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## SECTION 2.3 Impairment 

## 2.3.3 Significant assumptions applied 

The growth in the terminal period and dis- count rates applied in the impairment tests are summarised to the right. 

## GROWTH RATES 

Growth rates are determined for each individual cash-generating unit, trademark and item of property, plant and equipment tested. The growth rates applied for the terminal period are in line with the expected rate of inflation. 

The applied projections for growth rates and discount rates are compared to ensure a reason- able link between the two (real interest rate). 

## DISCOUNT RATE 

## Goodwill 

For the impairment testing of goodwill the Group uses a pre-tax risk-free interest rate that reflects the risk-free borrowing rate in each particular geographical segment. 

## Trademarks and property, plant and equipment 

For the impairment testing of trademarks and property, plant and equipment the Group uses a post-tax discount rate for each country. In determining the discount rate, a risk premium (spread) on the risk-free interest rate is fixed at a level that reflects management’s expecta- tions of the spread for future borrowings. 

The WACC rates in Asia vary within a wide range with the lowest rate for China and developed countries, whereas the subcon- tinent, including India and Nepal, has the highest WACC rates in the region. 

## Discount rates applied 

The risk-free interest rates used in impair- ment tests performed at year-end 2013 were based on observed market data. For coun- tries where long-term risk-free interest rates are not observable or valid due to specific national or macroeconomic changes affect- ing the country, the interest rate is estimated based on observations from other markets and/or long-term expectations expressed by major international credit institutions. 

The risk premium (spread) for the risk-free interest rate was fixed at market price or slightly lower than the current market level, which is comparable to the market level. The total interest rate, including spread, thereby reflected the long-term interest rate applicable to the Group’s investments in the individual markets. 

## ROYALTY RATES 

The royalty rate is based on the actual mar- ket position of the individual trademark in the global, regional and local markets. 

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## APPLIED GROWTH AND DISCOUNT RATES 

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## WESTERN EUROPE 

Western European markets are gener- ally characterised by stable or declining volumes. The entire region continues to experience strong competition, requiring ongoing optimisation of cost structures and use of capital. A slight increase in revenue is expected in the next three years, while the ongoing restructuring initiatives already implemented in key countries and under implementation in other countries, the ini- tiative to establish a fully integrated supply chain across all markets and the roll-out of the business standardisation project are ex- pected to contribute to productivity improve- ments and cost savings. Some countries will continue to be characterised by a high level of investment as a result of changes to the production structure. 

## EASTERN EUROPE 

The Russian beer market has been im- pacted more than anticipated by disruption from the closure of non-stationary outlets and sales restrictions from 1 January 2013. In addition, the region is impacted by the macroeconomic slowdown causing consum- ers to reduce their spending. This became increasingly visible during the second half of 2013. Revenue in the region is expected to increase in the long run. 

## ASIA 

Asia is a growth area with significant growth in China in particular. Revenue in the emerg- ing markets is expected to increase, while the more mature markets are expected to display stable earnings. 

