Philips 2011 Annual Report Download - page 148

10 12 Group financial statements 12.11 - 12.11
148 Annual Report 2011
Respiratory Care & Sleep Management
The annual impairment test resulted in EUR 450 million impairment.
This was mainly as a consequence of a weaker market outlook, lower
profitability projections from increasing investments and price
competition, as well as an adverse movement in the pre-tax discount
rate.
Home Monitoring
The annual impairment test resulted in EUR 374 million impairment.
This was mainly as a consequence of lower growth projections,
particularly in the US markets, and lower profitability projections based
on historical performance.
The pre-tax discount rate applied to the most recent cash flow
projection is 11.6%. The pre-tax discount rate applied in the previous
projection was 11.1%.
Professional Luminaires
The annual impairment test resulted in EUR 304 million impairment, as
a consequence of lower growth projections, lower profitability and
higher investment levels required.
Consumer Luminaires
The annual impairment test resulted in EUR 227 million impairment.
This was mainly as a consequence of lower growth projections on
slower than anticipated recovery of the market, a slower LED adoption
rate and an adverse movement in the pre-tax discount rate.
The pre-tax discount rate applied to the most recent cash flow
projection is 12.6%. The pre-tax discount rate applied in the previous
projection was 11.8%.
Additional information
After the impairment charge mentioned above, the estimated
recoverable amount for Respiratory Care & Sleep Management, Home
Monitoring and Professional Luminaires equals their respective carrying
value. Consequently, any adverse change in key assumptions would,
individually, cause a further impairment loss to be recognized.
The results of the annual impairment test of Imaging Systems and
Patient Care & Clinical Informatics have indicated that a reasonably
possible change in key assumptions would not cause the value in use to
fall to the level of the carrying value.
Based on the Q3 trigger-based impairments test, it was noted that the
headroom for the cash-generating unit Lumileds was EUR 102 million.
An increase of 90 basis points in pre-tax discounting rate, a 270 basis
points decline in the compound long term sales growth rate or a 12%
decrease in terminal value would cause its value in use to fall to the
level of its carrying value. Goodwill allocated to Lumileds at December
31, 2011 amounts to EUR 135 million.
Based on the Q4 trigger-based impairment test, it was noted that the
estimated recoverable amount for Consumer Luminaires approximates
the carrying value of the cash-generating unit. Consequently, any
adverse change in key assumptions would, individually, cause a further
impairment loss to be recognized. Goodwill allocated to Consumer
Luminaires at December 31, 2011 amounts to EUR 134 million.
Please refer to section 12.9, Information by sector and main country,
of this Annual Report for a specification of goodwill by sector.
10 Intangible assets excluding goodwill
The changes were as follows:
other intangible
assets
product
development software total
Balance as of
January 1, 2011:
Cost 5,486 1,046 665 7,197
Accumulated
amortization (1,956) (587) (456) (2,999)
Book value 3,530 459 209 4,198
Changes in
book value:
Additions 31 241 91 363
Acquisitions
and purchase
price allocation
adjustments 242 (1) (1) 240
Amortization (444) (146) (79) (669)
Impairment
losses (153) (15) (2) (170)
Transfer to
assets classified
as held for sale (8) (26) 1 (33)
Translation
differences 72 12 5 89
Other (6) (9) (7) (22)
Total changes (266) 56 8 (202)
Balance as of
December 31,
2011:
Cost 5,857 1,159 647 7,663
Accumulated
amortization (2,593) (644) (430) (3,667)
Book Value 3,264 515 217 3,996