14MB - Pirelli

EXTRAORDINARY SESSION CONSOLIDATED FINANCIAL STATEMENT SUSTAINABILITY REPORT DIRECTORS' REPORT PRELIMINARY INFORMATION
age cost of capital (discount rate). More to the point, the cash flows approved by management used
in determining the value of use cover a period of three years.
For the Real Estate sector, the flows relating to the fourth and fifth year are extrapolated from the
flows of the third year without applying growth assumptions.
Furthermore, consideration has been given to the cash flows generated from the sale of the cashgenerating
unit at the end of the explicit period (assumed to be equal to the present value of the
return in perpetuity of cash flows generated in the last year of projection); for industrial operations,
this flow has been extrapolated by applying a 2 percent growth factor to the flow of the last
year (2 percent in 2007).
The discount rates, net of taxes, applied to the cash flow projections are as follows:
Business
segment
354 PIRELLI & C. S.p.A. MILAN
Cash generating unit / groups of CGU
Discount rate
2008 2007
Tyre Consumer 9.20% 8.20%
Tyre Industrial 9.20% 8.20%
Other businesses Eco Technology 15.00% 7.80%
Real Estate Real Estate 6.50% -
Real Estate Agency 6.50% 6.20%
Real Estate Credit Servicing 6.50% 6.20%
Real Estate Property 6.50% 6.20%
Real Estate Poland 6.50% 6.20%
Real Estate Fund management 6.50% 6.20%
Real Estate Germany - DGAG/BIB 6.50% 6.20%
Real Estate Non-Performing Loans 6.50% 6.20%
As far as the Real Estate sector is concerned, the Group has indiscriminately allocated Euros 32.9
million being the difference between the purchase on the market over time of minority interests in
listed securities and the relative net assets. This higher value recognized is supported by considering
the recoverable amount of the sector as a whole.
On the basis of the results of the tests performed, there is no impairment.
A sensitivity analysis was also carried out: in all cases the value in use remains higher than the
carrying amounts even assuming a change in the key parameters, such as:
—— a change in the weighted average cost of capital by 50 basis point (hundredths of a percentage
point) or
—— for industrial operations, a change in the growth rate by 1 percentage point.
The impairment losses in 2008 on intangible assets other than goodwill, included in the column
decrease in the table, amount to Euros 60 thousand (Euros 3,823 thousand in 2007). They are recognized
in the income statement under “Amortization, depreciation and impairments” (Note 32).