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Consolidated Financial Statements as of December 31, 2015
Notes to the Consolidated Financial Statements
Impairment tests
6.3
Accounting policies
In accordance with IAS
36 –
Impairment of Assets
, intangible assets
According to the standard, goodwill is allocated to the CGU or group of
and property and equipment are tested for impairment whenever
CGUs that is expected to benefit from the synergies of the business
events or changes in the market environment indicate that the combination. Each unit or group of units to which the goodwill is so
recoverable amount of an individual asset and/or a cash-generating allocated should represent the lowest level within the entity at which
unit (CGU) may be less than its carrying amount. For assets with an the goodwill is monitored for internal management purposes and
indefinite useful life – mainly goodwill in the case of the Carrefour
should not be larger than an operating segment as defined in IFRS
8 –
group – the test is performed at least once a year.
Operating Segments
before aggregation.
Individual assets or groups of assets are tested for impairment by
For the purpose of analyzing the recoverable amount of goodwill, each
comparing their carrying amount to their recoverable amount, defined individual country is considered as representing a separate CGU. The
as the higher of their fair value less costs of disposal and their value in choice of this level is based on a combination of organizational and
use. Value in use is the present value of the future cash flows expected strategic criteria:
to be derived from the asset.
operations within each country (hypermarkets, supermarkets, etc.)
●
If the recoverable amount is less than the carrying amount, an
use shared resources (country-level centralized purchasing
impairment loss is recognized for the difference. Impairment losses on
organization, marketing systems, headquarters functions, etc.) that
property and equipment and intangible assets (other than goodwill)
represent an essential source of synergies between the various
may be reversed in future periods provided that the asset’s increased
operations;
carrying amount attributable to the reversal does not exceed the
decisions to dispose of business portfolios are generally made at
●
carrying amount that would have been determined, net of depreciation
country level and it is rare for just a single store to be sold.
or amortization, had no impairment loss been recognized for the asset
Value in use is considered as corresponding to the sum of discounted
in prior years.
future cash flows for a period generally not exceeding five years, plus a
Impairment of assets other than goodwill
terminal value calculated by projecting data for the final year to
perpetuity at a perpetual growth rate. A specific discount rate by
Impairment tests on property and equipment are performed at the
country is used for the calculation. Future cash flows are estimated
level of the individual stores (CGUs), for all formats.
based on the three-year business plan drawn up by country
In accordance with IAS
36, intangible assets (other than goodwill) and management and approved by Group management.
property and equipment are tested for impairment whenever there is
The discount rate for each country corresponds to the weighted
an indication that their recoverable amount may be less than their
average cost of equity and debt, determined using the median gearing
carrying amount. All stores that report a recurring operating loss before
rate for the sector. Each country’s cost of equity is determined based
depreciation and amortization for two consecutive years (after the
on local parameters (risk-free interest rate and market premium). The
start-up period) are tested.
cost of debt is determined by applying the same logic.
Recoverable amount is defined as the higher of fair value less costs of
Additional tests are performed at interim period-end when there is an
disposal and value in use.
indication of impairment. The main impairment indicators used by the
Value in use is considered as being equal to the store’s discounted Group are as follows:
future cash flows over a period of up to five years plus a terminal value.
internal impairment indicator: a material deterioration in the ratio
●
Fair value is estimated based on the prices of recent transactions,
of recurring operating income before depreciation, amortization and
industry practice, independent valuations or the estimated price at
provision expense to net revenues excluding gasoline between the
which the store could be sold to a competitor.
budget and the most recent forecast;
The discount rate applied is the same as for impairment tests on
external impairment indicator: a material increase in the discount
●
goodwill.
rate and/or a severe downgrade in the IMF’s GDP growth forecast.
Goodwill impairment
Impairment losses recognized on goodwill are irreversible, including
IAS
36 requires impairment tests to be performed annually at the level
those recorded at an interim period-end.
of each CGU or group of CGUs to which the goodwill is allocated.
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