financial report and registration document 2011 - Groupe SEB

The discount rates used were determined based on the weighted average
cost of capital, taking into account market interest rates, as well as a debt
ratio, beta and average equity risk premium based on historical data.
The equity risk premium used for 2011 was 5%, unchanged from 2010.
Specifi c equity risk premiums ranging from 0.5% to 4.0% were applied to
the Group’s different CGUs, according to their size, region and other specifi c
characteristics.
Impairment tests in 2011 were generally based on a 2012 budget similar to
the budget for 2011.
The All-Clad CGU – including the trademark for €111.8 million and goodwill for
€51 million at 31 December 2011 – was tested for impairment by comparing
its carrying amount with its value in use. The value in use calculation was
performed based on the sum of discounted future cash fl ows expected to
be derived from the assets concerned as contained in the fi ve-year business
plan as well as a terminal value determined by extrapolating the cash fl ows
forecast for the last year of the plan. The main actuarial assumptions used
were as follows:
� a discount rate of 9%, marginally up on the 8.83% used in 2010 (9.02%
in 2009), refl ecting a slight widening of debt spreads; and
� a long-term growth rate of 3%, in line with forecasts for the premium
household equipment market, similar to the rate used since All-Clad was
acquired.
This test led to the recognition of a €7.2 million impairment loss against All-
Clad’s goodwill, in addition to the €35.1 million aggregate impairment loss
already recorded at 31 December 2010, refl ecting the fact that despite the
marked turnaround in All-Clad’s performance in the second half of 2011 –
particularly in terms of sales and margins – the entity’s current results are
still slightly lower than expected.
The sensitivity of the impairment test results to changes in the individual
assumptions used at end-2011 to determine the value in use of the All-Clad
CGU is as follows:
� a 0.5- and 1-point increase in the discount rate would result in an additional
goodwill impairment loss of €11.6 million and €21.5 million, respectively;
� a 1-point decrease in the growth rate to perpetuity would result in an
additional impairment loss of €15.9 million;
� a 1-point decrease in operating result from activity (formerly “Operating
margin”) in the last year of the business plan – used to calculate
terminal value – would result in an additional goodwill impairment loss
of €7.2 million;
� as regards the sales trends for 2012-2016, Group management currently
considers the most probable scenario to be based on average annual
growth of 5.5%. Compared to these forecasts, a 10% downward revision
of forecast sales over the entire period would result in an additional
goodwill impairment loss of €20.0 million.
Financial Report and Registration Document 2011
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Consolidated fi nancial statements
Notes to the consolidated fi nancial statements
Goodwill impairment losses in an aggregate amount of €3.2 million were
also recorded in 2011 for Greece and Vietnam.
The carrying amounts of the “Mirro WearEver” brands (Mirro, WearEver
and AirBake) totalled an aggregate €4.7 million at 31 December 2011. The
impairment test performed at that date on the CGU containing these brands
did not result in the recognition of any impairment losses in addition to
those already recorded. The main actuarial assumptions used for the 2011
impairment test on this CGU were as follows:
� a discount rate after tax of 8.83%;
� a long-term growth rate of 2%.
A 1-point increase in the discount rate or a 5% downward revision of forecast
sales for 2012-2016 would result in the carrying amount of the brands being
written down in full.
Impairment tests on other trademarks and goodwill in 2011, 2010 and 2009
did not result in the recognition of any impairment losses.
The carrying amount of the Supor CGU – including the brand for €99 million
and goodwill for €351.2 million – was compared with its market value at
31 December 2011, as ZJ Supor is listed on the Shenzen stock exchange
and there is a liquid market for its shares. At 31 December 2011, Supor’s
share price was RMB 16.7, compared with a carrying amount of RMB 14.3.
The Arno, Lagostina, Rowenta, Panex, Krups and Moulinex trademarks
– which were carried in the balance sheet at 31 December 2011 at
€35.0 million, €30.4 million, €23.2 million, €11.07 million, €7.8 million and
€1.0 million respectively – were tested by discounting estimated future royalty
revenues from the licensing of the trademarks. The main assumptions used
in 2011 were as follows:
� a royalty rate of between 2% and 5.5%, unchanged from 2010 and 2009;
� a post-tax discount rate of between 8.1% (Rowenta) and 13.92% (Arno),
versus 7.81%-14.56% in 2010;
� a long-term growth rate of between 1% and 3%, unchanged from 2010
and 2009.
For all of these assets, the sensitivity of value in use to different scenarios was
analysed for the period between 2011 and 2015, including their sensitivity
to a one-point increase in the discount rate and one-point decrease in the
growth rate to perpetuity. The decreases in value in use under each of these
simulations would not result in the recognition of any impairment losses
on the trademarks concerned in the balance sheet. The test margin on the
Lagostina brand would be reduced to zero if the current 2012-2016 sales
forecasts were reduced by 25%.
GROUPE SEB
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