THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

ecoverable amount is the higher amount of the fair value of the
asset or a cash-generating unit less any costs to sell it and its value
in use. The recoverable amount must be determined for each individual
asset unless the asset itself does not generate any cash
inflows that are largely independent of those generated by other
assets or groups of assets. If the carrying amount of the asset exceeds
its recoverable amount, then an impairment loss is recorded
to reduce the value of the asset to its recoverable amount. In order
to determine an asset’s value in use, estimated future cash flows
deriving from the asset are discounted to their present value using
a pre-tax discount rate that reflects current market interest expectations
and the specific risks associated with the asset.
Impairment losses are recorded in the expense categories that reflect
the function of the impaired asset.
At each reporting date, the Group reviews all assets other than
goodwill to check whether any indications exist that any impairment
loss recognized in an early reporting period is no longer
required or can be reduced. If such indications exist, then the recoverable
amount of the asset is estimated. Any previously recognized
impairment loss is only reversed if there has been a
change in the estimates used to determine the asset’s recoverable
amount since the previous impairment loss was recognized.
If this is the case, then the carrying amount of the asset should be
adjusted to its higher recoverable amount. This higher amount may
not exceed the carrying amount of the asset that would have been
determined, net of accumulated depreciation or amortization, if
no impairment loss had been recognized in earlier years. Such reversal
is recognized immediately in the income statement unless
the asset is carried at a revalued amount, in which case the increase
is treated as a revaluation increase.
Goodwill
Goodwill is tested for impairment at least once per year. If events
or changes in circumstances indicate that an impairment loss may
need to be recognized, then a test is carried out more frequently.
Impairment is determined by determining the recoverable amount
attributable to the cash-generating unit to which the goodwill relates.
If the recoverable amount attributable to the cash-generating
unit is less than the carrying amount, then an impairment loss
is recognized. Impairment losses on goodwill may not be reversed
in future periods. The Group carries out its annual impairment test
for goodwill as at September 30.
Intangible assets
Intangible assets with indefinite useful lives are tested for impairment
at least annually either individually or at the level of the cashgenerating
units. These intangible assets are not amortized on a
scheduled basis.
Assets Held for Sale
Assets (or disposal groups comprising assets and liabilities) which
are primarily designated for sale and not for continuing use are
classified as held for sale. Any impairment loss attributable to a
disposal group is first allocated to goodwill and then to other assets
and liabilities on a pro rata basis. However, no impairment
loss is allocated to inventories, financial assets and deferred tax
assets, which continue to be measured in accordance with the
Group’s accounting policies.
Pensions and Other Post-Employment Benefits
The companies within the Group have various pension schemes
set up in accordance with the regulations and practices of the
countries in which they operate. Additionally, in two countries
agreements exist to provide additional post-employment healthcare
benefits. More than 90% of these benefits are unfunded.
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under the terms of which a company pays fixed contributions to
another entity and has no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined contribution
plans are recognized as an employee benefit expense in
the income statement as they become due. Prepaid contributions
are recognized as assets to the extent that a cash refund or a reduction
in future payments is applicable.
Defined benefit plans
Defined benefit plans comprise all pension plans other than defined
contribution plans. The Group’s net pension obligation with
respect to the defined benefit plans is calculated separately for
each plan by estimating the amount of future pension benefit entitlements
that employees have earned in return for their service
in current and prior periods; the amount of this pension benefit is
discounted to its present value. Any unrecognized past service
costs and the fair value of any plan assets are deducted. The discount
rate is determined as the rate on the reporting date of AArated
bonds that have maturity dates that approximate to the
payment terms of the Group’s obligations and that are denominated
in the same currency as the pension benefits are expected
to be paid. The computation is performed annually by a qualified
actuary using the projected unit credit method. If the computa-
110 Annual Report 2008 Symrise AG