Cemex 2013 Annual Report Download - page 77

Notes to the consolidated financial statements
Whenimpairmentindicatorsexist,foreachintangibleasset,CEMEXdeterminesitsprojectedrevenuestreamsovertheestimateduseful
lifeoftheasset.Inordertoobtaindiscountedcashowsattributabletoeachintangibleasset,suchrevenuesareadjustedforoperating
expenses,changesinworkingcapitaland otherexpenditures,as applicable,anddiscountedtonet presentvalue usingtheriskadjusted
discountrateofreturn.Signicantmanagementjudgmentisnecessarytodeterminetheappropriatevaluationmethodandestimatesunder
thekeyassumptions,amongwhichare:a)theusefullifeoftheasset;b)theriskadjusteddiscountrateofreturn;c)royaltyrates;andd)
growthrates.Assumptionsusedforthesecashowsareconsistentwithinternalforecastsandindustrypractices.
Thefairvaluesofintangibleassetsareverysensitivetochangesinthesignicantassumptionsusedintheircalculation.Certainkeyassumptions
aremoresubjectivethanothers.Inrespectoftrademarks,CEMEXconsidersthatthemostsubjectivekeyassumptioninthedetermination
ofrevenuestreams istheroyaltyrate.Inrespect ofextractionrights andcustomer relationships, themostsubjective assumptionsare
revenuegrowthratesandestimatedusefullives.CEMEXvalidatesitsassumptionsthroughbenchmarkingwithindustrypracticesandthe
corroborationofthirdpartyvaluationadvisors.
15B) Main acquisitions and divestitures during the reported periods
InAugust2013,CEMEXandHolcimLtd.(“Holcim”),aglobalproducerofbuildingmaterialsbasedinSwitzerland,reachedanagreementin
principle,toconductaseriesofrelatedtransactionsbymeansofwhich:a)intheCzechRepublic,CEMEXwouldacquireallofHolcim’sassets,
includingacementplant,fouraggregatesquarriesand17ready-mixplants;b)inGermany,CEMEXwouldselltoHolcimitsassetsinthe
westernpartofthecountry,consistingofonecementplant,twocementgrindingmills,oneslaggranulator,22aggregatesquarriesand
79ready-mixplants,whileCEMEXwouldmaintainitsoperationsinthenorth,eastandsouthofthecountry;andc)inSpain,Holcimwould
contributeallitsoperationsinthecountrytoCEMEXEspañaOperaciones,S.L.(“CEMEXEspañaOperaciones”),CEMEX’soperatingsubsidiary
inthecountry,inexchangeforapproximately25%oftheresultingcombinedentity’scommonstock,reectingtherelativeestimatedfair
valueofthenetassetstobecontributed,whileCEMEXwouldholda75%equityinterestinCEMEXEspañaOperaciones.Aspartofallthe
abovetransactions,CEMEXwouldreceive€70 million(US$96million) incash,reectingcertainfairvaluedifferencesbetweenthenet
assetstobesold,againstthecontributiontobereceivedandthenetassetstobeacquired,aswellasthesaleofcertainotherassetsand
therenderingofservicesduringthetransitionprocess.AsofDecember31,2013,theexecutionofthetransactionsaresubjecttovarious
conditionsprecedent,includingamongothers,negotiationofnalbindingagreementsandthereviewandauthorizationoftheEuropean
CommissionandtheCzechOfcefortheProtectionofCompetition(the“Authorities”),whichatthisstage,arependingandareexpected
duringthethirdquarterof2014.Nonetheless,CEMEXcannotpredictifAuthoritiesmayextendthereviewperiodorifitwouldpermitthe
transactionsasproposedbyCEMEXandHolcim,orifitwouldrequirecertainmodicationsthereof.Consideringthattheconclusionofthe
aforementionedtransactionsarestillsubjecttonalbindingagreementsandthattherequiredauthorizationsfromtheAuthoritiesareoutof
thecontrolofCEMEXandHolcim,andsuchapprovalcouldrequirechangestotheproposedtransactionoritswithdrawal,asofDecember
31,2013,therelatedCEMEX’snetassetsinGermanywerenottreatedasassetsheldfordisposal.
OnNovember15,2012,asdescribedinnote20D,andgivingeffecttotheputoptiongrantedtotheinitialpurchasersinDecember2012,
CEMEXsoldanon-controllinginterestof26.65%inCEMEXLatamHoldings,S.A.adirectsubsidiaryofCEMEXEspañaS.A.(“CEMEXEspaña”),
foranetamountofapproximatelyUS$960($12,336).
OnOctober12,2012,inaprivatetransaction,CEMEXmadethenalpaymentinconnectionwiththeacquisition,initiatedinApril2012from
thirdparties,ofthe49%non-controllinginterestinanindirectholdingcompanyofGlobalCement,S.A.,whichonMay23,2013changed
itsnametoCEMEXGuatemala,S.A.,CEMEX’smainoperatingsubsidiaryinGuatemala,foratotalamountincludingthenalpaymentof
approximatelyUS$54($694),recognizingwithin“Otherequityreserves”anamountofapproximatelyUS$32($411).
OnMay17,2012,throughapublictenderoffercommencedonMarch12,2012,andaftercompliancewithapplicableregulationsinthe
RepublicofIreland,ReadymixInvestments,anindirectsubsidiaryofCEMEXEspaña,acquiredallthesharesofReadymixplc(“Readymix”),
CEMEX’smainoperatingsubsidiaryintheRepublicofIreland,for€0.25pershareincash.Theacquisitionpriceforthe38.8%non-controlling
interestinReadymixwasapproximately€11(US$15or$187).ThelistingandtradingofReadymix’ssharesontheIrishStockExchangewas
cancelledbeginningonMay18,2012.
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