Financial Statements
13 Other non-current assets
| Other investments £m |
Intangible assets £m |
Goodwill £m |
|
|---|---|---|---|
| At 1 April 2004 | 17 | ||
| Additions | 98 | 73 | |
| Disposals/depreciation/impairment | (5) | ||
| Revaluations | 43 | ||
| At 31 March 2005 | 153 | 73 | |
| At 1 April 2005 | 153 | 73 | |
| Additions | 3 | ||
| On corporate acquisition (see below) | 75 | 167 | |
| Revaluation | 92 | ||
| Amortisation | (10) | ||
| Impaired in the year | (240) | ||
| At 31 March 2006 | 248 | 65 |
Other investments include British Land's investment in Songbird Estates PLC which was acquired for £98m in June 2004 and valued by a major independent firm of Chartered Accountants on the basis of open market value at £233m as at 31 March 2006 (2005: £140m).
Intangible assets relate to fund management contracts which are amortised over the expected remaining life of each contract.
Goodwill at 31 March 2005 related to the Spirit aquisition of £28m and the Debenhams acquisition of £45m. Goodwill in 2006 arose on the acquisitions set out below.
On 18 April 2005 the Group purchased the remaining 50% of the issued share capital of the BLWest companies. The fair value of the consideration was £50m and there was no goodwill arising on acquisition.
On 28 July 2005 the Group acquired 100% of the issued share capital of Pillar Property PLC; the fair value of the consideration was £816m.
| Book value acquired | ||||||
| BL West Group of companies £m |
Pillar Property PLC £m |
Accounting policy adjustment £m |
Fair value adjustment £m |
Fair value to Group £m |
||
|---|---|---|---|---|---|---|
| Properties | 92 | 311 | 403 | |||
| Investment in unit trusts | 682 | 3 | 685 | |||
| Intangible assets – fund management contracts | 75 | 75 | ||||
| Other net current assets (liabilities) | 12 | (11) | (7) | (6) | ||
| Borrowings | (54) | (283) | (337) | |||
| Loan notes | (12) | (12) | ||||
| 50 | 687 | (4) | 75 | 808 | ||
| Deferred taxation (on units and intangible assets) | (86) | (23) | (109) | |||
| Goodwill | 167 | |||||
| 866 | ||||||
| Satisfied by: | ||||||
| Cash paid (total consideration) | 866 | |||||
| Repayment of: borrowings | 391 | |||||
| loan notes | 7 | |||||
| Total amounts payable | 1,264 | |||||
Acquisition accounting has been finalised for all recent acquisitions. Adjustments to increase the deferred tax liability of £50m, and to recognise other liabilities of £10m have been made to the provisional amounts previously disclosed for the Pillar acquisition.
The Group's revenue for the year ended 31 March 2006 would have been £1,277m if Pillar Property PLC and the BL West group of companies had been acquired on1 April 2005; its profit after taxation would have been £1,220m.
The Group's profit after tax of £1,249m for the year ended 31 March 2006 includes post acquisition profits of £176m for Pillar Property PLC, and £37m for the BL West group.
Goodwill has been tested for impairment by comparing the carrying value of the cash generating unit including goodwill to its recoverable amount. For the purpose of impairment testing, the Spirit portfolio, Debenhams portfolio and the investment in HUT, are each regarded as cash-generating units. The recoverable amount of each cash-generating unit is based on the fair value less costs to sell, with fair value being determined in the light of external property values. As a result of these impairment tests, a non-cash impairment charge of £240 million has been recognised to write off goodwill in full.
The Board's in principle decision to become a REIT will result in the derecognition of deferred tax provisions in the foreseeable future. Further, there has been a substantial rise in the values of the acquired assets. These two factors have given rise to the goodwill impairment.