ETX-10829_Etex-AR2017_WEB_2018_DEF2 (2)

6.1
Financial report
Consolidated financial statements
Etex Annual Report 2017
Financial report
Consolidated financial statements
Impairment testing
In December 2017, impairment reviews were performed for a certain number of cash-generating units where impairment indicators arose.
The carrying value of capital employed has been compared with the recoverable amount of the cash-generating unit. This review did not
result in any impairment, except those that have been commented in Note 4.
The recoverable amount of the cash-generating units was based on its value in use. The value in use was determined by discounting the
future cash flows generated from the continuing use of the unit and was based on the following key assumptions:
- cash flows were projected based on actual operating results and the 3 year business plan (extended to 10 years when the
financial projections of a long-term strategy development is available for the cash-generating unit),
- cash flows for further periods were extrapolated using a constant growth rate in a range of 1 % to 5 % depending on the
countries involved and their respective inflation rates (a range of 1 % to 3 % in 2016).,
- cash flows are discounted using the weighted average cost of capital (WACC) in a range of 7.8 % to 13.8 % depending on the
countries involved (a range of 7.3 % to 11.8 % in 2016).
In connection with the impairment testing process, the future cash flows were subjected to stress tests that included changes in individual
macroeconomics parameters as part of the sensitivity analysis. A change of 100 basis point in the spread between the WACC and the
growth rate at perpetuity indicate a potential need for an impairment charge of € 8.0 million.
8.2. Business combinations
On 22 December 2017, Etex acquired the remaining 59% shares of the Spanish Pladur, a leading Spanish manufacturer of gypsum
products with a strong brand reputation on its domestic market, for a total contribution of €112,239 thousand, of which €45,712 thousand
in cash (plus acquisition cost for €1,140 thousands). The remainder is made up of the historical value of the company previously equity
accounted €29,403 thousand (see Note 12) and the gain recognised on the transaction: the company was previously accounted for as
equity accounted investee and the transaction generated a gain of €37,123 thousand (see Note 4). In 2017, Pladur did not contribute to
any significant sales or REBITDA given the timing of the transaction completion; the pro-forma REBITDA contribution would they have
been consolidated from the beginning of the year amounts to €8,895 thousand.
In April 2016, Etex acquired two companies in the United Kingdom: John Brash & Co., an established supplier of timber roofing battens,
for a price of €15,770 thousand, and EOS Façades, a major manufacturer and supplier of steel framing systems, for a price of €4,983
thousand; they contributed for 2016 to €33,450 and €5,960 thousand respectively in sales and to €2,504 and €765 thousand respectively
in EBITDA.
The fair value of the identifiable assets and liabilities of the businesses acquired in 2016 and in 2017 as at the date of acquisition are
disclosed in the following table.
In thousands of EUR Brash EOS 2016 Pladur 2017
Note 8 – Goodwill and business combinations
8.1. Reconciliation of the carrying amount of goodwill
In thousands of EUR 2016 2017
Gross book value 247,322 255,214
Accumulated impairment losses -52,700 -52,043
Net book value at the beginning of the year 194,622 203,171
Additions through business combinations 5,903 2,113
Translation differences 2,646 -2,309
Net book value at the end of the year 203,171 202,975
Gross book value 255,214 255,330
Accumulated impairment losses -52,043 -52,355
The main components of the carrying amount of goodwill are the following:
In thousands of EUR 2016 2017
Roofing 81,655 83,685
Building Performance 87,502 85,289
Industry 25,332 25,332
Etex Nordic 8,552 8,539
Others 130 130
Total 203,171 202,975
Non-current assets 8,599 514 9,113 149,456 149,456
Property, plant and equipment 3,282 514 3,797 113,485 113,485
Assets held for sale - - - 691 691
Intangible assets 5,317 - 5,317 32,111 32,111
Other non-current assets - - - 27 27
Deferred tax assets - - - 3,143 3,143
Current assets 16,730 3,051 19,781 30,210 30,210
Inventories 5,447 323 5,770 8,902 8,902
Trade and other receivables 10,960 2,217 13,177 19,196 19,196
Current financial assets - - - 962 962
Cash and cash equivalents 323 511 834 1,151 1,151
TOTAL ASSETS 25,329 3,565 28,895 179,667 179,667
Non-current liabilities 3,524 54 3,578 27,274 27,274
Provisions 317 - 317 6,498 6,498
Loans and borrowings 2,202 - 2,202 12,949 12,949
Deferred tax liabilities 1,005 54 1,059 7,827 7,827
Current liabilities 8,519 1,946 10,464 42,266 42,266
Current portion of loans and borrowings - - - 15,421 15,421
Trade and other liabilities 8,519 1,946 10,464 26,845 26,845
TOTAL LIABILITIES 12,043 2,000 14,043 69,540 69,540
Net identifiable assets and liabilities 13,287 1,565 14,852 110,126 110,126
Group share 13,286 1,565 14,851 110,126 110,126
Non-controlling interests - - 1 - -
Acquisition price satisfied in cash (Group share) 15,770 4,983 20,752 112,239 112,239
Goodwill generated 2,484 3,418 5,901 2,113 2,113
Etex Annual Report 2017 p. 29
Etex Annual Report 2017 p. 30
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