Notes 11 - 20

11 Dividends

The proposed final dividend for the year ended 29 January 2011 of 5.145p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

12 Goodwill

Impairment tests for goodwill

Goodwill has been allocated for impairment testing purposes to groups of cash generating units (‘CGUs’) as follows:

The recoverable amounts of these groups of CGUs have been determined based on value-in-use calculations. The groups of CGUs for which the carrying amount of goodwill is deemed significant are the UK and France. The key assumptions used for value-in-use calculations are set out below:

Assumptions

• The cash flow projections are based on financial budgets and strategic plans approved by the Board covering a five year period. These are based on both past performance and expectations for future market development.
• Key drivers in the plans are like-for-like (‘LFL’) sales, margin and operating profit percentage. LFL sales are based on the Group’s market expectations and the CGUs’ market shares.
• Cash flows beyond this five year period are calculated using a growth rate of 1.9% (2009/10: 1.9%) which does not exceed the long term average growth rate for retail businesses operating in the same countries as the CGUs.
• Working capital movements are included in the model, building in anticipated movements due to the level of trading and including reductions across the Group as part of the Delivering Value programme over the first three years.
• The weighted average cost of capital, used to discount future cash flows, is calculated using a combination of the cost of debt and the cost of equity balanced according to the Group’s level of financial gearing. A risk adjustment is then made for the country in which the CGU operates.

UK

• The risk-adjusted discount rate of 11.2% (2009/10: 11.3%) is pre-tax and reflects the specific risks inherent in the UK market. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill.

France

• The risk-adjusted discount rate of 11.4% (2009/10: 11.6%) is pre-tax and reflects the specific risks inherent in the French market. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill.

Poland

• The risk-adjusted discount rate of 12.7% (2009/10: 13.2%) is pre-tax and reflects the specific risks inherent in the Polish market. The Board do not consider that a reasonably possible change would lead to the recoverable amount being below the carrying amount of goodwill.

13 Other intangible assets

None of the Group’s other intangible assets have indefinite useful lives.

14 Property, plant and equipment

The amount of borrowing costs capitalised in property, plant and equipment in the year has been £1m (2009/10: £3m). The cumulative total of borrowing costs included at the balance sheet date, net of depreciation, is £25m (2009/10: £24m).

Land and buildings are analysed as follows:

Properties that were held at 1 February 2004 are carried at deemed cost, being the fair value of land and buildings as at the transition date to IFRS. Fair value is taken to be the open market value at the date of valuation. All property acquired after 1 February 2004 is carried at cost.

Included in land and buildings is leasehold land that is in effect a prepayment for the use of land and is accordingly being amortised on a straight line basis over the estimated useful life of the assets. The cost and depreciation of leasehold land included in land and buildings at 29 January 2011 are £264m and £54m (2009/10: £331m and £56m) respectively.

The Group does not revalue properties within its financial statements. A valuation exercise is performed for internal purposes annually in October by independent external valuers covering over one third of the property portfolio with the remaining portfolio valued internally. Based on this exercise the value of property is £3.3 billion (2009/10: £3.0bn). The key assumption used in calculating this is the estimated yields.

15 Investment property

A property valuation exercise is performed for internal purposes annually as described in note 14. Based on this exercise the fair value of investment property is £71m (2009/10: £52m).

16 Subsidiaries

A list of the significant investments in subsidiaries, including the name, country of incorporation and proportion of ownership interest is given in note 4 of the Company’s separate financial statements.

17 Investments in joint ventures and associates

No goodwill is included in the carrying amount of investments in joint ventures and associates (2009/10: £nil).

Details of the significant joint ventures and associates are shown below:

Aggregate amounts relating to joint ventures and associates:

18 Inventories

The cost of inventories recognised as an expense and included in cost of sales for the year ended 29 January 2011 is £6,089m (2009/10: £6,293m).

19 Trade and other receivables

Other receivables principally comprise rebates due from suppliers.

The fair values of trade and other receivables approximate to their carrying amounts. Refer to note 24 for information on the credit risk associated with trade and other receivables.

20 Cash and cash equivalents

Short term deposits comprise bank deposits and investments in money market funds, fixed for periods of up to three months. The fair values of cash and cash equivalents approximate to their carrying amounts.