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CONSOLIDATED FINANCIALSTATEMENTS
BarryCallebaut
Annual Report2010/11
Additions to development costs amount to CHF 28.9 million in fiscal year 2010/11
(2009/10: CHF 24.0 million). In both years,additions mainly included costs related to various
projects of internally generated software, amounting to CHF 21.3 million in fiscal year 2010/11
(2009/10: CHF 21.1 million). Costs related to the development of recipes and innovations of
CHF 2.6 million werecapitalized as development costs (2009/10: CHF 2.5 million).
During its annually performed review of the useful lives of assets,the Group has come to the
conclusion that certain strategic software related intangible assets have auseful life longer
than the previously used maximum term of five years. Consequently any new software
projects with aresidual value have been assessed and useful lives been adapted according to
outcome.The useful life span for software intangibles has therefore been increased to not
exceeding eight years.The effect of the reassessment of useful lives led to adecrease of the
amortization charge for fiscal year 2010/11 by CHF 2.2 million, which is accounted for as
achange in estimates in accordance with IAS 8.
The remaining amortization period for brand names varies between three and five years,for
licenses up to ten years, for software between two and eight years and for other including
patents between four and fourteen years.The amortization charge is included in the position
General and administration expenses in the Consolidated Income Statement.
Impairmenttesting forcash-generating units containing goodwill
The carrying amount of goodwill for the Group amounts to CHF 366.4 million (2009/10:
CHF 429.1 million). The allocation to the segments is as follows:
as of August 31, 2011 2010
in thousands of CHF
Global Sourcing &Cocoa 140.5 149.5
Europe (excluding discontinued operations for fiscal year 2010/11) 193.5 248.9
Americas 27.7 25.2
Asia-Pacific 4.7 5.5
Total 366.4 429.1
Goodwill acquired in abusiness combination is allocated to the respective segment that is
expected to benefit from the synergies of the combination, at acquisition date. Due to the
Group’s fully integrated business in the regions, the segments represent the lowest level
within the entity at which the goodwill is monitored for internal management purposes.Thus,
the impairment test is performed on asegment level.
For the impairment test, the recoverable amount of acash-generating unit is based on its
value in use and is compared to the carrying amount of the corresponding cash-generating
unit. Futurecash flows arediscounted using apre-tax rate that reflects current market assessments
based on the weighted average cost of capital (WACC).
The Group performs its impairment test during the fourth quarter of the fiscal year. This
approach was chosen since the Mid-Term Plan covering the next three fiscal years is updated
annually at the beginning of the fourth quarter. The Mid-Term Plan is based on the
assumption that there are no major changes to the Group’s organization. The residual value
is calculated from an estimated continuing value,which is primarily based on the third year
of the Mid-Term Plan.Theterminal growth rate used for determining the residual value does
not exceed the expected long-term growth rate of the industry.
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