for internal
management purposes. The Group tests whether there has been any impairment of intangible assets on an annual basis or when there is an indication of impairment.
The recoverable amount of a CGU is based on value in use calculations. These calculations use pre-tax cash flow projections based on financial forecasts approved by
management which cover a six-year period. Cash flows beyond six years are extrapolated using the growth rates and other key assumptions noted below.
The aggregate carrying amounts of goodwill allocated to each CGU are:
Goodwill
£m
Brands
£m
Total
£m
21.0
14.4
1.0
1.9
3.3
41.6
43.0
6.8
8.4
16.9
12.0
87.1
64.0
21.2
9.4
18.8
15.3
128.7
Goodwill
£m
Brands
£m
Total
£m
21.0
14.4
1.0
1.9
3.3
41.6
43.0
6.8
8.4
16.9
12.0
87.1
64.0
21.2
9.4
18.8
15.3
128.7
Long-term
growth rate
%
Pre-tax
discount rate
%
Long-term
growth rate
%
Pre-tax
discount rate
%
3.0
3.0
3.0
3.0
3.0
11.4
11.4
13.4
11.4
11.4
3.0
3.0
3.0
3.0
1.9
10.7
10.7
10.7
10.7
4.4
At 25 January 2025
Rubicon
FUNKIN
MOMA
Boost
Rio Tropical
Total
At 28 January 2024
Rubicon
FUNKIN
MOMA
Boost
Rio Tropical
Total
Key assumptions for each CGU:
Rubicon
FUNKIN
MOMA
Boost
Rio Tropical
2024
2025
Key assumptions used in value in use calculations
The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:
• Volume growth rates – reflect management expectations of volume growth based on growth achieved to date, current strategy and expected market trends, and will
vary according to each CGU.
• Marginal contribution – being revenue less material costs and all other marginal costs that management considers to be directly attributable to the sale of a given product.
Marginal contribution is based on approved financial budgets. Key assumptions are made within these budgets about pricing, discounts and costs based on historical data,
current strategy and expected market trends.
• Advertising and promotional spend – financial budgets approved by management are used to determine the value assigned to advertising and promotional spend.
This is based on planned spend for year one and strategic intent thereafter.
• Raw material price, production and distribution costs, selling costs and other overhead inflation – based on approved financial budgets, which incorporate current material
coverage, current strategy and expected market trends.
• Discount rate – the discount rate reflects management’s estimate of post-tax cost of capital adjusted for the specific risks impacting on each operating unit. The estimated
pre-tax cost of capital is based on guidance provided by an independent third party to the Group.
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