Atari 2010 Annual Report Download - page 74

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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3.2. GOODWILL BY CASH-GENERATING UNIT
In accordance with the accounting principle described in Note 2.12, the Group has allocated its goodwill to cash-
generating units (CGUs). The CGUs correspond to the Group’s core businesses and do not therefore represent legal
entities. Net goodwill per CGU is as follows:
(€ million) Online
Development/
Publishing
US
Distribution TOTAL
March 31, 2010 18.7 5.8 24.5
March 31, 2009 29.1 5.8 34.9
The Online Development/Publishing CGU represents Cryptic, which was acquired during fiscal year 2008/2009.
Other intangible assets with indefinite useful lives are included in the Retail Development/Publishing CGU and are tested
for impairment at the same time as goodwill. Their carrying amount totaled €1.8 million and €2.9 million on March 31,
2010 and March 31, 2009 respectively.
As stated in Note 3.1 above, the goodwill allocated to the Retail Development/Publishing CGU was written down in full
during the year ended March 31, 2009, leading to the recognition of a €40.3 million charge under “Impairment of
goodwill” in the consolidated income statement.
Additional goodwill impairment amounting to €19.7 million and €5.1 million was recorded during the year for the Europe
and Asia Distribution CGUs respectively following the sale of the Group's distribution operations in those regions. The
balance of the goodwill allocated to these CGUs has been reclassified to "Assets held for sale" (see Note 22.2 – Assets
and liabilities held for sale). The impairment recorded in relation to this goodwill has also been reclassified and is now
recorded under “Profit (loss) from discontinued operations” in the consolidated income statement for fiscal year ended 31
March, 2009.
3.3. IMPAIRMENT TESTS
In accordance with IFRS 3, Business Combinations, goodwill acquired in a business combination is not amortized.
Instead it is tested for impairment annually, or more frequently if events or changes in circumstances indicated that it
might be impaired. These tests are performed in March of every year as part of the annual accounts-closing process. If
the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognized in "Impairment of
goodwill" which is included under “Operating income (loss)”.
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, 2010, 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 four years, the present value of projected
cash flows for the subsequent year and a terminal value.
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, 2010 and March 31, 2009:
Discount rate Perpetuity growth rate Discount rate Perpetuity growth rate
Online Development/Publishing 18.60% 3.00% 18.60% 3.00%
US Distribution
18.60%
3.00%
18.60%
3.00%
March 31, 2010 March 31, 2009