Registration Document

P ◀ CONTENTS ▶
ownership by the end of the lease term, over the
shorter of the lease term and its useful life.
Leases under which the lessor retains substantially
all the risks and rewards incidental to ownership of
the asset are treated as operating leases. Payments
made under operating leases are expensed as an
operating item on a straight line basis over the term
of the lease.
2.8 Impairment of assets
2.8.1 Impairment of assets with finite
useful lives
Property, plant and equipment and intangible assets
with finite useful lives are tested for impairment
if there is objective indication of impairment.
Impairment losses are recognized in the income
statement, and may be reversed subsequently.
2.8.2 Impairment of assets with
indefinite useful lives
Goodwill and other intangible assets considered to
have an indefinite useful life are tested for impairment
whenever there is an indication of impairment, and
at least annually, in the last quarter of the fiscal year.
The results of the impairment tests conducted are
then confirmed using data as of August 31.
Cash Generating Units
Assets that do not generate cash inflows that are
largely independent of those from other assets, and
hence cannot be tested for impairment individually,
are grouped together in Cash Generating Units
(CGUs).
Impairment tests are conducted for each CGU or
group of CGUs, which are generally defined as one
of the Group’s two main activities, with the On-site
Service Solutions activity further segmented into
geographic regions.
The assets allocated to each CGU comprise:
• goodwill, which is allocated when the CGU
or group of CGUs is likely to benefit from the
business combination;
Consolidated information 06
Notes to the Consolidated Financial Statements
• other intangible assets, tangible assets, and net
working capital.
Indications of impairment
The main indicators that a CGU may be impaired are
a significant decrease in revenues and gross margin
or material changes in market trends.
Methods used to determine the recoverable
amount
An impairment loss is recognized in the income
statement when the carrying amount of an asset or
CGU is greater than its recoverable amount.
Recoverable amount is the greater of:
• fair value less costs to sell, i.e. the amount
obtainable from the sale of an asset (net of selling
costs) in an arm’s length transaction between
knowledgeable, willing parties;
• value in use, which is the present value of the
future cash flows expected to be derived from
continuing use and ultimate disposal of the asset
or CGU.
The value in use of CGUs is estimated using aftertax
cash flow projections generally based on three
year business plans prepared by management and
extrapolated to future years.
Management both at Group and subsidiary levels
prepares gross profit forecasts on the basis of past
performance and expected market trends. The
growth rate used beyond the initial period of the
business plan reflects the growth rate for the business
sector and region involved.
Expected future cash flows are discounted at the
average cost of capital.
The growth and discounting rates used for
impairment tests during the period are provided in
note 4.10.
Recognition of impairment losses
An impairment loss recognized with respect to a
CGU is allocated initially to reducing the carrying
amount of any goodwill allocated to that CGU, and
then to reducing the carrying amount of the other
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