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Notes to the consolidated financial statements Unilever Group
94 Unilever Annual Report and Accounts 2009
Financial statements
9 Goodwill and intangible assets (continued)
€ million € million € million € million € million
Indefinite- Finite-
lived lived
intangible intangible
Movements during 2008 Goodwill assets assets Software Total
Cost
1 January 2008 13,182 4,134 621 501 18,438
Acquisitions of group companies 60 90 1 – 151
Disposals of group companies (129) – – – (129)
Additions – 1 – 146 147
Disposals – – (3) (33) (36)
Currency retranslation (496) (81) (20) (34) (631)
Reclassification as held for sale – (37) (1) – (38)
31 December 2008 12,617 4,107 598 580 17,902
Amortisation and impairment
1 January 2008 (938) (213) (348) (184) (1,683)
Disposal of group companies 12–––12
Amortisation for the year – – (59) (109) (168)
Impairment – (37) (1) – (38)
Disposals ––23335
Currency retranslation (26) (8) 13 14 (7)
Reclassification as held for sale – 37 1 – 38
31 December 2008 (952) (221) (392) (246) (1,811)
Net book value 31 December 2008 11,665 3,886 206 334 16,091
There are no significant carrying amounts of goodwill and intangible assets that are allocated across multiple cash generating units (CGUs).
Impairments charge in the year
There were no material impairments in 2009. The impairments charged in 2008 principally related to a non-core savoury business in the Americas
which was subsequently classified as held for sale.
Significant CGUs
The goodwill and indefinite lived intangible assets (predominantly Knorr and Hellmann’s) held in the regional Savoury and Dressings CGUs are
considered significant in comparison to the total carrying amounts of goodwill and indefinite-lived intangible assets at 31 December 2009. No
other CGUs are considered significant in this respect.
The goodwill and indefinite lived intangible assets held in the regional Savoury and Dressings CGUs are:
€ billion € billion € billion € billion
2009 2009 2008 2008
Indefinite- Indefinite-
lived lived
Goodwill intangibles Goodwill intangibles
Western Europe 5.2 1.3 5.1 1.3
The America’s 3.9 1.3 3.6 1.3
AAC 1.9 0.6 1.9 0.5
During 2009, we conducted an impairment review of the carrying value of these assets. Value in use in the regional Savoury and Dressings CGUs
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 regional Savoury and Dressings CGUs:
• a longer-term sustainable growth rate of 2% to 3% for Western Europe, 5% for the Americas and 9% to 10% for AAC;
• average near-term nominal growth rates for the major product groups within the CGUs of 2% Western Europe, 4.5% The Americas, 9% for
AAC; and
• average operating margins for the major product groups within the CGUs ranging from 16% to 20% Western Europe, 19% to 20% The
Americas and 10% to 12% AAC.
The growth rates and margins used to estimate future performance are based on past performance and our experience of growth rates and
margins achievable in our key markets as a guide. We believe that the assumptions used in estimating the future performance of the regional
Savoury and Dressings CGUs are consistent 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
before applying 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 future performance 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.
We have performed sensitivity analysis around the base case assumptions and have concluded that no reasonable possible changes in key
assumptions would cause the recoverable amount of the regional Savoury and Dressings CGUs to be less than the carrying amount.