Notes to the Financial Statements

For the short period 1 April 2006 to 3 March 2007

15. GOODWILL

	Argos £m	Homebase £m	Total £m
At 1 April 2005	1,107.2	726.6	1,833.8
Additions	45.1	–	45.1
At 31 March 2006	1,152.3	726.6	1,878.9
At 1 April 2006 and 3 March 2007	1,152.3	726.6	1878.9

Goodwill is allocated to cash generating units (“CGUs”) at the level of each business segment. The recoverable amount of each of the business segments is determined based on value-in-use calculations. The key assumptions for the value-in-use calculation are those regarding discount rates and growth rates as well as expected changes to costs and selling prices. Management have estimated the discount rate taking account of the specific risks inherent within the Group’s retail businesses. Changes in selling prices and direct costs are based on past experience and expectations of future change in the markets. These calculations use cash flow projections based on financial budgets approved by management looking forward up to five years. Cash flows are extrapolated using estimated growth rates beyond the budget period. The key assumptions for the value-in-use calculations are:

a real growth rate of 2.25% which has been used to extrapolate cash flows beyond the budget period; and

a post tax discount rate of 7% applied to the cash flow projections which equates to a pre tax rate of approximately 10%.