GOODWILL AND HARMONY?

摘要

In the year to 31 March 2009, goodwill impairment charges wiped over £50bn off the book value of FTSE 100 constituents. Since an already fragile economy was sent into a tailspin by the collapse of Lehman Brothers in September 2008, all but four of the FTSE 100 have published annual reports.rnThis has provided the opportunity to analyse the assumptions applied in goodwill impairment testing and the extent to which the economic malaise has impacted on the UK's largest companies.rnThe headline figure of over £50bn cumulative goodwill impairment charges is significant. It represents over 15% of the cumulative goodwill carried on the books of FTSE 100 companies and 6% of net asset value. And it is some 150 times greater than the goodwill impairment reported in the year to 31 March 2008. It has also served as a major drag on profit before tax, reducing the cumulative reported level by 36%. However, £50bn is relatively minor in the context of the fall in market value of FTSE 100 companies of some £373bn, or 23%, between their annual reporting dates.