D’IETEREN ANNUAL REPORT 2010
86
FINANCIAL REPORT
NOTE 11: GOODWILL EUR million
2010
2009
Carrying amount at 1 January
939.8
852.0
Additions
26.5
15.2
Increase arising from put options granted to non-controlling shareholders (see note 33)
25.8
71.0
Adjustments
-6.3
-1.5
Translation differences
18.8
3.1
1,004.6
939.8
Carrying amount at 31 December
The additions arising from business combinations that occurred in the period are detailed in note 12. The increase arising from put options comprise the additional goodwill recognised at year end to reflect the change in the exercise price of the remaining options granted to non-controlling shareholders and the carrying value of non-controlling interest to which they relate (see note 33). In 2009, the increase arising from put options also comprised the additional goodwill related to the exercise by Cobepa on 1 September 2009 of its put options (16.35% of Belron’s equity capital). The adjustments result from subsequent changes in the fair value of the net assets (mainly recognition of US intangibles with finite useful lives – see note 13) and subsequent changes in the deferred consideration payable in relation to the acquisitions performed in 2009 by the Vehicle Glass segment. In accordance with the requirements of IAS 36 “Impairment of Assets”, the Group completed a review of the carrying value of goodwill and of the other intangible assets with indefinite useful lives (see note 13) as at each year end. The impairment review, undertaken by calculating value in use, was carried out to ensure that the carrying value of the Group’s assets are stated at no more than their recoverable amount, being the higher of fair value less costs to sell and value in use. In determining the value in use, the Group calculated the present value of the estimated future cash flows expected to arise from the continuing use of the assets using pre-tax discount rates in the range from 8% to 9% (2009: from 7% to 9%). The discount rate applied is based upon the weighted average cost of capital of each segment with appropriate adjustment for the relevant risks associated with the businesses. Estimated future cash flows are based on long-term plans (i.e. over 4 or 5 years) for each cashgenerating unit, with extrapolation thereafter based on long-term average growth rates for the individual cash-generating units. This growth rate is in the range from 2% to 4% (2009: 2% to 4%) for most of the units, including the ones that carry the most significant goodwill and intangible assets with indefinite useful lives. Future cash flows are estimates that are likely to be revised in future periods as underlying assumptions change. Key assumptions in supporting the value of goodwill and intangible assets with indefinite useful lives include long-term interest rates and other market data. Should the assumptions vary adversely in the future, the value in use of goodwill and intangible assets with indefinite useful lives may reduce below their carrying amounts. Based on current valuations, headroom appears to be sufficient to absorb a normal variation in the underlying assumptions.