VINCI - 2008 annual report

Consolidated fi nancial statements
13. Impairment tests on goodwill and other non-financial assets
In accordance with IAS 36 Impairment of Assets, goodwill and other non-fi nancial assets have been tested for goodwill at 31 December 2008.
The value in use of cash-generating units is determined on the basis of activity (concession, construction, energy and roads) and country, by
discounting the forecasted operating cash fl ows before tax (operating profi t plus depreciation and amortisation plus non-current provisions less
operating investments less change in operating WCR), at the rates below.
In the case of concessions, forecasted cash fl ows are determined across the length of contracts by applying a variable discount rate, determined
for each period depending on the debt to equity ratio.
For the other cash-generating units, forecasted cash fl ows are generally determined on the basis of the latest three-year plans available. For
periods beyond the three-year period, cash fl ows are extrapolated until the fi fth year, generally using a growth rate based on management’s
assessment of the outlook for the entity under consideration.
Beyond the fi fth year, the terminal value is determined by capitalising cash fl ows to infi nity.
13.1 Impairment tests on goodwill
Goodwill was tested for impairment using the following assumptions:
Parameters of the model applied
Impairment losses recognised
Carrying amount
to cash fl ow forecasts
in the year
of goodwill at
31 December Growth rate Growth rate
Pre-tax discount rate
(in € millions)
2008 (Years Y+1 to Y+5) (terminal value) 31/12/2008 31/12/2007
2008 2007
ASF Group 1,934.7 (*) (*) 9.49% 9.48% - -
VINCI Park 343.3 (*) (*) 9.08% 8.91% - -
Entrepose Contracting 200.9 1.2% to 5.6% 2.0% 10.13% 9.48% - -
Solétanche Bachy 179.0 1.2% to 3.4% 1.5% 10.13% 9.48% - -
Other goodwill 921.0 0 to 3% 0 to 3% 7.80% to 19.46% 6.8% to 17.7% (22.2) (6.0)
Total 3,578.9 (22.2) (6.0)
(*) Cash fl ow projections are determined over the length of concessions contracts using an average revenue growth rate of 2.2% for ASF and of 3% for VINCI Park.
The tests performed at 31 December 2008 led to the recognition of impairment losses of €22.2 million compared with €6 million at 31 December
2007.
Sensitivity of the value in use of cash-generating units to the assumptions made
For main goodwill items, the sensitivity of the enterprise value to the assumptions made is shown in the following table:
Sensitivity to interest rates
(in € millions) ASF VINCI Park Entrepose Contracting Solétanche Bachy
0.50% – 0.50% 0.50% – 0.50% 0.50% – 0.50% 0.50% – 0.50%
Discount rate for cash fl ows (1,101.0) 1,188.0 (161.5) 196.1 (14.5) 16.4 (30.0) 33.0
Growth rate to infi nity for cash fl ows (*) (*) (*) (*) 12.6 (11.1) 25.0 (23.0)
(*) Forecasts of cash fl ows are determined over the periods of the concession contracts.
At 31 December 2008, an increase (or decrease) of 50 basis points in the assumptions retained would not lead to material impairment
(or revaluation) in the Group’s consolidated fi nancial statements, as the value in use of the cash-generating units in question is well above
their carrying amount.
Sensitivity to cash fl ows
(in € millions) ASF VINCI Park Entrepose Contracting Solétanche Bachy
5.00% - 5.00% 5.00% - 5.00% 5.00% - 5.00% 5.00% - 5.00%
Change in forecast pre-tax operating cash fl ows 975.0 (975.0) 118.0 (118.0) 12.7 (12.7) 26.0 (26.0)
At 31 December 2008, a 5% increase (or decrease) of the forecasted cash fl ows assumed would not lead to material impairment (or revaluation) in
the Group’s consolidated fi nancial statements, as the value in use of the cash-generating units in question is well above their carrying amount.
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