The european Goodwill impairmenT STudy
2011-2012
The European Goodwill Impairment Study – 2011-2012
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Who We Are
Houlihan Lokey is an international investment bank with expertise in mergers and acquisitions, capital markets,
financial restructuring, and valuation. Over the past 40 years, Houlihan Lokey has established one of the
largest worldwide financial advisory practices. Our transaction expertise and leadership in the field of valuation
inspire confidence in the financial executives, boards of directors, special committees, retained counsel,
investors and business owners we serve. In 2010, Thomson Reuters ranked us the No. 1 global M&A fairness
opinion advisor over the past 10 years. In addition, we were named valuation firm of the year at the 2010 and
2011 M&A Advisor International Awards.
Our stability, integrity, technical leadership and global capabilities make us a trusted advisor for clients
worldwide, across a wide range of services including:
Opinion Services
Transaction & Valuation Reporting Services
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Transaction & Valuation Reporting Services
Our experience and analytical insight allow us to help our clients with their tax and financial reporting valuation
needs. We go beyond mere documentation to provide our clients with the confidence to meet their growing
financial reporting responsibilities, under both International Financial Reporting Standards (IFRS) and U.S.
Generally Accepted Accounting Principles (U.S. GAAP). Our breadth of resources has enabled us to become a
leader in valuing intangible and tangible assets as well as liabilities for a variety of purposes, including
purchase price allocation, impairment of goodwill and other assets, tax reporting, fresh-start accounting and
equity-based compensation. Our commitment to understanding changes in regulations and best practices—and
our ability to set the standards for uncharted territory—allow our clients to remain focused on operating their
businesses.
For more information, visit www.HL.com.
The European Goodwill Impairment Study – 2011-2012
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Table of Contents
Executive Summary ............................................................................................................................ 4
What Is an Impairment?...................................................................................................................... 6
Introduction—How Is the Current Economic Environment Reflected in Impairment Accounting? .............. 9
The Study—Results on an Aggregated Level ....................................................................................... 11
Industries Analysed .......................................................................................................................... 18
1. Aerospace, Defence and Government Services ........................................................................... 18
2. Automotive ............................................................................................................................. 22
3. Basic Industrials Group - Chemicals.......................................................................................... 26
4. Basic Industrials Group – Metals .............................................................................................. 30
5. Basic Industrials Group – Other ................................................................................................ 34
6. Business Services and Management Consulting ......................................................................... 38
7. Consumer Products, Food and Retail ........................................................................................ 42
8. Energy .................................................................................................................................... 47
9. Engineering, Construction and Building Products....................................................................... 52
10. Financial Institutions Group - Banks ....................................................................................... 56
11. Financial Institutions Group – Insurance ................................................................................. 61
12. Financial Institutions Group – Other ....................................................................................... 65
13. Healthcare ............................................................................................................................ 69
14. Media, Sports and Entertainment ........................................................................................... 73
15. Real Estate, Lodging and Leisure............................................................................................ 77
16. Technology and IT ................................................................................................................. 81
17. Telecommunications.............................................................................................................. 85
18. Transportation....................................................................................................................... 89
Appendix I – About the Authors......................................................................................................... 93
Appendix II - Glossary....................................................................................................................... 95
Appendix III - List of Companies ....................................................................................................... 96
Appendix IV - Endnotes .................................................................................................................. 109
The European Goodwill Impairment Study – 2011-2012
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Executive Summary
Goodwill Impairment Accounting After the Financial Crisis
Since the global financial decline, much has been said about the issue of goodwill impairment and how large
the write-downs would be. While many of Europe’s largest companies continue to pursue strengthening their
balance sheets by increasing equity levels, restocking inventories and refinancing debt, it is evident that a
number of them are still struggling with the repercussions of the financial crisis and yet their goodwill
impairment levels remain surprisingly low. This has led us to question whether the largest companies in
Europe were prepared to recognise their goodwill impairments, or had they sufficiently recovered to avoid such
impairment charges at the end of 2010. And just how risky are their balance sheets?
Houlihan Lokey’s European Goodwill Impairment Study 2011-2012 indicates that some industries have now
recovered from the financial crisis (September 2008 through end of 2010 covered period) and are reporting
increasing profits compared to 2009. However, certain industries such as Banks, Insurance, Financial
Institutions Group – Other, as well as Real Estate, Lodging and Leisure are still suffering from the
repercussions of the crisis but their goodwill impairment levels remain surprisingly low. Of particular note is the
fact that booked impairments for 2010 are the lowest we have seen over the past five years.
Purpose of the Study—Analysis Performed
The 2011-2012 Study analysed acquisitions and goodwill impairments recorded by the 600 largest European
companies listed on the STOXX Europe 600 Index*. The study’s findings provide insight into goodwill
impairment developments by industry, showing the extent to which goodwill impairments are being recognised
across each industry. It also provides executives with the ability to benchmark their companies against peers as
well as compare their industry against other industries’ results and general movements.
This study follows our previous annual European Goodwill Impairment Studies carried out in 2009 and 2010.
We analysed and reported on the acquisition history, goodwill impairments, the developments of market
capitalisation, and the book value of equity of companies across 18 major industries between 2006 and 2010.
Major Findings
Based on data compiled by Houlihan Lokey, the following are some key findings:
STOXX Europe 600 companies spent a total of Euro 1.9 trillion on acquisitions (based on the purchaseprice paid during 2006 to 2010), which equals 26% of their market capitalisation as of December 2010.
While a total of Euro 187 billion was booked as goodwill impairment during the period under review, onlyEuro 14 billion was booked in 2010—the lowest we have ever observed.
In 2010, only 155 of the 600 companies analysed booked goodwill impairments (194 companies in2009). In addition, approximately 22% (or 133 of the 600 companies analysed) still showed a highimpairment risk for 2010 (24% in 2009). This is in contrast to the pre-crisis years of 2006 when only 7%of companies showed such an impairment risk.
The European Goodwill Impairment Study – 2011-2012
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Almost 60% of the goodwill impairment in 2010 was booked by three industries: Banks, Energy, andTelecommunications. The latter two industries have faced their own specific challenges, which haveresulted in high goodwill impairments.
Impairment of fixed assets was the driver of overall impairment in 2010 at almost Euro 20 billion. Thisdiffers from previous years when impairments of goodwill were significantly higher than impairments offixed assets and intangible assets. This leads us to ask: Why are goodwill impairments now having lessimpact on companies’ profit and loss statements than fixed asset and intangible asset impairments? Ofnote, the impairment of intangible assets at Euro 12 billion is nearly on the same level as goodwillimpairment in 2010.
Concluding Thoughts
In the preceding two studies, Houlihan Lokey revealed that five industries had shown worrisome impairment
risk ratios: Automotive, Banks, Insurance, Financial Institutions Group – Other, as well as Real Estate, Lodging
and Leisure. Though these industries still possess the worst ratios in terms of book value of equity to market
value of equity, the Automotive and Real Estate, Lodging and Leisure industries have recovered slightly.
However, the impairment risks for the Banking industry and Financial Institutions Group – Other have worsened
over the past year. This seems to indicate that maintaining market values below book values may now be
considered acceptable.
The 2011-2012 Study results raise a number of interesting questions and provide some food for thought:
Does maintaining book value of equity above market value represent a longer term change in goodwillimpairment reporting practices? If so, how should it be viewed by those in the industries affected? And isthis acceptable to investors and other stakeholders in these industries?
If this is not considered a long-term development then how long can we anticipate it to last?
For more information on this study, please contact one of the following Houlihan Lokey representatives.
Dr. Marc Hayn
Managing Director
Frankfurt
+49 (0) 69 256 24 6128
Dr. Tim Laas
Senior Vice President
Frankfurt
+49 (0) 69 256 24 6129
E.W. (Sandy) Purcell
Senior Managing Director
London
+44 (0) 207 747 1464
*See Appendix II: Glossary for more information.
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What Is an Impairment?
The overall principle is that an asset (or a group of assets) is impaired when the entity is not able to recover the
carrying value either through the use or the sale of the asset or group of assets.
Chart 1Recoverable Amount
Typically, when a manager chooses between sell and make, they will favor the option which leads to the highest
value. The impairment test reflects this economic rationale. Therefore, the carrying amount has to be compared
to the fair value less the costs to sell (selling approach) and the value in use (making approach). If a third party
is more eligible to create a higher value, then this is an important metric to consider. On the other hand, if the
intrinsic value exceeds the external value, management (in general) will not sell assets below the value in use.
Nevertheless, both value concepts are affected by a number of external and internal factors. It is not
necessarily the case that the impact of each factor will cause impairments; notwithstanding this, impairment
tests have to be carried out.
Both values (the fair value less costs to sell and the value in use) do not always have to be determined. If either
the fair value less costs to sell or the value in use is higher than the carrying amount, there is no impairment
and further valuation steps are not required.
This study refers to IAS 36 Impairment of Assets, and we focused specifically on goodwill, intangible assets
and property, plants and equipment and financial assets, such as subsidiaries (IAS 27), associates (IAS 28),
and joint ventures (IAS 31), which are not held for sale and do not belong to discontinued operations.
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Triggering Events
IAS 36 differentiates between two classes of assets: intangible assets with an indefinite useful lifetime and
those that are not yet available for use. Goodwill acquired in a business combination is required to be tested
annually. For all other assets within the scope of IAS 36, impairment tests are only required if there are any
indications that the assets may be impaired. The standard explicitly refers to the following triggering events:1
External sources
Significant decline in the asset’s market value;
Significant changes in the technological, market, economic or legal environment;
Increase in market interest rates; and/or
Carrying amount of the net assets being higher than the market capitalisation.
Internal sources
Obsolescence or physical damage of an asset;
Significant change in the usage of an asset with an adverse effect; and/or
Indication that the expected economic performance will be reduced.
The standard defines occurrences that are reflected in internal reporting and indicate that an asset may be
impaired as follows:2
Cash flows for acquiring the asset(s), or subsequent cash needs for operating or maintaining it, aresignificantly higher than those originally budgeted;
Actual net cash flows or net operating profit/loss is significantly worse than budgeted;
Significant decline in budgeted net cash flows or operating profit; and/or
Operating losses or net cash outflows, when current period amounts are aggregated with budgetedamounts for the future.
Under IFRS the order of the impairment is defined as follows:3
1. Reduction in the carrying amount of goodwill; and2. Pro-rata reduction on the basis of the carrying amount to the other assets.
Therefore, the impairment is not limited to the carrying amount of the goodwill. This means that companies
with a small amount of goodwill may have to book an impairment that is significantly higher than the goodwill.
Take the following for example:
Carrying amount 200;
Recoverable amount 100; and
Goodwill 20.
In this case, the impairment is not limited to 20. The goodwill is fully impaired and the carrying amounts of
the other assets have to be reduced by 80 on a pro rata basis.
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What Was Analysed?
The study comprises the 600 largest European companies belonging to the STOXX Europe 600 Index as of
March 2011. It covers the period 2006 through December 2010 (the covered period) for capital market
information and financial reporting data.
Data analysed include:
Market capitalisation (MC);
Book value of equity (BVE);
Purchase price paid (PPP);
Earnings before taxes (EBT);
Goodwill;
Goodwill acquired;
Goodwill impairment; and
Impairments of intangible and tangible assets.
We used data to determine the following:
Market capitalisation4 to book value of equity: A ratio below 100% causes a trigger and it may be the firstindicator that an impairment is not unlikely.
Purchase price paid to market capitalisation ratio: Most of the analysed companies have carried outacquisitions in the covered period. The more the acquirer paid, the more challenging the impairment testwill be. Contrary to the acquired goodwill, internally developed goodwill resulting from organic growthcannot be recognised. Therefore, the impairment risk is lower for companies generating organic growth. Inaddition, the decline in market capitalisation increases the risk that goodwill acquired is overpriced.Covering the STOXX Europe 600 companies, almost 80% of purchase price paid was incurred during thebull market in the period 2006 to 2008.
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Introduction—How Is the Current Economic Environment Reflected in ImpairmentAccounting?
The current study found that for most industries the financial crisis is no longer an issue. In 2010, many
industries were back on track. Contrary to 2008 and 2009, when all industries were generating profits on an
aggregated basis, and some industries exhibited even profits based on EBT, which were higher than in peak
times before the crisis. Aggregated data reveal that EBT increased by nearly 60% compared to 2009, but it is
still almost 15% below 2007 peak results.
Chart 2Aggregated EBT Adjusted for Goodwill Impairments—All STOXX Europe 600 Companies
(in millions of Euro)
Source: Capital IQ
Forward-looking data is always an important factor for goodwill impairment as compared to historical
performance. Each industry and company may have different value drivers, but expected GDP growth is an
important factor for all. Every six months (in April and October), the IMF publishes a five-year GDP forecast.
Chart 3 highlights how these forecasts have changed since 2008. While the real GDP forecast for the EU
decreased only slightly from April to October 2008, it decreased dramatically from October 2008 to April
2009. Interestingly, the most recent IMF forecast, published in April 2011, has not changed this forecast.
Despite earlier signs of recovery, EU GDP is far from the growth path predicted in 2008.
875,468
917,239
608,223
515,895
777,340
831,477
889,259
537,652
485,082
763,688
400,000
500,000
600,000
700,000
800,000
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2006 2007 2008 2009 2010EBT before Goodwill Impairment EBT
The European Goodwill Impairment Study – 2011-2012
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Chart 3Real GDP Development for the European Union
Source: IMF data and statistics published July 26, 2011.
This complex environment is also reflected by capital markets. The STOXX Europe 600 had its peak in the
middle of 2007 and its trough in Q1’09. Afterwards, the STOXX Europe 600 recovered, but it is still
significantly below its 2007 peak (more than -40%) and even below its starting level in January 2006 (-13%).
Chart 4STOXX Europe 600 Index
Source: Bloomberg.
90%
95%
100%
105%
110%
115%
120%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
GDP forecast as of April 2008 GDP forecast as of October 2008 GDP forecast as of April 2009
GDP forecast as of October 2009 GDP forecast as of April 2010 GDP forecast as of October 2010
GDP forecast as of April 2011
40%
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80%
100%
120%
140%
160%
180%
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Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
STOXX Europe 600
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The Study—Results on an Aggregated Level
Houlihan Lokey analysed the goodwill impairment of STOXX Europe 600 companies for transactions carried out
from 2006 to 2010. Our analysis indicates the following:
Based on purchase price paid as of closing from 2006 up until 2010, STOXX Europe 600 companiesspent a total of Euro 1.9 trillion on acquisitions, which equals the market capitalisation of the index byabout 26% as of December 2010. A number of acquisitions were carried out during the bull market at ahigher level of market capitalisation compared to the level at the end of December 2010.
A total of Euro 0.2 trillion was booked as goodwill impairment from 2006 to 2010. Further, only write-downs of Euro 0.1 trillion occurred during the 2008 to 2009 financial crisis. Thus, despite the crisis, theoverall reported goodwill seems to be nearly unaffected.
Chart 5Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
The amount of booked goodwill impairment as of 2008 and 2009 appears to have not fully reflected thedecline of market capitalisation. This result raises several questions: Why have companies not bookedhigher impairments? Is this caused by an insufficient level of capital, or does the market assume tooconservative projections?
As companies retained a significant portion of their profits, equity (calculated as the sum of commonstock), additional paid in capital, and retained earnings increased for the STOXX Europe 600 companiesby almost 14%. Too low capital should not have been such an issue in 2010. Hence, the answer to thequestion raised earlier is clear: Management teams appear to generally believe that the values of theircompanies are higher than their market capitalisations.
Further results include: In 2010, only 155 of the 600 companies analysed booked goodwill impairments(compared to 194 in 2009).
43,990 27,98070,571
30,814 13,652
446,283
572,720
446,212
241,815182,310
0
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200,000
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400,000
500,000
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Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600
The European Goodwill Impairment Study – 2011-2012
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Chart 6Number of Companies with Goodwill Impairments by Industry
Sources: Capital IQ and annual reports.
As of December 2010, book value of equity still significantly exceeded the market capitalisation for 13%of STOXX Europe 600 companies. About 25% or more of all companies in the following industries showedthis worrisome ratio (MC/BVE ratio): Financial Institutions Group – Banks, Financial Institutions Group –Insurance, Financial Institutions Group – Other, and Real Estate, Lodging and Leisure.
Despite improvement in the capital markets and the already booked goodwill impairments, book value ofequity is still not supported by the market capitalisation for these companies. In general, impairments maybe avoided only if the value in use equals at least the book value. In comparison to Houlihan Lokey’sEuropean Goodwill Impairment Study – 2009 and 2010-2011, the crucial industries (FinancialInstitutions Group - Banks, Financial Institutions Group - Insurance, Financial Institutions Group – Otheras well as Real Estate, Lodging and Leisure) - with the exception of Automotive - are still the same.
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The European Goodwill Impairment Study – 2011-2012
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Chart 7Companies with Book Value of Equity Above or at Market Capitalisation*
* Sources: Capital IQ, Bloomberg, and annual reports.As of December 2010.
Booked goodwill impairments did not lead to changes in ratios of book value of equity to marketcapitalisation, which are in line with the ratios before the financial crisis (2006 to 2007). Three yearsafter the investment bank Lehman Brothers filed for Chapter 11 bankruptcy, the market capitalisation tobook value of equity (MC/BVE) ratio is not yet back to a reasonable level for all companies.
As of December 2010, 79 companies show a market capitalisation significantly below book value of equity(BVE) compared to 23 companies in 2006.
Is this an indicator that overall the level of booked goodwill impairments is still too low?
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The European Goodwill Impairment Study – 2011-2012
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Chart 8Market Capitalisation in Relation to Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
If the market capitalisations for companies do not support the goodwill, then the value in use must exceedthe market values. In 2008 there were good reasons why the internal view (value in use) was often moreappropriate than the external view (market capitalisation). But the number of companies with book valuessignificantly above market capitalisations is still not at the level before the crisis, the current data suggestthat the internal view is not always more appropriate than the market view.
Recognising goodwill impairments in times of high profits may cause a communication challenge, whichpreferably should be avoided.
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The European Goodwill Impairment Study – 2011-2012
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Houlihan Lokey developed the concept of an Impairment Risk Factor (IRF), which uses four weather conditions
- Sunny, Cloudy, Rainy, and Stormy - to depict potential impairment risk. The classification of a company to
one of these weather conditions depends on the impairment risk ratios of “Purchase Price Paid to Market
Capitalisation” and “Market Capitalisation to Book Value of Equity” as outlined in table 1.
Table 1Definition of Impairment Risk Factor
The potential impairment risk for each industry and its development compared to our 2010-2011 Study is
represented in table 2.
SUNNY CLOUDY RAINY STORMY
PPP/MC-Ratio <0.25 >0.25 <0.25 >0.25
MC/BV-Ratio >1.00 >1.00 <1.00 <1.00
Score 1 2 3 4
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Table 2Impairment Risk Factor (IRF) by Industry
Industry
ImpairmentRisk Factor
Dec 09
ImpairmentRisk Factor
Dec 10
Change ofImpairmentRisk Factor
ImpairmentForecast
Percentageof StormyCompanies
Number ofStormy
Companies
Aerospace Defence and Government Services 2.0 1.7 8% 1
Automotive 1.8 1.5 7% 1
Basic Industrials Group - Chemicals 1.3 1.0 0% 0
Basic Industrials Group - Metals 1.5 1.5 4% 1
Basic Industrials Group - Other 1.4 1.4 2% 1
Business Services and Management Consulting 1.6 1.4 0% 0
Consumer Products, Food and Retail 1.4 1.3 0% 0
Energy 1.5 1.6 8% 5
Engineering, Construction and Building Products 1.9 1.8 14% 4
Financial Institutions Group - Banks 2.7 2.8 40% 21
Financial Institutions Group - Insurance 2.4 2.4 29% 9
Financial Institutions Group - Other 2.1 2.0 10% 3
Healthcare 1.4 1.4 0% 0
Media, Sports and Entertainment 1.6 1.5 3% 1
Real Estate, Lodging and Leisure 2.4 2.3 28% 9
Technology and IT 1.5 1.4 0% 0
Telecommunications 1.6 1.3 0% 0
Transportation 1.6 1.4 0% 0
The European Goodwill Impairment Study – 2011-2012
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The good news is that most industries show an improved forecast while none of the industries analysed are
facing Stormy conditions. Surprisingly, certain industries have a worsened impairment climate compared to last
year, these industries are Energy and Financial Institutions Group – Banks. Energy was among the industries
with the biggest impairment in each category: goodwill, intangible assets and fixed assets. The increase in
intangible and fixed asset impairment seems to be a means to get pressure out of the balance sheets without
booking goodwill impairments in times of overall good economic conditions. Almost every fourth company had a
market capitalisation at or below book value of equity. This ratio is still more than three times higher than
before the financial crisis.
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Industries Analysed
1. Aerospace, Defence and Government Services
Aerospace, Defence and Government Services (ADG) comprises both civilian and military aerospace and
defence equipment manufacturers and key government suppliers.
Economic Climate
The European aerospace and defence market generated estimated total revenues of Euro 149.5 billion in
2010, a 2.8% increase from 2009, compared to a 1.1% increase from 2008 to 2009.5 The industry
experienced slower growth in 2009 due to reduced operations in Iraq and Afghanistan. Industry growth is
expected to rise in 2011 and subsequent years, primarily driven by civil aerospace, which is expected to reach
Euro 206.6 billion by the end of 2014.
In 2010, European defence spending decreased by approximately 2.8%, despite the continued growth of world
military expenditure.6 In the first half of 2011, European governments continued to reduce their defence
budgets in an attempt to relieve excessive budget deficits. The U.K., for instance, intends to reduce its defence
budget by 2.5% by 2012, for a total 7.5% reduction from 2014 to 2015, through the reductions of
procurement programmes, private finance initiative (PFI) service contracts and the installed base of defence
equipment in Britain.7 Additionally, the Defence Ministry in Germany is expected to generate Euro 8.3 billion
of savings relative to its preceding plan between 2010 and 2015.8 In July 2011, Germany ended compulsory
military service in an effort to reduce the size of its armed forces by 20% to a targeted maximum of 185,000
personnel.9
In June 2011, the European Defence Agency signed an agreement with the European Space Agency with the
purpose of boosting cooperation, sharing research and distinguishing areas where space assets can support
military needs.10 The agreement would also promote synergies between the military and civilian sectors, as well
as among the EU member states, by encouraging the use of dual-use technologies and the sharing of defence
assets.11
Moreover, EU member states continue to consolidate resources, as a result of contracting defence budgets, as
illustrated by the 50-year treaty on defence and security signed by Britain and France in November 2010. The
treaty encompasses the joint use of aircraft carriers, a 10,000-person joint expeditionary force and
unparalleled levels of cooperation over nuclear missiles.12
Civil aerospace is considered to be structurally stronger than in prior cycles as more than 50% of the order
backlog is in emerging markets, and because several companies have made considerable progress in reducing
costs.13 The civil aerospace aftermarket has begun recovering from the effects of the economic downturn in
2008 and 2009. Although aircraft deliveries decreased between 2009 and 2010, the commercial value
generated by the sector, including maintenance and services activities, increased 25% in 2010 compared to
2009.14 Analysts anticipate civil aerospace aftermarket sales growth of 5% to 10% in 2011, as well as strong
The European Goodwill Impairment Study – 2011-2012
19
growth over the next few years, driven by improved air traffic and airline capacity growth, the end of
de-stocking and maintenance deferrals and the structural ageing of aircrafts globally.15,16
Large commercial aircraft deliveries decreased by approximately 1% in 2010, but have been forecast to
increase an estimated 6% in 2011 and 15% in 2012, primarily driven by growth in existing platforms and new
programmes.17 However, airline industry margins are expected to decrease from 5% in 2010 to 3.1% in 2011
due to high oil prices.18
In 2010, global passenger air traffic rose by 8.2%, driven primarily by emerging markets, while global airline
capacity increased by 4.4%.19 Comparatively, air traffic and capacity in Europe increased 4.2% and 2.6%,
respectively, despite declines in growth in December 2010 due to severe weather. Europe accounted for
35.6% of the international passenger traffic market in 2010.20,21
As of March 2011, global passenger air traffic growth slowed to 5.8% year-over-year mainly due to the
earthquake and tsunami in Japan, as well as the political unrest in the Middle East and North Africa, while
capacity increased by 8.3%.22 Europe experienced continued air traffic growth in the first quarter of 2011,
increasing 29.3% in April 2011 compared to April 2010, during which the industry had been impacted by the
Icelandic volcanic eruption which resulted in localised airspace closure;23 and overall European passenger
traffic in March 2011 increased 5.3% compared to March 2010.24 Some analysts anticipate that overall
passenger volume at European airports is expected to grow by 4.5% in 2011.25
In 2011, analysts also expect lessors to account for a greater portion of aircraft financing and European
governments to decrease their aircraft financing support as a result of financial budget pressures and new
OECD regulations.26
Table 3Aerospace, Defence and Government Services—Companies Included
Impairment Climate
In general, the Aerospace, Defence and Government Services industry moved closely with the STOXX Europe
600. As of December 2010, its market value decreased compared to its level in January 2006 and the industry
lost more than 22% of its market value compared to its peak in June 2007.
BAE Systems plc Chemring Group plc Cobham plcEuropean Aeronautic Defence andSpace Company EADS N.V.
Finmeccanica SpA Meggitt PLC MTU Aero Engines Holding AG Rolls-Royce Group plc
Safran S.A. Thales Ultra Electronics Holdings plc Zodiac S.A.
The European Goodwill Impairment Study – 2011-2012
20
Chart 9Aerospace, Defence and Government Services—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Aerospace, Defence and Government Services companies made acquisitions totalling approximately
Euro 18 billion during the covered period, of which Euro 16 billion was spent in 2006 through 2008.
Significant and noteworthy acquisitions include a stake in Airbus by EADS in 2006; the acquisition of Armor
Holdings by BAE Systems in 2007; and the acquisition of DRS Technologies by Finmeccanica in 2008.27
At fiscal year-end 2010, Aerospace, Defence and Government Services reported a total goodwill of
Euro 39 billion, of which Euro 12 billion was acquired from 2006 to 2010. Approximately 64% of the
purchase price paid in 2006 to 2008 was allocated to goodwill. In 2010, companies in this industry booked
goodwill impairments of Euro 0.3 billion, equal to approximately 1% of the recorded goodwill as of fiscal year
2010 and 2% of the purchase price paid.
Goodwill impairment booked from 2006 to 2010 comprises only about 15% of the goodwill acquired in the
same period. In addition, the total purchase price paid represents still more than 24% of the market
capitalisation (PPP/MC ratio) as of December 31, 2010, whereas booked goodwill impairment (2006 through
December 2010) covers only 10% of the total purchase price paid. At the end of December 2010, 8% of
Aerospace, Defence and Government Services companies showed book value of equity above the market
capitalisation.
61 244 172
1,054349
3,7815,937 6,008
1,5271,200
0
2,000
4,000
6,000
8,000
10,000
12,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment Charges Purchase Price Paid (EURm) STOXX Europe 600 ADG
The European Goodwill Impairment Study – 2011-2012
21
Chart 10Aerospace, Defence and Government Services—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, Aerospace, Defence and Government Services had an overall IRF
score of 1.7 at the end of December 2010 (2.0 in December 2009). Therefore, the impairment forecast for
this industry has slightly improved and indicates still Cloudy conditions. Only one company is included in the
Stormy category. The IRF distribution for all companies included in this industry is reflected in chart 11.
Chart 11Aerospace, Defence and Government Services—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
0% 0%14%
21%
64%
0% 8% 0% 8%
83%
2
3
9
1
0
1
10
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of Equity
Dec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%
Mar
ketC
apital
isat
ion
/B
ook
Valu
eof
Equ
ity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
22
2. Automotive
The Automotive industry comprises companies based in Europe specialising in the production of automobiles,
auto parts, tyres and automotive equipment.
Economic Climate
In 2010, the conclusion of governmental fleet renewal schemes in several EU member states resulted in a
5.5% decline in demand for passenger cars compared to 2009, while demand for commercial vehicles
increased 8%.28,29 Light vehicle production in Europe in 2010 increased 12%, primarily driven by an increase
in exports to North America and China as well as the non-recurrent de-stocking effect in 2009.30 The European
automobile industry accounts for approximately 25% of worldwide vehicle production.31
In Q1’11, analysts estimated European vehicle production increased 8%, largely driven by German OEMs.32
In May 2011, demand for passenger cars increased by an estimated 7.1% year-over-year in the EU, however,
for the five months ended May 2011, total passenger car demand decreased 0.8% compared to the same
period in 2010.33
Growth in European vehicle demand continues to be driven by emerging market demand, particularly China.34
Light vehicle production in Europe is forecast to increase 5% in 2011, compared to 2% for global auto
production.35 In Western Europe, analysts forecast a 1% decline in passenger car demand, from approximately
13 million units in 2010 to 12.9 million in 2011, while light commercial vehicle demand in Europe is
expected to increase 8% to 1.6 million units.36,37 Furthermore, the conclusion of the scrappage schemes
resulted in a continuous decline in new car sales in Europe. After recovering for the first time in 11 months
with a slight increase of 0.9% year-over-year in February 2011, new car sales declined once more in March
and April 2011, by 5% and 4.1% year-over-year, respectively.38 Overall, in 2011, new vehicle registrations are
forecast to decrease by 1%, while vehicle production is expected to increase by 1% in Europe.39 Although
Western European passenger car demand is forecast to be 13 million units in 2012 and 13.6 million units in
2013, declining consumer confidence and rising unemployment could have a considerable negative impact on
volume.40
In 2010, the European truck market grew by 8%, primarily driven by rapidly increasing sales of original
equipment tyres and industrial production recovery.41 European truck volumes increased approximately 60% in
2010 year-over-year, and are forecast to increase by 35% in 2011.42,43
In 2010, European auto parts companies experienced increases in production, primarily as a result of the non-
recurrence of a significant de-stocking effect. European auto parts production increased an estimated 12% in
2010, and is forecast to grow approximately 1% in 2011.44
The European Goodwill Impairment Study – 2011-2012
23
Auto suppliers are expected to experience strong cyclical recovery with improvement in demand. OEMs are
increasingly focusing on improving scale through global platforms, which may result in an increase in auto
supplier consolidation.45 As a result of the OEM emphasis on global platforms, auto suppliers will be better-
positioned to manage raw material inflation risks, as the OEMs will be more likely to share the liability of raw
material inflation.46 Over the next few years, analysts expect European auto suppliers to exceed light vehicle
production as a result of improved revenue contribution from emerging markets and a decrease in platforms
utilised by global OEMs.
Tyre demand in Europe increased 16% in 2010, recovering from its 10% decrease in 2009, and is forecast to
grow 6% in 2011.47 However, accelerating raw material prices could cause tyre operating margins to be
unstable in the short-term, as there is usually a delay before tyre companies can offset a rise in raw material
prices through price increases.48 Additionally, several tyre companies have initiated sizeable capacity expansion
projects for future growth, but this may lead to reduced cash-flow in the short-term.49
In February 2011, the European Parliament approved legislation that will regulate CO2 emissions from light
commercial vehicles in Europe.50 The regulation targets a weight-based standard of average CO2 emissions of
130 grams per kilometre for new cars in 2012, with a long-term target of 95 grams per kilometre by 2020.51 If
the average CO2 emissions of a manufacturer’s fleet surpass the regulation’s limit value in any year from 2012,
the manufacturer has to pay an excess emissions premium for each gram per kilometre of exceedance for every
car registered.52 Currently, cars registered in the EU average CO2 emissions of 140 grams per kilometre.53
Table 4Automotive— Companies Included
Impairment Climate
The market capitalisation for companies included in the Automotive industry increased compared to its level in
January 2006 by almost 40%. However, as of December 2010, the industry lost almost 20% of its market
value compared to its peak in June 2007. Note, the peak in 2008 was caused mainly by the stock rally in
relation to the Porsche-Volkswagen transaction.
BMW GroupCompagnie Generale DESEtablissements Michelin SCA
Continental AG Daimler AG
Fiat Industrial Fiat S.p.A. GKN plc Inchcape PLC
Nokian Tyres Oyj Pirelli & C. SpA Porsche Automobile Holding SE PSA Peugeot Citroen
Renault S.A. Valeo S.A. Volkswagen AG
The European Goodwill Impairment Study – 2011-2012
24
Chart 12Automotive—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Automotive companies made acquisitions of approximately Euro 34 billion during the covered period, of which
Euro 24 billion was spent in 2009. At fiscal year-end 2010, this industry reported a total amount of goodwill
of approximately Euro 18 billion, of which Euro 16 billion was acquired from 2006 to 2010. Noteworthy
acquisitions include a stake in Volkswagen by Porsche in 2007; the acquisition of Scania by Volkswagen in
2008; and the 2009 acquisition of Volkswagen by Porsche.54
In fiscal year 2010, companies in the Automotive industry booked total impairments of about Euro 1.6 billion,
with the largest amount of Euro 0.8 billion (50.7%) relating to the impairment of fixed assets. In addition,
Euro 0.7 billion (47.6%) of intangible assets were impaired. The remaining less than Euro 0.1 billion related
to goodwill impairments booked by only two companies. The relatively high amount of fixed-asset impairment
might be an indicator for overcapacity in the industry. The booked goodwill impairments in fiscal year 2010 are
the lowest impairments of the previous periods and account for approximately 2% of the total goodwill
impairments booked during the period 2006 to 2010.
Comparing the amount of goodwill impairment with the acquired goodwill in 2006 to 2010 only 9% of the
goodwill acquired was impaired. In addition, the total purchase price paid represents nearly 14% of the market
capitalisation (PPP/MC ratio) as of December 31, 2010, whereas, booked goodwill impairment (2006 to
December 2010) covers only 4% of the total purchase price paid. At the end of December 2010, 20% of
companies showed book value of equity close to or above the market capitalisation.
189 35 302 88926
1,445
3,746 4,301
23,669
662
(1,000)
4,000
9,000
14,000
19,000
24,000
29,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paide (EURm) STOXX Europe 600 Automotive
The European Goodwill Impairment Study – 2011-2012
25
Chart 13Automotive—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
At the end of 2010, the market capitalisation for the Automotive industry was only 3% below the average
market capitalisation for 2007 and 2008.
According to the MC/BVE and PPP/MC ratios, the industry had an overall score of 1.5 at the end of December
2010 (and 1.8 at December 2009). The impairment forecast for the industry has slightly improved and
indicates still Cloudy conditions. However, one company is still in the Stormy category, with 20% showing a
book value of equity above market capitalisation.
Chart 14Automotive—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
7%
21%14%
36%
21%
7%13%
0%
20%
60%
1
2
0%
3
9
1
3
2
5
3
0%
10%
20%
30%
40%
50%
60%
70%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%
Mar
ketC
apital
isat
ion
/B
ook
Valu
eof
Equ
ity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
26
3. Basic Industrials Group - Chemicals
Chemicals is a subsector of the Basic Industrials Group which comprises consumer, specialty, pharmaceutical,
base, and fine chemicals.
Economic Climate
Overall EU chemicals production increased 10.1% in 2010 compared to 2009, driven by an increase in
exports, as well as orders from other EU manufacturing sectors.55 The EU external trade chemicals surplus
increased 10.3% in 2010 compared to 2009, primarily driven by specialty chemicals and external demand
from non-EU, Europe, Latin America and emerging Asia.56 Polymers, petrochemicals and basic inorganics were
the primary contributors to EU chemical production growth in 2010.57 However, industry production remains
approximately 5.6% below pre-crisis levels.58 Chemical sales increased 17.2% in 2010 compared to 2009,
primarily due to export sales.59
The Chemicals industry in the EU has been steadily recovering since April 2009, even though its major
customer sectors experienced varying impacts from the economic downturn. The biggest production increases
in the EU chemicals sector in 2010, compared to 2009, originated from the automotive industry, followed by
basic metals and electrical equipment.60 However, the European construction sector (a significant chemicals
customer) experienced a 4% decrease in production in 2010, and is forecast to further contract by 1% in
2011.61,62
EU chemicals production in April 2011 rose 2.9% and EU chemicals prices increased by 9.8% compared to
March 2010.63 Chemical sales increased 17.3% in March 2011 year-over-year, driven by exports and overall
chemicals price increases.64 In Q2’11, analysts anticipated a sharp decline in global industrial activity as the
rate of inventory stocking decreased, partially driven by the effects of Japan and energy price inflation.65
However, as Japanese activity and oil prices recover, analysts expect a return of industrial activity in Q3’11.66
Table 5Basic Industrials Group - Chemicals—Companies Included
Impairment Climate
The Chemicals industry performed well at the end of Q3’08, when it was then hit by the financial crisis and
stock prices decreased. Though at the end of 2009 market capitalisation was sitting at less than 20% of its
Akzo Nobel N.V. Arkema S.A. BASF SE Brenntag
Clariant AG Croda International plc Givaudan AG Johnson Matthey plc
K+S Aktiengesellschaft Kemira Group Lanxess AG Novozymes A/S
Rhodia S.A. Royal DSM N.V. Sika AG Solvay S.A.
Symrise AG Syngenta AG Umicore S.A. Victrex
Wacker Chemie AG Yara International ASA
The European Goodwill Impairment Study – 2011-2012
27
peak in June 2008, it rallied back in 2010 to mark a new high by end of December 2010, at 80% above the
level of January 2006.
Chart 15Basic Industrials Group - Chemicals—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
(in millions of Euro)
Sources: Capital IQ, Bloomberg, and annual reports.
Chemicals companies made acquisitions of about Euro 33 billion during the covered period, of which
Euro 27 billion was spent from 2006 to 2008. At fiscal year-end 2010, this industry reported goodwill of
Euro 18.9 billion, of which Euro 12.9 billion was acquired from 2006 to 2010. Notable deals include:67
The acquisitions of Engelhard and Degussa Construction Materials both in 2006;
The acquisition of Ciba Holding by BASF in 2009;
The acquisition of Imperial Chemical Industries by Akzo Nobel in 2008 (booked an impairment of morethan Euro 1 billion for Morton International in 2008); and
The acquisition of Morton International by K+S in 2009.
In fiscal year 2010, Chemicals companies booked total impairments of Euro 0.7 billion. The largest amount
relates to the impairment of fixed assets at Euro 0.6 billion (82.3%), followed by the impairment of intangible
assets at Euro 0.1 billion (16.6%), and the remaining Euro 0.01 billion (1.1%) accounting for the impairment
of goodwill.
The goodwill impairments booked for fiscal years 2008 and 2009 account for 94% of the total goodwill
impairments booked from 2006 to 2010. Booked goodwill impairments in fiscal year 2010 are 98% below the
66 43
1,301409
7
8,932
3,329
15,003
3,751
1,813
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Chemicals
The European Goodwill Impairment Study – 2011-2012
28
booked impairments of fiscal year 2009, which was driven mainly by the goodwill impairments booked by
BASF SE and Royal DSM N.V.
Goodwill impairments from 2006 to 2010 equal about 14% of the goodwill acquired in the same period. In
addition, the total purchase price paid represents 18% of the market capitalisation (PPP/MC ratio) as of
December 31, 2010, whereas booked goodwill impairment (2006 to December 2010) covers only 10% of the
total purchase price paid. As of December 2010, only 5% of Chemicals companies showed book value of
equity close to or above market capitalisation.
Chart 16Basic Industrials Group - Chemicals—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, Basic Industrials Group - Chemicals had an overall
score of 1.0 at the end of December 2010 (and 1.3 at December 2009), which is again the lowest score for all
industries investigated. Therefore, the IRF for the industry indicates Sunny conditions.
0% 5% 5%20%
70%
0%5%
18%
77%
0% 0%1
4
17
1 1
4
14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
29
Chart 17Basic Industrials Group - Chemicals—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
30
4. Basic Industrials Group – Metals
Metals is a subsector of the Basic Industrials Group comprising precious metals and minerals, iron and steel,
coal, aluminium, and the base metal markets.
Economic Climate
In 2010, the global Metals industry experienced 78% growth in mergers and acquisitions (M&A) activity,
primarily driven by Asian and South American countries.68 As a result of escalating commodity prices and
increasing pressure on contracts by miners, metals companies largely focused on vertical integration to secure
raw materials.69 Analysts expect strong growth in metals M&A activity in 2011 due to decreased economic
uncertainty, as companies seek to further consolidate, secure raw materials and expand their presence in
developing markets. 70
Industrial production in Europe is forecast to grow 4% in 2011.71 Production capacity in 2011 and 2012 is
expected to be relatively depressed owing to low capital spending during the previous two years.72 Steel
production in Europe is expected to increase by 3% in 2011, compared to 7% globally, as a result of a lower
demand outlook in Europe.73 Analysts anticipate steel prices to increase in line with input costs over 2011; low
utilisation rates will inhibit steel producers from attaining price increases before input costs. 74
Precious metals continue to experience investment growth in Europe, as they are considered a safe investment
amid current concerns regarding a potential sovereign debt default by peripheral EU nations.75
In 2011, commodity prices are expected to continue rising, driven by sustained demand from developing
economies. 76 Analysts expect base metals performance to be volatile depending on periodic financial and debt
shocks; however, expansionary monetary policy is expected to contribute to overall growth. 77 Aluminium is
forecast to experience strong growth, despite confronting challenges of excess capacity and high inventories.78
Additionally, strong commodity prices are leading to robust balance sheets for metals companies; analysts
expect companies to use the excess cash to pursue additional M&A activities, particularly in emerging
markets.79
The European Goodwill Impairment Study – 2011-2012
31
Table 6
Basic Industrials Group - Metals—Companies Included
Impairment Climate
In terms of market capitalisation (as of December 2010), the Metals industry is 132% above its level in
January 2006, but it experienced a decline due to the financial crisis and is still 15% below its market
capitalisation compared to its peak in May 2008.
Chart 18Basic Industrials Group - Metals—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Companies made acquisitions totalling Euro 115 billion during the covered period, of which Euro 107 billion
was spent throughout 2006 to 2008. At the end of fiscal year 2010, the Metals industry reported a total
amount of goodwill of Euro 38 billion, of which Euro 31 billion was acquired from 2006 to 2010.
Notable deals carried out include the acquisitions of:80
Acerinox S.A. Anglo American plc Antofagasta plc Aperam
Arcelor Mittal Aurubis AG BHP Billiton plc Boliden AB
Eramet S.A. Eurasian Natural Resources Corp Plc Fresnillo PLC Kazakhmys PLC
Kloeckner & Co SE Lonmin plc Norsk Hydro ASA Outokumpu Oyj
Petropavlovsk PLC Randgold Resources Ltd. Rautaruukki Corporation Rio Tinto Group
Salzgitter AG SSAB AB ThyssenKrupp AG Vedanta Resources plc
Voestalpine AG Xstrata plc
1,630307
5,235
772 171
42,46444,721
19,439
3,800 4,269
0
10,000
20,000
30,000
40,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
300%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Metals
The European Goodwill Impairment Study – 2011-2012
32
Arcelor by the Mittal Steel Company and other related transactions in 2006 and 2007;
Tintaya Copper Mine by Xstrata in 2006;
Alcan by Rio Tinto in 2007;
IPSCO by SSAB in 2007;
Anglo Ferrous Brazil by Anglo American in 2008;
Böhler-Uddeholm by Voestalpine in 2008; and
Jubilee Mines by Xstrata in 2007.
In fiscal year 2010, Metals companies booked total impairments of Euro 1.4 billion of which the largest
amount of Euro 1.1 billion (84%) relates to the impairment of fixed assets, followed by the impairment of
goodwill at Euro 0.2 billion (13.1%), while the remainder of less than Euro 0.1 billion (2.9%) accounts for the
impairment of intangible assets.
The booked goodwill impairments in fiscal year 2010 were 78% below the booked impairments of the previous
fiscal year at Euro 0.8 billion. Goodwill impairments from 2006 to 2010 equal 26% of the goodwill acquired
in the same period. In addition, the total purchase price paid represents 21% of the market capitalisation
(PPP/MC ratio) as of December 31, 2010, whereas booked goodwill impairment (2006 to December 2010)
covers only 13% of the total purchase price paid, which was driven mainly by one impairment booked by Rio
Tinto in 2007. As of December 2010, 16% of the companies showed book value of equity close to or above
the market capitalisation.
Chart 19Basic Industrials Group – Metals—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
0% 0%
20%24%
56%
0% 8% 8%
19%
65%
0 2 2
5
17
0
0
5
6
14
0%
10%
20%
30%
40%
50%
60%
70%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
33
Considering the MC/BVE and PPP/MC ratios, the industry had an overall score of 1.5 at the end of December
2010 (and 1.5 at December 2009). Our impairment forecast for this industry indicates Cloudy conditions.
Chart 20Basic Industrials Group - Metals—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apital
isat
ion
/B
ook
Valu
eof
Equ
ity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
34
5. Basic Industrials Group – Other
Other, a subsector of the Basic Industrials Group, comprises electrical components and equipment, industrial
machinery, and paper products.
Economic Climate
In 2010, the global electrical components and equipment market generated total revenues of approximately
Euro 60 billion, representing a 3.7% increase over 2009.81 Europe accounted for 23.1% of the global market
in 2010.82 In 2011, European electrical companies have been increasing prices and passing on higher raw
material costs to customers.83 However, contract engineering companies have found it more difficult to pass on
higher costs as they generally fix input costs at the time of contract signing.84 Most electrical component
companies carry relatively higher inventories than required, as a result, analysts expect the beginning of
de-stocking by the end of Q2’11.85 Furthermore, electrical companies are forecast to continue increasing
expenditures in R&D, sales and production development.86 Analysts expect energy efficiency to remain a
significant growth driver for electrical companies, especially after the deployment of the Smart Grid.87 The
Smart Grid, a new power grid that uses advanced automation and IT, is expected to support the integration of
renewable intermittent energy sources, enable consumers to decrease their energy usage and permit utilities to
decrease their operating costs.88 Industrial productivity and infrastructure investments are expected to be
primary growth drivers for electrical companies as well.89
Industrial production in Europe experienced growth of 8% to 10% in 2010.90 The completion of de-stocking at
customers and distributors enhanced industrial machinery growth rates in the first half of 2010.91 Additionally,
volume recovery in 2010 led to strong margin development for companies in the industry.92 Industrial
machinery companies are increasingly seeking business in the mining equipment, industrial automation and
trucks end markets, the strongest markets in 2010.93 The industry is forecast to generate 10% average organic
sales growth in 2011 and 8% in 2012, primarily driven by the structural expansion in emerging markets.94
However, the growth in emerging markets is expected to decrease in the second half of 2011.95 Capital Goods
sector sales growth has historically correlated very highly with the change in new credit as a percentage of
GDP, as a slowing in the pace of corporate deleveraging leads to increased investment. In their 2011 outlook,
analysts take the view that a slowdown in the pace of deleveraging is sufficient to further boost demand growth
in 2011.96 Additionally, industrial machinery companies are expected to generate growth from the cyclical
rebound in Europe.97 Pricing in 2011 is expected to remain strong as inventory volumes are recovering,
commodity prices are increasing and companies are not compelled to liquidate inventory for cash. Analysts
expect commodity prices to continue increasing in 2011, driven by industrial metals such as copper and nickel
as well as plastics and steel prices. 98 Industrial production in Europe is forecast to grow 6.2% in 2011.99
The global paper products market experienced 12.5% growth in 2010.100 The European paper and packaging
industry has continued recovering in 2010, partially driven by industry consolidation and better pricing.101 Pulp
prices have remained strong as a result of increasing demand, especially from China.102
The European Goodwill Impairment Study – 2011-2012
35
Additionally, commodity prices have continued rising due to cost pressures from expensive purchased fibre and
increasing chemical and energy costs.103 However, the cost pressures negatively affect company margins.104
Consolidation within the paper industry enables companies to reduce costs and European excess capacity.105
The European paper market is forecast to grow at a compound annual growth rate of 3.7% from 2010 through
2015.106
Table 7
Basic Industrials Group - Other—Companies Included
Impairment Climate
In terms of market capitalisation, Basic Industrials Group - Other (as of December 2010) is 47% above its
levels in January 2006. However, as of December 2010, the industry’s market value was still down almost
20% from its July 2007 peak.
Aalberts Industries ABB Ltd. Alfa Laval AB Alstom S.A.
Andritz AG Atlas Copco Group Bekaert S.A. Charter International plc
Cookson Group PLC DCC plcGamesa CorporaciónTecnológica S.A.
GEA Group AG
Georg Fischer Hexagon AB IMI plc Invensys plc
Kone Oyj Konecranes PlcKoninklijke PhilipsElectronics N.V.
L'Air Liquide S.A.
Legrand S.A. Man SE Metso Corp. Mondi plc
Nexans S.A. Orkla ASA Prysmian S.p.A. Renewable Energy Corp. ASA
Rexam plc Rheinmetall AG Sandvik AB Scania AB
Schindler Holding AG Schneider Electric S.A. SGL Carbon SE Siemens AG
SKF AB Smiths Group plc Stora Enso Corp. Sulzer, Ltd.
Svenska Cellulosa Aktiebolaget, SCA The Linde Group The Weir Group PLC Tognum AG
Trelleborg AB UPM-Kymmene Corp. Vallourec S.A. Vestas Wind Systems A/S
Volvo AB Wärtsilä Oyj Abp Zardoya Otis, S.A.
The European Goodwill Impairment Study – 2011-2012
36
Chart 21Basic Industrials Group - Other—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Companies in this industry made acquisitions totaling Euro 82 billion during the covered period, of which
Euro 70 billion was spent from 2006 to 2008. At fiscal year-end 2010, this industry reported goodwill of
Euro 86 billion, of which Euro 38 billion was acquired from 2006 to 2010. Significant deals carried out
include the acquisitions of BOC by Linde in 2006; American Power Conversion by Schneider Electric in 2007;
the Bayer Diagnostics Division, UGS, and Dade Behring by Siemens in 2007; Genlyte Group and Respironics
by Royal Philips Electronics in 2008; Intergraph by Hexagon AB; and Areva T&D’s distribution business by
Schneider Electric S.A.107
As of fiscal year 2010, companies booked total impairments of Euro 2.4 billion. The largest amount relates to
the impairment of goodwill at Euro 1.4 billion (55.2%), followed by the impairment of fixed assets at
Euro 0.8 billion (32.6%), and the remaining Euro 0.3 billion (12.1%) relates to the impairment of intangible
assets.
Booked goodwill impairments in fiscal year 2010 is the largest amount of goodwill impaired during the covered
period. Goodwill impairments for the period 2006 to 2010 equal 10% of the goodwill acquired in the same
period. In addition, the total purchase price paid represents about 18% of the market capitalisation (PPP/MC
ratio) as of December 31, 2010, whereas booked goodwill impairment (2006 to December 2010) covers only
7% of the total purchase price paid. As of December 2010, 16% of the companies showed book value of
equity close to or above the market capitalisation.
260 575 1,205 4601,350
21,238
31,716
16,664
4,368
8,212
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid STOXX Europe 600 BIG - Other
The European Goodwill Impairment Study – 2011-2012
37
Chart 22Basic Industrials Group - Other—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking the MC/BVE and PPP/MC ratios into consideration, Basic Industrials Group - Other had an overall score
of 1.4 at the end of December 2010 (and 1.4 at June 2010). Our impairment forecast for this industry
indicates Sunny conditions, with one company still in Stormy territory.
Chart 23Basic Industrials Group - Other—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
0% 8% 6% 8%
79%
0% 8% 8% 8%
76%
0 4 4 4
39
0 4 3 4
41
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of Equity
Dec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apital
isat
ion
/B
ook
Valu
eof
Equ
ity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
38
6. Business Services and Management Consulting
Business Services and Management Consulting (Business Services) comprises companies that provide human
resources and employment services, IT services, research and consulting services, security services, facilities
services, and other diversified support services.
Economic Climate
In 2010, economic recovery and decreased structural cost basis led to improved earnings growth for business
services companies.108 Analysts anticipate the industry to experience further consolidation over the next couple
years, partially driven by recovery in balance sheet strength. 109 Furthermore, emerging markets represent a
significant growth opportunity for the industry.110
In 2011, analysts forecast the business services industry to generate 7% organic revenue growth.111 Cyclical
companies such as human resources and employment services companies are expected to experience the
strongest growth.112 Companies in the computer-services sector expect to benefit from the increase in spending
as developed countries recover from poor economic conditions.
Revenues generated from government opportunities in the industry are expected to decrease in 2011 as a
result of contract negotiations, reductions in discretionary spending and funding for specific projects and
contract renewals.113 However, business services companies, primarily in the U.K., are likely to attain
incremental revenue from the implementation of the U.K.’s Department of Work & Pensions’ work
programme.114 Administered by the private sector, this is a welfare programme intended to increase the hiring
rate of the unemployed, decrease the average time on benefits and raise the average time in employment.115
Furthermore, outsourcing is expected to continue providing strong growth opportunities, partially driven by
fiscal pressure experienced by EU governments resulting in private sector outsourcing.116
In the medium-term, security companies are expected to benefit from increasing interest rates and higher
inflation.117 Additionally, emerging markets offer stronger growth potential and elevated margins for security
companies, compared to mature markets.118 Emerging markets such as Asia, Latin America and Africa present
immature security markets, steady growth in the utilisation of banking services, higher GDP growth, expansion
in market share through acquisitions added to the organic growth and cross selling strategies.119
In 2010, the financial sector accounted for 28% of all consulting work in Europe, while IT consulting
generated approximately 27% of all consulting revenues.120 In Q1’11, consulting firms experienced an
improvement in organic growth, partially driven by activities related to international trade.121 Additional sectors
that present high growth potential for the industry include nuclear, offshore energy and green buildings. 122
Analysts forecast that the European market for consulting may grow nearly 5% in 2011 to 2012.123
The European Goodwill Impairment Study – 2011-2012
39
Table 8Business Services and Management Consulting—Companies Included
Impairment Climate
Business Services’ market capitalisation (as of December 2010) is 62% above the January 2006 level having
fully recovered from the financial crisis. The industry outperformed the STOXX Europe 600 over the past two
years, and set a new high mark in December 2010.
Chart 24Business Services and Management Consulting—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Business Services companies made acquisitions of Euro 23 billion during the covered period, of which Euro 19
billion was spent from 2006 to 2008. At fiscal year-end 2010, the industry reported goodwill of Euro 30
billion, of which Euro 15.7 billion was acquired from 2006 to 2010. The largest acquisition carried out during
this period was that of Vedior by Randstad in 2008.124
As of fiscal year 2010, companies booked total impairments of Euro 0.2 billion. The largest amount, relating to
the impairment of goodwill, was at Euro 0.15 billion, followed by the impairment of intangible assets at less
than Euro 0.01 billion.
Adecco S.A. Aggreko plc Amadeus IT Holding Atos Origin S.A.
Babcock International Group plc Bureau Veritas S.A. Cap Gemini S.A. Capita Group plc
Experian plc G4S plc Hays plc HomeServe Plc
Indra Sistemas, S.A. Intertek Group plc Logica PLC Michael Page International plc
MITIE Group plc Randstad Holding N.V. Rentokil Initial plc Securitas AB
Serco Group plc SGS S.A. Teleperformance
37942
941
239 147
6,239
5,671
6,916
1,010
3,423
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan -06 Jul -06 Dec -06 Jul -07 Dec -07 Jun -08 Dec -08 Jun -09 Dec -09 Jun -10 Dec -10 Jun -11
Goodwill Impairment Purchase Price Paid (EURm) STOXX Europe 600 Business Services
The European Goodwill Impairment Study – 2011-2012
40
Booked goodwill impairments in fiscal year 2010 were 39% below the booked impairments of the previous
fiscal year. The goodwill impairments booked for fiscal years 2008 and 2009 account for 68% of the total
goodwill impairments booked from 2006 to 2010. Goodwill impairments for this period equal 11% of the
goodwill acquired in the same period. In addition, the total purchase price paid represents nearly 24% of the
market capitalisation (PPP/MC ratio) as of December 31, 2010, whereas booked goodwill impairment (2006 to
2010) covers only 13% of the total purchase price paid. The largest impairment (Euro 0.5 billion) was booked
by Randstad in 2008. As of December 2010, 4% of Business Services companies showed book value of equity
close to or above the market capitalisation.
Chart 25Business Services and Management Consulting—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, Business Services had an overall score of 1.4 at the end of
December 2010 (and 1.6 at December 2009). Taking into account the low equity in comparison to recognised
goodwill, our impairment forecast for this industry indicates Sunny conditions, with no company in the Stormy
category.
0% 0% 5%14%
82%
0% 0% 4% 9%
87%
01
3
20
01
2
18
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
41
Chart 26Business Services and Management Consulting—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
42
7. Consumer Products, Food and Retail
Consumer Products, Food and Retail (Consumer Products) comprises a variety of products such as cosmetics,
apparel, household products, electronics and luxury goods. Food includes grocery, beverage, agriculture and
commodities, distribution, and private label and contract manufacturing. Retail consists of department stores,
mass merchants, and specialty retailers.
Economic Climate
In 2011, analysts believe the deflated housing market and economic concerns will continue to negatively affect
consumer spending. 125 For instance, in the U.K., retail market prices are expected to rise as a result of an
increase in commodity prices, higher labor manufacturing costs, inflationary pressures on fuel and utility costs
and an increase in VAT, resulting in lower volume growth.126 However, Germany has been experiencing
improving sales trends in 2011.127
Retail sales are continuing to shift towards Internet shopping, partially driven by the economic recession and
the price comparison convenience provided by the Internet to obtain the best value.128 The online retail market
is forecast to grow 13.4% in 2011, compared to 1.9% forecast growth in the overall retail market. In the
medium-term, e-commerce growth drivers include continuing innovation from Internet retailers to improve the
overall consumer experience, increasing diversification of product offerings, enhanced delivery and returns
options, improved service levels, and growing Internet efficiencies.129
According to analysts, in 2011, food and household and personal care products companies are expected to
confront significant input cost pressures.130 Several large European food manufacturers have already increased
prices to pass on input cost inflation, and expect to further increase prices later in 2011.131 Analysts anticipate
food inflation to accelerate in 2011. 132 In addition, volume growth in European consumer staples is expected
to be adversely affected by cost inflation of 9% to 15%.133
In 2011, growth in the European beverages sector is expected to be driven by margin expansion, increasing
volume growth, acquisitions and deleveraging.134 Additionally, consumer demand for European beverages in
emerging markets continues to rise.135
Consumer goods sales growth in emerging markets was 15% in 2010, partially driven by the accelerating
number of middle-class consumers with discretionary spending income in emerging economies.136,137 Growth in
luxury goods in Q1’11 was primarily driven by strong demand in Asia, which is expected to persist in the
medium-term.138 In 2011, analysts forecast consumer goods sales growth of 9% for emerging markets. 139 In
the long-term, growth drivers for the industry include regional and category positions, innovations and an
increase in consumer spending.140
The European Goodwill Impairment Study – 2011-2012
43
Table 9Consumer Products, Food and Retail—Companies Included
Impairment Forecast
In this study, Consumer Products was the industry with the most companies included. The market
capitalisation of these companies is 41% above its levels of January 2006. As of December 2010, the industry
had fully recovered from the drought of the financial crisis, outperformed the STOXX Europe 600 over the past
two years, and marked a new high as of December 2010.
Adidas AG Anheuser-Busch InBev Aryzta AG Associated British Foods plc
Beiersdorf AG British American Tobacco plc Britvic Bulgari SpA
Bunzl plc Burberry Group plc C&C Group Carlsberg A/S
Carrefour S.A.Casino Guichard Perrachon &Cie S.A.
Chocoladefabriken Lindt & Spruengli AG Christian Dior S.A.
Coca-Cola Hellenic Bottling CompanyS.A.
Compagnie FinanciereRichemont S.A.
Compass Group plc CSM N.V.
Danone Davide Campari Debenhams plc Delhaize Group
Diageo plc Dixons Retail Dufry Group Ebro Puleva S.A.
Edenred Electrolux AB ETS Fr Colruyt S.A. Greene King plc
Halfords Heineken Holding N.V. Heineken N.V. Henkel AG & Co. KGaA Vz
Hennes & Mauritz AB Hermes International S.A. Home Retail Group Husqvarna AB
Imperial Tobacco Group plc Inditex S.A. J. Sainsbury plc Jeronimo Martins SGPS S.A.
Kerry Group plc Kesko Oyj KingFisher plc Koninklijke Ahold N.V.
L'Oreal S.A. Luxottica Group SpA LVMH Moet Hennessy Louis Vuitton Marine Harvest ASA
Marks & Spencer Group plc Metro AG Mitchells & Butlers plc Nestlé S.A.
Next Group plc Nutreco Holding N.V. Oriflame Cosmetics S.A. Pandora
Parmalat SpA Pernod-Ricard S.A. PPR S.A. Puma AG Rudolf Dassler Sport
Reckitt Benckiser Group plc SABMiller plc SEB S.A. Societe Bic
Sodexo Suedzucker AG Swatch Group AG Swedish Match AB
Tate & Lyle plc Tesco PLC Travis Perkins plc Unilever N.V.
Unilever plc Whitbread plc Wm. Morrison Supermarkets plc Wolseley plc
The European Goodwill Impairment Study – 2011-2012
44
Chart 27Consumer Products, Food and Retail—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Companies in this industry made acquisitions totalling Euro 208 billion during the covered period, of which
roughly Euro 168 billion was spent from 2006 to 2008. At fiscal year-end 2010, the industry reported
goodwill of Euro 266 billion, of which Euro 117 billion was acquired from 2006 to 2010. Notable and
significant acquisitions include those of:141
Allied Domecq by Pernod-Ricard in 2006;
Royal Numico by Danone in 2007;
Anheuser-Busch Companies by InBev in 2008;
Scottish & Newcastle by Carlsberg and Heineken Holding in 2008;
National Starch by Henkel in 2008;
Altadis by Imperial Tobacco Group in 2008;
Vin&Sprit Group by Pernod-Ricard in 2009; and
Beer operations from FEMSA by Heineken Holding N.V. in 2010.
As of fiscal year 2010, companies booked total impairments of Euro 4 billion. The largest amount of
Euro 2.2 billion (54.1%) relates to the impairment of fixed assets, followed by the impairment of goodwill at
Euro 1.3 billion (31.5%), and the remainder of Euro 0.6 billion (14.4%) relates to the impairment of
intangible assets.
Booked goodwill impairments in fiscal year 2010 are 42% below the level of goodwill impairments booked for
the fiscal year 2009 at Euro 2.1 billion. The goodwill impairments booked in fiscal year 2008, 2009 and
2010 account for 80% of the total goodwill impairments booked from 2006 to 2010. Goodwill impairments for
377 1,101 2,381 2,148 1,253
43,302
35,919
88,716
15,985
24,510
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Consumer Products, Food and Retail
The European Goodwill Impairment Study – 2011-2012
45
2006 to 2010 equal 6% of the goodwill acquired in the same period. In addition, the total purchase price paid
represents about 17% of the market capitalisation (PPP/MC ratio) as of December 31, 2010, whereas the
booked goodwill impairment (of 2006 to December 2010) covers only 5% of the total purchase price paid.
As of December 2010, 5% of companies in this industry showed book value of equity close to or above the
market capitalisation.
Chart 28Consumer Products, Food and Retail—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, the Consumer Products industry had an overall score
of 1.3 at the end of December 2010 (and 1.4 at December 2009). Our impairment forecast indicates Sunny
conditions for this industry as a whole, with no company in Stormy territory.
0% 1% 10% 14%
75%
0%1% 4%
15%
80%
0%1 3
12
64
17
10
55
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
46
Chart 29Consumer Products, Food and Retail—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
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quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
47
8. Energy
Energy comprises the oil, gas, coal and consumable fuels, utilities, and energy equipment and services sectors.
Economic Climate
Europe continues to focus on expanding renewable capacity primarily owing to energy security concerns, energy
price increases and environmental concerns.142 Utilities are experiencing pressure from the EU and national
governments as they are liberalising the power markets, expanding renewables, penalising fossil fuel generators
for CO2 emissions and advocating energy efficiency measures that decrease consumption.143 In April 2011, the
production of energy in the EU decreased by 3% compared to March 2011.144
The global oil and gas industry is expected to continue recovering in 2011; analysts forecast 6% growth in
global capital expenditures over 2011 and 2012. 145 Additionally, non-OPEC growth in crude markets is
anticipated to be limited.146 Oil prices in 2011 have increased significantly owing to the political unrest in the
Middle East and North Africa and concerns regarding oil supply from these regions.147
Due to rising fuel prices, analysts revised power price forecasts to 20% to 30% above current market
forwards.148 Higher power prices, reduced implicit subsidies and nuclear concerns are expected to result in
further support for cheaper renewable technologies, such as wind.149
As a result of the nuclear accident in Japan, countries have cancelled or postponed plans for nuclear power
stations. For instance, in May 2011, Germany announced its decision to shut down all 17 of its nuclear power
plants by the end of 2022.150 As a result, Germany has become increasingly reliant on France to replace
nuclear power, but analysts expect coal and renewable energy to account for a greater share of energy
generation as well.151
In June 2011, the EU consented to stress test its more than 140 nuclear reactors for resistance to natural
disasters, as well as man-made disasters such as power outages and engineering failures.152 The stress tests
will be performed by individual member states, and the final results will be presented in April 2012.153 If any
plant closures occur after the completion of the tests, analysts believe states would respond by increasing
capacity at coal plants in the short-term.154 However, gas may become the prevalent source of energy as gas
plants require significantly less capital investment and can be built more quickly.
In November 2010, the European Commission released the Energy 2020 strategy that outlines procedures over
the next 10 years to save energy, create an internal EU energy market, become leaders in energy technology
and innovation, and provide secure and affordable energy.155 The EU Renewable Directive requires EU member
states to produce 20% of their energy needs from renewable energy sources by 2020.156
The European Goodwill Impairment Study – 2011-2012
48
On July 1, 2011, the European Commission launched the European Energy Efficiency Fund (EEE-F) as part of
the European Energy Programme for Recovery (EEPR), which will apportion Euro 146 million for a new
financial facility devoted to energy efficiency and renewable energies projects, particularly in urban settings.157
Table 10Energy—Companies Included
Impairment Climate
The Energy industry has followed the STOXX Europe 600 fairly closely, and as of December 2010 it is at its
levels of January 2006. However, as of December 2010, Energy lost almost 30% of its market value compared
to its peak in January 2008.
A2A SpA Acciona S.A. Aker Solutions ASA Alpiq Holding AG
AMEC plc BG Group plc Bourbon BP plc
Cairn Energy plc Centrica plcCompagnie Générale deGéophysique-Veritas
Dragon Oil PLC
Drax Group plc. E.ON AG EDP Renováveis EDP-Energias de Portugal, S.A.
Electricité de France Enagas S.A. Endesa S.A. ENEL Greenpower
Enel SpA Eni SpA Essar Energy Fortum Oyj
Fugro N.V. Galp Energia SGPS SA. Gas Natural SDG S.A. GDF Suez
Iberdrola Renovables S.A. Iberdrola S.A. International Power plc John Wood Group plc
Lundin Petroleum AB National Grid plc Neste Oil Corp. Northumbrian Water Group plc
OMV Aktiengesellschaft Pennon Group plc Petrofac Ltd. Petroleum Geo Services ASA
Premier Oil plc Public Power Corporation S.A. Red Eléctrica Corporación S.A. Repsol YPF S.A.
Royal Dutch Shell plc RWE AG Saipem SpA SBM Offshore N.V.
Scottish & Southern Energy plc SeaDrill Ltd. Severn Trent plc SNAM Rete Gas SpA
StatoilHydro ASA SUBSEA7 Suez Environnement S.A. Technip
Tenaris S.A.Terna Rete Elettrica NazionaleSpA
TGS Nopec Geophysical Co ASA Total S.A.
Tullow Oil plc United Utilities Group PLC Veolia Environnement S.A. Verbund AG
The European Goodwill Impairment Study – 2011-2012
49
Chart 30Energy—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Energy companies made acquisitions of Euro 308 billion during the covered period, of which Euro 254 billion
was spent from 2007 to 2009. At the end of fiscal year 2010, this industry reported a total amount of goodwill
of Euro 168 billion, of which Euro 94 billion was acquired from 2006 to 2010. Noteworthy transactions
include:158
GDF Suez’s acquisition of Senoko Power in 2008 and a controlling interest in Aguas de Barcelona in2010;
Acciona’s acquisition of a stake in Endesa in 2007;
Iberdrola’s acquisition of Scottish Power in 2007;
Enel’s acquisition of Endesa in 2008;
Electricité de France’s acquisition of British Energy in 2009;
Gas Naturals SDG’s acquisition of Union Fenosa in 2009;
RWE’s acquisition of Essent in 2009,
BP’s acquisition of Devon’s Gulf of Mexico Deepwater properties in 2010, and
Royal Dutch Shell’s acquisition of certain assets held by East Resources in 2010.
As of fiscal year 2010, Energy companies booked total impairments of Euro 14.5 billion, of which the largest
amount relates to the impairment of fixed assets at Euro 9.1 billion (63%), followed by the impairment of
goodwill at Euro 2.5 billion (16.9%), and the remaining Euro 2.9 billion (20.1%) relating to the impairment of
intangible assets. Energy is the industry with the biggest overall impairment (goodwill, intangible and fixed
asset impairment), it scores either first or second for the biggest impairments in each impairment category.
627 1573,838 1,532 2,447
25,911
99,796
89,686
64,677
27,607
0
20,000
40,000
60,000
80,000
100,000
120,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Energy
The European Goodwill Impairment Study – 2011-2012
50
Booked goodwill impairments in fiscal year 2010 were 60% above the booked impairments of the previous year
of Euro 1.5 billion. The goodwill impairments booked for fiscal years 2008, 2009 and 2010 account for 91%
of the total goodwill impairments booked during the period 2006 to 2010.
Goodwill impairments from 2006 to 2010 equal 9% of the goodwill acquired in the same period. In addition,
the total purchase price paid represents more than 26% of the market capitalisation (PPP/MC ratio) as of
December 31, 2010, whereas booked goodwill impairment (2006 to December 2010) covers only 4% of the
total purchase price paid. At the end of December 2010, 19% of Energy companies showed book value of
equity close to or above the market capitalisation, also one company showed a market capitalisation of 50% or
less of book value of equity.
Chart 31Energy—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, Energy had a score of 1.6 as of December 2010
(and 1.5 at December 2009). Our impairment forecast for the industry as a whole indicates Cloudy conditions,
with five companies still in Stormy territory.
1%3%
7%
24%
65%
2% 3%
14%20%
61%
12
9
13
39
12
5
16
44
0%
10%
20%
30%
40%
50%
60%
70%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
51
Chart 32Energy—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
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Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
52
9. Engineering, Construction and Building Products
Engineering, Construction and Building Products comprises building materials and companies engaged in the
construction of commercial buildings, civil engineering projects, and large scale contracts.
Economic Climate
In 2010, Western European construction activity fell 14%, partially due to government budget constraints and
housing oversupply.159 During the economic downturn, materials companies experienced a decrease in margins,
while contracting companies experienced stable-to-improving margins.160 Nonetheless, analysts expect
materials companies to recover, driven by considerable cost-cutting initiatives and a recovery in construction
activity.161 However, rising energy costs could negatively impact the profitability of materials companies,
offsetting the benefits from cost-cutting.162
Contracting companies have increasingly diversified into numerous areas of infrastructure and services; as a
result, they have been able to continue expanding their order books throughout the construction downturn.163
Analysts believe that the growth of European contractors will continue to be influenced by traffic growth and
infrastructure expenditure.164
In 2011, analysts expect European construction to grow by 2.2%, followed by 4.9% in 2012 and 5.6% in
2013.165 The residential sector is forecast by analysts to be the primary driver of recovery in European
construction activity in the near-term.166 In 2011, analysts forecast the European residential market to grow
5%, however, non-residential markets are expected to grow merely 2%, as the private sector remains cautious
on the economic outlook.167 The residential sector is influenced by unemployment rates, housing pricing, the
development of interest rates and credit availability.168,169 The non-residential sector is primarily influenced by
economic developments such as unemployment, consumer confidence, the development of industrial and
services production and credit market availability.170 The civil engineering construction sector is highly
correlated with government finances as it is most reliant on public funding, thus widening budget deficit
forecasts result in a decrease in civil engineering spending.171,172
In 2010, civil engineering output accounted for 24% of overall European construction activity.173 In 2011,
analysts anticipate a 3% decrease in civil works in Western Europe, as governments are likely to decrease
spending on infrastructure projects in an effort to re-balance their economies.174,175 Due to the inability of
governments to finance large scale infrastructure projects, the public-private partnerships market is beginning
to experience increased activity. However, such activity is subject to the availability of credit and the ability
and willingness of banks to lend is selective to particular projects. As a result, in February 2011, the European
Commission announced the European Project Bond initiative to attract private financing for projects that have
significant public interest. The initiative will provide guarantees on subordinated debt facilities to support
senior project bonds issued by infrastructure project companies.176 Long-term growth for engineering services
companies is expected to be driven by private and public spending in developed markets, increasing demand
from emerging markets and demand related to sustainability.177
The European Goodwill Impairment Study – 2011-2012
53
Construction costs may continue to increase in 2011, due to rising prices of raw materials such as copper and
steel, and the recovery of cement and aggregates prices.178 Analysts forecast cement volume growth in Western
Europe of 3.4% in 2012, following a 2% decline in 2011.179 In the long-term, the industry is expected to be
positively influenced by the development of emerging markets, the growth of energy infrastructure, the
renovation and maintenance of existing infrastructures and the development of energy efficiency.180
Table 11
Engineering, Construction and Building Products—Companies Included
Impairment Climate
Engineering, Construction and Building Products has almost consistently outperformed the STOXX Europe 600,
and (as of December 2010) is 16% above its levels of January 2006. However, compared to its peak in June
2007, the industry has lost almost 33% of its market value as of December 2010.
Actividades de Construcción y Servicios,S.A
Assa Abloy AB Balfour Beatty plc Bilfinger Berger AG
Bouygues SA Carillion plc CRH plc Eiffage S.A.
FLSmidth & Co. A/SFomento de Construcciones y Contratas,S.A.
Geberit AG Grupo Ferrovial S.A.
HeidelbergCement AG Hochtief AG Holcim Ltd. Holmen AB
Imerys SA Imtech N.V. Lafarge S.A. Outotec
Royal Boskalis Westminster N.V. Saint Gobain Skanska AB Spirax-Sarco Engineering PLC
Tecnicas Reunidas S.A. Vinci S.A.WienerbergerBaustoffindustrie AG
YIT Oyj
The European Goodwill Impairment Study – 2011-2012
54
Chart 33Engineering, Construction and Building Products—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Engineering, Construction and Building Products companies made acquisitions totalling nearly
Euro 105 billion during the covered period, of which Euro 96 billion was made between 2006 and 2008. At
fiscal year-end 2010, the industry reported goodwill of Euro 82 billion, of which Euro 45 billion was acquired
from 2006 to 2010.
Significant acquisitions carried out include: APRR Group’s acquisition by Eiffage in 2006; Grupo Ferrovial’s
acquisition of BAA in 2006; Vinci’s acquisition of Autoroutes Du Sud de La France in 2006;
HeidelbergCement of Hanson in 2007; and Lafarge’s acquisition of Orascom Cement in 2008.181
As of fiscal year 2010, companies booked total impairments of Euro 1.3 billion, of which the largest amount
relates to the impairment of fixed assets at Euro 0.7 billion (53.7%), followed by the impairment of goodwill at
Euro 0.6 billion (41.9%), and the remaining Euro 0.1 billion (4.4%) accounts for the impairment of intangible
assets.
Booked goodwill impairments in fiscal year 2010 are 40% below than those of the previous year of
Euro 0.9 billion. Goodwill impairments for 2006 to 2010 equal 6% of the goodwill acquired in the same
period. In addition, the total purchase price paid represents 57% of the market capitalisation (PPP/MC ratio)
as of December 31, 2010, whereas booked goodwill impairment (2006 to December 2010) covers only 3% of
the total purchase price paid. At end of December 31, 2010, 21% of Engineering, Construction and Building
Products companies showed book value of equity close to or above market capitalisation.
276 130 566 927 550
52,845
24,410
18,786
3,3915,435
0
10,000
20,000
30,000
40,000
50,000
60,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm)
STOXX Europe 600 Engineering, Construction and Building Products
The European Goodwill Impairment Study – 2011-2012
55
Chart 34Engineering, Construction and Building Products—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, the industry had an overall score of 1.8 at December 2010 (and
1.9 at December 2009); therefore, our impairment forecast for the industry as a whole indicates still Cloudy
conditions, with three companies still in the Stormy category.
Chart 35Engineering, Construction and Building Products—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
0%10% 6%
29%
55%
0%14%
7%
18%
61%
0
4
2
5
17
32
9
17
0%
10%
20%
30%
40%
50%
60%
70%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
56
10. Financial Institutions Group - Banks
The Banks subsector of the Financial Institutions Group (FIG – Banks) comprises deposit-taking institutions,
such as commercial banks, savings-and-loans banks, credit institutions and universal banking institutions, as
well as bank holding companies.
Economic Climate
In 2010, the European banks subsector continued to underperform the European market, primarily due to
concerns regarding capital, Basel III and funding owing to the peripheral European downturn.182 The subsector
has begun to recover in 2011, partially due to discussions regarding a solution to the peripheral European
downturn, including further development of the European Financial Stability Facility (EFSF).183 EFSF was
established by EU member states in June 2010, as part of the financial stability package, to issue bonds
guaranteed by the EU for up to Euro 440 billion for on-lending to Euro area member states in crisis.184
The funding crisis of the European banks has resulted in increased interdependency between the banks and
sovereigns in peripheral countries as there is no central lender to bail out the banking sector in the Euro
area.185 As a result, the sovereigns have been obligated to provide fiscal bailouts.186 Additionally, the European
Central Bank has been compelled to continue to extend its liquidity provision for the subsector so as to
maintain orderly financial markets in Europe.187
In November 2010, the G20 leaders officially endorsed the Basel III framework, which requires banks to hold
more capital against their loans, and the Basel Committee issued the details of the global regulatory standards
on bank capital adequacy and liquidity in December 2010. The framework includes two new proposed liquidity
statutes: For short-term liquidity, banks will be required to maintain 100% of their possible 30-day outflow in
high-quality assets, including cash and government bonds, whereas, for long-term liquidity, banks will be
required to secure funding from stable channels, thereby limiting loan to deposit ratios in excess of 100%.188
Analysts believe the proposal on long-term liquidity could negatively influence economic growth and lead to
decreased corporate credit availability, less matched funding for mortgages, reduced long-term financing
availability, preference for ABS versus covered bonds and less demand for bank bonds.189 Analysts estimate
that banks in the EU may confront a funding shortfall of Euro 3 trillion to meet the proposed rules, unless they
reduce the size of their assets (or increase the portion of assets with shorter-term maturities), increase the
percentage of longer-term maturities in wholesale funding, and/or replace short-term wholesale funding with
deposits.190 The new rules will be phased in from January 2013 through January 2019.191
In 2010, European finance ministers conducted stress tests on banks to alleviate market concerns regarding
the health of banks in Europe and to help eliminate notions that some lenders may have concealed the full
level of their exposure to bad debt.192 Based on a Tier 1 ratio, seven banks failed the test, and aggregate
impairment losses for the 91 banks under the adverse scenario totaled Euro 566 billion.193 Furthermore, the
2010 stress tests were unable to restore confidence in the financial health of banks in the EU, partially
because only sovereign exposures held on trading books were included in the tests, while most of the sovereign
The European Goodwill Impairment Study – 2011-2012
57
exposures are held on banking books.194 The EU regulator conducted an additional EU stress test in 2011 with
tougher criteria, based on 2010 year-end balance sheets, and released the results of the tests on 90 banks,
comprising an estimated 65% of banking assets, as of June, 15, 2011.
In 2011, bank term debt has been experiencing extremely wide spreads and significant borrowing volumes,
despite the high borrowing cost.195 In Q1’11, long-term debt issuance by European banks increased
approximately 26% year-over-year, primarily driven by collateralised issuance.196 In the second half of 2011,
analysts expect growth in European banks to be primarily driven by their ability to pass on higher debt spreads
to lending customers rapidly enough to offset the growing cost of funds.197 Analysts expect banks to continue
re-pricing in 2011; banks have confronted higher capital requirements and more costly funding, as a result,
they have been able to raise the rates they charge consumers.198
Analysts believe that the growth experienced by European banks is primarily attributable to non-EU growth
markets.199 This development is expected to continue through 2012, with domestically-focused operators
expected to generate negligible loan growth.200 Analysts believe that banks profit from operations in banking
markets that are currently expanding as they offer superior long-term loan volume trends and risk-adjusted
returns. 201
Table 12
Financial Institutions Group - Banks—Companies Included
Alpha Bank S.A. Banca Carige SpA Banca Monte dei Paschi di Siena SpABanca Popolare dell'Emilia RomagnaScrl
Banca Popolare di Milano Scrl Banca Popolare di Sondrio SCARL Banco Bilbao Vizcaya Argentaria, S.A. Banco Comercial Portugues S.A.
Banco de Sabadell S.A. Banco de Valencia S.A. Banco Espirito Santo S.A. Banco Popolare SC
Banco Popular Espanol S.A. Banco Santander, S.A. Bank of Piraeus S.A. Bankinter S.A.
Barclays plc BNP Paribas Close Brothers Group plc Commerzbank AG
Credit Agricole S.A. Credit Suisse Group Danske Bank A/S Deutsche Bank AG
Dexia SA DnB NOR ASA Erste Group Bank AG Evrobanka EFG tedionica
HSBC Holdings plc ING Groep N.V. Intesa Sanpaolo SpA Investec plc
Jyske Bank A/S KBC Group N.V. Lloyds Banking Group plc Mediobanca S.p.A.
National Bank of Greece S.A. Natixis Nordea Bank AB Pohjola Bank plc
Raiffeisen International Bank-HoldingAG
Royal Bank of Scotland Group plc Skandinaviska Enskilda Banken AB Societe Generale Group
Standard Chartered PLC Svenska Handelsbanken AB Swedbank AB Sydbank A/S
The Governor and Company of The Bankof Ireland
UBS AG UniCredit S.p.A. Unione di Banche Italiane Scpa
Valiant Holding AG
The European Goodwill Impairment Study – 2011-2012
58
Impairment Climate
The market capitalisation of the FIG—Bank industry closely followed the development of the Europe STOXX
600 and decreased 22% compared to its levels of January 2006. As of December 2010, the industry lost more
than 40% of its market value compared to its peak in May 2007.
Chart 36
Financial Institutions Group - Banks—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
FIG — Banks had acquisitions totalling Euro 330 billion during the covered period, of which Euro 289 billion
was spent during 2006 to 2008. At fiscal year-end 2010, the industry reported Euro 242 billion of goodwill, of
which Euro 123 billion was acquired from 2006 to 2010. Noteworthy acquisitions include those of:202
IXIS by Natixis in 2007;
Sanpaolo IMI by Banca Intesa in 2007;
ABN Amro by Royal Bank of Scotland in 2007;
Capitalia by UniCredit in 2007;
Banca Antonveneta by Banca Monte dei Paschi di Siena in 2008;
Fortis Banque by BNP Paribas in 2009;
Dresdner Bank by Commerzbank in 2009;
HBOS by Lloyds Banking Group in 2009;
Sal.Oppenheim by Deutsche Bank in 2009, and
Postbank by Deutsche Bank in 2010.
545 584
43,930
5,079 2,027
68,973
176,609
43,506
19,342 21,942
-10,000
10,000
30,000
50,000
70,000
90,000
110,000
130,000
150,000
170,000
190,000
2006 2007 2008 2009 20100%
50%
100%
150%
200%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 FIG- Banks
The European Goodwill Impairment Study – 2011-2012
59
As of fiscal year 2010, companies booked total impairments of Euro 3.8 billion, which is nearly 50% below the
booked impairments of fiscal year 2009 at Euro 7.6 billion.
Goodwill impairments from 2006 to 2010 equal 42% of the goodwill acquired in the same period. In addition,
the total purchase price paid represents 34% of the market capitalisation (PPP/MC ratio) as of December 31,
2010, whereas booked goodwill impairment (2006 to December 2010) covers 29% of the total purchase price
paid. At the end of December 2010, more than 70% of the industry showed book value of equity close to or
above the market capitalisation, with almost one fifth having a market capitalisation below 50% of book value
of equity.
Chart 37
Financial Institutions Group - Banks—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, FIG - Banks had an overall score of 2.8 at end of
December 2010 (and 2.7 at December 2009), which is the highest IRF of all covered industries. Our
impairment forecast for this industry indicates Rainy conditions, with 40% of the companies still in Stormy
territory.
11%
42%
18% 18%12%
19%
42%
11%
23%
6%
10
22
6
12
3
6
24
1010
7
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of Equity
Dec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
60
Chart 38
Financial Institutions Group - Banks—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
61
11. Financial Institutions Group – Insurance
Insurance is a subsector of the Financial Institutions Group (FIG – Insurance) comprising companies that
safeguard the assets of its policyholders by transferring risk from an individual or business to an insurance
company. The three primary insurance sectors are property/casualty, life and health insurance.
Economic Climate
In 2010, the European insurance industry was negatively affected by weak earnings momentum, depressed
yields and concerns regarding peripheral sovereigns, however, the industry generated a more than 3.5%
increase in total gross written premiums.203,204 Gross written European life premiums grew approximately 4%,
and gross written non-life premiums grew nearly 3% in 2010, primarily driven by the economic recovery and
renewed interest in insurance products.205 Gross written health and property premiums increased 6% and 1%,
respectively. Despite considerable volatility in the capital markets in 2010, the total investment portfolio of
European insurers grew 5% to approximately Euro 7.5 trillion.
Proposed by the European Commission in early 2009, the Solvency II Directive became EU law in December
2009. Solvency II is a major revision of EU insurance law intended to modernise supervision, deepen market
integration, improve consumer protection, and increase the international competitiveness of European insurers.
Under this law, insurers would be obligated to take account of all of the types of risk they are exposed to and
manage such risks more effectively. This would result in an increase in transparency and ensure that
supervisory authorities cooperate effectively and coordinate their activities. Solvency II is intended to align the
capital requirements of European insurers with the amount of risk they assume, however, this substantial
recapitalisation by insurers would result in the decline of investment returns. Nonetheless, analysts believe that
this law will be regulated in such a manner that it will not change the overall capital of the insurance industry,
although it may establish a volatile operating environment in the long-term. 206,207 Over the past several months,
Solvency II has compelled insurers to lessen exposure to equities as they are capital intensive, focus their
operations on insurance rather than investment returns and maintain a higher capital balance as asset risk
necessitates its own solvency capital.208
In January 2011, the European Commission released the Omnibus II Directive, which proposes to change the
formulation of rules and standards under Solvency II, and postpones full implementation of the Solvency II
regulation to January 1, 2013.209
In 2011, non-life insurance experienced positive pricing developments, with 2% to 4% growth in Q1’11.210
Analysts expect property and casualty insurance earnings to stabilise, with further improvements in 2012 due
to pricing increases, and life insurance and asset management to experience modest growth. 211
The European Goodwill Impairment Study – 2011-2012
62
Table 13Financial Institutions Group - Insurance—Companies Included
Impairment Climate
The Insurance industry has followed the STOXX Europe 600 fairly closely, and is 28% below its levelof January 2006. Compared to its peak in May 2007, companies have lost almost 50% of theirmarket value as of December 2010.
Chart 39
Financial Institutions Group - Insurance—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, annual reports, and Bloomberg.
Admiral Group plc AEGON N.V. Ageas Allianz SE
Amlin plc Assicurazioni Generali SpA Aviva plc AXA
Baloise-Holding Catlin Group Ltd. CNP Assurances S.A. Delta Lloyd N.V.
Hannover Rückversicherung AG Helvetia Versicherungen AG Jardine Lloyd Thompson Group plc Legal & General Group Plc
Mapfre S.A. Munich Re Group Old Mutual plc Prudential plc
RSA Insurance Group plc. Sampo Oyj SCOR SE Standard Life plc
Storebrand ASA Swiss Life Holding Swiss Reinsurance Co. Topdanmark A/S
TrygVesta A/S Vienna Insurance Group Zurich Financial Services AG
295 430 897 739 989
32,207
42,195
19,052
6,954
2,017
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 FIG - Insurance
The European Goodwill Impairment Study – 2011-2012
63
Insurance companies made acquisitions totaling Euro 102 billion during the covered period, of which
Euro 93 billion were made between 2006 and 2009. Notable deals include:212
AXA’s acquisition of Winterthur in 2006;
Fortis’s acquisition of ABN AMRO in 2007;
Old Mutual’s acquisition of Skandia U.K. Holdings in 2008;
Ceska Group acquisition by Assicurazioni Generali in 2008;
The Midland Company’s acquisition by Munich Re in 2008; and
Erste Group’s (insurance business) acquisition by Vienna Insurance Group in 2008.
Booked goodwill impairments in fiscal year 2010 were 34% above the previous fiscal year of Euro 0.7 billion.
Goodwill impairments from 2006 to 2010 equal 9% of the goodwill acquired in the same period. In addition,
the total purchase price paid represents 34% of the market capitalisation (PPP/MC ratio) as of December 31,
2010, whereas booked goodwill impairment (2006 to December 2010) covers only 3% of the total purchase
price paid. As of December 31, 2010, 61% of Insurance companies showed book value of equity close to or
above market capitalisation.
Chart 40
Financial Institutions Group - Insurance—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking the MC/BVE and PPP/MC ratios into consideration, Insurance had an overall score of 2.4 as of
December 2010 (and 2.4 at December 2009). Therefore, our impairment forecast for the industry indicates
Cloudy conditions, with 26% of companies still in the Stormy category.
6%
27%30%
15%
21%
3%
32%
26%
23%
16%
1
10
8
7
5
2
9
10
5
7
0%
5%
10%
15%
20%
25%
30%
35%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
64
Chart 41Financial Institutions Group - Insurance—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%
Mar
ketC
apit
alis
atio
n/B
ook
Valu
eof
Equ
ity
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
65
12. Financial Institutions Group – Other
Other, a subsector of the Financial Institutions Group, (FIG – Other) comprises diversified institutions engaged
in activities such as investment banking, private equity, stock exchange, asset management and real estate.
Economic Climate
In 2010, overall revenues for European investment banks declined 17%, partially due to the 36% quarter-over-
quarter decrease in fixed income revenues in Q4’10.213 The performance of fixed income was offset by the
23% increase in underwriting and advisory businesses revenues in Q4’10 compared to Q3’10.214 Equities
trading revenues decreased 9% quarter-over-quarter in Q4’10.215 For Q1’11, overall revenues for European
investment banks declined 10% year-over-year.216
Analysts forecast European investment banking revenues to decline 1% in 2011, with a slight decrease in
fixed-income trading resulting from Basel III effects, offset by an increase in advisory businesses and
equities.217,218 Additionally, European investment banks could benefit from regulatory arbitrage opportunities
resulting from regulatory constraints negatively affecting U.S. investment banks.219
In 2010, the value of assets under management in Europe increased by approximately 11% year-over-year to
Euro 13.8 trillion, due to the sustained economic recovery, increased investor demand and general market
appreciation.220 Currently, institutional investors account for 68% of total European assets under
management.221 As of April 2011, Europe had net assets of approximately Euro 7.9 trillion.222
Private equity in Europe declined in the beginning of 2011 compared to the end of 2010; deal volume
decreased 7% and value decreased 48% to Euro 12.2 billion, driven by sovereign debt issues and uncertainty
regarding the effects of government austerity plans.223 The decline in private equity activity is primarily
attributable to a severe quarterly decline in the buyout segment. However, compared to the first quarter of
2010, buyout volume rose 22% in the Q1’11, and value increased by 12%.224 Additionally, venture deal
activity decreased 11% quarter-over-quarter in the beginning of 2011, and market value declined 17% to
Euro 247 million. 225
In 2010, M&A activity in Europe increased 13% compared to 2009, partially driven by emerging markets.226 In
Q1’11, dollar volume of M&A activity in Europe increased 10% year-over-year, but decreased 17% compared
to Q4’10, partially due to concerns regarding the health of government finances and other threats to the global
economy.227 Furthermore, an estimated 52% of all European deals in the first half of 2011 were secondary
buyouts, in which the deal was between two private equity firms, further emphasising the shortage of deals in
Europe. 228
Additionally, on May 27, 2011, the EU Council of Ministers formally adopted the Alternative Investment Fund
Managers (AIFM) Directive, initially proposed by the European Commission in April 2009.229 Under the AIFM
Directive, hedge funds and private equity companies will be directly regulated and supervised by the EU
beginning in 2012.230
The European Goodwill Impairment Study – 2011-2012
66
In 2010, European exchanges were primarily focused on reducing costs, decreasing prices and maintaining
market share.231 However, in 2011, analysts expect European exchanges to concentrate on growth strategies to
diversify their revenues.232 Expected growth strategies include innovation and diversification of revenues by
asset class, service offering and geography, and consolidation in trading and post-trade in small- or medium-
sized deals.233 Analysts forecast 10% growth in the value of European cash equities traded in 2011.234
Table 14Financial Institutions Group - Other—Companies Included
Impairment Climate
As of December 2010, FIG – Other had a market capitalisation 36% above the level as of January 2006.
However, compared to its peak in October 2007, companies in this industry lost more than 30% of their
market value at the end of December 2010.
3i Group plc Aberdeen Asset Management PLC Ackermans & Van Haaren N.V. Ashmore Group PLC
Bolsas y Mercados Españoles S.A. Criteria CaixaCorp, S.A. Deutsche Boerse AG Eurazeo
EXOR GAM Holding AG Groupe Bruxelles Lambert S.A. Hargreaves Lansdown
Henderson Group PLC ICAP plc IG Group Holdings Plc Industrivärden
Intermediate Capital Group PLC Investment AB Kinnevik Investor AB Julius Bär Gruppe AG
London Stock Exchange Group plc Man Group plc Pargesa Holding S.A. Partners Group Holding AG
Provident Financial plc Ratos AB Schroders plc Sofina S.A.
Wendel
The European Goodwill Impairment Study – 2011-2012
67
Chart 42Financial Institutions Group - Other—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
(in millions of Euro)
Sources: Capital IQ, Bloomberg, and annual reports.
Companies in this industry made acquisitions totalling Euro 34 billion during the covered period, of which
Euro 27 billion was spent from 2006 to 2008. At fiscal year-end 2010, the industry reported a total of
Euro 26 billion of goodwill, of which Euro 19 billion was acquired from 2006 to 2010. Notable acquisitions
include those of ISE by Deutsche Börse in 2007; Borsa Italiana by the London Stock Exchange in 2008; Grupo
Financiero Inbursa by Criteria CaixaCorp in 2008; and Adeslas by Criteria CaixaCorp S.A. in 2010.235
Goodwill impairments for 2006 to 2010 equal 15% of the goodwill acquired in the same period. Also, the total
purchase price paid represents 27% of the market capitalisation (PPP/MC ratio) as of December 31, 2010,
whereas booked goodwill impairment (2006 to December 2010) covers only 10% of the total purchase price
paid. At the end of December 2010, 37% of the industry showed book value of equity close to or above the
market capitalisation.
58 23629
2,021
41
7,272
9,9799,668
2,9583,863
0
2,000
4,000
6,000
8,000
10,000
12,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 FIG - Other
The European Goodwill Impairment Study – 2011-2012
68
Chart 43Financial Institutions Group - Other—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, FIG — Other had an overall score of 2.0 at end of December
2010 (and 2.1 at December 2009). Our impairment forecast for the industry indicates Cloudy conditions, with
10% of companies still in the Stormy category.
Chart 44
Financial Institutions Group - Other—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
6%
29%
6%10%
48%
3%
24%
10% 10%
52%
1
7
3 3
15
2
9
23
15
0%
10%
20%
30%
40%
50%
60%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
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The European Goodwill Impairment Study – 2011-2012
69
13. Healthcare
Healthcare comprises companies engaged in manufacturing medical equipment, supplies and pharmaceuticals,
as well as operating healthcare facilities and provision of managed healthcare.
Economic Climate
In 2010, the European medical technology sector attained organic sales growth of an estimated 6%.236
Analysts forecast the sector to continue growing at an organic sales growth of 7% in 2011, 9% in 2012, and
10% in 2013.237 Nonetheless, organic sales growth rates remain below pre-crisis levels of approximately 13%
in 2003 to 2007, due to increased penetration of core markets, growing price competition and reimbursement
pressures, and rising costs of conducting businesses, which are becoming increasingly complex.238
Cyclical European medical technology companies are expected to achieve organic sales growth of 9% in 2011,
as new product cycles allow them to gain share in their markets.239 Comparatively, defensive European medical
technology companies are expected to experience organic sales growth of only 6%, as they have limited
prospects to grow their markets.240 Defensive European medical technology companies are expected to
concentrate on accelerating sales growth and increasing efficiencies.241 In 2011, analysts anticipate that
growing cash positions at various European medical technology firms may lead to strategic transactions,
including M&A and internal investment. 242 The current market environment provides large firms with an
opportunity to acquire other niche companies in order to restore top-line growth.243
In 2010, several European countries announced pharmaceutical pricing reforms; however, the European
pharmaceutical sector is confronting difficulties in generating top- or bottom-line growth in the near future, but
anticipates to overcome it by 2015.244 The replacement potential of pipeline drugs is quite limited and
company managements are concentrating on cutting costs, expanding in emerging markets and diversifying
product portfolios.245
Analysts forecast sales growth of 5% in 2011 and 3% in 2012 in the pharmaceuticals sector, despite
increasing competition from generic manufacturers.246 Generic manufacturers continue to gain market share in
the pharmaceutical market; analysts forecast generic manufacturers to account for 5% of pharmaceutical sales
in 2011 and more than 7% in 2012, an increase from 2.5% to 3% in the previous few years.247 Although the
replacement potential of pipeline drugs is incremental in 2011, analysts expect significant blockbuster drug
opportunities in 2012.248 Analysts also expect 2013 to be the most promising in terms of pipeline delivery
versus ongoing patent expirations, with the net incremental pipeline replacement becoming positive in
2014.249
Additionally, emerging markets are becoming a significant part of the pharmaceutical sector’s strategy to
generate sustainable revenue growth.250 Analysts believe that growth in pharmaceuticals has increasingly
shifted from mature markets towards emerging markets such as Brazil, Russia, India and China.251 Emerging
markets are forecast to account for approximately 50% of industry sales growth between 2010 and 2015,
primarily driven by branded generics and off-patent original products.252
The European Goodwill Impairment Study – 2011-2012
70
Table 15Healthcare—Companies Included
Impairment Climate
The Healthcare industry moved closely with the development of the STOXX Europe 600 index, and is at its
levels of January 2006. Compared to its peak in April 2007, companies in the industry have lost 12% of their
market value as of December 2010.
Chart 45Healthcare—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Healthcare companies made acquisitions totalling Euro 188 billion during the covered period, of which
Euro 104 billion was made in 2009 and 2010. At fiscal year-end 2010, the industry reported goodwill of
Euro 127 billion, of which Euro 71 billion was acquired from 2006 to 2010.
Actelion Ltd. AstraZeneca plc Bayer AG BioMérieux S.A.
Celesio AG Coloplast A/S Elan Corp. plc Elekta AB
Essilor International Fresenius Medical Care AG & Co. KGAA Fresenius SE Galenica Ltd.
Getinge AB GlaxoSmithKline plc GN Store Nord Grifols, S.A.
Hikma Pharmaceuticals Lonza Group AG Meda AB Merck & Co. Inc.
Nobel Biocare Holding AG Novartis AG Novo Nordisk A/S Orion Corp.
Qiagen N.V. Rhoen Klinikum AG Roche Holding AG Sanofi-Aventis
Shire Ltd. Smith & Nephew plc Sonova Holding AG Stada-Arzneimittel AG
Straumann Holding AG Synthes Inc. UCB S.A. William Demant Holding A/S
30 59 383 1,075 32
40,514
24,844
18,710
66,168
37,726
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid STOXX Europe 600 Healthcare
The European Goodwill Impairment Study – 2011-2012
71
Noteworthy deals include:253
Bayer’s acquisition of Schering in 2006;
AstraZeneca’s acquisition of MedImmune in 2007;
Novartis’s acquisition of Alcon in 2008;
GlaxoSmithKline’s acquisition of Stiefel Laboratories in 2009;
Merck & Co.’s merger with Schering-Plough Corporation in 2009;
Sanofi-Aventis’s acquisition of Merial in 2009; and
Novartis AG’s acquisition of Alcon Inc. in 2010.
As of fiscal year 2010, companies booked total impairments of Euro 6.1 billion, with the largest amount of
Euro 5.5 billion (90.8%) relating to the impairment of intangible assets, followed by the impairment of fixed
assets at Euro 0.5 billion (8.7%), and the remaining less than Euro 0.1 billion (0.5%) accounting for the
impairment of goodwill. The high amount of booked impairment of intangible assets relates mainly to IPR&D
impairment from Merck & Co. Inc. (i.e., vorapaxar, one of the company’s investigational cardiovascular
medicines).
Booked goodwill impairments in fiscal year 2010 are significantly below those of previous periods and account
for only 2% of the total goodwill impairments booked from 2006 to 2010. Goodwill impairments from 2006 to
2010 equal 2% of the goodwill acquired in the same period. In addition, the total purchase price paid
represents 27% of the market capitalisation (PPP/MC ratio) as of December 31, 2010, whereas booked
goodwill impairment (2006 to December 2010) covers only 1% of the total purchase price paid. At the end of
December 31, 2010, only one Healthcare company showed book value of equity close to or above market
capitalisation.
The European Goodwill Impairment Study – 2011-2012
72
Chart 46
Healthcare—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking MC/BVE and PPP/MC ratios into consideration, Healthcare had an overall score of 1.4 as of December
2010 (and 1.4 at December 2009), therefore, our impairment forecast for the industry indicates Sunny
conditions.
Chart 47
Healthcare—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
0% 0% 0% 11%
89%
0% 0% 3% 8%
89%
0 0 1 3
32
0 0 14
33
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
ate
ofC
ompa
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Market Capitalisation / Book Value of EquityDec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
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Purchase Price Paid / Market Capitalisation
25%
Rainy
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Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
73
14. Media, Sports and Entertainment
Media, Sports and Entertainment comprises companies engaged in advertising, broadcasting, cable and
satellite, casinos and gambling, and publishing.
Economic Climate
The Media, Sports and Entertainment industry is expected to benefit from a strong recovery in corporate
spending driven by high levels of free cash flow.254 However, analysts believe that media areas exposed to
government spending, such as professional publishers, state-owned TV companies and regional newspapers,
will experience limited growth owing to the continual reduction of budget deficits. 255
In 2010, global advertising spending increased approximately 5%, primarily driven by short-term expenditures
to increase sales, recovery in various sectors and the emergence of new categories such as tablets and
smartphones.256 In the first half of 2011, European ad spending has been adversely affected by budget
reductions from fast moving consumer goods (FMCG) manufacturers and push-back on pricing by
advertisers.257 Additionally, commodity and oil prices increased significantly, as a result FMCG manufacturers
and automakers reduced their ad expenditures to offset the price increase.258 Global events such as the natural
disaster in Japan and the political unrest in the Middle East have also discouraged advertisers from further
investment.259 However, analysts believe ad spending is expected to recover in the second half of 2011,
partially driven by decreasing commodity and oil prices.260 In 2011, analysts forecast advertising in Western
Europe to grow by 2.1% versus 4.5% globally.261 In 2012, Western European advertising growth is expected to
re-accelerate to 3.9%, compared to 5.8% globally, primarily driven by major one-time events such as the
Summer Olympics, European championship football and U.S. presidential elections.262 Additionally, analysts
believe that social network advertising is a significant opportunity to capitalise on in the advertising sector. 263
Overall, the publishing sector has been experiencing a recovery in revenue growth. However, for newspapers,
classified-based regional advertising has been negatively affected by Internet expansion, whereas brand-based
national advertising has been recovering.264 In 2011, analysts forecast newspaper ad spending to decrease by
2.5%.265 The newspaper industry is expected to experience further consolidation and/or geographical expansion
as well.266 Analysts expect newspaper circulation to continue declining, and do not anticipate the successful
implementation of pay models for the online portion of newspaper and magazine businesses. 267
In 2010, TV experienced a strong recovery, and continues to gain share in every market as advertisers
increasingly reinvest in TV.268 TV advertising recovery in 2010 was primarily driven by broadcasters offering
larger volumes of ad slots.269 In 2011, TV advertising growth will primarily be dependent on pricing increases
due to the minimal number of slots available at peak times and limited opportunity for audience expansion.270
TV advertising is forecast to grow by 2% to 3% in Western Europe in 2011.271 Long-term growth in the media
industry is expected to be driven by structural, competitive and technological changes, especially driven by the
Internet.272
The European Goodwill Impairment Study – 2011-2012
74
The regulation of new online gaming markets in the EU is expected to continue, but at varying rates depending
on the gaming regulations of individual member states.273 Analysts believe that increased European online
gaming regulation in 2011 and 2012 will be driven by governments seeking prospective revenues from a
widespread rise in gaming taxation. 274 In the short-term, rising tax and marketing costs for online operators
would compel them to look for scale benefits through M&A and the reduction of fixed costs related to software,
staff, administration and marketing. 275
Table 16
Media, Sports and Entertainment—Companies Included
Impairment Climate
Media, Sports and Entertainment has followed the STOXX Europe 600 fairly closely since the end of 2008 and
outperformed the STOXX Europe 600 in 2010. The market capitalisation of the industry is at its level of
January 2006. Compared to its peak in June 2007, the industry has lost more than 15% of its market
capitalisation as of December 2010.
Aegis Group plc British Sky Broadcasting Group plc Daily Mail and General Trust plc Eutelsat Communications
Gestevision Telecinco S.A. Informa plc ITV plc JCDecaux S.A.
Kabel Deutschland Ladbrokes PLC Lagardere SCA Mediaset SpA
Metropole Television M6 Modern Times Group Mtg AB OPAP S.A. PagesJaunes Groupe
Pearson plc Prosiebensat.1 Media Publicis Groupe S.A. Reed Elsevier N.V.
Reed Elsevier plc Sanoma Oyj Schibsted ASA Springer (Axel)
Television Francaise 1 S.A. United Business Media plc Vivendi William Hill plc
Wolters Kluwer N.V. WPP plc
The European Goodwill Impairment Study – 2011-2012
75
Chart 48
Media, Sports and Entertainment—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Media, Sports and Entertainment companies made acquisitions totalling Euro 59 billion during the covered
period, of which Euro 24 billion was spent in 2008. At fiscal year-end 2010, the industry reported
Euro 81 billion of goodwill, of which Euro 36 billion was acquired during 2006 to 2010. Notable deals carried
out include:276
Lottomatica’s acquisition of GTECH Holdings in 2006;
Publicis Groupe’s acquisition of Digitas in 2007;
Thomson’s acquisition of Reuters in 2008; and
Vivendi’s acquisitions of Blizzard in 2008 and GVT in 2009.
As of fiscal year 2010, companies booked total impairments of Euro 0.5 billion, with the largest amount
relating to the impairment of intangible assets at Euro 0.3 billion (56.2%), followed by the impairment of
goodwill at Euro 0.2 billion (35.1%), and the remainder at less than Euro 0.1 billion (8.7%) accounting for the
impairment of fixed assets.
Booked goodwill impairments in fiscal year 2010 were 90% below the booked impairments of the previous
fiscal year at Euro 1.9 billion. Goodwill impairments for the period 2006 to 2010 equal 17% of the goodwill
acquired in the same period. In addition, the total purchase price paid represents 38% of the market
capitalisation (PPP/MC ratio) as of December 31, 2010, whereas booked goodwill impairment (2006 to 2010)
covers only 16% of the total purchase price paid. As of December 31, 2010, 7% of Media, Sports and
Entertainment companies showed book value of equity close to or above market capitalisation.
200 233
3,3841,890
183
10,902
13,438
24,132
6,2754,426
0
5,000
10,000
15,000
20,000
25,000
30,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Media, Sports and Entertainment
The European Goodwill Impairment Study – 2011-2012
76
Chart 49
Media, Sports and Entertainment—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, Media, Sports and Entertainment had an overall
score of 1.5 as of December 2010 (and 1.6 at December 2009). The IRF for the industry as a whole indicates
Cloudy conditions, with only one company still in the Stormy category.
Chart 50
Media, Sports and Entertainment—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
0% 0% 4%11%
86%
0% 0% 7% 7%
87%
2 2
26
01
3
24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cena
tage
ofC
ompa
nies
Market Capitalisation / Book Value of Equity
Dec-09 Dec-10
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
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lue
ofE
quit
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Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
77
15. Real Estate, Lodging and Leisure
Real Estate, Lodging and Leisure comprises companies engaged in developing, renting, leasing, and managing
residential and commercial properties.
Economic Climate
The European real estate industry stabilised in 2010, in terms of both value and occupancy.277 Additionally,
yields stabilised in 2010, which led to the emergence of rental growth as a primary driver of capital values and
resulted in a larger difference in sector performance.278 Analysts anticipate strong recovery in the cyclical office
rental markets in Europe to continue in 2011 and 2012 at growth rates of approximately 10%.279 Retail rents
are forecast to grow 1% to 2% in 2011 and 2012.280 Industrial rents are forecast to remain flat as a result of
high vacancy and more easily facilitated development.281 The commercial real estate markets continue to
endure a lack of credit availability; however, the re-financing risk for real estate companies has significantly
declined.282
In Europe, investment capital is primarily concentrated on the prime end of the direct property market, as
rental levels and occupancy levels have stabilised and are experiencing strong recovery.283 Analysts believe that
the stabilisation in rental value and occupancy is underwriting risk premiums, and could potentially lead to
continued capital inflows to direct real estate. 284 However, values for secondary properties will likely remain
depressed and experience further declines in 2011, due to the shortage of financing.285
The industry faces the challenge of refinancing the large amount of real estate debt that is set to mature
through 2013.286 Banks are continuing to recapitalise, and are thus concentrating on refinancing, renegotiating
and amending existing loans, making it more difficult for companies to obtain new loans in 2011.287 Basel III
regulation and government pressure on several primary European real estate lenders to exit the sector have led
to further tightening of the debt markets; the new capital constraints over the next five years may result in an
unwillingness of banks to offer real estate finance.288 Analysts believe that insurance companies, in search of
higher-yielding assets and supported by Solvency II, will become alternative debt providers to the industry.289
The real estate industry is also experiencing an increased focus on energy-efficient, sustainable buildings, as
sustainability will be linked to high quality and tenants are increasingly seeking energy-friendly buildings with
lower operating costs.290 In the short term, the European real estate industry faces the challenges of regulation,
the sovereign debt crisis, a weak lending market and austerity measures in Europe.291
The European Goodwill Impairment Study – 2011-2012
78
Table 17
Real Estate, Lodging and Leisure—Companies Included
Impairment Climate
The performance of the market capitalisation of the Real Estate, Lodging and Leisure industry closely follows
the development of the STOXX Europe 600. However, as of December 2010, the industry lost almost 30% of
its market value compared to its peak in February 2007, and is just at its level of January 2006.
Chart 51
Real Estate, Lodging and Leisure—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Companies in this industry made acquisitions totalling Euro 35 billion, which were almost entirely made from
2006 to 2008. At fiscal year-end 2010, the industry reported a total of Euro 16 billion of goodwill, of which
Euro 5 billion was acquired from 2006 to 2010. Noteworthy acquisitions that were carried out include:
Accor S.A. Berkeley Group Holdings plc British Land Co. plc Carnival plc
Castellum AB Cofinimmo S.A. Corio N.V. Derwent London plc
Fonciere des Regions Gecina S.A. Hammerson plc Icade
Intercontinental Hotels Group plc Klepierre S.A. Land Securities Group plc Persimmon plc
PSP Swiss Property AG Segro plc Swiss Prime Site AG Thomas Cook Group plc
TUI Travel PLC Wereldhave N.V. Unibail-Rodamco SE Barratt Developments PLC
Immofinanz AG Taylor Wimpey PLC Capital Shopping Centres GRP Eurocommercial Properties
Great Portland Estates JM AB National Express GRP Paddy Power
2,037
3,634
637 831 492
6,402
16,099
7,117
3,738
1,807
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Real Estate, Lodging and Leisure
The European Goodwill Impairment Study – 2011-2012
79
Derwent London’s acquisition of London Merchant Securities in 2007; Klepierre SA’s acquisition of Steen &
Strøm ASA in 2008; and Swiss Prime Site’s acquisition of Jelomi Holding in 2009.292
As of fiscal year 2010, companies in this industry booked total impairments of Euro 1 billion, the largest
amount relating to the impairment of goodwill at Euro 0.5 billion (50.2%), followed by the impairment of fixed
assets at Euro 0.4 billion (45.1%), and the remaining less than Euro 0.1 billion (4.7%) relating to the
impairment of intangible assets.
Fiscal year 2010 booked goodwill impairments were 41% below those of the previous period, and mark the
lowest amount of goodwill impairment in the covered period. The amount of total goodwill impairment for 2006
to 2010 (Euro 7.6 billion) is higher than the goodwill acquired in the same period (Euro 5.1 billion). In
addition, the total purchase price paid represents 28% of the market capitalisation (PPP/MC ratio) as of
December 31, 2010, whereas, the booked goodwill impairment (2006 to December 2010) covers 40% of the
total purchase price paid, the second highest percentage of all analysed industries. At the end of December
31, 2010, almost 60% of companies showed book value of equity close to or above market capitalisation.
Chart 52
Real Estate, Lodging and Leisure—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, the industry had an overall score of 2.3 at December 2010 (and
2.4 at December 2009), which is the third highest IRF of all analysed industries. The impairment forecast for
Real Estate, Lodging and Leisure as a whole indicates Cloudy conditions, with 22% of companies still included
in the Stormy category.
3%
30%
20%
33%
13%
3%
22%
31%
25%
19%
1
7
10
8
6
1
9
6
10
4
0%
5%
10%
15%
20%
25%
30%
35%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofCom
pani
es
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
80
Chart 53
Real Estate, Lodging and Leisure—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
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Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
81
16. Technology and IT
The Technology and IT industry comprises software companies, as well as companies engaged in
manufacturing semiconductors, communications equipment, computer equipment, and technology-related
office equipment.
Economic Climate
In 2010 and Q1’11, the semiconductor and software sectors of the technology industry outperformed the
overall European market.293 Semiconductor inventory in Q4’10 increased further to 10.2% above the three-year
seasonal average.294 The European semiconductor industry is facing various risks as a result of the earthquake
and tsunami in Japan, including direct input material shortages for production, shipment delays for capacity
expansions, and a decrease in customer production due to component shortages.295 The disruption in
components supply (due to the earthquake) did not have a significant impact on European semiconductor
companies in Q1’11.296 Analysts forecast global semiconductor revenues to increase by 14% in 2011.297
Additionally, PC and consumer electronics demand remained depressed in Q1’11, whereas the automotive,
industrial and smartphone end markets experienced strong demand.298
Smartphone shipment growth continued to be robust in the first half of 2011, driven by an increasing presence
in emerging markets and rising smartphone utilisation globally.299,300 Analysts believe that the smartphone
sector is currently focused on providing handsets at mass market pricing levels.301 Handset units are forecast to
grow by 10% globally in 2011, driven by 57% growth in smartphone units.302 Additionally, growth in PC units
is expected to slow down to 3.6% in 2011, compared to 13.7% in 2010, primarily as a result of an increase in
tablet market share.303 Analysts expect tablet manufacturers competing with Apple, Inc. to re-examine
manufacturing plans for their tablets as a result of low demand and possible inventory build compared to the
iPad.304
In 2011, analysts expect corporate IT spending to rise and consolidation in the software and IT services sector
to increase as larger companies seek to acquire maintenance streams, customers and additional technologies,
and smaller companies seek to grow or be acquired.305 Global corporate expenditures on IT are forecast to grow
an estimated 4.3% year-over-year in 2011, primarily as a result of customers’ continuing to reduce the backlog
of delayed purchases from 2008 and 2009.306 Analysts also expect IT services companies to generate stronger
revenue growth as well.307
The European Goodwill Impairment Study – 2011-2012
82
Table 18Technology and IT—Companies Included
Impairment Climate
Technology and IT market capitalisation moved closely with the development of the STOXX Europe 600 Index,
and is 20% below its level of January 2006. However, as of December 2010, the industry lost almost 35% of
its market value compared to its peak in October 2007.
Chart 54
Technology and IT—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Technology and IT companies made acquisitions totalling Euro 57 billion during the covered period, of which
Euro 44 billion were made between 2006 and 2008. At fiscal year-end 2010, this industry reported a total of
Euro 32 billion of goodwill. However, during the period 2006 to 2010 total goodwill of Euro 30 billion was
acquired.
Aixtron AG Alcatel-Lucent ARM Holdings plc ASML Holding N.V.
Autonomy Corp. plc Dassault Systemes S.A. Electrocomponents Gemalto N.V.
Halma plc Infineon Technologies AG LM Ericsson Telephone Co. Logitech International S.A.
Meyer Burger Technology Micro Focus International PLC Misys plc Neopost S.A.
Nokia Corp. Rotork plc Sage Group plc SAP AG
Software AG Spectris STMicroelectronics N.V. Temenos Group AG
United Internet AG Wincor Nixdorf AG
12
2,6683,285
9120
19,537
8,661
15,616
6,3506,876
0
5,000
10,000
15,000
20,000
25,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Technology and IT
The European Goodwill Impairment Study – 2011-2012
83
Significant acquisitions include those of:308
Lucent Technologies by Alcatel Technologies in 2006;
NAVTEQ by Nokia in 2008;
Business Objects by SAP in 2008;
LM Ericsson Telephone’s acquisition of Bizitek in 2009; and
SAP AG’s acquisition of Sybase in 2010.
None of the Technology and IT companies booked goodwill impairments in fiscal year 2010. Goodwill
impairments for the period 2006 to 2010 equal 23% of the goodwill acquired in the same period. In addition,
the total purchase price paid represents 31% of the market capitalisation (PPP/MC ratio) as of December 31,
2010, whereas booked goodwill impairment (2006 to December 2010) covers 23% of the total purchase price
paid. As of December 31, 2010, no Technology and IT company showed book value of equity close to or above
market capitalisation.
Chart 55
Technology and IT—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, Technology and IT had an overall score of 1.4 as of
December 2010 (and 1.5 at December 2009). The IRF for this industry improved and now indicates Sunny
conditions.
0% 0% 4% 9%
87%
0% 0%0%
12%
88%
0 03
23
0 01
2
20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
84
Chart 56
Technology and IT—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
85
17. Telecommunications
The Telecommunications industry comprises companies engaged in telecommunication networks.
Economic Climate
In Q4’10, European mobile growth declined 0.7% year-over-year, partially due to a deceleration in mobile data
revenue growth.309 However, outgoing mobile voice usage increased 5.6% year-over-year in Q4’10.310 The
European cable sector is experiencing steady growth, driven by increasing Internet usage, higher bandwidth
requirements for data-intensive applications such as video, expansion in devices with Internet capability and
convergence in mobile media and communications.311
In Q1’11, European mobile service revenue decreased 2.7% compared to Q4’10, due to mobile termination
rates reductions, sluggish smartphone penetration and Southern European austerity measures.312 In 2011,
mobile service revenue growth in Europe is forecast to decline by 1.4% as a result of reductions in mobile
termination rates and the cannibalisation of voice and messaging by smartphones.313,314 In 2011, analysts
believe that the volume of data traffic on portable devices through public Wi-Fi networks will grow by 25% to
50%, a much faster rate than cellular broadband network traffic volume.315 As a result, mobile providers may
partner with Wi-Fi providers or construct blended networks to benefit from this development.316
Analysts believe there is an increasing imbalance between European telecom operators and content providers’
networks as the telecommunications networks are being inundated with data from content delivery networks
(CDNs) such as Google/YouTube and other media sites.317 European operators are significantly increasing their
investments in new technologies, such as fibre and 4G, to sustain the elevating data flows in
telecommunications networks.318 Some of the largest European telecoms operators are beginning to proceed
cohesively, and met with the European Commissioner for Digital Agenda in 2011 to address the issue and
potentially obtain payment from content companies to meet broadband targets.319 However, this is a
controversial proposal as it violates the principle of net neutrality, which advocates the equality of all Internet
content.320 Certain European telecom operators and content operators are currently in negotiations that may
result in collaboration on new technologies to decrease the impact of data traffic on the telecommunications
networks.321 Broadband penetration in Europe is currently at 95.6% of PC homes and 71.4% of households.322
E-waste (electronic waste) is increasingly becoming a significant environmental issue in the sector. Europe was
the first major market to address the subject of recovery of e-waste by coordinating a recovery system through
the Waste Electrical and Electronic Equipment (WEEE) Directive in 2002, which placed responsibility on the
producers, rather than the distributors.323
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Table 19Telecommunications—Companies Included
Impairment Climate
The market capitalisation of the Telecommunication industry has moved closely with the STOXX Europe 600
Index, and is 10% below its level as of January 2006. Furthermore, as of December 2010, the industry has
lost more than 30% of its market value compared to its peak in October 2007.
Chart 57Telecommunications—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Telecommunications companies made acquisitions of nearly Euro 138 billion between 2006 and December
2010, of which Euro 106 billion were made between 2006 and 2008. At fiscal year-end 2010, the industry
reported a total of Euro 225 billion of goodwill, of which Euro 80 billion was acquired from 2006 to 2010.
Notable deals include:324
Belgacom S.A. BT Group plc Cable & Wireless Worldwide Cable and Wireless Communications
Deutsche Telekom AG Elisa Oyj France Telecom Iliad S.A.
Inmarsat Plc Mobistar S.A. OTE Portugal Telecom SGPS S.A.
Royal KPN N.V. SES S.A. Swisscom AG TDC
Tele2 AB Telecom Italia SpA Telefonica S.A. Telekom Austria AG
Telenet Group Holding N.V. Telenor ASA TeliaSonera AB Vodafone Group plc
36,934
17,662
800
9,748
3,539
45,512
22,639
37,927
5,350
26,336
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Telecommunications
The European Goodwill Impairment Study – 2011-2012
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Telefonica’s acquisition of O2 in 2006 and its acquisition of Brasilcel (Euro 18 billion) in 2010;
Vodafone’s acquisitions of ClearWave and VenFin in 2006 as well as its acquisition of CGP InvestmentsHoldings in 2008
France Telecom’s acquisition of Mobinil in 2010 as well as a 40% stake in Meditel in 2010; and
Deutsche Telekom’s acquisition of Hellenic Telecommunications Organization in 2008.
As of fiscal year 2010, companies booked total impairments of Euro 5.1 billion, the largest amount relating to
the impairment of goodwill at Euro 3.6 billion (70.5%), followed by the impairment of fixed assets at
Euro 1.5 billion (29.5%). The companies did not book any impairments relating to its intangible assets.
The booked goodwill impairments in fiscal year 2010 are significantly below the impairments of previous years
2006, 2007 and 2009. The goodwill impairments of the periods 2006, 2007 and 2009 accounted for a total
of Euro 64.3 billion. Goodwill impairments for 2006 to 2010 equal 86% of the goodwill acquired in the same
period. The total purchase price paid represents 31% of the market capitalisation (PPP/MC ratio) as of
December 31, 2010, and booked goodwill impairment (2006 to December 2010) covers 90% of the total
purchase price paid. As of December 31, 2010, less than 10% of Telecommunications companies showed
book value of equity close to or above market capitalisation.
Chart 58
Telecommunications—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Considering the MC/BVE and PPP/MC ratios, Telecommunications had an overall score of 1.3, as of December
2010 (and 1.6 at December 2009); therefore, the IRF for the industry has improved and now indicates Sunny
conditions, with no company in Stormy territory.
0% 9% 0% 5%
86%
0% 4% 4%13%
79%
01
0
3
19
02
1 1
19
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
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Chart 59
Telecommunications—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
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18. Transportation
The Transportation industry comprises the rail, road, and water transportation sectors.
Economic Climate
In 2010, trade volume growth in air and ocean was primarily driven by the re-stocking process. Analysts expect
trade routes between Europe and Asia to experience volume growth of 5% to 6% during the next three years.325
The Transportation industry continues to face numerous challenges, including rising oil prices and enduring oil
dependency, a worsening climate and local environment, and increasing congestion and declining
accessibility.326
In 2010, European airport traffic increased by 4.2%, but was still 2.1% below 2007 peak traffic levels
primarily due to the negative effects of the volcanic ash cloud in Iceland in April 2010.327 Passenger traffic in
Q1’11 rose by 5.4%.328 Traffic in the first half of 2011 has been adversely affected by the natural disasters in
Japan as well as the social unrest in the Middle East and North Africa.329 Nevertheless, passenger volume in
European airports is forecast by analysts to grow by 4.5% in 2011.330 High oil prices could negatively influence
airline capacity, and some airlines have already publicised capacity reductions for the winter.331
Container vessel orders declined 30% in 2010, compared to 45% in 2009, owing to order delays rather than
cancellations.332 In 2011, analysts believe the containers supply overhang may adversely affect the freight
rates outlook for head haul routes, particularly between Asia and Europe.333 Freight rates for containers trading
between Asia and Europe are expected to decline 16% in 2011, and 4% in 2012, with expected recovery in
2013.334 Additionally, sea freight fleet growth is expected to accelerate over the next few years; the fleet is
forecast to grow 9% year-over-year in 2011 and 9.8% year-over year in 2012.335 Analysts expect crude tanker
fleet utilisation to continue declining until mid-2013, as the sector is experiencing a multi-year downturn
partially due to over-supply.336 Fleet growth for bulk carriers is forecast to be 13% in 2011, surpassing
expected demand growth of 7%, despite the anticipated slippage in orders.337 In the next two years, analysts
believe cash conservation will become essential for ship owners, as crude tankers and bulkers are currently
experiencing a multi-year downturn.338
In 2011, analysts expect the European toll road sector to experience positive performance driven by the
increase in traffic volumes and the conclusion of risks attributable to the corporate sector.339 In March 2011,
the European Commission adopted the Transport 2050 strategy for a competitive transport system that will
expand mobility, eliminate obstacles in important areas, and stimulate growth and employment.340 The
proposals under this plan target a 60% reduction in transport emissions and a considerable decrease in
Europe’s dependence on imported oil by 2050. By 2050, the primary goals will include: no more
conventionally-fuelled cars in cities; 40% utilisation of sustainable low carbon fuels in aviation and at least
40% reduction in shipping emissions; and a 50% shift of medium distance intercity passenger and freight
journeys from road to rail and waterborne transport.341 On June 23, 2011, the EU signed an agreement on the
accession by the EU to the Convention concerning Internal Carriage by Rail (COTIF), which will enable the EU
to expand its influence on international rail issues.342
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Table 20
Transportation—Companies Included
Impairment Climate
The market capitalisation of the Transportation industry has followed the development of the STOXX Europe
600 fairly closely, and is just below its level of January 2006. However, compared to its peak in July 2007,
companies have lost almost 30% of their market value as of December 2010.
Chart 60Transportation—Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Sources: Capital IQ, Bloomberg, and annual reports.
Transportation companies made acquisitions totalling Euro 19 billion between 2006 and December 2010. At
fiscal year-end 2010, the industry reported a total of Euro 25 billion of goodwill, of which Euro 9.2 billion was
acquired during 2006 to 2010. Notable acquisitions carried out include those of:343
Societies des Autoroutes du Nord-Est de La France Group by Abertis Infraestructuras in 2006; and
Laidlaw by FirstGroup in 2008.
A.P. Møller - Mærsk A/S Abertis Infraestructuras S.A. Aeroports de Paris Air France-KLM
Atlantia SpA Brisa - Auto-Estradas de Portugal S.A. British Airways Plc Deutsche Lufthansa AG
Deutsche Post AG DSV A/S Firstgroup plc Fraport AG
Groupe Eurotunnel S.A. Iberia Lineas Aereas de Espana S.A. Kuehne & Nagel International AG PostNL N.V.
Royal Vopak N.V. Ryanair Holdings plc Stagecoach Group plc
15 53
68588 48
8,806
3,013
4,963
2,501
186
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2006 2007 2008 2009 2010
0%
50%
100%
150%
200%
250%
Jan 2006 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010
Goodwill Impairment (EURm) Purchase Price Paid (EURm) STOXX Europe 600 Transportation
The European Goodwill Impairment Study – 2011-2012
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As of fiscal year 2010, Transportation companies booked total impairments of Euro 0.7 billion, with the largest
amount relating to the impairment of fixed assets at Euro 0.6 billion (84.6%), followed by the impairment of
intangible assets at less than Euro 0.1 billion (8.7%), and the remaining less than Euro 0.1 billion (6.8%)
relating to the impairment of goodwill.
Booked goodwill impairments in fiscal year 2010 were 46% below the booked impairments of fiscal year 2009
at Euro 0.09 billion. Goodwill impairments for the period spanning 2006 to 2010 equals 10% of the goodwill
acquired in the same period. In addition, the total purchase price paid represents almost 14% of the market
capitalisation (PPP/MC ratio) as of December 31, 2010, whereas, booked goodwill impairment (2006 to
December 2010) covers only 5% of the total purchase price paid. As of December 31, 2010, 10% of
Transportation companies showed book value of equity close to or above market capitalisation.
Chart 61Transportation—Distribution of Market Capitalisation and Book Value of Equity
Sources: Capital IQ, Bloomberg, and annual reports.
Taking into consideration the MC/BVE and PPP/MC ratios, Transportation had an overall score of 1.4 as of
December 2010 (and 1.6 at December 2009). The IRF for the industry indicates Sunny conditions, with no
company in Stormy territory.
0% 10% 10%
20%
60%
0% 5% 5%
21%
68%
0 1 1
4
13
2 2
4
12
0%
10%
20%
30%
40%
50%
60%
70%
80%
Less than 50% Between 50%and 90%
Between 90%and 110%
Between 110%and 150%
Above 150%
Per
cent
age
ofC
ompa
nies
Market Capitalisation / Book Value of EquityDec-09 Dec-10
The European Goodwill Impairment Study – 2011-2012
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Chart 62
Transportation—IRF Distribution
Sources: Capital IQ, Bloomberg, and annual reports.
10%
100%
1000%
0% 1% 10% 100% 1000%Mar
ketC
apit
alis
atio
n/
Boo
kVa
lue
ofE
quit
y
Purchase Price Paid / Market Capitalisation
25%
Rainy
Sunny
Stormy
Cloudy
The European Goodwill Impairment Study – 2011-2012
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Appendix I – About the Authors
Dr. Marc Hayn
Dr. Hayn is a Managing Director in Houlihan Lokey’s Frankfurt office and Head of Northern Europe’s Financial
Advisory Services business. He specialises in corporate finance and has assisted clients in complex business
valuations, as well as conceptualising and implementing value based-management systems. He has carried out
a large number of valuations for the purposes of group reorganisations, purchase price allocations, impairment
tests, squeeze outs, domination and profit and loss transfer agreements, mergers, management participation
plan and portfolios.
Dr. Hayn teaches business valuation at the University of the Saarland and is a frequent guest speaker on
valuation. Also, he has published articles and books on topics such as new valuation techniques and valuation
for tax and accounting purposes.
Dr. Tim Laas
Dr. Laas is a Senior Vice President in Houlihan Lokey’s Frankfurt office, where he is a member of the firm’s
Financial Advisory Services business. He has more than a decade of experience providing valuation and
financial opinion services across several industries.
His valuations have been carried out for various purposes such as valuations for group reorganisations,
purchase price allocations, impairment tests, squeeze outs, domination and profit and loss transfer
agreements, mergers, management participation plan and portfolios.
Dr. Laas is a frequent guest speaker on valuations and has published articles and books on topics such as
valuation techniques with respect to personal taxes and valuation for tax and accounting purposes.
The European Goodwill Impairment Study – 2011-2012
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E.W. (Sandy) Purcell
Mr. Purcell is a Senior Managing Director in Houlihan Lokey’s London office and Head of the international
Financial Advisory Services business, where he manages valuation, financial advisory, and opinion services for
clients involved in domestic and cross-border transactions.
With more than two decades of experience in the financial services and advisory industry, Mr. Purcell has been
involved in providing fairness and solvency (capital adequacy) opinions on numerous U.S. and European
transactions. He also provides technical expertise on financial due diligence, strategic business valuation,
financial restructurings and divestitures.
He has significant experience with the valuation of securitised vehicles and structured investment vehicles
(SIVs), and has advised numerous hedge fund and private equity sponsors on the valuation of their portfolio
assets. He has structured, negotiated and closed complex financial and capital transactions in many industries,
including transportation, financial services, telecommunications, energy, aviation, consumer products and
industrial products.
Mr. Purcell has taught business valuation of privately held companies at Northwestern University and is a
frequent speaker on valuation, capital markets and other financial issues. In addition, he is a member of the
Institute of Directors (IoD), the Confederation of British Industry (CBI), the Association of Corporate Growth
(ACG), the Valuation Special Interest Group of the Institute of Chartered Accountants in England & Wales
(ICAEW), the Society of Share and Business Valuers, and the Business Valuation Association.
The European Goodwill Impairment Study – 2011-2012
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Appendix II - Glossary
4G In telecommunications 4G is the fourth generation of cellular wireless standards.
BVE Book value of equity: Written down value of an asset as shown on a firm’s balance
sheet. Book value of equity is computed by deducting accumulated depreciation
from the purchase price of the asset. According to GAAP provisions, an asset’s
book value of equity cannot show any increase or decrease in the asset’s market
value; it rarely reflects the asset’s true worth.
EBT Earnings before taxes
EU European Union
GAAP Generally Accepted Accounting Principles
GDP Gross domestic product
IAS International Accounting Standards
IFRS International Financial Reporting Standards
IRF Impairment Risk Factor: Concept developed by Houlihan Lokey, differentiated into
four categories that provides an indication of the potential impairment risk.
MC Market capitalisation: On-going market valuation of a public firm computed by
multiplying the number of outstanding shares with the current share market price.
It is, however, not necessarily the price a buyer would pay for the entire firm. And
it is not a realistic estimate of the firm’s actual size because a share’s market
price is based on trading in only a fraction of the firm’s total outstanding shares.
OECD Organisation for Economic Co-operation and Development
PPP Purchase price paid
Q Quarter
STOXX Europe 600 Index The STOXX Europe 600 Index is derived from the STOXX Europe Total Market
Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed
number of 600 components, the STOXX Europe 600 Index represents large, mid
and small capitalisation companies across 18 countries of the European region:
Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Ireland,
Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland and the United Kingdom.
WiFi Wireless fidelity
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Appendix III - List of Companies
Company Industry3i Group plc Financial Institutions Group – Other
A.P. Møller - Mærsk A/S Transportation
A2A SpA Energy
Aalberts Industries Basic Industrials Group – Other
ABB Ltd. Basic Industrials Group – Other
Aberdeen Asset Management PLC Financial Institutions Group – Other
Abertis Infraestructuras S.A. Transportation
Acciona S.A. Energy
Accor S.A. Real Estate, Lodging and Leisure
Acerinox S.A. Basic Industrials Group – Metals
Ackermans & Van Haaren N.V. Financial Institutions Group – Other
Actelion Ltd. Healthcare
Actividades de Construcción y Servicios, S.A Engineering, Construction and Building Products
Adecco S.A. Business Services and Management Consulting
Adidas AG Consumer Products, Food and Retail
Admiral Group plc Financial Institutions Group – Insurance
Aegis Group plc Media, Sports and Entertainment
AEGON N.V. Financial Institutions Group – Insurance
Aeroports de Paris Transportation
AGEAS Financial Institutions Group – Insurance
Aggreko plc Business Services and Management Consulting
Air France-KLM Transportation
Aixtron AG Technology and IT
Aker Solutions ASA Energy
Akzo Nobel N.V. Basic Industrials Group – Chemicals
Alcatel-Lucent Technology and IT
Alfa Laval AB Basic Industrials Group – Other
Allianz SE Financial Institutions Group – Insurance
Alpha Bank S.A. Financial Institutions Group – Banks
Alpiq Holding AG Energy
Alstom S.A. Basic Industrials Group – Other
Amadeus IT Holding Business Services and Management Consulting
AMEC plc Energy
Amlin plc Financial Institutions Group – Insurance
Andritz AG Basic Industrials Group – Other
Anglo American plc Basic Industrials Group – Metals
Anheuser-Busch InBev Consumer Products, Food and Retail
Antofagasta plc Basic Industrials Group – Metals
Aperam Basic Industrials Group – Metals
Arcelor Mittal Basic Industrials Group – Metals
Arkema S.A. Basic Industrials Group – Chemicals
ARM Holdings plc Technology and IT
ARYZTA AG Consumer Products, Food and Retail
Ashmore Group PLC Financial Institutions Group – Other
ASML Holding N.V. Technology and IT
Assa Abloy AB Engineering, Construction and Building Products
Assicurazioni Generali SpA Financial Institutions Group – Insurance
Associated British Foods plc Consumer Products, Food and Retail
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Company IndustryAstraZeneca plc Healthcare
Atlantia SpA Transportation
Atlas Copco Group Basic Industrials Group – Other
Atos Origin S.A. Business Services and Management Consulting
Aurubis AG Basic Industrials Group – Metals
Autonomy Corp. plc Technology and IT
Aviva plc Financial Institutions Group – Insurance
AXA Financial Institutions Group – Insurance
Babcock International Group plc Business Services and Management Consulting
BAE Systems plc Aerospace, Defence and Government Services
Balfour Beatty plc Engineering, Construction and Building Products
Baloise-Holding Financial Institutions Group – Insurance
Banca Carige SpA Financial Institutions Group – Banks
Banca Monte dei Paschi di Siena SpA Financial Institutions Group – Banks
Banca Popolare dell'Emilia Romagna Scrl Financial Institutions Group – Banks
Banca Popolare di Milano Scrl Financial Institutions Group – Banks
Banca Popolare di Sondrio SCARL Financial Institutions Group – Banks
Banco Bilbao Vizcaya Argentaria, S.A. Financial Institutions Group – Banks
Banco Comercial Portugues S.A. Financial Institutions Group – Banks
Banco de Sabadell S.A. Financial Institutions Group – Banks
Banco de Valencia S.A. Financial Institutions Group – Banks
Banco Espirito Santo S.A. Financial Institutions Group – Banks
Banco Popolare SC Financial Institutions Group – Banks
Banco Popular Espanol S.A. Financial Institutions Group – Banks
Banco Santander, S.A. Financial Institutions Group – Banks
Bank of Piraeus S.A. Financial Institutions Group – Banks
Bankinter S.A. Financial Institutions Group – Banks
Barclays plc Financial Institutions Group – Banks
Barratt Developments PLC Real Estate, Lodging and Leisure
BASF SE Basic Industrials Group – Chemicals
Bayer AG Healthcare
Beiersdorf AG Consumer Products, Food and Retail
Bekaert S.A. Basic Industrials Group – Other
Belgacom S.A. Telecommunications
Berkeley Group Holdings plc Real Estate, Lodging and Leisure
BG Group plc Energy
BHP Billiton plc Basic Industrials Group – Metals
Bilfinger Berger AG Engineering, Construction and Building Products
BioMérieux S.A. Healthcare
BMW Group Automotive
BNP Paribas Financial Institutions Group – Banks
Boliden AB Basic Industrials Group – Metals
Bolsas y Mercados Españoles S.A. Financial Institutions Group – Other
Bourbon Energy
Bouygues SA Engineering, Construction and Building Products
BP plc Energy
Brenntag Basic Industrials Group – Chemicals
Brisa - Auto-Estradas de Portugal S.A. Transportation
British Airways Plc Transportation
British American Tobacco plc Consumer Products, Food and Retail
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Company IndustryBritish Land Co. plc Real Estate, Lodging and Leisure
British Sky Broadcasting Group plc Media, Sports and Entertainment
Britvic Consumer Products, Food and Retail
BT Group plc Telecommunications
Bulgari SpA Consumer Products, Food and Retail
Bunzl plc Consumer Products, Food and Retail
Burberry Group plc Consumer Products, Food and Retail
Bureau Veritas S.A. Business Services and Management Consulting
C&C Group Consumer Products, Food and Retail
Cable & Wireless Worldwide Telecommunications
Cable and Wireless Communications Telecommunications
Cairn Energy plc Energy
Cap Gemini S.A. Business Services and Management Consulting
Capita Group plc Business Services and Management Consulting
Capital Shopping Centres GRP Real Estate, Lodging and Leisure
Carillion plc Engineering, Construction and Building Products
Carlsberg A/S Consumer Products, Food and Retail
Carnival plc Real Estate, Lodging and Leisure
Carrefour S.A. Consumer Products, Food and Retail
Casino Guichard Perrachon & Cie S.A. Consumer Products, Food and Retail
Castellum AB Real Estate, Lodging and Leisure
Catlin Group Ltd. Financial Institutions Group – Insurance
Celesio AG Healthcare
Centrica plc Energy
Charter International plc Basic Industrials Group – Other
Chemring Group plc Aerospace, Defence and Government Services
Chocoladefabriken Lindt & Spruengli AG Consumer Products, Food and Retail
Christian Dior S.A. Consumer Products, Food and Retail
Clariant AG Basic Industrials Group – Chemicals
Close Brothers Group plc Financial Institutions Group – Banks
CNP Assurances S.A. Financial Institutions Group – Insurance
Cobham plc Aerospace, Defence and Government Services
Coca-Cola Hellenic Bottling Company S.A. Consumer Products, Food and Retail
Cofinimmo S.A. Real Estate, Lodging and Leisure
Coloplast A/S Healthcare
Commerzbank AG Financial Institutions Group – Banks
Compagnie Financiere Richemont S.A. Consumer Products, Food and Retail
Compagnie Générale de Géophysique-Veritas Energy
Compagnie Generale DES Etablissements Michelin SCA Automotive
Compass Group plc Consumer Products, Food and Retail
Continental AG Automotive
Cookson Group PLC Basic Industrials Group – Other
Corio N.V. Real Estate, Lodging and Leisure
Credit Agricole S.A. Financial Institutions Group – Banks
Credit Suisse Group Financial Institutions Group – Banks
CRH plc Engineering, Construction and Building Products
Criteria CaixaCorp, S.A. Financial Institutions Group – Other
Croda International plc Basic Industrials Group – Chemicals
CSM N.V. Consumer Products, Food and Retail
Daily Mail and General Trust plc Media, Sports and Entertainment
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Company IndustryDaimler AG Automotive
Danone Consumer Products, Food and Retail
Danske Bank A/S Financial Institutions Group – Banks
Dassault Systemes S.A. Technology and IT
Davide Campari Consumer Products, Food and Retail
DCC plc Basic Industrials Group – Other
Debenhams plc Consumer Products, Food and Retail
Delhaize Group Consumer Products, Food and Retail
Delta Lloyd N.V. Financial Institutions Group – Insurance
Derwent London plc Real Estate, Lodging and Leisure
Deutsche Bank AG Financial Institutions Group – Banks
Deutsche Boerse AG Financial Institutions Group – Other
Deutsche Lufthansa AG Transportation
Deutsche Post AG Transportation
Deutsche Telekom AG Telecommunications
Dexia SA Financial Institutions Group – Banks
Diageo plc Consumer Products, Food and Retail
Dixons Retail Consumer Products, Food and Retail
DnB NOR ASA Financial Institutions Group – Banks
Dragon Oil PLC Energy
Drax Group plc. Energy
DSV A/S Transportation
Dufry Group Consumer Products, Food and Retail
E.ON AG Energy
Ebro Puleva S.A. Consumer Products, Food and Retail
Edenred Consumer Products, Food and Retail
EDP Renováveis Energy
EDP-Energias de Portugal, S.A. Energy
Eiffage S.A. Engineering, Construction and Building Products
Elan Corp. plc Healthcare
Electricité de France Energy
Electrocomponents Technology and IT
Electrolux AB Consumer Products, Food and Retail
Elekta AB Healthcare
Elisa Oyj Telecommunications
Enagas S.A. Energy
Endesa S.A. Energy
ENEL Greenpower Energy
Enel SpA Energy
Eni SpA Energy
Eramet S.A. Basic Industrials Group – Metals
Erste Group Bank AG Financial Institutions Group – Banks
Essar Energy Energy
Essilor International Healthcare
ETS Fr Colruyt S.A. Consumer Products, Food and Retail
Eurasian Natural Resources Corp Plc Basic Industrials Group – Metals
Eurazeo Financial Institutions Group – Other
Eurocommercial Properties Real Estate, Lodging and Leisure
European Aeronautic Defence and Space Company EADS N.V. Aerospace, Defence and Government Services
Eutelsat Communications Media, Sports and Entertainment
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Company IndustryEvrobanka EFG tedionica Financial Institutions Group – Banks
EXOR Financial Institutions Group – Other
Experian plc Business Services and Management Consulting
Fiat Industrial Automotive
Fiat S.p.A. Automotive
Finmeccanica SpA Aerospace, Defence and Government Services
Firstgroup plc Transportation
FLSmidth & Co. A/S Engineering, Construction and Building Products
Fomento de Construcciones y Contratas, S.A. Engineering, Construction and Building Products
Fonciere des Regions Real Estate, Lodging and Leisure
Fortum Oyj Energy
France Telecom Telecommunications
Fraport AG Transportation
Fresenius Medical Care AG & Co. KGAA Healthcare
Fresenius SE Healthcare
Fresnillo PLC Basic Industrials Group – Metals
Fugro N.V. Energy
G4S plc Business Services and Management Consulting
Galenica Ltd. Healthcare
Galp Energia SGPS SA. Energy
GAM Holding AG Financial Institutions Group – Other
Gamesa Corporación Tecnológica S.A. Basic Industrials Group – Other
Gas Natural SDG S.A. Energy
GDF Suez Energy
GEA Group AG Basic Industrials Group – Other
Geberit AG Engineering, Construction and Building Products
Gecina S.A. Real Estate, Lodging and Leisure
Gemalto N.V. Technology and IT
Georg Fischer Basic Industrials Group – Other
Gestevision Telecinco S.A. Media, Sports and Entertainment
Getinge AB Healthcare
Givaudan AG Basic Industrials Group – Chemicals
GKN plc Automotive
GlaxoSmithKline plc Healthcare
GN Store Nord Healthcare
Great Portland Estates Real Estate, Lodging and Leisure
Greene King plc Consumer Products, Food and Retail
Grifols, S.A. Healthcare
Groupe Bruxelles Lambert S.A. Financial Institutions Group – Other
Groupe Eurotunnel S.A. Transportation
Grupo Ferrovial S.A. Engineering, Construction and Building Products
Halfords Consumer Products, Food and Retail
Halma plc Technology and IT
Hammerson plc Real Estate, Lodging and Leisure
Hannover Rückversicherung AG Financial Institutions Group – Insurance
Hargreaves Lansdown Financial Institutions Group – Other
Hays plc Business Services and Management Consulting
HeidelbergCement AG Engineering, Construction and Building Products
Heineken Holding N.V. Consumer Products, Food and Retail
Heineken N.V. Consumer Products, Food and Retail
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Company IndustryHelvetia Versicherungen AG Financial Institutions Group – Insurance
Henderson Group PLC Financial Institutions Group – Other
Henkel AG & Co. KGaA Vz Consumer Products, Food and Retail
Hennes & Mauritz AB Consumer Products, Food and Retail
Hermes International S.A. Consumer Products, Food and Retail
Hexagon AB Basic Industrials Group – Other
Hikma Pharmaceuticals Healthcare
Hochtief AG Engineering, Construction and Building Products
Holcim Ltd. Engineering, Construction and Building Products
Holmen AB Engineering, Construction and Building Products
Home Retail Group Consumer Products, Food and Retail
Homeserve Plc Business Services and Management Consulting
HSBC Holdings plc Financial Institutions Group – Banks
Husqvarna AB Consumer Products, Food and Retail
Iberdrola Renovables S.A. Energy
Iberdrola S.A. Energy
Iberia Lineas Aereas de Espana S.A. Transportation
Icade Real Estate, Lodging and Leisure
ICAP plc Financial Institutions Group – Other
IG Group Holdings Plc Financial Institutions Group – Other
Iliad S.A. Telecommunications
Imerys SA Engineering, Construction and Building Products
IMI plc Basic Industrials Group – Other
Immofinanz AG Real Estate, Lodging and Leisure
Imperial Tobacco Group plc Consumer Products, Food and Retail
Imtech N.V. Engineering, Construction and Building Products
Inchcape PLC Automotive
Inditex S.A. Consumer Products, Food and Retail
Indra Sistemas, S.A. Business Services and Management Consulting
Industrivärden Financial Institutions Group – Other
Infineon Technologies AG Technology and IT
Informa plc Media, Sports and Entertainment
ING Groep N.V. Financial Institutions Group – Banks
Inmarsat Plc Telecommunications
Intercontinental Hotels Group plc Real Estate, Lodging and Leisure
Intermediate Capital Group PLC Financial Institutions Group – Other
International Power plc Energy
Intertek Group plc Business Services and Management Consulting
Intesa Sanpaolo SpA Financial Institutions Group – Banks
Invensys plc Basic Industrials Group – Other
Investec plc Financial Institutions Group – Banks
Investment AB Kinnevik Financial Institutions Group – Other
Investor AB Financial Institutions Group – Other
ITV plc Media, Sports and Entertainment
J. Sainsbury plc Consumer Products, Food and Retail
Jardine Lloyd Thompson Group plc Financial Institutions Group – Insurance
JCDecaux S.A. Media, Sports and Entertainment
Jeronimo Martins SGPS S.A. Consumer Products, Food and Retail
JM AB Real Estate, Lodging and Leisure
John Wood Group plc Energy
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Company IndustryJohnson Matthey plc Basic Industrials Group – Chemicals
Julius Bär Gruppe AG Financial Institutions Group – Other
Jyske Bank A/S Financial Institutions Group – Banks
K+S Aktiengesellschaft Basic Industrials Group – Chemicals
Kabel Deutschland Media, Sports and Entertainment
Kazakhmys PLC Basic Industrials Group – Metals
KBC Group N.V. Financial Institutions Group – Banks
Kemira Group Basic Industrials Group – Chemicals
Kerry Group plc Consumer Products, Food and Retail
Kesko Oyj Consumer Products, Food and Retail
KingFisher plc Consumer Products, Food and Retail
Klepierre S.A. Real Estate, Lodging and Leisure
Kloeckner & Co SE Basic Industrials Group – Metals
Kone Oyj Basic Industrials Group – Other
Konecranes Plc Basic Industrials Group – Other
Koninklijke Ahold N.V. Consumer Products, Food and Retail
Koninklijke Philips Electronics N.V. Basic Industrials Group – Other
Kuehne & Nagel International AG Transportation
Ladbrokes PLC Media, Sports and Entertainment
Lafarge S.A. Engineering, Construction and Building Products
Lagardere SCA Media, Sports and Entertainment
L'Air Liquide S.A. Basic Industrials Group – Other
Land Securities Group plc Real Estate, Lodging and Leisure
Lanxess AG Basic Industrials Group – Chemicals
Legal & General Group Plc Financial Institutions Group – Insurance
Legrand S.A. Basic Industrials Group – Other
Lloyds Banking Group plc Financial Institutions Group – Banks
LM Ericsson Telephone Co. Technology and IT
Logica PLC Business Services and Management Consulting
Logitech International S.A. Technology and IT
London Stock Exchange Group plc Financial Institutions Group – Other
Lonmin plc Basic Industrials Group – Metals
Lonza Group AG Healthcare
L'Oreal S.A. Consumer Products, Food and Retail
Lundin Petroleum AB Energy
Luxottica Group SpA Consumer Products, Food and Retail
LVMH Moet Hennessy Louis Vuitton Consumer Products, Food and Retail
Man Group plc Financial Institutions Group – Other
Man SE Basic Industrials Group – Other
Mapfre S.A. Financial Institutions Group – Insurance
Marine Harvest ASA Consumer Products, Food and Retail
Marks & Spencer Group plc Consumer Products, Food and Retail
Meda AB Healthcare
Mediaset SpA Media, Sports and Entertainment
Mediobanca S.p.A. Financial Institutions Group – Banks
Meggitt PLC Aerospace, Defence and Government Services
Merck & Co. Inc. Healthcare
Metro AG Consumer Products, Food and Retail
Metropole Television M6 Media, Sports and Entertainment
Metso Corp. Basic Industrials Group – Other
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Company IndustryMeyer Burger Technology Technology and IT
Michael Page International plc Business Services and Management Consulting
Micro Focus International PLC Technology and IT
Misys plc Technology and IT
Mitchells & Butlers plc Consumer Products, Food and Retail
Mitie Group plc Business Services and Management Consulting
Mobistar S.A. Telecommunications
Modern Times Group Mtg AB Media, Sports and Entertainment
Mondi plc Basic Industrials Group – Other
MTU Aero Engines Holding AG Aerospace, Defence and Government Services
Munich Re Group Financial Institutions Group – Insurance
National Bank of Greece S.A. Financial Institutions Group – Banks
National Express GRP Real Estate, Lodging and Leisure
National Grid plc Energy
Natixis Financial Institutions Group – Banks
Neopost S.A. Technology and IT
Neste Oil Corp. Energy
Nestlé S.A. Consumer Products, Food and Retail
Nexans S.A. Basic Industrials Group – Other
Next Group plc Consumer Products, Food and Retail
Nobel Biocare Holding AG Healthcare
Nokia Corp. Technology and IT
Nokian Tyres Oyj Automotive
Nordea Bank AB Financial Institutions Group – Banks
Norsk Hydro ASA Basic Industrials Group – Metals
Northumbrian Water Group plc Energy
Novartis AG Healthcare
Novo Nordisk A/S Healthcare
Novozymes A/S Basic Industrials Group – Chemicals
Nutreco Holding N.V. Consumer Products, Food and Retail
Old Mutual plc Financial Institutions Group – Insurance
OMV Aktiengesellschaft Energy
OPAP S.A. Media, Sports and Entertainment
Oriflame Cosmetics S.A. Consumer Products, Food and Retail
Orion Corp. Healthcare
Orkla ASA Basic Industrials Group – Other
OTE Telecommunications
Outokumpu Oyj Basic Industrials Group – Metals
Outotec Engineering, Construction and Building Products
Paddy Power Real Estate, Lodging and Leisure
PagesJaunes Groupe Media, Sports and Entertainment
Pandora Consumer Products, Food and Retail
Pargesa Holding S.A. Financial Institutions Group – Other
Parmalat SpA Consumer Products, Food and Retail
Partners Group Holding AG Financial Institutions Group – Other
Pearson plc Media, Sports and Entertainment
Pennon Group plc Energy
Pernod-Ricard S.A. Consumer Products, Food and Retail
Persimmon plc Real Estate, Lodging and Leisure
Petrofac Ltd. Energy
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Company IndustryPetroleum Geo Services ASA Energy
Petropavlovsk PLC Basic Industrials Group – Metals
Pirelli & C. SpA Automotive
Pohjola Bank plc Financial Institutions Group – Banks
Porsche Automobile Holding SE Automotive
Portugal Telecom SGPS S.A. Telecommunications
PostNL N.V. Transportation
PPR S.A. Consumer Products, Food and Retail
Premier Oil plc Energy
Prosiebensat.1 Media Media, Sports and Entertainment
Provident Financial plc Financial Institutions Group – Other
Prudential plc Financial Institutions Group – Insurance
Prysmian S.p.A. Basic Industrials Group – Other
PSA Peugeot Citroen Automotive
PSP Swiss Property AG Real Estate, Lodging and Leisure
Public Power Corporation S.A. Energy
Publicis Groupe S.A. Media, Sports and Entertainment
Puma AG Rudolf Dassler Sport Consumer Products, Food and Retail
Qiagen N.V. Healthcare
Raiffeisen International Bank-Holding AG Financial Institutions Group – Banks
Randgold Resources Ltd. Basic Industrials Group – Metals
Randstad Holding N.V. Business Services and Management Consulting
Ratos AB Financial Institutions Group – Other
Rautaruukki Corporation Basic Industrials Group – Metals
Reckitt Benckiser Group plc Consumer Products, Food and Retail
Red Eléctrica Corporación S.A. Energy
Reed Elsevier N.V. Media, Sports and Entertainment
Reed Elsevier plc Media, Sports and Entertainment
Renault S.A. Automotive
Renewable Energy Corp. ASA Basic Industrials Group – Other
Rentokil Initial plc Business Services and Management Consulting
Repsol YPF S.A. Energy
Rexam plc Basic Industrials Group – Other
Rheinmetall AG Basic Industrials Group – Other
Rhodia S.A. Basic Industrials Group – Chemicals
Rhoen Klinikum AG Healthcare
Rio Tinto plc Basic Industrials Group – Metals
Roche Holding AG Healthcare
Rolls-Royce Group plc Aerospace, Defence and Government Services
Rotork plc Technology and IT
Royal Bank of Scotland Group plc Financial Institutions Group – Banks
Royal Boskalis Westminster N.V. Engineering, Construction and Building Products
Royal DSM N.V. Basic Industrials Group – Chemicals
Royal Dutch Shell plc Energy
Royal KPN N.V. Telecommunications
Royal Vopak N.V. Transportation
RSA Insurance Group plc. Financial Institutions Group – Insurance
RWE AG Energy
Ryanair Holdings plc Transportation
SABMiller plc Consumer Products, Food and Retail
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Company IndustrySafran S.A. Aerospace, Defence and Government Services
Sage Group plc Technology and IT
Saint Gobain Engineering, Construction and Building Products
Saipem SpA Energy
Salzgitter AG Basic Industrials Group – Metals
Sampo Oyj Financial Institutions Group – Insurance
Sandvik AB Basic Industrials Group – Other
Sanofi-Aventis Healthcare
Sanoma Oyj Media, Sports and Entertainment
SAP AG Technology and IT
SBM Offshore N.V. Energy
Scania AB Basic Industrials Group – Other
Schibsted ASA Media, Sports and Entertainment
Schindler Holding AG Basic Industrials Group – Other
Schneider Electric S.A. Basic Industrials Group – Other
Schroders plc Financial Institutions Group – Other
SCOR SE Financial Institutions Group – Insurance
Scottish & Southern Energy plc Energy
SeaDrill Ltd. Energy
SEB S.A. Consumer Products, Food and Retail
Securitas AB Business Services and Management Consulting
SEGRO plc Real Estate, Lodging and Leisure
Serco Group plc Business Services and Management Consulting
SES S.A. Telecommunications
Severn Trent plc Energy
SGL Carbon SE Basic Industrials Group – Other
SGS S.A. Business Services and Management Consulting
Shire Ltd. Healthcare
Siemens AG Basic Industrials Group – Other
Sika AG Basic Industrials Group – Chemicals
Skandinaviska Enskilda Banken AB Financial Institutions Group – Banks
Skanska AB Engineering, Construction and Building Products
SKF AB Basic Industrials Group – Other
Smith & Nephew plc Healthcare
Smiths Group plc Basic Industrials Group – Other
SNAM Rete Gas SpA Energy
Societe Bic Consumer Products, Food and Retail
Societe Generale Group Financial Institutions Group – Banks
Sodexo Consumer Products, Food and Retail
Sofina S.A. Financial Institutions Group – Other
Software AG Technology and IT
Solvay S.A. Basic Industrials Group – Chemicals
Sonova Holding AG Healthcare
Spectris Technology and IT
Spirax-Sarco Engineering PLC Engineering, Construction and Building Products
Springer (Axel) Media, Sports and Entertainment
SSAB AB Basic Industrials Group – Metals
Stada-Arzneimittel AG Healthcare
Stagecoach Group plc Transportation
Standard Chartered PLC Financial Institutions Group – Banks
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Company IndustryStandard Life plc Financial Institutions Group – Insurance
StatoilHydro ASA Energy
STMicroelectronics N.V. Technology and IT
Stora Enso Corp. Basic Industrials Group – Other
Storebrand ASA Financial Institutions Group – Insurance
Straumann Holding AG Healthcare
Subsea7 Energy
Suedzucker AG Consumer Products, Food and Retail
Suez Environnement S.A. Energy
Sulzer, Ltd. Basic Industrials Group – Other
Svenska Cellulosa Aktiebolaget, SCA Basic Industrials Group – Other
Svenska Handelsbanken AB Financial Institutions Group – Banks
Swatch Group AG Consumer Products, Food and Retail
Swedbank AB Financial Institutions Group – Banks
Swedish Match AB Consumer Products, Food and Retail
Swiss Life Holding Financial Institutions Group – Insurance
Swiss Prime Site AG Real Estate, Lodging and Leisure
Swiss Reinsurance Co. Financial Institutions Group – Insurance
Swisscom AG Telecommunications
Sydbank A/S Financial Institutions Group – Banks
Symrise AG Basic Industrials Group – Chemicals
Syngenta AG Basic Industrials Group – Chemicals
Synthes Inc. Healthcare
Tate & Lyle plc Consumer Products, Food and Retail
Taylor Wimpey PLC Real Estate, Lodging and Leisure
TDC Telecommunications
Technip Energy
Tecnicas Reunidas S.A. Engineering, Construction and Building Products
Tele2 AB Telecommunications
Telecom Italia SpA Telecommunications
Telefonica S.A. Telecommunications
Telekom Austria AG Telecommunications
Telenet Group Holding N.V. Telecommunications
Telenor ASA Telecommunications
Teleperformance Business Services and Management Consulting
Television Francaise 1 S.A. Media, Sports and Entertainment
TeliaSonera AB Telecommunications
Temenos Group AG Technology and IT
Tenaris S.A. Energy
Terna Rete Elettrica Nazionale SpA Energy
Tesco PLC Consumer Products, Food and Retail
TGS Nopec Geophysical Co ASA Energy
Thales Aerospace, Defence and Government Services
The Governor and Company of The Bank of Ireland Financial Institutions Group – Banks
The Linde Group Basic Industrials Group – Other
The Weir Group PLC Basic Industrials Group – Other
Thomas Cook Group plc Real Estate, Lodging and Leisure
ThyssenKrupp AG Basic Industrials Group – Metals
Tognum AG Basic Industrials Group – Other
Topdanmark A/S Financial Institutions Group – Insurance
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Company IndustryTotal S.A. Energy
Travis Perkins plc Consumer Products, Food and Retail
Trelleborg AB Basic Industrials Group – Other
TrygVesta A/S Financial Institutions Group – Insurance
TUI Travel PLC Real Estate, Lodging and Leisure
Tullow Oil plc Energy
UBS AG Financial Institutions Group – Banks
UCB S.A. Healthcare
Ultra Electronics Holdings plc Aerospace, Defence and Government Services
Umicore S.A. Basic Industrials Group – Chemicals
Unibail-Rodamco SE Real Estate, Lodging and Leisure
UniCredit S.p.A. Financial Institutions Group – Banks
Unilever N.V. Consumer Products, Food and Retail
Unilever plc Consumer Products, Food and Retail
Unione di Banche Italiane Scpa Financial Institutions Group – Banks
United Business Media plc Media, Sports and Entertainment
United Internet AG Technology and IT
United Utilities Group PLC Energy
UPM-Kymmene Corp. Basic Industrials Group – Other
Valeo S.A. Automotive
Valiant Holding AG Financial Institutions Group – Banks
Vallourec S.A. Basic Industrials Group – Other
Vedanta Resources plc Basic Industrials Group – Metals
Veolia Environnement S.A. Energy
Verbund AG Energy
Vestas Wind Systems A/S Basic Industrials Group – Other
Victrex Basic Industrials Group – Chemicals
Vienna Insurance Group Financial Institutions Group – Insurance
Vinci S.A. Engineering, Construction and Building Products
Vivendi Media, Sports and Entertainment
Vodafone Group plc Telecommunications
Voestalpine AG Basic Industrials Group – Metals
Volkswagen AG Automotive
Volvo AB Basic Industrials Group – Other
Wacker Chemie AG Basic Industrials Group – Chemicals
Wärtsilä Oyj Abp Basic Industrials Group – Other
Wendel Financial Institutions Group – Other
Wereldhave N.V. Real Estate, Lodging and Leisure
Whitbread plc Consumer Products, Food and Retail
Wienerberger Baustoffindustrie AG Engineering, Construction and Building Products
William Demant Holding A/S Healthcare
William Hill plc Media, Sports and Entertainment
Wincor Nixdorf AG Technology and IT
Wm. Morrison Supermarkets plc Consumer Products, Food and Retail
Wolseley plc Consumer Products, Food and Retail
Wolters Kluwer N.V. Media, Sports and Entertainment
WPP plc Media, Sports and Entertainment
Xstrata plc Basic Industrials Group – Metals
Yara International ASA Basic Industrials Group – Chemicals
YIT Oyj Engineering, Construction and Building Products
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Company IndustryZardoya Otis, S.A. Basic Industrials Group – Other
Zodiac S.A. Aerospace, Defence and Government Services
Zurich Financial Services AG Financial Institutions Group – Insurance
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Appendix IV - Endnotes
1 International Accounting Standards (IAS) 36.12.2 IAS 36.14.3 IAS 36.104.4 Calculated on the preceding 20 trading days (Sources: Bloomberg and Capital IQ).5 Datamonitor. “Aerospace & Defense in Europe,” October 2010.6 Stockholm International Peace Research Institute. “Falling European Military Spending—A Threat to Our Security?”
April 11, 2011.7 Goldman Sachs. Europe: Aerospace & Defense. “Defence Downturn Deepens for Europe’s Big Three; Thales to Sell,”
April 6, 2011.8 Goldman Sachs. Europe: Aerospace & Defense. “Defence Downturn Deepens for Europe’s Big Three; Thales to Sell,”
April 6, 2011.9 Euronews. “German Conscription Ends,” July 5, 2011.10 Europolitics. “EU’s Defence and Space Agencies to Sign Cooperation Agreement,” June 17, 2011.11 Europolitics. “EU’s Defence and Space Agencies to Sign Cooperation Agreement,” June 17, 2011.12 Guardian.co.uk. “Britain and France Sign Landmark 50-Year Defence Deal,” November 2, 2010.13 Deutsche Bank. Global Markets Research: Commerical Aerospace. “Quarterly Healthcheck—Q1’10,” April 26, 2010.14 Aerospace & Defence Association of Europe. “Latest Figures from European General Aviation Manufacturers Show
Signs of Recovery,” May 19, 2011.15 Goldman Sachs. Europe: Aerospace & Defense. “Civil Aerospace: U.S. Recovery to Drive More Outperformance in
2011,” January 12, 2011.16 Citi. Equities: European Aerospace & Defense. “Positive into Paris Air Show,” May 18, 2011.17 Citi. Equities: European Aerospace & Defense. “Positive into Paris Air Show,” May 18, 2011.18 Citi. Equities: European Aerospace & Defense. “Positive into Paris Air Show,” May 18, 2011.19 International Air Transport Association. “Strong 2010 but Uncertainties in 2011 – Severe Weather Dents
Recovery,” February 2, 2011.20 International Air Transport Association. “Strong 2010 but Uncertainties in 2011 – Severe Weather Dents Recovery,”
February 2, 2011.21 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.22 International Air Transport Association. “Air Travel Shrinks in March – Events in Japan and MENA Impact Air
Transport,” May 3, 2011.23 International Air Transport Association. “International Air Travel Rebounds in April,” June 2, 2011.24 International Air Transport Association. “Air Travel Shrinks in March – Events in Japan and MENA Impact Air
Transport,” May 3, 2011.25 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.26 Goldman Sachs. Europe: Aerospace & Defense. “Civil Aerospace: U.S. Recovery to Drive More Outperformance in
2011,” January 12, 2011.27 Capital IQ.28 European Automobile Manufacturers’ Association. “Passenger Cars: Registrations in 2010 5.5% Lower than in 2009,”
January 14, 2011.29 European Automobile Manufacturers’ Association. “Commerical Vehicles: Registrations Up 8% in 2010,” January 25,
2011.30 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended on
High,” February 1, 2011.31 European Automobile Manufacturers’ Association. “The Automobile Industry Pocket Guide,” 2010.32 Deutsche Bank. Global Markets Research: European Autos. “Q1’11 Previews,” April 15, 2011.33 European Automobile Manufacturers’ Association. “Passenger Cars: Registrations Slip 0.8% in January-May,” June
17, 2011.34 Deutsche Bank. Global Markets Research: European Autos. “Q1’11 Previews,” April 15, 2011.35 J.P. Morgan. Europe Equity Research: European Auto Parts/Tires. “Fundamentals for Auto Parts/Tires Still Strong,”
May 26, 2011.
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36 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended onHigh,” February 1, 2011.
37 Barclays Capital. Equity Research: European Autos & Auto Parts. “Mix Enrichment Continues in May,” June 7, 2011.38 EUbusiness. “European Car Sales Fall for Second Month,” May 17, 2011.39 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended on
High,” February 1, 2011.40 Barclays Capital. Equity Research: European Autos & Auto Parts. “Mix Enrichment Continues in May,” June 7, 2011.41 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended on
High,” February 1, 2011.42 UniCredit. Automotive Compendium. “Where the Rubber Meets the Road,” April 2011.43 J.P. Morgan. Europe Equity Research: European Trucks. “Q1’11 Preview: Fundamentals Improving, Slow Margin
Development,” April 18, 2011.44 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended on
High,” February 1, 2011.45 J.P. Morgan. Europe Equity Research: European Auto Components. “Initiating Coverage on Faurecia (OW), Continental
(OW) and Michelin (N),” January 11, 2011.46 J.P. Morgan. Europe Equity Research: European Auto Components. “Initiating Coverage on Faurecia (OW), Continental
(OW) and Michelin (N),” January 11, 2011.47 Deutsche Bank. Global Markets Research: European Automotive. “Q4 Sector Preview: 2010 Looks to Have Ended on
High,” February 1, 2011.48 J.P. Morgan. Europe Equity Research: European Auto Components. “Initiating Coverage on Faurecia (OW), Continental
(OW) and Michelin (N),” January 11, 2011.49 J.P. Morgan. Europe Equity Research: European Auto Components. “Initiating Coverage on Faurecia (OW), Continental
(OW) and Michelin (N),” January 11, 2011.50 International Council on Clean Transportation. “EU Standards for Light Commercial Vehicles,” March 7, 2011.51 PublicServiceEurope. “Electric cars stalled without government support,” June 14, 2011.52 EUROPA. “Reducing CO2 Emissions from Passenger Cars,” December 2010.53 EUROPA. “CO2 Emissions from New Cars Continue Steep Descent in 2010,” June 29, 2011.54 Capital IQ.55 Cefic – European Chemical Industry Council. “Monthly Short Summary, March 2011,” March 2, 2011.56 Cefic – European Chemical Industry Council. “Monthly Short Summary, April 2011,” April 6, 2011.57 Cefic – European Chemical Industry Council. “Monthly Short Summary, March 2011,” March 2, 2011.58 Cefic – European Chemical Industry Council. “Monthly Short Summary, March 2011,” March 2, 2011.59 Cefic – European Chemical Industry Council. “Monthly Short Summary, April 2011,” April 6, 2011.60 Cefic – European Chemical Industry Council. “Monthly Short Summary, March 2011,” March 2, 2011.61 Cefic – European Chemical Industry Council. “Monthly Short Summary, March 2011,” March 2, 2011.62 Citi. Equities: Chemicals. “Citi’s Chemicals Quidnunc Fundamental Focus,” May 27, 2011.63 Cefic – European Chemical Industry Council. “Monthly Short Summary, July 2011,” June 23, 2011.64 Cefic – European Chemical Industry Council. “Monthly Short Summary, July 2011,” June 23, 2011.65 J.P. Morgan. Europe Equity Research: European Chemicals. “Use Macro-Led Weakness to Buy Stocks Which Benefit
from Acquisitions & Restructuring. Buy Solvay, Arkema and Yuke Catt.“ June 7, 2011.66 J.P. Morgan. Europe Equity Research: European Chemicals. “Use Macro-Led Weakness to Buy Stocks Which Benefit
from Acquisitions & Restructuring. Buy Solvay, Arkema and Yuke Catt.“ June 7, 2011.67 Capital IQ.68 PricewaterhouseCoopers. Industrial Products: Metals. “Metals Deals: Forging Ahead 2010 Annual Review,” 2011.69 PricewaterhouseCoopers. Industrial Products: Metals. “Metals Deals: Forging Ahead 2010 Annual Review,” 2011.70 PricewaterhouseCoopers. Industrial Products: Metals. “Metals Deals: Forging Ahead 2010 Annual Review,” 2011.71 Citi. Equities: Metals and Mining. “Commodity Price Revisions,” May 16, 2011.72 Deutsche Bank. Global Markets Research: Metals and Mining. “A Bold 2011 for the Miners,” January 11, 2011.73 Bank of America Merrill Lynch. European Steel. “European Steel: 3 Themes for 2011,” January 10, 2011.74 Bank of America Merrill Lynch. European Steel. “European Steel: 3 Themes for 2011,” January 10, 2011.75 BMO Capital Markets Research. “Global Metals & Mining,” February 2011.76 Deutsche Bank. Global Markets Research: Metals and Mining. “A Bold 2011 for the Miners,” January 11, 2011.
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77 Deutsche Bank. Global Markets Research: Metals and Mining. “A Bold 2011 for the Miners,” January 11, 2011.78 Deutsche Bank. Global Markets Research: Metals and Mining. “A Bold 2011 for the Miners,” January 11, 2011.79 Deutsche Bank. Global Markets Research: Metals and Mining. “A Bold 2011 for the Miners,” January 11, 2011.80 Capital IQ.81 Datamonitor. “Global Electrical Components & Equipment,” May 25, 2011.82 Datamonitor. “Global Electrical Components & Equipment,” May 25, 2011.83 J.P. Morgan. Europe Equity Research: Electrical Engineers. “Views and Expectation into Q2,” July 7, 2011.84 J.P. Morgan. Europe Equity Research: Electrical Engineers. “Views and Expectation into Q2,” July 7, 2011.85 J.P. Morgan. Europe Equity Research: Electrical Engineers. “Views and Expectation into Q2,” July 7, 2011.86 J.P. Morgan. Europe Equity Research: Electrical Engineers. “Views and Expectation into Q2,” July 7, 2011.87 Societe Generale. Equity: Capital Goods. “Riding the Cycle,” January 10, 2011.88 Societe Generale. Equity: Capital Goods. “Riding the Cycle,” January 10, 2011.89 J.P. Morgan. Europe Equity Research: Electrical Equipment. “EPG Conference Day 2: Siemens, ABB, Alstom and
More,” May 18, 2011.90 Bank of America Merrill Lynch. Capital Goods. “Beyond the Sweet Spot,” January 13, 2011.91 Deutsche Bank. Global Markets Research: Capital Goods. “2011 Outlook,” January 5, 2011.92 Bank of America Merrill Lynch. Capital Goods. “Beyond the Sweet Spot,” January 13, 2011.93 Deutsche Bank. Global Markets Research: Capital Goods. “2011 Outlook,” January 5, 2011.94 Barclays Capital. Equity Research. “European Capital Goods: Initiation of Coverage,” February 16, 2011.95 UniCredit. Equity Research: Capital Goods. “Capital Goods Sector Outlook,” June 24, 2011.96 Deutsche Bank. Global Markets Research: Capital Goods. “2011 Outlook,” January 5, 2011.97 Bank of America Merrill Lynch. Capital Goods. “Beyond the Sweet Spot,” January 13, 2011.98 Bank of America Merrill Lynch. Capital Goods. “Beyond the Sweet Spot,” January 13, 2011.99 J.P. Morgan. Europe Equity Research: European Capital Goods. “Q1’11 Survey and Previews Mechanicals: Outlook
Statements Stabilising at a High Level,” April 11, 2011.100 Datamonitor. Industrial Profile.“Global Paper Products,” April 2011.101 Credit Suisse. Equity Research: Paper & Packaging. “Shifting to Second Gear,” January 25, 2011.102 Credit Suisse. Equity Research: Paper & Packaging. “Shifting to Second Gear,” January 25, 2011.103 Credit Suisse. Equity Research: Paper & Packaging. “Shifting to Second Gear,” January 25, 2011.104 Credit Suisse. Equity Research: Paper & Packaging. “Shifting to Second Gear,” January 25, 2011.105 Credit Suisse. Equity Research: Paper & Packaging. “Shifting to Second Gear,” January 25, 2011.106 Datamonitor. Industrial Profile.“Global Paper Products,” April 2011.107 Capital IQ.108 RBC Capital Markets. Equity Research: Business Services Sector. “Growth Potential Underappreciated,” January 13,
2011.109 RBC Capital Markets. Equity Research: Business Services Sector. “Growth Potential Underappreciated,” January 13,
2011.110 RBC Capital Markets. Equity Research: Business Services Sector. “Growth Potential Underappreciated,” January 13,
2011.111 Bank of America Merrill Lynch. Business Services. “Like Growth? Love Business Services,” March 28, 2011.112 Bank of America Merrill Lynch. Business Services. “Like Growth? Love Business Services,” March 28, 2011.113 Bank of America Merrill Lynch. Business Services. “Like Growth? Love Business Services,” March 28, 2011.114 Bank of America Merrill Lynch. Business Services. “Like Growth? Love Business Services,” March 28, 2011.115 Bank of America Merrill Lynch. Business Services. “Like Growth? Love Business Services,” March 28, 2011.116 RBC Capital Markets. Equity Research: Business Services Sector. “Growth Potential Underappreciated,” January 13,
2011.117 Deutsche Bank. Global Markets Research: European Security Sector. “Top Picks,” January 14, 2011.118 Deutsche Bank. Global Markets Research: European Security Sector. “Top Picks,” January 14, 2011.119 Deutsche Bank. Global Markets Research: European Security Sector. “Top Picks,” January 14, 2011.120 Consultant-News.com. “European Consulting Market Hits Almost Euro 25 Billion and New Report Says Set to Grow,”
June 23, 2011.
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121 Bureau Veritas SA. “Press Release,” May 4, 2011.122 Bureau Veritas SA. “Press Release,” May 4, 2011.123 Consultant-News.com. “European Consulting Market Hits Almost Euro 25 Billion and New Report Says Set to Grow,”
June 23, 2011.124 Capital IQ.125 Barclays Capital. European General Retail. “UPDATE: Barclays Capital Retail Checkout – Negative Trends Returning to
the Market,” June 7, 2011.126 Collins Stewart. Retail. “The Sale Is Now On,” June 8, 2011.127 Barclays Capital. European General Retail. “UPDATE: Barclays Capital Retail Checkout – Negative Trends Returning to
the Market,” June 7, 2011.128 Collins Stewart. Retail. “The Sale Is Now On,” June 8, 2011.129 Collins Stewart. Retail. “The Sale Is Now On,” June 8, 2011.130 Bank of America Merrill Lynch. European Consumer Staples. “Commodities Not Yet a Tailwind,” May 13, 2011.131 Bank of America Merrill Lynch. European Consumer Staples. “Commodities Not Yet a Tailwind,” May 13, 2011.132 Jeffries International Ltd. Consumer: Food Retailers. “European Food Retail 2011 Views,” January 7, 2011.133 UniCredit. Equity Research: Consumer Goods. “Consumer Monthly,” June 15, 2011.134 J.P. Morgan. Europe Equity Research: European Beverages. “You Get What You Pay For,” April 27, 2011.135 J.P. Morgan. Europe Equity Research: European Beverages. “You Get What You Pay For,” April 27, 2011.136 UniCredit. Equity Research: Consumer Goods. “Consumer Monthly,” June 15, 2011.137 Goldman Sachs. Europe Retail. “Building GS SUSTAIN Analysis Into Our Investment Framework,” March 5, 2010.138 UniCredit. Equity Research: Consumer. “Consumer Monthly,” May 13, 2011.139 UniCredit. Equity Research: Consumer Goods. “Consumer Monthly,” June 15, 2011.140 ESN. ESN Food & Beverage. “Repeating the Message; Stay Defensive,” April 13, 2011.141 Capital IQ.142 Jefferies. Equity Research Global: Clean Technology. “Powering Europe in the 21st Century,” April 19, 2011.143 Jefferies. Equity Research Global: Clean Technology. “Powering Europe in the 21st Century,” April 19, 2011.144 Europolitics. Industry. “Output Edges Up in the EU,” June 15, 2011.145 Deutsche Bank. Global Markets Research: European Integrated Oils. “2011 Outlook – The Upcycle Takes Hold,”
January 6, 2011.146 Deutsche Bank. Global Markets Research: European Integrated Oils. “2011 Outlook – The Upcycle Takes Hold,”
January 6, 2011.147 Deutsche Bank. Global Markets Research: European Utilities. “Impact of an Oil Price Spike,” March 3, 2011.148 Goldman Sachs. Europe: Utilities. “Higher Energy Commodities and Intervention: Renewables to Benefit,” June 14,
2011.149 Goldman Sachs. Europe: Utilities. “Higher Energy Commodities and Intervention: Renewables to Benefit,” June 14,
2011.150 Bank of America Merrill Lynch. The Oil Gusher #63. “Nuclear Shutdowns to Impact European Gas Demand?” June 13,
2011.151 Bank of America Merrill Lynch. The Oil Gusher #63. “Nuclear Shutdowns to Impact European Gas Demand?” June 13,
2011.152 Bank of America Merrill Lynch. The Oil Gusher #63. “Nuclear Shutdowns to Impact European Gas Demand?” June 13,
2011.153 Bank of America Merrill Lynch. The Oil Gusher #63. “Nuclear Shutdowns to Impact European Gas Demand?” June 13,
2011.154 Bank of America Merrill Lynch. The Oil Gusher #63. “Nuclear Shutdowns to Impact European Gas Demand?” June 13,
2011.155 Europa. “Energy: Commission Presents its New Strategy Towards 2020,” November 10, 2010.156 Jefferies. Equity Research Global: Clean Technology. “Powering Europe in the 21st Century,” April 19, 2011.157 European Commission. EEPR. “European Energy Efficiency Fund (EEE-F),” July 1, 2011.158 Capital IQ.159 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.160 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.161 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.
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162 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.163 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.164 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.165 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.166 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.167 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.168 Deutsche Bank. Global Markets Research: European Contractors. “Cautiously Waiting for the Recovery,” January 13,
2010.169 Citi. Citigroup Global Markets: Building Products. “European Construction Outlook,” June 30, 2010.170 Deutsche Bank. Global Markets Research: European Contractors. “Cautiously Waiting for the Recovery,” January 13,
2010.171 Deutsche Bank. Global Markets Research: European Contractors. “Cautiously Waiting for the Recovery,” January 13,
2010.172 Goldman Sachs. Europe: Construction. “Addressing the Divergent Trends in Private and Public Construction,” April 6,
2010.173 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.174 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.175 RBC Capital Markets. Equity Research: Construction & Services. “Initiation of Coverage,” February 21, 2011.176 RBC Capital Markets. Equity Research: Construction & Services. “Initiation of Coverage,” February 21, 2011.177 Credit Suisse. Equity Research: Engineering Services Sector. “We Prefer Arcadis Over Imtech and WS Atkins,” January
10, 2011.178 RBC Capital Markets. Equity Research: Construction & Services. “Initiation of Coverage,” February 21, 2011.179 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.180 Goldman Sachs. Europe: Construction. “A Long Grind, But with Material Upside Potential,” April 21, 2011.181 Capital IQ.182 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.183 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.184 European Financial Stability Facility. “About EFSF,” 2010.185 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.186 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.187 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.188 Bank for International Settlements. “International Regulatory Framework for Banks (Basel III),” 2011.189 Bank of America Merrill Lynch. European Banking Advisor. “European Banks: 16% Sustainable Return (and priced for
12%),” April 14, 2011.190 Barclays Capital. Equity Research: European Banks. “Not So Fast, Regulators,” June 1, 2010.191 Bank for International Settlements. “International Regulatory Framework for Banks (Basel III),” 2011.192 EUbusiness. “EU Vows Transparency in Bank Stress Tests,” July 13, 2010.193 Societe Generale. Equity: European Banks. “Will the Upcoming EBA Bank Stress Tests Trigger Further Capital
Raising?” May 19, 2011.194 Societe Generale. Equity: European Banks. “Will the Upcoming EBA Bank Stress Tests Trigger Further Capital
Raising?” May 19, 2011.195 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.196 Bank of America Merrill Lynch. European Banking Advisor. “European Banks: 16% Sustainable Return (and priced for
12%),” April 14, 2011.197 Credit Suisse. Equity Research: European Banks. “A Roadmap for the Sovereign/Bank Crisis,” February 4, 2011.198 Bank of America Merrill Lynch. European Banking Advisor. “European Banks: 16% Sustainable Return (and priced for
12%),” April 14, 2011.199 Goldman Sachs. Europe: Banks. “Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank,” December
13, 2010.200 Goldman Sachs. Europe: Banks. “Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank,” December
13, 2010.201 Goldman Sachs. Europe: Banks. “Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank,” December
13, 2010.
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202 Capital IQ.203 CEA. “Annual Report,” 2010-2011.204 Credit Suisse. Equity Research: European Insurance 2011. “A Year in Transition,” January 19, 2011.205 CEA. “Annual Report,” 2010-2011.206 Goldman Sachs. Europe: Insurance. “Solvency II: Is it Time to Be Realistic?” April 16, 2010.207 EUROPA. “Solvency II,” 2011.208 J.P. Morgan. Europe Equity Research: European Insurance. “Insurers Seeking Investment Alpha – A Few Trends,” May
24, 2011.209 CEA. “Annual Report,” 2010-2011.210 UniCredit. Equity Research: Insurance. “European Insurers: The Pied Pipers,” June 7, 2011.211 Credit Suisse. Equity Research: European Insurance 2011. “A Year in Transition,” January 19, 2011.212 Capital IQ.213 Barclays Capital. Equity Research: European Investment Banks. “Trimming and Slimming,” March 4, 2011.214 Barclays Capital. Equity Research: European Investment Banks. “Trimming and Slimming,” March 4, 2011.215 Barclays Capital. Equity Research: European Investment Banks. “Trimming and Slimming,” March 4, 2011.216 Barclays Capital. Equity Research: European Investment Banks. “Risk of Further Earnings Downgrades,” June 9,
2011.217 Barclays Capital. Equity Research: European Investment Banks. “Trimming and Slimming,” March 4, 2011.218 Barclays Capital. Equity Research: European Investment Banks. “Risk of Further Earnings Downgrades,” June 9,
2011.219 J.P. Morgan. Global Investment Banks. “Regulatory Arbitrage Series: OW European over U.S. IBs,” March 8, 2011.220 EFAMA. EFAMA’s Fourth Annual Review. “Asset Management in Europe,” May 2011.221 EFAMA. EFAMA’s Fourth Annual Review. “Asset Management in Europe,” May 2011.222 EFAMA. “UCITS Experience Net Inflows in April due to Strong Net Sales of Equity Funds,” June 14, 2011.223 Unquote. “Private Equity Barometer Q1’11,” April 20, 2011.224 Unquote. “Private Equity Barometer Q1’11,” April 20, 2011.225 Unquote. “Private Equity Barometer Q1’11,” April 20, 2011.226 The Wall Street Journal. “Battered Europe Has the Strength to Merge,” January 4, 2011.227 The Wall Street Journal. “Europe M&A Activity Slowly Revives,” March 31, 2011.228 Unquote. “Secondary Buyouts on the Rise,” June 20, 2011.229 Council of the European Union. “Council Adopts EU Rules for Alternative Investment Fund Managers,” May 27, 2011.230 Council of the European Union. “Council Adopts EU Rules for Alternative Investment Fund Managers,” May 27, 2011.231 Citi. Equities: European Exchanges. “Battle for Growth,” January 17, 2011.232 Citi. Equities: European Exchanges. “Battle for Growth,” January 17, 2011.233 Citi. Equities: European Exchanges. “Battle for Growth,” January 17, 2011.234 Citi. Equities: European Exchanges. “Battle for Growth,” January 17, 2011.235 Capital IQ.236 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.237 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.238 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.239 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.240 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.241 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.242 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some Strong
Outperformers,” January 12, 2011.
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243 Deutsche Bank. Global Markets Research: European Medical Devices. “2011 Outlook: A Year of Some StrongOutperformers,” January 12, 2011.
244 Barclays Capital. Equity Research: European Pharmaceuticals. “Biosimilars – Opportunity or Threat?” February 11,2011.
245 Citi. Equities: EU Pharmaceuticals 2011. “Continuing Cremnophobia,” January 13, 2011.246 Citi. Equities: EU Pharmaceuticals 2011. “Continuing Cremnophobia,” January 13, 2011.247 J.P. Morgan. Europe Equity Research: European Pharmaceuticals. “The Diagnosis – 2011 Outlook,” January 6, 2011.248 J.P. Morgan. Europe Equity Research: European Pharmaceuticals. “The Diagnosis – 2011 Outlook,” January 6, 2011.249 Citi. Equities: EU Pharmaceuticals 2011. “Continuing Cremnophobia,” January 13, 2011.250 Citi. Equities: EU Pharmaceuticals 2011. “Continuing Cremnophobia,” January 13, 2011.251 Deutsche Bank. Global Markets Research: European Pharmaceuticals. “Emerging Markets for Beginners,” February 4,
2011.252 Deutsche Bank. Global Markets Research: European Pharmaceuticals. “Emerging Markets for Beginners,” February 4,
2011.253 Capital IQ.254 Credit Suisse. Equity Research: Media. “Reasons to Be Cheerful,” January 18, 2011.255 Goldman Sachs. Europe: Media. “5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV,” January 5,
2011.256 Deutsche Bank. Pan European Media Sector. “Rolling into the Mid-Cycle,” January 10, 2011.257 J.P. Morgan. Europe Equity Research: European Media. “Stocks for Bulls and for Bears According to Our Media Quant
Screen,” June 10, 2011.258 J.P. Morgan. Europe Equity Research: European Media. “Stocks for Bulls and for Bears According to Our Media Quant
Screen,” June 10, 2011.259 J.P. Morgan. Europe Equity Research: European Media. “Stocks for Bulls and for Bears According to Our Media Quant
Screen,” June 10, 2011.260 J.P. Morgan. Europe Equity Research: European Media. “Stocks for Bulls and for Bears According to Our Media Quant
Screen,” June 10, 2011.261 Barclays Capital. European Media. “Ad Watch IV – Slowdown Not Slump,” June 21, 2011.262 Barclays Capital. European Media. “Ad Watch IV – Slowdown Not Slump,” June 21, 2011.263 Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group.
“Technology, Media & Telecommunications Predictions 2011,” 2011.264 Goldman Sachs. Europe: Media. “5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV,” January 5,
2011.265 J.P. Morgan. Europe Equity Research: European Media. “Stocks for Bulls and for Bears According to Our Media Quant
Screen,” June 10, 2011.266 Citi. European Media. “Surprise, Surprise,” January 19, 2011.267 Deutsche Bank. Pan European Media Sector. “Rolling into the Mid-Cycle,” January 10, 2011.268 Goldman Sachs. Europe: Media. “5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV,” January 5,
2011.269 Deutsche Bank. European TV Sector. “2011: Focus Shifts to Pricing Power and Cost Discipline,” January 7, 2011.270 Deutsche Bank. European TV Sector. “2011: Focus Shifts to Pricing Power and Cost Discipline,” January 7, 2011.271 Deutsche Bank. European TV Sector. “2011: Focus Shifts to Pricing Power and Cost Discipline,” January 7, 2011.272 Goldman Sachs. Europe: Media. “5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV,” January 5,
2011.273 Bank of America Merrill Lynch. Leisure Centre. “2011 – The Year Ahead in Leisure,” January 17, 2011.274 Bank of America Merrill Lynch. Leisure Centre. “2011 – The Year Ahead in Leisure,” January 17, 2011.275 Bank of America Merrill Lynch. Leisure Centre. “2011 – The Year Ahead in Leisure,” January 17, 2011.276 Capital IQ.277 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.278 Deutsche Bank. Global Markets Research: French Real Estate. “Property “A la Française” – Initiating French REITs,”
January 13, 2011.279 Goldman Sachs. Europe: Real Estate. “Looking for Pockets of Growth or Discounts with Receding Risks,” January 13,
2011.
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280 Goldman Sachs. Europe: Real Estate. “Looking for Pockets of Growth or Discounts with Receding Risks,” January 13,2011.
281 Goldman Sachs. Europe: Real Estate. “Looking for Pockets of Growth or Discounts with Receding Risks,” January 13,2011.
282 Goldman Sachs. Europe: Real Estate. “Looking for Pockets of Growth or Discounts with Receding Risks,” January 13,2011.
283 Barclays Capital. Equity Research. “Global Real Estate Securities Monitor,” April 5, 2011.284 Barclays Capital. Equity Research. “Global Real Estate Securities Monitor,” April 5, 2011.285 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.286 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.287 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.288 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.289 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.290 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.291 PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. “Europe,” 2011.292 Capital IQ.293 UniCredit. Equity Research: European Technology. “From Disruptions in Japan to New M&A Momentum,” April 8,
2011.294 J.P. Morgan. Europe Equity Research: European Semiconductors. “In a Stock Picking Environment,” April 7, 2011.295 UniCredit. Equity Research: European Technology. “From Disruptions in Japan to New M&A Momentum,” April 8,
2011.296 UniCredit. Equity Research: European Technology. “From Disruptions in Japan to New M&A Momentum,” April 8,
2011.297 Goldman Sachs. European Semiconductors & Tech Hardware. “2Q’11,” June 9, 2011.298 J.P. Morgan. Europe Equity Research: European Semiconductors. “In a Stock Picking Environment,” April 7, 2011.299 Citi. Equities: European Semiconductors. “1Q’11 Results Preview,” April 25, 2011.300 Barclays Capital. European Technology Hardware. “BarCap Global Communication Media and Technology Conference
Guide,” May 23, 2011.301 Citi. Equities: European Semiconductors. “1Q’11 Results Preview,” April 25, 2011.302 Goldman Sachs. European Semiconductors & Tech Hardware. “2Q’11,” June 9, 2011.303 Goldman Sachs. European Semiconductors & Tech Hardware. “2Q’11,” June 9, 2011.304 Citi. Equities: European Semiconductors. “1Q’11 Results Preview,” April 25, 2011.305 Credit Suisse. Equity Research: European Software and Services. “European Software and Services 2011 Outlook,”
January 11, 2011.306 Credit Suisse. Equity Research: European Software and Services. “European Software and Services 2011 Outlook,”
January 11, 2011.307 Bank of America Merrill Lynch. European Technology. “The IT Services Handbook,” June 3, 2011.308 Capital IQ.309 Credit Suisse. Equity Research: European Telecoms. “Data Growth Slowing, Auctions Coming,” April 5, 2011.310 Credit Suisse. Equity Research: European Telecoms. “Data Growth Slowing, Auctions Coming,” April 5, 2011.311 Societe Generale. Diversified Telecom Services. “European Cable’s Gilded Age: Pipe Dreams No Longer,” April 21,
2011.312 Bank of America Merrill Lynch. European Telecoms. “Disliked and Underweight,” June 3, 2011.313 Credit Suisse. Equity Research: European Telecoms. “Data Growth Slowing, Auctions Coming,” April 5, 2011.314 Bank of America Merrill Lynch. European Telecoms. “Q1 Can Be the Cruelest Quarter,” June 6, 2011.315 Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group.
“Technology, Media & Telecommunications Predictions 2011,” 2011.316 Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group.
“Technology, Media & Telecommunications Predictions 2011,” 2011.317 Bank of America Merrill Lynch. European Telecoms. “European Net Neutrality: Very Different from the U.S.,” February
23, 2011.318 Bank of America Merrill Lynch. European Telecoms. “European Net Neutrality: Very Different from the U.S.,” February
23, 2011.
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319 Bank of America Merrill Lynch. European Telecoms. “European Net Neutrality: Very Different from the U.S.,” February23, 2011.
320 The Financial Times Ltd. Telecoms. “Europe Telecom Groups Target Google,” April 26, 2011.321 Bloomberg. “YouTube in Network Deal Talks With Operators, Manufacturers,” June 8, 2011.322 Bank of America Merrill Lynch. European Telecoms. “Q1 Can Be the Cruelest Quarter,” June 6, 2011.323 Bank of America Merrill Lynch. European Telecoms. “Disliked and Underweight,” June 3, 2011.324 Capital IQ.325 Deutsche Bank. Industrial Transportation. “Sustainable Growth in 2011 After a Buoyant 2010,” February 2, 2011.326 Europa. Conference “Intelligent Transport Systems in Action”,” June 6, 2011.327 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.328 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.329 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.330 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.331 Citi. European Airports and Airport Operators. “Increasing Sector Interest Expected from 2H’11,” June 8, 2011.332 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.333 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.334 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.335 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.336 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.337 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.338 Goldman Sachs. Europe: Transportation: Shipping. “The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles,”
June 8, 2011.339 Deutsche Bank. Industrial Transportation. “Sustainable Growth in 2011 After a Buoyant 2010,” February 2, 2011.340 Europa. “Transport 2050: Commission Outlines Ambitious Plan to Increase Mobility and Reduce Emissions,” March
28, 2011.341 Europa. “Transport 2050: Commission Outlines Ambitious Plan to Increase Mobility and Reduce Emissions,” March
28, 2011.342 Europa. “Transport: EU to Join International Rail Organization,” June 23, 2011.343 Capital IQ.
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william (wick) SmithManaging Director3455 Peachtree Rd. NESuite 2000, 20th Fl.Atlanta, GA 30326+1 [email protected]
aSia
ryuta FujinoManaging DirectorWorld Trade Center Building31st Fl.2-4-1 Hamamatsu-choMinato-kuTokyo 105-6131+81 (0) 3 4577 [email protected]
weimin chenManaging Director1118 South TowerBeijing Kerry Centre1 Guang Hua Rd.Chaoyang DistrictBeijing 100020 PRC+86 (10) 852 3551 [email protected]