Page 98 - Loomis Annual Report 2017

94
Notes – Group
Loomis Annual Report 2017
Goodwill is tested on an annual basis for impairment. When impairment is indicated, the impairment loss to be recognized is the amount by which the carrying amount exceeds the recov- erable amount. The recoverable amount is the higher of the
fair value less costs to sell and value in use. The value in use is the present value of the estimated future cash ows. The cash ows are based on nancial plans established by Group Man- agement and approved by the Board of Directors that normally cover a period of ve years. Cash ows beyond this period have been extrapolated using an estimated growth rate. Wher- ever possible, Loomis uses external sources of information, however, past experience is also important as there are no of - cial indexes or similar information that can be used directly as
a basis for assumptions and assessments made in connection with impairment testing.
The calculation of value in use is based on assumptions and assessments. The most important assumptions relate to organic growth, development of the operating margin, utilization of operating capital employed and the relevant WACC (weighted average cost of capital) rate used to discount future cash ows. The discount rates used are stated after tax and re ect spe- ci c risks that apply to the various cash generating units. The assumptions and assessments on which impairment testing is based are summarized below (broken down by Loomis’ operat- ing segments):
Goodwill
NOTE 16
SEK m
Dec. 31, 2016
5,437 14 –93 – 268 5,626
– –
– 5,626
Dec. 31, 2016
3,295 1,569 862 –99 5,626
Dec. 31, 2017
Opening balance
Acquisitions
Divestments
Reclassi cations
Translation differences
Closing accumulated balance
Opening impairment losses
Impairment losses for the year
Closing accumulated impairment losses
Closing residual value
SEK m
Goodwill distributed by operating segment:
USA
Europe
5,626
340
–351
5,615
–
–
–
–
Dec. 31, 2017
2,983
1,924
815
–107
5,615
%
Europe
USA International
Estimated growth rate beyond forecasted period
WACC*
International Other
Total
SEK m
Acquisition-related intangible assets
Dec. 31, 2016
2.01) (2.0) 5.9–25.6 2.0 (2.0) 7.8 2.0 (2.0) 8.7
Opening balance
Acquisitions
Divestments –53 Translation differences 29 Closing accumulated balance 654 Opening amortization –323 Amortization for the year –62 Disposal 12 Translation differences –20 Closing accumulated amortization –393 Closing residual value 261
Acquisition-related intangible assets primarily consist of contract portfolios.
1) For all cash generating units, except the Nordic countries, Turkey and Argentina, an annual estimated growth rate of 2.0 percent is used beyond the forecast period. As in previous year, a rate of 0 percent was used for the Nordic countries and a rate of 5 percent was used and for Turkey and Argentina.
Impairment testing of all cash-generating units was carried out in the third quarter of 2017, with the exception for the acqui- sions made during the year. The results of the impairment testing showed that there were no goodwill impairment losses to be recognized.
As of the balance sheet date, a sensitivity analysis of the estimated value in use was carried out in the form of a general reduction of 0.5 percentage points of the organic growth and operating margin for the forecast period, and a general increase in the WACC of 0.5 percentage points. The sensitivity analysis indicated that none of the adjustments individually generates a need for an impairment loss to be recognized in any cash gen- erating unit.
If current operating margins would be applied for the future years, and all other variables would remain unchanged, an impairment loss of goodwill would arise of SEK 49 million for one unit in Europe and SEK 229 million for one unit in Interna- tional.
*) The discount rate used in impairment testing is stated after tax.
672 6
654
154
–31
–
5,615
NOTE 17
Dec. 31, 2017
0
777
–393
–55
20
–
–428
Other intangible assets
349
NOTE 18
SEK m
Dec. 31, 2016
325 15 27 –27 43 6 388
–206 11 –39 –37 –3 –274 114
Dec. 31, 2017
Opening balance
Acquisitions
Capital expenditures Disposals/write-offs Reclassi cations
Translation differences
Closing accumulated balance
Opening amortization Disposals/write-offs
Amortization for the year Reclassi cations
Translation differences
Closing accumulated amortization Closing residual value
388
3
34
–54
–41
0
4
376
–274
44
0
–4
–274
Other intangible assets regards mainly to software licenses.
102