Balance at 1 April 201430,0522,93932,991
Effect of movements in foreign exchange(629)(899)(1,528)
Balance at 31 March 201538,67810,14848,826
Balance at 1 April 201538,67810,14848,826
Acquisitions (see note 30)1,1873,6514,838
Effect of movements in foreign exchange1,5971,2142,811
Balance at 31 March 201641,46214,29455,756
Amortisation and impairment
Balance at 1 April 201413,7302,30216,032
Amortisation for the year551551
Effect of movements in foreign exchange105(24)81
Balance at 31 March 201513,8352,82916,664
Balance at 1 April 201513,8352,82916,664
Amortisation for the year974974
Effect of movements in foreign exchange190411601
Balance at 31 March 201614,0253,47217,497
Net book value
At 1 April 201416.32263716,959
At 31 March 201524,8437,31932,162
At 31 March 201627,43710,82238,259

The amortisation charge is recognised in administrative expenses in the income statement.

Other intangible assets are made up of:

  • Customer relationships acquired as part of the acquisition of PSEP. The remaining amortisation period left on these assets is 7.75 years
  • Customer relationships, technology know-how and technology patents acquired as part of the acquisition of VIC. The average remaining amortisation period on these assets is 11.28 years (maximum 13.17 years).
  • Customer relationships and order backlog acquired as part of the acquisition of Kuhlmann. The average remaining amortisation period on these assets is 9.01 years.

There were £nil impairments made during 2016 (2015: £nil).

The following cash generating units have significant carrying amounts of goodwill:

Special Fasteners Engineering Co. Ltd (Taiwan)9,7809,296
TR Fastenings AB (Sweden)1,0631,063
Lancaster Fastener Company Ltd (UK)1,2451,245
Serco Ryan Ltd (within TR Fastenings Ltd) (UK)4,0834,083
Power Steel and Electro-Plating Works SDN Bhd (PSEP) (Malaysia)753821
Viterie Italia Centrale (VIC) (Italy)9,0208,231
TR Kuhlmann GmbH (Germany)1,389

The Group tests goodwill annually for impairment. The recoverable amount of cash generating units is determined from value in use calculations.

Value in use was determined by discounting the future cash flows generated from the continuing use of the unit. In this method, the free cash flows after funding internal needs of the subject company are forecast for a finite period of four years based on actual operating results, budgets and economic market research. Beyond the finite period, a terminal (residual) value is estimated using an assumed stable cash flow figure.

The values assigned to the key assumptions represent management's assessment of future trends in the fastenings market and are based on both external and internal sources of historical data.

The recoverable amount of Special Fasteners Engineering Co. Ltd (Taiwan), Viterie Italia Centrale (Italy) and Serco Ryan Ltd (within TR Fastenings Ltd) (UK) have been calculated with reference to the key assumptions shown below:

Long term growth rate2.0%3.0%2.0%2.0%2.0%2.0%
Discount rate — post-tax8.8%9.6%9.6%11.3%8.2%8.9%
Discount rate — pre-tax10.6%11.6%13.9%16.5%10.2%11.1%

Long term growth rate

Four year management plans are used for the Group's value in use calculations. Long term growth rate into perpetuity has been determined as the lower of:

  • the nominal GDP rates for the country of operation
  • the long term compound annual growth rate in EBITDA in years six to ten estimated by management

Post-tax risk adjusted discount rate

The discount rate applied to the cash flows of each of the Group's operations is based on the Weighted Average Cost of Capital ('WACC') (using post-tax numbers). The cost of equity element uses the risk free rate for ten year bonds issued by the government in the respective market, adjusted for a risk premium to reflect both the increased risk of investing in equities and the systematic risk of the specific Group operating company.

In making this adjustment, inputs required are the equity market risk premium (that is, the increased return required over and above a risk free rate by an investor who is investing in the market as a whole) and the risk adjustment, beta, applied to reflect the risk of the specific Group operating company relative to the market as a whole.

In determining the risk adjusted discount rate, management has applied an adjustment for the systematic risk to each of the Group's operations determined using an average of the betas of comparable listed fastener distribution and manufacturing companies and, where available and appropriate, across a specific territory. Management has used a forward-looking equity market risk premium that takes into consideration studies by independent economists, the average equity market risk premium over the past ten years and the market risk premiums typically used by investment banks in evaluating acquisition proposals.

The table above discloses the discount rate on a post and pre-tax basis. This takes into account certain components such as the various discount rates reflecting different risk premiums and tax rates in the respective regions. Overall, the Board is confident that the discount rate adequately reflects the circumstances in each location and is in accordance with IAS36.

The £0.79m and £0.48m increase in the goodwill of VIC and SFE respectively refer to foreign exchange gains as these investments are held in Euros and Singapore Dollars.

The £0.07m decrease in the goodwill of PSEP refers to foreign exchange losses as this investment is held in Malaysian Ringgit.

Sensitivity to changes in assumptions

Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of any cash generating unit to exceed its recoverable amount.