74 Goodwill and other intangible assets
Inhoudsopgave Voorwoord Bestuursverslag Corporate governance
Consolidated Financial Statements Company Financial Statements Pillar 3
Result from joint ventures
2016
2015
Profit or loss from continuing operations
9
(5)
Post-tax profit or loss from discontinued
operations
Net profit
9
(5)
Other comprehensive income
Total comprehensive income
9
(5)
Contingent assets and liabilities
Rabo Real Estate Group entered into commitments on
31 December 2016 with regard to real estate projects,
commitments with third parties (including subcontractors and
architects) for the amount of 27 (2015:17).
Goodwill is reviewed for impairment by comparing the carrying
amount of the cash generating unit (including goodwill) with
the best estimate of the value in use of the cash generating
unit. For this purpose, the best estimate of the value in use
determined on the basis of cash flow forecasts is used first, as
taken from annual medium-term plans drawn up as part of
the annual planning cycle.The plans reflect the management's
best estimates of market conditions, market restrictions,
discount rates (before taxation), growth in operations, etc.
If the outcome shows that there is no significant difference
between the fair value and the carrying amount, the fair
value is assessed in more detail, with the relevant share
price being used for listed companies. In addition, valuation
models are used which are similar to the initial recognition
of an acquisition, peer reviews, etc. The valuation models are
tested and include the development of the activities since the
acquisition, the most recent income and expenses forecasts
drawn up by management, as well as updated forecasts,
assessments of discount rates, final values of growth rates, etc.
Peer reviews include an assessment of the price/earnings ratio
and price/carrying amount ratio of similar listed companies,
or similar market transactions. Assumptions are generally
based on experience, management's best estimates of future
developments and, if available, external data.
The carrying amount of the goodwill allocated to RNA in the
wholesale banking segment is 136 (2015:131).The recoverable
amount is based on the value in use and determined using cash
flow forecasts.The principal assumptions used are a growthrate
of after tax earnings expected in the near term of 12.8% (2015:
average of 7.5%), the discount rate of 13% (2015:14%) and
the multiplier used for calculating the present value of the
discounted cash flows after the forecast period of 16 (2015:16).
As the recoverable amount exceeds the carrying amount, it was
concluded that the goodwill allocated to RNA was not impaired.
A change of 0.5% in the discount rate does not cause the
carrying amount to exceed the recoverable amount.
The goodwill allocated to one of the cash-generating units in
the domestic retail segment is significant in comparison with
the goodwill's total carrying amount.The carrying amount of
this goodwill is 322 (2015: 322) and the cash-generating unit
is the collective of local Rabobanks.The recoverable amount
is based on the value in use. The value in use is determined
using cash flows expected in the near future based on financial
forecasts. As the recoverable amount substantially exceeded the
carrying amount, it was concluded that the goodwill allocated
to this cash-generating unit was not impaired. An increase in
the discount rate of 10% or a reduction in the future cashflows
of 10% are considered to be a maximum of possible changes
in key assumptions. Such a change does not cause the carrying
amount to exceed the recoverable amount and would not
result in an impairment.
No impairment of goodwill was recognised in 2016 (2015: 623).
Impairments of software developed in-house and other
intangible assets are not individually material. The total
impairments of software developed in-house was 4 (2015: 30).
This was mainly caused by the fact that the software is (partly)
no longer used.
Software Other
developed intangible
in millions of euros Goodwill in-house assets Total
Year ended 31 December 2016
Opening balance 905 428 160 1,493
Foreign exchange differences 1 (1) 2 2
Additions 1 105 52 158
Disposals - (1) (7) (8)
Changes due to sale of Athlon (367) - - (367)
Other (3) 6 - 3
Amortisation - (113) (75) (188)
Impairments - (4) - (4)
Closing balance 537 420 132 1,089
Cost 1,227 1,465 564 3,256
Accumulated amortisation and
impairments (690) (1,045) (432) (2,167)
Net carrying amount 537 420 132 1,089
Year ended 31 December 2015
Opening balance 1,454 421 184 2,059
Foreign exchange differences 79 1 4 84
Additions 4 380 54 438
Disposals - (239) (12) (251)
Other (9) 11 7 9
Amortisation - (116) (77) (193)
Impairments (623) (30) - (653)
Closing balance 905 428 160 1,493
Cost 1,571 1,450 646 3,667
Accumulated amortisation and
impairments (666) (1,022) (486) (2,174)
Net carrying amount 905 428 160 1,493
224 Rabobank Jaarverslag 2016