LensCrafters 2010 Annual Report Download - page 154

ANNUAL REPORT 2010> 152 |
in accordance with the provisions of paragraph 7 of IAS 36, future cash flows of the cash–generating units in the Retail
distribution segment were adjusted in order to reflect the transfer prices at market conditions. This adjustment was made
since the cash generating units belonging to this segment generate distinct and independent cash flows whose products
are sold within an active market. The impairment test performed as of the balance sheet date resulted in a recoverable
value greater than the carrying amount (net operating assets) of the abovementioned cash–generating units. No external
impairment indicators were identified which could highlight potential risks of impairment. In percentage terms, the surplus
of the recoverable amount of the cash–generating unit over its the carrying amount was equal to 115 percent and 182
percent of the carrying amount of the Wholesale and Retail North America cash–generating units, respectively: It should
be noted that (i) the discount rate which makes the recoverable amount of the cash generating units equal to their carrying
amount is approximately 13 percent for the Wholesale cash–generating unit and approximately 17 percent for the Retail
North America cash–generating unit, and (ii) the growth rate which makes the recoverable amount of the cash–generating
units equal to their carrying amounts would be negative.
In addition, any reasonable changes to the abovementioned assumptions used to determine the recoverable amount
(i.e. growth rate changes of +/–1 percent and discount rate changes of +/–0.5 percent) would not significantly affect the
impairment test results.
For fiscal 2010, the impairment test of goodwill for the retail Asia–Pacific cash–generating unit has resulted in an impairment
loss of Euro 20.4 million. The impairment loss has been recorded in the “general and administrative” line within the
consolidated statement of income. This impairment loss is not considered material as compared to the total amount of
the Group’s goodwill.
The impairment noted above is due mostly to the economic uncertainties of the Australia–New Zealand, region, which
resulted in an increase in competition, and adverse weather conditions which occurred in late 2010 causing the performance
of the Asia–Pacific cash–generating units to be lower than expected. In view of this management revised the expected
cash flows to reflect additional investment and expected delays in the achievement of planned targets.
11. INVESTMENTS
Investments amounted to Euro 54.1 million (Euro 46.3 million as of December 31, 2009). The balance as of 2010 and 2009
mainly includes the 40 percent ownership in Multiopticas Internacional S.L. (MOI) Under the terms of the agreement the
Group has a call option for the remaining 60 percent of MOI. The call option will be exercisable by the Group at a price to
be determined on the basis of MOI’s sales and EBITDA values at the time of the exercise. .The increase as compared to
2009 is primarily due to the agreement with a third party entered into in February 2010 by which the third party manages
the company, Eyebiz Pty Limited (Eyebiz), which serves as the Group’s Sydney–based optical lens finishing laboratory. .As
a result of the transaction Eyebiz has become an associate of the Group. The Group has a 30 percent ownership in Eyebiz
The investment in Eyebiz is accounted for according to the equity method in the consolidated financial statements of the
Group as of December 31, 2010.
12. OTHER NON–CURRENT ASSETS
(thousands of Euro)
As of December 31,
2010 2009
Other financial assets 34,014 18,026
Other assets 114,111 129,565
Total other non–current assets 148,125 147,591