Annual Report 2009/10 Excellence in Retailing - Douglas Holding

146 Financial statements
Facts & figures
Consolidated income statement
Consolidated balance sheet
Statement of changes in Group equity
Segment reporting
Consolidated Cash Flow statement
Notes
Notes to the income statement
Notes to the balance sheet
Auditor’s report
experience values as well as external macroeconomic data. The forecasts are developed
on the basis of actual past values and take into account an additional rise in profitability
for individual foreign Perfumery companies from the increase in the share of private
and exclusive labels.
The forecasts are based on a detailed forecast period of ten years, which corresponds
to the companies’ standardized forecasting system, and a subsequent constant perpetual
annuity. The calculations are based on a risk-adjusted growth rate of between 0 and 1 percent
(previous year: 0 to 2 percent) before adjustments for future market saturation effects
depending on the expected ROCE. For discounting purposes, an interest rate is applied of
between 7.5 and 11.0 percent before taxes (prior year: 9 to 13 percent).
Material goodwill amounts exist for Douglas France, Thalia Holding and the Buch und
Kunst Group. A write-down requirement for Thalia Holding and the Buch und Kunst Group
following the change in key planning assumptions is not currently thought to be possible.
Impairment testing applied to goodwill led to write-downs totaling 16.5 million EUR
for the fiscal year under review (previous year: 5.7 million EUR). Of which, 7.0 million EUR
relates to the operating segment in Spain, 4.6 million Euro to the operating segment in
France, 3.1 million Euro to the operating segment in Croatia and 1.8 million Euro to the
operating segment in Lithuania. The write-downs mainly arose from the economically
strained situation in the aforementioned countries and to falling consumer spending.
All goodwill of these cash-generating units are attributable to the Perfumeries Division.
The write-downs arose on the basis of the budget forecasts for the coming years as part
of the impairment testing. The total impairment needs for this cash-generating unit was
deducted from the existing goodwill amount. The ramaining amounts equal the value in
use per cash-generating unit.
In addition to the impairment tests, a sensitivity analysis was performed. Based on a
lower growth rate of 0.5 percent and a declining gross profit ratio by 0.5 percentage points,
an additional write-down amount would arise in the amount of 16.7 million Euro and 11.5
million Euro, respectively, for Douglas France. In respect of Croatia and Lithuania and
based on the same sensitivity parameters, a write-down amount of 2.6 and 1.4 million
Euro, respectively, and 0.0 million Euro and 0.0 million Euro for Lithuania would arise.
Location advantages associated with the leasehold interests that were purchased from
the prior tenant are capitalized under intangible assets with indefinite useful lives. The
useful life of these assets is independent of the term of the rental agreement. In addition,
the Internet domains of buch.de internetstores AG and buch.ch AG have been capitalized.
Material items of goodwill and intangible assets with indefinite lives existed as of the
balance sheet date for the following cash-generating units: