Atari 2009 Annual Report Download - page 81

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ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
81
The method used to test goodwill for impairment consists essentially of comparing the recoverable amount of each CGU
with the carrying amount of the corresponding net assets. At March 31, 2009, for the Online Development/Publishing and
US Distribution CGUs, these recoverable amounts corresponded to the value in use of the assets concerned and were
generally calculated on the basis of expected operating cash flows for the next three years, the present value of
projected cash flows for the subsequent year and a terminal value. For the Europe and Asia Distribution CGUs,
recoverable amounts were determined based on the sale prices of the assets concerned, net of transaction costs, in
accordance with IFRS 5.
The main assumptions used by management to project future cash flows are a discount rate, growth rates, expected
trends in sale prices and operating costs.
The table below sets out the discount rates and perpetuity growth rates used at March 31, 2009 and March 31, 2008:
Discount rate Perpetuity growth rate Discount rate Perpetuity growth rate
Retail Development/Publishing N/A N/A 13,40% 3,00%
Online Development/Publishing 18,60% 3,00% N/A N/A
US Distribution 18,60% 3,00% 13,40% 3,00%
Europe Distribution N/A N/A 13,40% 3,00%
Asia Distribution N/A N/A 13,40% 3,00%
March 31, 2009
March 31, 2008
Management set the discount rate on the basis of the weighted average cost of capital, reflecting the market's current
assessment of the time value of money and the specific risks to which the various cash-generating units are exposed. In
view of the current division of the Group's activities, the allocation of goodwill per CGU and the Group's general risk
premium included in the discount rate, the use of a single discount rate for all of the Group's CGUs was judged
appropriate for the impairment tests. The discount rates used are post tax rates applied to post tax cash flows. They yield
the same recoverable amounts as would be obtained by applying pre-tax discount rates to pre-tax cash flows, as
required under IAS 36.
The Group prepared its cash flow projections on the basis of the 2009-2010 budget and its business plan. Growth-rate
assumptions in the business plan reflect management's best estimates and are based notably on the expectation that
business will recover.
At March 31, 2009, the sensitivity of the recoverable amounts of the Group's CGUs to a one-point change in the discount
rate or the perpetuity growth rate was as follows:
Cash-generating unit
(€ million) + 1 pt. - 1 pt. + 1 pt. - 1 pt.
Online Development/Publishing
22,7 -3,4 4,0 2,1 -1,8
US Distribution
57,6 -3,4 3,8 2,3 -2,1
Discount rate
Perpetuity growth rate
Impact of a one-point change in:
Difference between
recoverable
amount and
carrying amount