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Unilever Annual Report and Accounts 2006 89
Financial Statements (continued)
Notes to the consolidated accounts Unilever Group
9Goodwill and intangible assets (continued)
€million € million € million € million € million
Indefinite- Finite-
lived lived
intangible intangible
Movements during 2005 Goodwill assets assets Software Total
Cost
1 January 2005 12 887 4 251 597 193 17 928
Acquisitions of group companies 13 – – – 13
Disposals of group companies (49) (6) (16) (4) (75)
Additions –248692
Reversal of assets held for sale not included in final disposal 15 55 – – 70
Currency retranslation 1 214 411 46 16 1 687
31 December 2005 14 080 4 713 631 291 19 715
Amortisation and impairment
1 January 2005 (937) – (150) (27) (1 114)
Disposals of group companies 42 1 3 2 48
Amortisation for the year(a) – – (62) (38) (100)
Impairment losses (131) (251) – – (382)
Currency retranslation (91) (13) (6) (2) (112)
31 December 2005 (1 117) (263) (215) (65) (1 660)
Net book value 31 December 2005 12 963 4 450 416 226 18 055
(a) Includes €(1) million relating to discontinued operations.
Thereare no significant carrying amounts of goodwill and intangible assets that are allocated across multiple cash generating units (CGUs).
Impairments charges in the year
The impairments charged in 2006 principally relate to planned business disposals that will be completed during 2007.
In 2006, Slim•Fast was fully integrated into The Americas business as part of the North American beverage operations. As a result of the
integration, Slim•Fast is no longer evaluated on a stand-alone basis but as part of the North American beverage CGU. The 2006 impairment
review on this basis and on a stand-alone basis did not result in any impairments (2005: €363 million; 2004: €791 million).
Significant CGUs
The goodwill and indefinite-lived intangible assets (predominantly Knorr and Hellmann’s)held in the global savoury and dressings CGU,
comprising €11.6billion (2005: €11.9 billion) and €3.4 billion (2005: €3.6 billion) respectively,areconsidered significant in comparison to
the total carrying amounts of goodwill and indefinite-lived intangible assets at 31 December 2006. No other CGUs areconsidered significant
in this respect.
During 2006, we conducted an impairment review of the carrying value of these assets. Value in use of the global savoury and dressings CGU
has been calculated as the present value of projected future cash flows. A pre-tax discount rate of 10% was used.
The following key assumptions were used in the discounted cash flow projections for the savoury and dressings CGU:
•alonger-term sustainable growth rate of 3%, adjusted for market fade, used to determine an appropriate terminal value multiple;
•average near-term nominal growth for the major product groups within the CGU of 3%; and
•average operating margins for the major product groups within the CGU ranging from 16% to 19%.
The growth rates and margins used to estimate futureperformance are based on past performance and our experience of growth rates and
margins achievable in our key markets as a guide. Webelieve that the assumptions used in estimating the futureperformance of the savoury
and dressings CGU areconsistent with past performance.
The projections covered a period of ten years as we believe this to be a suitable timescale over which to review and consider annual
performance beforeapplying a fixed terminal value multiple to the final year cash flows of the detailed projection. Stopping the detailed
projections after five years and applying a terminal value multiple thereafter would not result in a value in use that would cause impairment.
The growth rates used to estimate futureperformance beyond the periods covered by our annual planning and strategic planning processes do
not exceed the long-term average rates of growth for similar products.
Wehave performed sensitivity analysis around the base case assumptions and have concluded that no reasonably possible changes in key
assumptions would cause the recoverable amount of the global savoury and dressings CGU to be less than the carrying amount.