NOTES TO THE CONSOLIDATED BALANCE SHEET 17 TO 29

17 Goodwill

The Group tests goodwill annually for impairment, or more frequently if there are indicators that goodwill might be impaired. The impairment recognised for the year was £35.1 million (2005 £2.7 million). Of the impairment for the year, £15.4 million relates to the exhibition division following a downturn in the consumer and gift markets it serves and £19.2 million relating to the national newspapers division.

When testing for impairment, the recoverable amounts for all the Group’s cash-generating units (CGUs) are measured at their value in use by discounting future expected cash flows. These calculations use cash flow projections based on management approved budgets and forecasts in the case of businesses acquired in the year, the cash flow projections are consistent with the business acquisition plans. Cash flows beyond the initial five-year period are extrapolated using a long-term growth rate. The cash flows are discounted at the Group’s weighted current cost of capital adjusted for the particular risks associated with each CGU. These assumptions have been used for all CGUs to which goodwill is allocated.

Goodwill arising on the acquisitions is attributable to the anticipated profitability relating to the distribution of the Group’s products in new and existing markets and anticipated operating synergies from the business combinations.

18 Other intangible assets

Intangible assets all have a finite life and are being amortised over their useful lives. Each year, the Group reviews the appropriateness of its intangible assets. The Group tests intangible fixed assets annually for impairment, or more frequently if there are indicators that intangible fixed assets might be impaired. The impairment recognised for the year was £24.1 million (2005 £2.6 million). Of the impairment for the year, £22.4 million relates to write down of radio licences following a softening of the markets they serve, £1.0 million relating to the national newspapers division and £0.8 million relating to the exhibitions division following a downturn in the consumer and gift markets they serve. The Group is satisfied that the carrying value at 1st October, 2006 remains recoverable in full.

When testing for impairment, the recoverable amounts for all the Group’s cash-generating units (CGUs) are measured at their value in use by discounting future expected cash flows. These calculations use cash flow projections based on management approved budgets and forecasts in the case of businesses acquired in the year, the cash flow projections are consistent with the business acquisition plans. Cash flows beyond the initial five-year period are extrapolated using a long-term growth rate. The cash flows are discounted at the Group’s weighted current cost of capital adjusted for the particular risks associated with each CGU.

The Group's material intangible assets are further analysed as follows:

19 Property, plant and equipment

The Group’s properties, other than its specialised buildings, were revalued at 30th September, 1994, on the basis of external valuations and are depreciated over their useful economic lives. Subsequent additions are carried at historical cost, less accumulated depreciation, in accordance with IAS 16 Tangible Fixed Assets. Specialised buildings, being those properties constructed specifically for use in the business, are carried at historical cost less accumulated depreciation.

Group fixed assets include assets in the course of construction as follows:

No depreciation was charged on assets in the course of construction during the year (2005 £Nil).

The net book value of Group plant and equipment includes £Nil (2005 £24.8 million) in respect of assets held under finance leases mainly held in a number of the Group’s provincial newspaper centres. Depreciation of £1.6 million (2005 £4.8 million) was charged on such assets in the year.

The historical cost and related depreciation of Group properties are set out below:

20 Investments in joint ventures and associates

Summarised income statement and balance sheet information in respect of the Group’s joint ventures analysed by business activity is set out below:

Information on principal joint ventures from the latest available accounts (all incorporated in Great Britain and registered and operating in England and Wales unless otherwise stated).

Summarised income statement and balance sheet information in respect of the Group’s associates analysed by business activity is set out below:

Information on principal associates from the latest available accounts (all incorporated and operating in Great Britain unless
otherwise stated).

Joint ventures have been accounted for under the proportionate consolidation method and associates under the equity method
using unaudited accounts to 1st October, 2006, provided in the case of listed associates that such information is public information at the latest practicable date for inclusion by the Group.

As part of a prior year transaction to acquire a 25% interest in George Little Management LLC, the Group received a preferred profit distribution of US$1.5 million for the first five years to November 2005. The purchase agreement included ‘put and call options’ for the balance of the shares. Details of these commitments are given in Note 40.

The Group has significant influence in Shopcreator plc and participates in its direction through board representation, even though its holding is below 20%.

21 Non-current assets – available for sale investments

The investments above represent investments in listed equity securities and unlisted securities, which are recorded as non-current assets unless they are expected to be sold within one year, in which case they are recorded as current assets. The investments in listed securities have no fixed maturity or coupon rate and the fair value of these investments is based on quoted market prices.

Since there is no active market upon which they are traded, unlisted equity securities are recorded at cost, as their fair values cannot be reliably measured.

Investments are analysed as follows:

The Group’s investment in XAP Corporation Inc has been impaired by £12.0 million (2005 £Nil) following a review of its carrying value.

Information on principal investments, taken from latest published accounts (incorporated in Great Britain unless stated otherwise).

22 Inventories

23 Trade and other receivables

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

24 Trading investments

The above investment represented the Group’s investment in Reuters Group plc ordinary share capital.

25 Cash and cash equivalents

26 Trade and other payables

The Directors consider that the carrying amount of trade and other payables approximates their fair value.

27 Current liabilities – current tax payable

28 Acquisition option commitments

The Group is party to a number of put options over the remaining minority and majority interests in its subsidiaries, joint ventures, associates and investments. IAS 39 Financial Instruments requires the recognition of acquisition liabilities. The Group has taken advantage of the transitional rules available under IAS 39 and hence the adoption of IAS 39 has no impact on accounting for financial derivatives for 2005. The effective date of adoption of IAS 39 is 3rd October 2005, the discounted present value of these options is £32.7 million (2005 £20.1 million). From 3rd October, 2005 onwards these discounts are unwound as a notional interest charge to the income statement.

29 Derivative financial instruments

The Group’s derivative financial instruments are summarised as follows:

The maturity profile of the Group’s derivative financial instruments is as follows: