75. Goodwill and Other Intangible Assets - - - - - - - - - - - About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Software Other Amounts in mi Hi ions of euros Goodwill developed intangible Total inhouse assets Year ended December 312018 Opening balance 519 371 112 1,002 Foreign exchange differences 3 3 Additions 80 41 121 Disposals (2) (17) (13) (32) Other 18 1 19 Amortization (95) (49) (144) Impairments (1) (2) (3) Closing balance 519 357 90 966 Cost 1,136 1,286 444 2,866 Accumulated amortisation and impairments (617) (929) (354) (1,900) Net carrying amount 519 357 90 966 Year ended December 312017 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 Amortization (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 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 ofthe 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 ofthe 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 ofthe 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 ofthe 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 ofthe goodwill allocated to RNA in the wholesale banking segment is EUR 125 million (2017: EUR 119 million). 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 growth rate of after tax earnings expected in the near term (five years) of 6% (2017:12%), the discount rate of 11.0% (2017:15.8%) and the multiplier used for calculating the present value ofthe discounted cash flows after the forecast period of 17.0 (2017: 12.6). 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 ofthe 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 EUR 322 million (2017: EUR 322 million) 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 nearfuture 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 cash flows 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. An impairment of goodwill was recognized in 2018 for EUR 1 million (2017: nil). Impairments of software developed in- house and other intangible assets are not individually material. The total impairments of software developed in-house was nil (2017: EUR 31 million). Annual Report 2018 - Consolidated Financial Statements 188

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Annual Reports Rabobank | 2018 | | pagina 190