ACCIONA, S.A. AND SUBSIDIARIES (Consolidated Group ...

Goodwill of companies
The Acciona Group's most significant amount of goodwill has been allocated to the Energy
Division and represents the value of the capacity for the business to grow at long term, primarily
in international markets. The other Subgroups that recognise goodwill relate mainly to
Transmediterránea, Compañía Urbanizadora del Coto, Acciona Facility Services, Acciona Agua
and Acciona Wind Power.
The impairment test takes into consideration the cash-generating units' overall capacity to
generate future cash flows. The Group prepares five-year forecasts of project cash flows,
including the best available estimates of the income and expenses of the cash-generating units
using industry projections, past experience and future expectations.
Also, a residual value is calculated on the basis of the normalised cash flows of the last year of the
forecast, to which a perpetuity growth rate is applied (in general, ranging from 0% to 2.5%) which
under no circumstances exceeds the growth rates of previous years. The cash flow used to
calculate residual value takes into account the replacement investments required for the continuity
of the business in the future at the estimated growth rate.
The weighted average cost of capital (WACC) is used to discount cash flows, which will depend
on the type of business and on the market in which it is carried on. WACC is calculated on the
basis of the average leverage ratio during the forecast period, generally establishing a range of +/-
10% of the estimated average ratio and, therefore, there are two tiers (maximum and minimum) of
discount rate that enable recoverable amount to be calculated in a reasonable interval.
Also calculated is: i) the effective cost of borrowings, which takes into account the tax shield that
they give rise to, based on the average tax rates in each country; and ii) the estimated cost of own
capital based on a risk-free interest rate, Beta (that takes into consideration the leverage ratio and
the risk of the asset), a market premium of 6% (estimated on the basis of the historical returns of
the capital markets and checked against recent studies and rates generally used by investment
banks), and a country-risk premium (that includes the risk differential between the various
markets).
The risk-free rate considered is the return on a 10-year bond in Spain. The high degree of
volatility of the returns on sovereign debt in recent times should be mentioned, with risk
premiums in 2011 that ranged between a minimum of approximately 60 basis points and a
maximum 460 basis points in the case of Spain. This volatility hinders the estimation of the riskfree
rate that serves as the basis for the discounting of long-term forecasts. The Group considered
an increase with respect to the rate applied in the valuations in 2010 to 5.6%.
Based on the foregoing, the range of discount rates applied to calculate impairment, by division
and country (the principal countries in which the Group operates were considered), was as
follows:
- Page 25 -