49 / 158
LISI 2016 FINANCIAL REPORT
49
–
–
the goodwill of the CGUs in an operating sector was reassigned to
operating sector level, therefore still ensuring compliance with the
provisions of IAS 36.80 (b);
–
–
the tests on the non-current assets, excluding goodwill, are always
carried out at CGU level;
–
–
no modification was made to the sectoral information presented in
application of IFRS 8.
Furthermore, this change in methods does not alter the conclusions
of the impairment test. In fact, based on the former distribution, the
tests would not have given rise to an impairment being observed.
The net values of the goodwill is divided at December 31, 2016 as follows
(in €’000)
LISI AEROSPACE
LISI AUTOMOTIVE
LISI MEDICAL
LISI total
Net goodwill
144.6
61.6
94.2
300.4
Intangible fixed assets
with an indefinite useful life
None
None
None
None
Trademarks
None
1.6
None
1.6
Result of the impairment test
No sign of impairment
No sign of impairment
No sign of impairment
Key assumptions
Cash flow within one year
Forecasts
Cash flow within four years
4-year strategic plan
4-year strategic plan
4-year strategic plan
Discount rate after tax
6.66%
8.15%
4.77%
Growth rate of flows not covered by
the budget and strategic assumptions
2.00%
2.00%
1.90%
On the basis of the same distribution, the net values of the goodwill was divided at December 31, 2015 as follows
(in €’000)
LISI AEROSPACE
LISI AUTOMOTIVE
LISI MEDICAL
LISI total
Net goodwill
149.9
61.6
48.8
260.3
Intangible fixed assets
with an indefinite useful life
None
None
None
None
Trademarks
None
2.4
None
2.4
Result of the impairment test
No sign of impairment
No sign of impairment
No sign of impairment
Key assumptions
Cash flow within one year
Forecasts
Cash flow within four years
4-year strategic plan
4-year strategic plan
4-year strategic plan
Discount rate after tax
6.74%
7.92%
6.66%
Growth rate of flows not covered by
the budget and strategic assumptions
2.00%
1.80%
1.90%
In accordance with IAS 36 “Impairment of Assets”, goodwill was
tested for impairment on December 31, 2016.
These tests, in accordance with Note 2.2.8.5, were conducted for
each CGU corresponding to the divisions. The combinations of
cash generating units (CGU) are determined in accordance with the
operational reporting and their recoverable values on the basis of a
calculation of utility value. Each utility value is calculated based on the
discounting, at the rates mentioned below, of the forecast operating
cash flows after taxes. The projections of cash flow are determined
based on budget data and the four-year strategic plans approved by
the Board of Directors.
Beyond the fifth year, the terminal value is calculated on the basis
of a capitalization to infinity of the cash flows. The key assumptions
relate in particular to the evolution of sales based on the order book
and the master contracts signed by the Group, if applicable, the
operating profit rate, the renewal capex rate, and the determination
of factors that may affect the working capital. The assumptions are
in particular established on the basis of observations made during
previous activity cycles in the various lines of business, as well as in
external market surveys and the observation of the sensitivity of the
contractual data for the environment of each division. It is specified
that these assumptions are the best estimate possible of the market
situation at the time they were prepared, and that they take into
consideration the market trends for the years 2017 to 2020.
The determination of the infinite growth rate and the discounting rates
used on the different combinations of CGUs was carried out by an
independent expert.
CONSOLIDATED FINANCIAL STATEMENTS
3