An impairment charge is recognized in the income statement when the carrying amount of an asset or CGU or group of CGUs is greater than its recoverable amount.
Recoverable amount is the greater of:
The value in use of a CGU or group of CGUs is estimated using after-tax cash flow projections based on business plans and a terminal value calculated by extrapolating data for the final year of the business plan. Business plans generally cover one to five years.
These plans have been drawn up for each operating segment resulting from the Group’s organizational structure as described in note 4.1.
Management both at Group and subsidiary levels prepares underlying profit forecasts on the basis of past performance and expected market trends.
The growth rate used beyond the initial period of the business plans reflects the growth rate of the operating segment concerned, taking into account the geographic regions in which the operating segment conducts business.
Expected future cash flows are discounted at the weighted average cost of capital calculated for the Group. For certain CGUs or groups of CGUs a premium is added to the weighted average cost of capital in order to reflect the greater risk factors affecting certain countries in which the operating segment concerned conducts business.
An impairment charge recognized with respect to a CGU or group of CGUs is allocated initially to reducing the carrying amount of any goodwill allocated to that CGU, and then to reducing the carrying amount of the other assets of the CGU or group of CGUs in proportion to the carrying amount of each asset.
Impairment charges recognized with respect to goodwill cannot be reversed.
Impairment charges recognized with respect to any other asset may only be reversed if there is an indication that the impairment charge is lower or no longer exists. The amount reversed is based on the new estimates of the recoverable amount.
The increased carrying amount of an asset resulting from the reversal of an impairment charge cannot exceed the carrying amount that would have been determined for that asset had no impairment charge been recognized.
Accumulated impairment charges against property, plant and equipment and intangible assets (including goodwill) amounted to 32 million euro as of August 31, 2021 (222 million euro as of August 31, 2020), and include a net loss of 27 million euro recognized in other operating expenses in Fiscal 2021 (188 million euro in Fiscal 2020).
The main assumptions used were as follows:
| FISCAL 2021 | FISCAL 2020 | |||
|---|---|---|---|---|
| DISCOUNT RATE | LONG-TERM GROWTH RATE | DISCOUNT RATE | LONG-TERM GROWTH RATE | |
| Corporate Services | Corporate Services FISCAL 20218.0% |
Corporate Services FISCAL 20202.2% |
8.0% | 2.1% |
| Energy & Resources | Energy & Resources FISCAL 20218.2% |
Energy & Resources FISCAL 20202.6% |
8.6% | 2.4% |
| Government & Agencies | Government & Agencies FISCAL 20217.5% |
Government & Agencies FISCAL 20202.1% |
7.4% | 1.9% |
| Sports & Leisure | Sports & Leisure FISCAL 20217.3% |
Sports & Leisure FISCAL 20202.1% |
7.3% | 1.9% |
| Healthcare | Healthcare FISCAL 20217.3% |
Healthcare FISCAL 20202.2% |
7.4% | 2.0% |
| Seniors | Seniors FISCAL 20217.6% |
Seniors FISCAL 20202.0% |
7.5% | 1.9% |
| Schools | Schools FISCAL 20217.5% |
Schools FISCAL 20202.0% |
7.4% | 1.9% |
| Universities | Universities FISCAL 20217.0% |
Universities FISCAL 20202.0% |
7.2% | 2.0% |
| Other non-segmented activities | Other non-segmented activities FISCAL 20217.9% |
Other non-segmented activities FISCAL 20202.0% |
7.8% | 1.9% |
| Benefits & Rewards Services | Benefits & Rewards Services FISCAL 20218.8% |
Benefits & Rewards Services FISCAL 20202.7% |
9.5% | 2.3% |
The discount rates used by segment (group of CGUs) were set based on the weighted average of the discount rates for each geographic region, taking into account the relative weighting of each segment in the Group’s revenues:
