Financial Report and Registration Document 2010 - Groupe Seb

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CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The All-Clad CGU – including the trademark for €108.2 million and goodwill
for €64 million at 31 December 2010 – was tested for impairment by
comparing its carrying amount to its value in use, defi ned as the sum of
discounted future cash flows for the 5-year period covered by the business
plan. Terminal value was determined based on the expected future cash
flows to be derived from the assets in the last year of the plan. The main
actuarial assumptions used were as follows:
discount rate of 8.83%, down slightly on the 2009 rate of 9.02% and 2008
rate of 9.37%, due to the fall in risk-free rates;
long-term growth rate of 3%, in line with forecasts for the high-end
household equipment market, similar to the rate used since All-Clad was
acquired.
Following the test at 31 December 2010, an impairment loss of €14.7 million
was recorded in the consolidated fi nancial statements in addition to the
€20.4 million loss already booked in 2009. After the severe recession that
depressed demand in the United States in 2009, sales and other business
indicators began to show signs of recovery in 2010. However, All-Clad has
still not returned to the levels forecast in the initial business plan, which is
the reason for the additional goodwill impairment.
The sensitivity of test results to changes in the individual assumptions used in
2010 to determine the value in use of the All-Clad CGU assets is as follows:
a one-point decrease in the discount rate would mean that no impairment
loss would have been booked in 2010;
0.5- and 1-point increases in the discount rate would result in an additional
impairment loss of €12.7 million and €23.5 million, respectively;
a one-point decrease in the growth rate to perpetuity would result in an
additional impairment loss of €17.5 million;
a one-point decrease in operating margin in the last year of the business
plan – used to calculate terminal value – would result in an impairment
loss of €6.5 million.
as regards the sales trends for 2011-2015, Group management currently
considers the most probable scenario to be based on average annual
growth of 5.5%. Compared to these forecasts, a 10% downward revision
of forecast sales over the entire period would result in an additional
impairment loss of €37.1 million.
In 2008, impairment losses of €3.5 million were recognised respectively
on the Mirro WearEver brands (Mirro, WearEver and AirBake) and other
related intangible assets, following an impairment test of the Mirro WearEver
CGU (see Note 6), reflecting lower-than-expected profits and their impact
on the business plan for future years.
The carrying amount of these brands was €4.5 million at 31 December 2010.
The test performed at that date on the CGU that owns these brands did
not result in any impairment losses in addition to those booked previously.
The main actuarial assumptions used were as follows:
discount rate after tax of 8.83%;
long-term growth rate of 2%.
A 1-point increase in the discount rate or a 3% downward revision of forecast
sales for 2011-2015 would result in the carrying amount of the brands being
written down in full.
Impairment tests on other trademarks and goodwill in 2010, 2009 and 2008
did not result in the recognition of any impairment losses.
The carrying amount of the Supor CGU – including the brand for €91.6 million
and goodwill for €326.7 million – was compared to its market value at
31 December 2010, as ZJ Supor is listed on the Shenzen stock exchange
and there is a liquid market for its shares. At 31 December 2010, Supor’s
share price was RMB 23.9, while its carrying amount was RMB 13.
The Arno, Lagostina, Rowenta, Panex, Krups and Moulinex trademarks,
which are carried in the balance sheet at 31 December 2010 for €38.1 million,
€30.4 million, €23.2 million, €12.05 million, €7.8 million and €1.0 million
respectively, were tested by discounting estimated future royalty revenues
from the licensing of the trademarks. The main assumptions used in 2010
were as follows:
royalty rate: 2% to 5.5%, unchanged from 2009 and 2008;
discount rate after tax: 7.81% (Rowenta) to 14.56% (Arno) versus 8.30%
to 14.9% in 2009;
long-term growth rate: 1% to 3%, unchanged from 2009 and 2008.
For all of these assets, the sensitivity of value in use to different scenarios was
analysed for the period between 2011 and 2015, including their sensitivity
to a one-point increase in the discount rate and one-point decrease in the
growth rate to perpetuity. The decreases in value in use under each of these
simulations would not result in the recognition of any impairment losses on
trademarks in the balance sheet. The test margin on the Lagostina brand
would be reduced to zero if current 2010-2014 sales forecasts were reduced
by 28%.
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GROUPE SEB
FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010
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