Philips 2015 Annual Report Download - page 137

Group nancial statements 12.9
Annual Report 2015 137
included in the table below. These assumptions are
based on the annual impairment test performed in the
second quarter except for the unit Professional Lighting
Solutions which performed an updated test in Q4 2015.
Philips Group
Key assumptions in %
2015
compound sales growth rate1)
initial
forecast
period
extra-
polation
period2)
used to
calculate
terminal
value
pre-tax
discount
rates
Respiratory Care &
Sleep Management 6.9 5.6 2.7 11.5
Image-Guided
Therapy 3.0 2.4 2.7 12.2
Patient Care &
Monitoring
Solutions 6.0 4.8 2.7 13.4
Professional
Lighting Solutions 5.0 5.1 2.7 15.1
1) Compound sales growth rate is the annualized steady growth rate over
the forecast period
2) Also referred to later in the text as compound long-term sales growth
rate
The assumptions used for the 2014 cash ow
projections were as follows:
Philips Group
Key assumptions in %
2014
compound sales growth rate1)
initial
forecast
period
extra-
polation
period2)
used to
calculate
terminal
value
pre-tax
discount
rates
Respiratory Care &
Sleep Management 4.2 3.6 2.7 11.4
Imaging Systems 3.3 3.1 2.7 12.8
Patient Care &
Clinical Informatics 4.9 3.8 2.7 12.8
Professional
Lighting Solutions 10.1 6.5 2.7 13.8
1) Compound sales growth rate is the annualized steady growth rate over
the forecast period
2) Also referred to later in the text as compound long-term sales growth
rate
Among the mentioned units, Professional Lighting
Solutions has the lowest excess of the recoverable
amount over the carrying amount. The headroom of
Professional Lighting Solutions was estimated at EUR
100 million. The following changes could, individually,
cause the value in use to fall to the level of the carrying
value:
Philips Group
Sensitivity analysis
increase in
pre-tax
discount rate,
basis points
decrease in
compound
long-term
sales growth
rate, basis
points
decrease in
terminal value
amount, %
Professional
Lighting
Solutions 40 80 5.5
The results of the annual impairment test of Respiratory
Care & Sleep Management, Image-Guided Therapy and
Patient Care & Monitoring Solutions indicate that a
reasonably possible change in key assumptions would
not cause the value in use to fall to the level of the
carrying value.
Additional information 2015
In addition to the units with signicant goodwill, other
cash-generating units are sensitive to uctuations in
the assumptions as set out above.
Based on the annual impairment test, it was noted that
the headroom for the cash-generating unit Home
Monitoring was estimated at EUR 30 million. An
increase of 130 points in the pre-tax discounting rate, a
320 basis points decline in the compound long-term
sales growth rate or a 19% decrease in terminal value
would cause its value in use to fall to the level of its
carrying value. The goodwill allocated to Home
Monitoring at December 31, 2015 amounts to EUR 32
million.
Based on the most recent impairment test, it was noted
that with regard to the headroom for the cash-
generating unit Consumer Luminaires the estimated
recoverable amount approximates the carrying value of
this cash-generating unit. Consequently, any adverse
change in key assumptions would, individually, cause
an impairment loss to be recognized. The goodwill
allocated to Consumer Luminaires at December 31,
2015 amounts to EUR 127 million.
Please refer to note 2, Information by sector and main
country for a specication of goodwill by sector.