The cash flows that were used for determining the impairments are based on the business plans drawn up by the business unit concerned for a period of at least five years. A weighted average discount rate is determined for each cash-generating unit, in line with those for comparable companies. The calculations that give the impairments and their reversals are based on a weighted average post-tax discount rate of 6% (2016: between 5.5% and 7%). Changes in the assumptions have not resulted in any deviation in the calculated amounts.
Prompted by developments in the rental portfolio of a limited number of station complexes in the Netherlands, a review was carried out of the recoverable amount for these complexes. The commercial value was measured at €66 million. This led to an impairment of €11 million, €6 million of which is accounted for in property, plant and equipment and €5 million in investment property (€16 million in 2016).
The carrying amount of the Group’s non-current assets is reviewed every reporting date in order to determine whether there are grounds for impairments. If such grounds are found, an estimate is made of the recoverable amount of the asset in question. For goodwill and intangible non-current assets that are not yet available for use, the recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or a cash generating unit is the higher of the value in use and the fair value net of selling costs. In assessing the value in use, the present value of the estimated future pre-tax cash flows is calculated using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment assessments, assets are grouped together into the smallest group of assets that generates cash flows from continuing use that are largely independent of other assets or groups of assets (the ‘cash-generating unit’). In impairment assessments, the goodwill acquired in a business combination is allocated to the cash-generating units that are expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are first deducted from the carrying amount of any goodwill allocated to the units, and then deducted from the carrying amount of the other assets in the unit or group of units on a pro rata basis.
Impairment losses in respect of goodwill are not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.