Annual report 2008 - Altarea Cogedim

The goodwill, which was recognised in an amount of
€351,278 thousand in the financial statements for the
2007 financial year, was allocated on a provisional basis
to various cash-generating units until 31 December 2008.
At 31 December 2008, the definitive allocation of goodwill
was as follows:
(in € thousand)
Property development for third parties 262,222
of which Residential Property Development 122,260
of which Commercial Property Development 139,962
Retail development - GPUM* 89,056
Total assets 351,278
The property development for third parties cash-generating
unit reflects the property development for third parties
operating segment defined in note 7.30.
The retail development-major mixed-use urban project cashgenerating
unit is defined in note 7.14. The latter segment
is included among the Group’s non-recurring activities.
12. Impairment
of assets under IAS 36
In accordance with IAS 36, the Group remeasured the
amounts o f goodwill associated with its cash-generating
units.
12.1. Goodwill arising on the Cogedim
acquisition
Impairment testing was carried out internally for the property
development for third parties and the retail developmentmajor
mixed-use urban projects cash-generating units.
The impairment testing for the property development for
third parties cash-generating unit was carried out using the
discounted cash flow model based on the business plan
prepared by management in the final quarter of 2008 over
a period running from 2009 to 2013.
– Free cash flows were determined based on the above
business plan predicated on business volume and
operating margin assumptions factoring in the economic
and financial crisis.
– The growth rate projected from 2013 onwards is equal to
0% (vs. a projected growth rate of 1% at 31 December
2007).
– The discount rate applied ranges between 10.60% and
11.60% (vs. a discount rate of between 8.6% and 9.3%
at 31 December 2007).
The recoverable amount adopted is the value in use
calculated based on low assumptions (discount rate of
11.60% and growth rate of 0%). An impairment loss of
€149.1 million was recognised.
The impairment testing for the retail development-major
mixed-use urban projects cash-generating unit was carried
out using the discounted cash flow method. The principal
operating assumption used related to business volumes,
which take into account the deferral and cancellation
of some business volumes in view of the economic and
financial crisis. The value in use adopted (€15 million)
lies in the range determined using capitalisation rates of
between 6.25% and 6.55% and discount rates of between
7.50% and 9.75%. An impairment loss of €74.1 million
was recognised.
The goodwill recognised on the acquisition of Cogedim at
31 December 2008 stood at €128 million, breaking down
by segment as follows:
(in € thousand) 12/31/2008 12/31/2007
Property development for third parties
262,222
of which Residential Property Development 113,028 122,260
of which Commercial Property Development 139,962
Retail development - GPUM* 15,000 89,056
Total Goodwill - Cogedim 128,028 351,278
See note 7.3. “Changes in accounting method made by the
Group”.
12.2. Brand
A valuation of the Cogedim brand at the acquisition date
was conducted by an independent valuation expert. The
brand was tested individually and together with the property
development for third parties cash-generating unit. (see
preceding section).
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