AMPER, SA and Subsidiaries Consolidated Financial Statements for ...

Goodwill is not amortized; instead, impairment tests are carried out. These tests are performed
annually or when there are indications that these sums may not be fully recoverable. Impairment
losses related to goodwill are irreversible. Impairment tests on goodwill are made together with
those on assets allocated to the cash-generating unit (or groups of cash-generating units), from
which it is expected to benefit from the synergies of a business combination.
In the case of Cash-generating Units to which goodwill or intangible assets with an indefinite
working life, the recoverability analysis is systematically done at the end of each year or in
circumstances when it is considered necessary to carry out this analysis.
The recoverable sum is the greater between the market value less the cost required for its sale
and its value in use, this being understood as the discounted current value of future estimated
cash flows. To calculate the recovery value of the tangible fixed assets and the goodwill, value in
use is the criterion used by the Group in almost all case.
To estimate the value in use, the Group prepares its forecasts of future cash flows after tax based
on the most recent budgets approved by the Company Administrators. These budgets
incorporate the best available estimates of revenues and costs of the Cash-generating Units
using sector forecasts, past experience and future expectations. The forecasts cover the next five
financial years, including an appropriate residual value for each business, using the most suitable
growth rate for each cash-generating unit (coinciding with that estimated by the analysts).
These flows are discounted to calculate their discounted current value at a rate (after tax) that
includes the capital cost of the business and the geographical area in which it takes place. To
calculate it, the current cost of money is calculated and the risk premiums generally used by
analysts for the business and geographical area (this being calculated as the difference between
the Spanish government bond and the bond period of the country in which international
operations are carried out).The result in 2011 is a discount rate of between 10.5% and 14.5%
(between 9.2% and 13.8% for 2010), depending on the business being analysed and the country
risk considered.
If the recoverable sum is lower than the net book value of the asset, a provision is recorded for
impairment loss for the difference, with a charge to "Net impairment/reversion losses" in the
Consolidated Income Statement.
Impairment losses recognised for an asset in previous years are reversed when there is a change
in the estimates of its recoverable sum, increasing the book value of the asset with a credit to
income at the maximum book value that the asset would have had if the write down had not been
carried out. Impairment losses on goodwill are not reversible.
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