75. Goodwill and Other Intangible
Assets
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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
