Values

110
Group Financial Statements
Notes
Th e impairment test for the RTL goodwill is based on the management’s
business forecast in a detailed planning period of fi ve
years. Th e discounted planned cash fl ow was based on a discount
rate after taxes of 8.29 percent. For impairment testing, a growth
rate of 1 percent was assumed for the period after the end of the
detailed planning period. Accordingly, it was ascertained that no
impairment was needed for the goodwill carried in the fi nancial.
Validation with stock market prices over the period prior to and on
the balance sheet date confi rmed this estimate.
A total of €-286 million in impairments of goodwill and intangible
assets with an indefi nite useful life were recorded in the year
under review. €-17 million was allocated to assets held for sale.
Impairments of goodwill and other intangible assets with an indefi
nite useful life are shown under “Special Items” on the income
statement.
An impairment of €-140 million was recorded for the goodwill
from the U.K. TV station Five Group on June 30, 2009. Th is
extraordinary write-down refl ects the worsening of both the advertising
market and Five’s share of the market. Th e “fair value
less costs to sell” approach was retained, factoring the costs
and the benefi ts of the contemplated restructuring program.
Th e impairment test was based on a growth rate of 3 percent
and a discount rate of 9.2 percent. Th e annual impairment test
on December 31, 2009, with the same growth rate and a discount
rate of 8.4 percent did not result in any additional impairment requirements.
Even raising the discount rate by 1 percentage point
(9.4 percent) would not have shown a need for impairment.
In addition, an impairment of €-70 million was recorded for the
goodwill of the Greek radio and TV broadcaster Alpha Media Group
as of June 30, 2009. A much weaker Greek advertising market, when
compared to the original business plan, resulted in a signifi cant
underperformance. A cost reduction program was initiated during
the fi rst half-year 2009; this was not suffi cient to compensate
a signifi cant decline in revenue. Th e “fair value less costs to sell”
approach was retained at June 30, 2009, by factoring the costs and
the benefi ts of the contemplated restructuring program. Th e impairment
test was based on a growth rate of 3 percent and a discount
rate of 9.5 percent. As the restructuring plan has been implemented
in 2009, “value in use” has been retained at December 31, 2009,
using a discount rate of 9.1 percent. It did not result in any additional
impairment requirements. However, the fi nalization of the
Alpha Media Group business combination resulted in a reallocation
of the impairment amount: €-66 million were allocated to goodwill,
€-4 million were due to intangible assets. As a result of the impairment,
the carrying amount of the goodwill fell to €49 million.
An increase in the discount rate selected for the annual impairment
test by 1 percentage point or a reduction of 1 percentage point
in the growth rate used for the impairment test would not yield any
additional impairment requirements as of December 31, 2009.
Th e annual impairment test at Arvato Print Ibérica, an Arvato
unit comprising printing companies in Spain and Portugal,
yielded a need for impairment of €-26 million. In the view of
management, the reasons for the downward trend of business
can be found in the ongoing recession in Spain and negative
price development in the printing market. Th e impairment was
fully allocated to goodwill. Th e impairment test was based on a
growth rate of 0 percent. Th e discounting was based on a discount
rate after taxes of 7.21 percent. Raising the discount rate
by 1 percentage point would increase the needed impairment
by €14 million. A reduction in the growth rate of 1 percentage
point would have increased the amount of impairment by
€11 million.
Th e Spanish call center operator Qualytel, which belongs to
Arvato, is also suff ering heavily from the economic situation in
Spain. Th e negative trend stemming from the shrinking economy
is aggravated by a signifi cantly lower volume of business with a
key client – a loss that could not be off set by new business. Th e
annual impairment test revealed the need for an impairment of
€36 million: €26 million for goodwill, reducing its carrying amount
to zero, and €10 million for customer agreements recognized as
asset. Th e extensive restructuring measures initiated in 2009 to
adapt capacities to market conditions and reduce costs have been
refl ected in the impairment calculation. Th e impairment test was
based on a growth rate of 1 percent. Th e discounting was based
on a discount rate after taxes of 11.77 percent. Th e amount of the
discount rate refl ects the inclusion of South American businesses.
Raising the discount rate by 1 percentage point would increase
the needed impairment by €4 million. Applying a growth rate of
0 percent would have only an insignifi cant eff ect on the results of
the impairment test.
Th e cash-generating unit “Gruner + Jahr Spain” underwent an
impairment test in accordance with IAS 36 eff ective June 30, 2009.
Th e test found the need for an impairment of €-21 million on the
goodwill. Th e valuation allowance is attributable primarily to the
downturn in the Spanish economy due to the economic crisis and
to a general cautiousness in the advertising sector. Th e calculation
was based on a discount rate of 7.59 percent. An impairment test
at a discount rate of 8.06 percent eff ective December 31, 2009, did
not show any additional need for impairment compared to the halfyear
calculation. Raising the discount rate by 1.6 percentage points
or reducing the cash fl ow by 17 percent with otherwise unchanged
assumptions would show an increased need for impairment.
In the spring of 2009, the Bertelsmann AG Executive Board decided
to sell Random House’s business in Asia. Sales negotiations
were initiated. Carrying the business at fair value less cost to sell in
line with IFRS 5 resulted in an impairment of €-12 million.
Bertelsmann Annual Report 2009