IBERSOL Annual Report and Consolidated Accounts 2017

ANNUAL REPORT 2017 2.7 IMPAIRMENT TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS Intangible assets with a specific lifetime are not subject to amortisation and are, instead, subject to annual impairment tests. Assets subject to amortisation are revaluated to de- termine any impairment whenever there are events or alterations in the circumstances causing their accounting value not to be recoverable. An impairment loss is recognised in the consolidated statement of comprehensive income by the amount by which the recovera- ble amount exceeds the accounted amount. The recoverable amount is the highest amount between an asset’s fair value minus the costs necessary for its sale and its utilisation value. To perform impairment tests, assets are grouped at the lowest level at which it may be able to separately identify cash flows (units generating cash flows). A cash-generating unit (CGU) is the smallest group of assets which includes the asset and that generates cash flows from continued use and which is generally independent from the cash input from other assets or asset groups. In the case of tangible assets, each shop was identified as a cash-generating unit. Shops with negative Ebitda for at least 2 years are subject to impairment tests. Consolidation differences are distributed among the group’s cash-flow generating units (CGUs), identified according to the country of operation and the business segment. The recoverable value of a CGU is determined based on calculating the utilisation value. Those calculations apply cash flow forecasts based on financial budgets approved by the managers and cover a 5-year period. The Board of Directors determines the budgeted gross margin based on past performance and on its market growth expectations. The average weighted growth rate used is consistent with provisions included in the sector’s reports. The discount rates used after taxes and reflect specific risks related with the assets from a CGU. 2.8 FINANCIAL ASSETS 2.8.1 Classification The group classifies its financial assets under the following categories: financial assets at the fair value through results, loans granted and accounts receivable, investments held until maturity and financial assets available for sale. The investment is classified according to its purpose. The Board of Directors decides on the classification when the investments are ini- tially recorded and re-assesses that classification at each report date. As at 31 December 2016, Ibersol held only category B and D financial assets. 215