179 / 236
Variations du goodwill
(x 1,000 EUR)
Pubstone Belgium Pubstone Netherlands
CIS France
Total
Cost
AT 01.01.2015
100,157
39,250
26,929
166,336
AT 31.12.2015
100,157
39,250
26,929
166,336
Writedowns
AT 01.01.2015
44,380
3,600
47,980
Writedowns recorded during the financial year
4,800
2,300
7,100
AT 31.12.2015
49,180
5,900
55,080
Book value
AT 01.01.2015
55,777
35,650
26,929
118,356
AT 31.12.2015
50,977
33,350
26,929
111,256
Impairment test
At the end of the financial year 2015, the goodwill was subject to an
impairment test (executed on the groups of properties to which it was
allocated per country), by comparing the fair value of the properties
plus the goodwill to their value in use.
The fair value of the buildings is the value of the portfolio as estab-
lished by the independent real estate experts. This fair value is
established using three valuation methods: the ERV (Estimated Rental
Value) capitalisation approach, the expected cash flow approach
and the residual valuation approach. To carry out the calculation, the
independent real estate experts take as main assumptions the index-
ation rate, the discount rate and the buildings’ estimated end-of-lease
disposal value. These assumptions are based on market observations
taking into account investors’ expectations, particularly regarding
revenue growth and market risk premium. For further information, see
the Report of the Real Estate Experts of this Annual Financial Report.
The value in use is established by the Group according to expected
future net cash flows based on the rents stipulated in the tenants’
leases, the expenses to maintain and manage the property portfolio,
and the expected gains from disposals. The main assumptions are
the indexation rate, the discount rate, an attrition rate (number of
buildings and corresponding volume of revenues for which the tenant
will terminate the lease, year after year), as well as the buildings’
end-of-lease disposal value. These assumptions are based on the
Group’s knowledge of its own portfolio. The return required on its
shareholders’ equity is used as the discount rate.
Given the different methods used to calculate the fair value of the
buildings as established by the independent real estate experts and
the value in use as established by the Group, as well as the fact that
the assumptions used to calculate each of these may differ, the two
values may not be the same and the differences can be justified.
For 2015, the result of this test (illustrated in the table below) leads to
an impairment of 4,800 K EUR on the goodwill of Pubstone Belgium
and 2,300 K EUR on the goodwill of Pubstone Netherlands. For CIS,
no impairment was recorded. During the financial year 2015, the fair
value of the Pubstone Belgium and Pubstone Netherlands port-
folios recorded negative variations of respectively 400 K EUR and
2,783 K EUR, whereas the fair value of CIS recorded a positive variation
of 3,306 K EUR.
Assumptions used in the calculation of the value
in use of Pubstone
A projection of future net cash flows was drawn up for the remaining
duration of the lease bearing on the rents less the maintenance costs,
investments and operating expenses, as well as the proceeds from
asset disposals.
During this remaining period, an attrition rate is taken into account
based on the terms of the lease signed with AB InBev. The buildings
vacated are assumed to have all been sold. At the end of the initial
27-year lease, a residual value is calculated. The sale price of the
properties and the residual value are based on the average value of
the portfolio per square meter assessed by the expert at 31.12.2015
indexed to 1% (2014: 1%) per year. In 2014, a 15% margin had been
increased to the expert’s value starting from the fourth year. This
margin was based on the realised gains observed on the sale of
pubs/restaurants since the acquisition of the Pubstone portfolio. Out
of caution, in the cash flow projection, this margin was reduced to nil
in 2015.
The indexation considered on these cash flows decreases gradu-
ally from 1.70% to 1.50% starting from the second year for Pubstone
Belgium. The indexation is progressive for Pubstone Netherlands from
1.20% to 1.50% starting from the second year. In 2014, the indexation
was progressive from 0.5% to 1.50% (starting from the fifth year) for
the two portfolios Pubstone Belgium and Pubstone Netherlands.
The discount rate used amounts to 5.60% (2014: 5.80%).
Assumptions used in the calculation of the value
in use of CIS
A projection was drawn up of future net cash flows over 27 years. The
assumption adopted is the renewal of all the leases during a 27-year
period from the acquisition date.
The cash flow comprises the present indexed rent up to the date of
the first renewal of the lease. After this date, the cash flow consid-
ered is the indexed allowable rent. Cash expenditures foreseen in the
buildings’ renovation plan are also taken into account. Allowable rents
are rents estimated by the expert, stated in his portfolio valuation at
31.12.2015, which are considered sustainable in the long term in terms
of the profitability of the activity of the operating tenant.
At the 28
th
year, a residual value is calculated per property.
The indexation considered for these cash flows stands at 2% per year
(2014: 2%).
The discount rate used amounts to 5.60% (2014: 5.80%).
the positive difference between the conventional value offered for
the property assets at the acquisition (on which the price paid for the
shares was based) and the fair value of these property assets (being
expressed after deduction of the transfer duties standing at 1.8% and
6.2% in France).
175