74 Goodwill and other intangible assets
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Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
in millions of euros
Goodwill
Software
developed
in-house
Other
intangible
assets
Total
Year ended 31 December2017
Opening balance
537
420
132
1,089
Foreign exchange differences
(19)
(1)
(5)
(25)
Additions
115
49
164
Disposals
(40)
(3)
(43)
Other
1
21
(6)
16
Amortisation
(113)
(55)
(168)
Impairments
(31)
(31)
Closing balance
519
371
112
1,002
Cost
1,127
1,517
573
3,217
Accumulated amortisation and
impairments
(608)
(1,146)
(461)
(2,215)
Net carrying amount
519
371
112
1,002
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
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 119 (2016:136).The cash-
generating unit is RNA.The recoverable amount is based on
the value in use and determined using cash flow forecasts.
The principal assumptions used are a growthrate of aftertax
earnings expected in the near term (five years) of 12.0% (2016:
average of 12.8%), the discount rate of 15.8% (2016:18.1
and the multiplier used for calculating the present value of the
discounted cash flows after the forecast period of 12.6 (2016:
11.9). 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 (2016: 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 2017 (2016:
nil). Impairments of software developed in-house and other
intangible assets are not individually material. The total
impairments of software developed in-house was 31 (2016:4).
This was mainly caused by the fact that the software is (partly)
no longer used.
Rabobank Annual Report 2017 - Consolidated financial statements
220
