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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
The Staffing CGU was identified as having a recoverable amount
lower than its carrying amount in 2016, which led to the recognition
of a €7.0 million impairment loss. Sensitivity analyses were performed
to measure the impact of changes in the main assumptions used for
calculating the impairment loss (WACC, EBITDA and perpetuity growth
rate).
The impacts of changes in scope of consolidation in 2016 are described
in Note 3.2 – Business combinations.
3.4 Impairment testing
The recoverable amount of the CGUs was calculated based on their
value in use. In order to determine value in use, the Group projects
the future cash flows that it expects to derive from each CGU. These
projections are based on four-year budgets and cash flows beyond this
four-year period are estimated by extrapolating the projections using a
perpetuity growth rate (see below). This growth rate must not exceed the
medium- to long-term average growth rate for the industry as a whole.
Future cash flows are discounted based on the weighted average cost
of capital (WACC) of each business segment.
The cash flows used were based on budget forecasts drawn up by the
operating management teams of each CGU when determining their
medium and long-term strategy. The Group applied a normative cost of
debt weighted for the Group as a whole and a cost of equity specific
to each country in order to determine the WACC (see table below).
The table below presents the main factors used for modelling the assumptions applied for the impairment tests:
2016
CGU
Perpetuity growth rate used for
extrapolating future cash flows
beyond the projection period
Discount rate
Global Product Solutions
1.5%
7.7%
Energy & Infrastructure
1.5%
8.0%
Staffing
1.0%
10.7%
If any impairment is identified based on the calculation of discounted
future cash flows and/or market values of the assets concerned, or if
there is a change in market conditions or in the cash flows that were
originally estimated, then previously recognised impairment losses may
need to be revised or modified.
A 1% (100 basis points) increase in the WACC, EBITDA and perpetuity
growth rate assumptions used for the impairment tests carried out on the
Global Product Solutions and Energy & Infrastructure CGUs would not
result in the recognition of an impairment loss for these CGUs.
NOTE 4
SEGMENT REPORTING
Operating segments are components of the Group about which separate
financial information is available that is evaluated regularly by Group
management in deciding how to allocate resources and in assessing
performance. Consequently, the Group has three operating segments:
Global Product Solutions (outsourced R&D), Energy & Infrastructure
(complex infrastructure engineering) and Staffing (worldwide assignment
of consultants specialised in Oil & Gas and other industrial sectors).
The main accounting policies used for operating segments are as
follows:
●
each segment has its own resources and may share certain resources
with other segments to create synergies. This sharing is carried out
through a reallocation of costs or through contractual relations
between different legal entities;
●
management costs that are directly attributable to the three operating
segments are allocated to each segment concerned;
●
the indicator, “EBITA including share of profit of equity-accounted
investees”, excludes non-recurring income and expenses.
Analysis by operating segment
Assets and liabilities allocated by operating segment correspond to
operating assets and liabilities used by each division in its operating
activities and which are directly attributable to the segment or can be
allocated to the segment on a reasonable basis. They correspond to:
●
goodwill, intangible assets and property, plant and equipment;
●
trade receivables, other receivables and other current assets;
●
trade payables, amounts due to suppliers of non-current assets, accrued
taxes and payroll costs, liabilities related to share acquisitions, short-
term provisions and other current liabilities.
ASSYSTEM
REGISTRATION DOCUMENT
2016
93