notes 11-15

A final dividend per equity share of 9.7p has been proposed for 2011 and, subject to shareholder approval, is payable on 7 June 2012. The proposed final dividend has not been accrued in these consolidated financial statements.

12 goodwill

(i) summary

The carrying value of goodwill at 31 December is allocated to cash generating units or groups of cash generating units (CGUs) as set out below.

(ii) impairment testing

The recoverable amounts of CGUs or groups of CGUs were determined based on value in use calculations at 31 December 2011. The cash flow projections used in these calculations are based on the Group’s financial budget for 2012, as approved by the board in December 2011, and the Group’s financial plans in respect of 2013 and 2014. As highlighted in the principal accounting policies, the calculation of value in use requires the use of estimates which, although based on management’s best knowledge, may ultimately differ from actual results.

Key assumptions

The key assumptions for the value in use calculations are:

1. Discount rates. The pre tax discount rates used in the value in use calculations are set out in the table below. These discount rates are derived from the Group’s pre tax weighted average cost of capital (WACC), as adjusted for the specific risks relating to each region in which the CGUs operate. The Group’s pre tax WACC fell by 1% due primarily to a fall in the underlying risk free rate.
   
   

   	2011 %	2010 %
   Europe	10	11
   US	10	11
   Brazil	13	15
   Russia	15	18
   China	13	14
   Egypt	20	21
   Mexico	14	16

2. Growth rates. Cash flows beyond the three year planning horizon have been extrapolated using growth rates ranging between 1.6% and 7.5%. The growth rates used do not exceed the medium to long term GDP growth rates relating to each region in which the CGUs operate.
3. Operating profit. Forecasts for sales and margins are based on analyses of sales, markets, costs and competitors. Consideration is given to past experience and knowledge of future contracts. Forecasts for aluminium and resin are based on forward prices and time projections after taking into account pass through of costs and hedging. Forecasts for other raw materials and energy are based on inflation forecasts and supply and demand factors.

Sensitivities

The recoverable amount of the goodwill allocated to the Personal Care CGUs was calculated using discount rates between 10% and 13% and growth rates between 1.6% and 7.5% to reflect the different regions in which the CGUs operate. A comparison of the recoverable amount with carrying value gave rise to minimal goodwill headroom. A 1% increase in discount rates would reduce the recoverable amount by approximately £60m. Similarly, a 1% decrease in either growth rates or operating profit would reduce the recoverable amount by approximately £70m and £10m, respectively.

With respect to all other CGUs or groups of CGUs, management considers that no reasonably possible change in any of the key assumptions would cause the recoverable amount of goodwill to fall below carrying value.

13 other intangible assets

The impairment of £4m in 2011 comprises the write off of certain software licenses. The impairment of £65m in 2010 related to the discontinued Closures division.

14 property, plant and equipment

The carrying value of property, plant and equipment includes finance leased assets of £33m (2010: £34m) in respect of property and £nil (2010: £1m) in respect of plant and equipment.

Of the impairment of £9m in 2011, £5m relates to the write down of assets on conversion from steel to aluminium in the Indian beverage cans business and £4m relates to write downs of assets in Plastic Packaging in respect of previously announced plant closures and restructuring in some of the remaining continuing businesses following disposal of the Closures division. In 2010 the impairment of £61m comprised £6m on continuing operations and £55m in respect of the discontinued Closures division. Of the £6m from continuing operations, £5m related to the write down of assets on conversion of plants from steel to aluminium in the European beverage cans business and £1m related to over capacity in the Mexican beverage cans business.

The reversal of impairment of £1m in 2011 is an over provision relating to the write down of assets on conversion from steel to aluminium in a Spanish beverage cans plant. The reversal of impairment in 2010 of £3m related to the North American plastic packaging business whereby the proceeds from the sale of assets were higher than previously expected.

15 investments in subsidiaries

The principal subsidiaries, all of which are wholly owned, are shown below. An asterisk indicates that the capital is directly owned by Rexam PLC. Subsidiaries incorporated in the UK are registered in England and Wales. All subsidiaries are included in the consolidated financial statements.