English - Siegfried

Significant accounting judgments andestimatesPreparing the Consolidated Financial Statements requiresa certain degree of discretionary decision-making bymanagement. The most important risk factors that couldlead to changes in assets and liabilities within a year arelisted below.Estimating the recoverability of Goodwill The annualimpairment test of the recoverability of Goodwill demandsestimates of the value in use of the cash-generating unitto which goodwill is allocated. This value in use is calculatedby estimating (with an appropriate discount rate to deter -mine present value) the expected future cash flows of thecash-generating unit. Goodwill recorded on the BalanceSheet on the closing date was CHF 28.4 million. Therecoverability of Goodwill depends mainly upon thesuccess of the Siegfried Division to implement its strategyfor controlled substances.Deferred tax assets As described in Note 5, the Group hascapitalized tax assets from tax losses of CHF 11.9 million andunrecognized tax losses and tax credits of CHF 69.2 million.Any substantial change in the financial position of one ofthe Group’s companies, especially in the USA, would enablethe use of additional tax losses carried forward. Otherwisethe recoverability of the tax assets would be at risk. Basedon the expected future taxable profit, management reviewsthe recoverability of deferred tax assets every year.Environmental provisions Provisions depend on obliga -tions to eliminate environmental pollution. Future reme -diation costs depend on the regulatory status and managementdecisions on future construction projects. Thesecosts are reduced or postponed if the construction projectsare not realized and the environmental provision amount(CHF 12.2 million) would be reduced as a consequence.Pensions and other post-employment benefits Manyof Siegfried’s employees participate in post-employmentbenefit plans. The calculations of the recognized assetsand liabilities from such plans are based upon statisticaland actuarial assumptions such as discount rates, futureincreases in salaries and future pension indexations. Inaddition, the actuaries use statistically based data for theirassumptions such as future withdrawals of participantsfrom the plan and estimates on life expectancy. Dueto changes in the market and economic conditions, theactuarial assumptions used may differ materially fromactual results. These differences could impact the assets orliabilities recognized in the Balance Sheet in future periods.70 Financial Statements Siegfried Group