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Study Results Show Impairment Levels Declined 33% Compared to Prior Year
Duff & Phelps Corporation, a leading independent financial advisory and investment banking firm, today announced the release of its 2013 Canadian Goodwill Impairment Study (“Study”), prepared in partnership with the Canadian Financial Executives Research Foundation (“CFERF”). Now in its second year of publication, the 2013 Study was compiled utilizing financial information for calendar year 2012 from a base set of 616 Canadian-based, publicly-traded companies.
Key highlights from the study include:
Canadian publicly-traded companies reporting under IFRS recorded $7.9 billion of goodwill impairment in 2012, a notable decrease of 33% from the $11.0 billion reported in 2011.
Interestingly, despite the decreased impairment levels, the overall frequency of impairment events increased to 52 events in 2012, compared to 36 events in 2011. This indicates that the average amount of individual impairments has decreased year over year.
Of the $7.9 billion total goodwill impairment in the 2013 Study, approximately $6 billion (or 76% of the total) was captured by the top three impairment events. This concentration is consistent with findings from the 2012 Study, when three impairment events accounted for 81% of the total.
Approximately 82% of the total goodwill impairment recorded in 2012 was concentrated in two industries: Consumer Discretionary and Materials
“The 2013 study examines general and industry goodwill impairment trends in Canada both pre and post the transition to IFRS in 2010,” said Paul Barnes, the global Valuation Advisory Services leader of Duff & Phelps. “With the addition of five new industry spotlights, the report provides companies with a useful tool to benchmark their impairment testing results, process and assumptions against their peers”.
The Study continues to examine general goodwill impairment trends, highlighting new regulatory developments and reporting the results of its annual survey of Financial Executives International Canada (FEI Canada) members, representing both privately-owned and publicly-traded companies.
To access the full results of the 2013 Canadian Goodwill Impairment Study, along with the companion studies for the U.S. and Europe, please visit www.duffandphelps.com.
About Duff & Phelps
As a leading global financial advisory and investment banking firm, Duff & Phelps leverages analytical skills, market expertise and independence to help clients make sound decisions. The firm advises clients in the areas of valuation, M&A and transactions, restructuring, alternative assets, disputes and taxation – with more than 1,000 employees serving clients from offices in North America, Europe and Asia. For more information, visit www.duffandphelps.com.
Investment banking services in the United States are provided by Duff & Phelps Securities, LLC; Pagemill Partners; and GCP Securities, LLC. Member FINRA/SIPC. Transaction opinions are provided by Duff & Phelps, LLC. M&A advisory and capital raising services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd., which is authorized and regulated by the Financial Conduct Authority.
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