NOTES TO THE STATEMENT OF FINANCIAL POSITION
In April 2014, the company created a new subsidiary in South Korea. On May 1, 2014, this subsidiary took over the activities of the agent that had previously been representing Lectra in this country for many years. This purchase of assets and liabilities related to the agent’s activities generated goodwill for €718,000 at 2014 closing rate. No acquisition was made in ﬁscal year 2013. All past acquisitions have been paid for in full, and no further earn-out is due on these transactions.
2014 Book value at January 1 Change in scope of consolidation(1) Goodwill impairment Exchange rate differences Book value at December 31
(1) Integration of Lectra Korea, see note 2.28.
2013 31,132 – (702) (444) 29,986
29,986 664 – 1,074 31,724
Cash Generating Units (CGU) have been deﬁned as a sales subsidiary or group of more than one sales subsidiaries sharing common resources; these CGUs are sufﬁciently autonomous to generate cash inﬂows independently. Operating segments as deﬁned in note 35 correspond to groups of these CGUs. Goodwill shown in the statement of ﬁnancial position was subjected to impairment testing in December 2014. The projections used are based on the 2015-2017 plan for each CGU based on actual 2014 cash ﬂows and on forecast trends in each market concerned and, beyond 2017, on a projection to inﬁnity using a 2% growth rate assumption. Future ﬂows after tax are discounted using the weighted average cost of capital. The discount rates adopted differ depending on the CGU to allow for exposure to local economic environments. They are broken down as follows: – the cost of capital is determined on the basis of an estimated risk free rate for each CGU plus a market risk premium of 5% adjusted for the sector’s beta; – a speciﬁc risk premium has been computed for each CGU. This varies between 1% and 1.5% depending on the estimated risk attaching to fulﬁllment of the 2015-2017 plan; – the normative cost of debt is determined on the basis of average market conditions for the fourth quarter of 2014 plus the margin applied by the banks. The resulting estimates of the value in use of goodwill components for the 2014 year end closing have not led to any impairment. In 2013, the impairment tests on the Spain CGU led to the goodwill recognized on this CGU in the statement of ﬁnancial position being reduced to zero. This had resulted in a €702,000 impairment expense recorded on the “Goodwill impairment” line in the income statement.