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FINANCIAL STATEMENTS
6
CONSOLIDATED FINANCIAL STATEMENTS
The allocation of the carrying amount of goodwill by cash-generating unit (CGU) is shown below:
In millions of euros
31/12/2014
31/12/2015
Carrying
amount
Effect
of changes
in scope of
consolidation
Impairment
losses
recognised
during
the year
Currency
translation
differences
Carrying
amount
Accumulated
impairment
losses
at year-end
Global Product Services
89.9
4.2
–
0.4
94.5
13.5
Energy & Infrastructure
14.5
22.0
–
3.1
39.6
5.5
Staffing
20.1
–
(7.0)
–
13.1
7.0
TOTAL
124.5
26.2
(7.0)
3.5
147.2
26.0
The impairment losses recognised in 2015 concern the “Staffing” CGU.
Although measures have been put in place to diversify this CGU’s
operations, both in terms of geographic coverage and business sectors,
in view of its outlook the Group recorded a €7 million impairment loss
against the CGU’s assets during the year, which was recognised in
“Non-recurring income and expenses”.
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 five-year budgets and cash flows beyond this
five-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 established by
the operating management teams of each CGU when drawing up 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 used for the impairment tests:
2015
CGU
Perpetuity growth rate used
for extrapolating future cash flows
beyond the projection period
Discount rate
Global Product Services
1.50%
8.0%
Energy & Infrastructure
1.50%
8.2%
Staffing
1.00%
10.2%
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 rates used for the
impairment tests carried out on the Global Product Services and
Energy & Infrastructure CGUs would not result in the recognition of an
impairment loss for these CGUs.
The Staffing CGU was identified as having a recoverable amount
lower than its carrying amount in 2015, which led to the recognition
of a €7 million impairment loss. Sensitivity analyses were performed
to measure the impact of changes in the main assumptions used for
calculating the impairment loss.
The table below shows the difference between the recoverable amount
and carrying amount of the Staffing CGU, with brackets indicating
where the scenario concerned would lead to an impairment loss and
the figure presented corresponding to the amount of the impairment
loss (in millions of euros).
In millions of euros
Sensitivity to changes in WACC
and perpetuity growth rates
Sensitivity to changes in EBITDA, WACC
and perpetuity growth rates
WACC
(%)
Normative EBITDA rate
(%)
(1.0)% (0.5)% 0.0% 0.5% 1.0% (1.0)% (0.5)% 0.0% 0.5% 1.0%
Perpetuity growth rate
(%)
0.5% (4.8)
(6.4)
(7.8)
(9.0)
(10.2)
(9.7)
(8.6)
(7.8)
(7.1)
(6.6)
1.0% (3.7)
(5.4)
(7)*
(8.3)
(9.5)
(8.8)
(7.8)
(7)*
(6.2)
(5.7)
1.5% (2.4)
(4.3)
(5.9)
(7.4)
(8.7)
(7.9)
(6.8)
(5.9)
(5.3)
(4.8)
(1.0)% (0.5)% 0.0% 0.5% 1.0%
WACC
(%)
* Actual scenario, based on Management’s best estimate, used for measuring goodwill
impairment
.
ASSYSTEM
FINANCIAL REPORT
2015
98