ANNUAL REPORT 2016
Key Audit Matter
Summary of the Audit Approach
Recoverability of fixed assets, intangible assets
and Goodwill
Disclosures related to fixed assets, intangible assets
and goodwill are presented in notes 8, 9 and 35 of the
consolidated financial statements.
In December 31st 2016 fixed assets and intangible
assets (excluding goodwill) recognized in consolidated
financial statements amount to 179,4 and 14,9
million of euros, respectively, being done impairment
tests to the respective cash generating units
identified, whenever there is indicators or changes in
circumstances that the respective recoverable amount
may be lower than the amount registered. In result
of the impairment tests impairment losses of 817.743
euros were registered in 2016.
Additionally, in December 31st 2016, Goodwill
recognized in consolidated financial statements
amounts to 111 million euros and respect mainly to
acquisition in previous years of 2 subsidiaries (Lurca
and Vidisco) and to the acquisition in 2016 of Eat
Out Group, being done impairment tests using the
discounted cash flow model.
Considering the materiality of the amounts, the
complexity of the assessment model and the elevated
level of judgement, related to the assumptions used
in impairment tests, the matter is a key audit matter
for the issuance of our opinion. The calculation of the
value in use requires that management defines a set of
estimatives and assumptions based on economic and
market forecasts, namely in what concerns projections
of future cash flows, growth rates in perpetuity and
discount rates to be used
In the specific case of fixed assets and intangible
assets, we analyse the EBITDA of the cash generating
units in order to identify the units that present
indicators of impairments.
For the situations that require the performance of
impairment tests, the audit procedures that we
developed consisted in the following:
- Assessment of the adequation of the impairment
model used by management and respective
calculations therein;
- Appreciation of the reasonability of assumptions used
inherent to the impairment model, namely those that
present more sensibility in the determination of the
value in use, namely evolution of revenues, margin
EBITDA, discount rate and growth rate in perpetuity;
- Assessment of the reasonability of projections of future
cash flows, compared with historic performance, in
particular the following: (i) Assessment of growth rates
of sales by their comparation to historic and forecasted
values for the economy and business sector; (ii) in the
specific case of foods beverage business in retail service
areas, we tested the reasonability of assumptions of
management, relatively to the evolution of traffic in
SCUT’s through analysis of the report of the Institute
of Mobility and Transports (IMT);
- Obtaining information of PwC specialists in relation to
discount rates used, considering comparable data from
other companies in the sector of food & beverage in
order to assess the reasonability of the discount rate;
- Making meetings with management to understand and
assess the assumptions used and their coherence with
budget approved for 2017;
- Performing a sensibility analysis to main assumptions
of the model.
We also reviewed the compliance of disclosures
considering the accounting standards applicable,
namely IAS 36 and what was considered as relevant.
Statutory Audit Report
December 31st 2016
Ibersol, S.G.P.S., S.A.
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