2011 Annual Report - Italcementi Group

2011 Annual Report
Presentation 4
General information 15
Annual Report Consolidated Annual Report Directors’ report 150
Extraordinary session Italcementi S.p.A. Annual Report Separate financial statements 239
4. Investments in subsidiaries and associates
The changes compared to December 31, 2010, were as follows:
(in thousands of euro)
At December 31, 2010 1,740,651
Acquisitions 55,825
Repayments ( 450)
Sales ( 14,551)
Impairment losses on financial assets ( 52,284)
Impairment losses on financial assets withdrawn from reserves ( 7,524)
At December 31, 2011 1,721,667
During the year the subsidiary Sicilfin S.r.l. incorporated the companies Silicalcite S.r.l., Italcementi Ingegneria
S.r.l., Intertrading S.r.l., Immobiliare Salesiane S.r.l. and Imes S.r.l. and changed its business name to
Italcementi Ingegneria S.r.l.; the values of these equity investments were, therefore, combined.
Acquisitions refer mainly to the payment to replenish losses at Nuova Sacelit S.p.A. and to the increase in the
share capital of Calcestruzzi S.p.A., for, respectively, 5,000 thousand euro and 50,787 thousand euro.
Repayments refer to the partial return of the share capital by Sirio S.p.A..
Sales include the sale of the equity investment in Axim Italia S.p.A. at a sale price of 15,203 thousand euro, for
which a net gain of 1,633 thousand euro was posted under finance income.
Investments in subsidiaries and associates are tested for impairment if evidence of impairment emerges, by
comparing carrying amount with recoverable amount. The methods used to determine recoverable amount are
described in the accounting policies in the section “Impairment losses on assets”.
The value configuration used to determine the recoverable amount of equity investments is value in use, that
is, fair value less costs to sell, with reference to comparable transactions.
The value in use of each equity investment is determined on the basis of 2012 budget data and on the
discounted projection of expected future cash flows, taking account of changes in operating assets, net of the
effects of investments for additions or restructuring. The observation period varies between five to nine years
according to the characteristics of the markets on which the Group companies operate. The terminal value is
calculated on the basis of the discounted cash flows for the last year. The growth rate is based on the forecast
long-term growth of the relevant industrial sector of the country and on the estimated long-term inflation rate.
The estimate assumes a growth rate, for operations in Italy, equivalent to the long-term inflation rate (2%). The
pre-tax discount factor used to calculate the present value of expected cash flows for operations in Italy is
8.9%.
The aforementioned discount and growth rates are supported by previous experience and are in line with
those in use in the sector.
Impairment testing highlighted the need to impair the investments in Calcementi Jonici S.p.A. for 1,767
thousand euro, Nuova Sacelit S.p.A. for 10,021 thousand euro, International City for Ready Mix for 1,843
thousand euro, Azienda Agricola Lodoletta S.r.l. for 285 thousand euro, on the basis of estimated value in use,
and to apply an adjustment to the carrying amount of Calcestruzzi S.p.A. for 45,892 thousand euro, of which
38,368 thousand euro was expensed and 7,524 thousand euro taken from the reserve, on the basis of fair
value inferred from market transactions, determined with the assistance of a fair value opinion issued by an
independent professional.
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