The European Goodwill Impairment Study 2011-2012

The european Goodwill impairmenT STudy
2011-2012
The European Goodwill Impairment Study 2011-2012
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 Portfolio Valuation & Advisory Services Financial Consulting
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 practicesand our ability to set the standards for uncharted territoryallow our clients to remain focused on operating their businesses. For more information, visit www.HL.com.
Table of Contents
Executive Summary ............................................................................................................................ 4 What Is an Impairment?...................................................................................................................... 6 IntroductionHow Is the Current Economic Environment Reflected in Impairment Accounting? .............. 9 The StudyResults 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
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 Europes 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 Lokeys 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 StudyAnalysis 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 studys 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 purchase price 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, only Euro 14 billion was booked in 2010the lowest we have ever observed. In 2010, only 155 of the 600 companies analysed booked goodwill impairments (194 companies in 2009). In addition, approximately 22% (or 133 of the 600 companies analysed) still showed a high impairment 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.
Almost 60% of the goodwill impairment in 2010 was booked by three industries: Banks, Energy, and Telecommunications. The latter two industries have faced their own specific challenges, which have resulted in high goodwill impairments. Impairment of fixed assets was the driver of overall impairment in 2010 at almost Euro 20 billion. This differs from previous years when impairments of goodwill were significantly higher than impairments of fixed assets and intangible assets. This leads us to ask: Why are goodwill impairments now having less impact on companies profit and loss statements than fixed asset and intangible asset impairments? Of note, the impairment of intangible assets at Euro 12 billion is nearly on the same level as goodwill impairment 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 goodwill impairment reporting practices? If so, how should it be viewed by those in the industries affected? And is this 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.
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 1 Recoverable 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.
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 assets 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, are significantly 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 budgeted amounts for the future.
Under IFRS the order of the impairment is defined as follows:3 1. Reduction in the carrying amount of goodwill; and 2. 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.
7
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 first indicator that an impairment is not unlikely. Purchase price paid to market capitalisation ratio: Most of the analysed companies have carried out acquisitions in the covered period. The more the acquirer paid, the more challenging the impairment test will be. Contrary to the acquired goodwill, internally developed goodwill resulting from organic growth cannot be recognised. Therefore, the impairment risk is lower for companies generating organic growth. In addition, 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 the bull market in the period 2006 to 2008.
IntroductionHow Is the Current Economic Environment Reflected in Impairment Accounting?

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 2 Aggregated EBT Adjusted for Goodwill ImpairmentsAll STOXX Europe 600 Companies (in millions of Euro)
1,000,000 917,239 889,259 831,477 800,000 777,340 763,688
900,000
875,468
700,000 608,223 600,000 537,652 500,000 515,895 485,082
400,000 2006
Source: Capital IQ
2007 2008 EBT before Goodwill Impairment
2009 EBT
2010
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.
Chart 3 Real GDP Development for the European Union
120%
115%
110%
105%
100%
95%
90% 2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
GDP forecast as of April 2008 GDP forecast as of October 2009 GDP forecast as of April 2011
Source: IMF data and statistics published July 26, 2011.
GDP forecast as of October 2008 GDP forecast as of April 2010
GDP forecast as of April 2009 GDP forecast as of October 2010
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 Q109. 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 4 STOXX Europe 600 Index
200% 180% 160% 140% 120% 100% 80% 60% 40% Jan-06 Jan-07 Jan-08 STOXX Europe 600
Source: Bloomberg.
Jan-09
Jan-10
10
The StudyResults 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 companies spent a total of Euro 1.9 trillion on acquisitions, which equals the market capitalisation of the index by about 26% as of December 2010. A number of acquisitions were carried out during the bull market at a higher 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 writedowns of Euro 0.1 trillion occurred during the 2008 to 2009 financial crisis. Thus, despite the crisis, the overall reported goodwill seems to be nearly unaffected.
Chart 5 Development of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 572,720 200% 446,283 150% 446,212 500,000 400,000 300,000 182,310 200,000 50% 43,990 0% 2006 Goodwill Impairment (EURm)
Sources: Capital IQ, Bloomberg, and annual reports.
Jan 2007
Jan 2008
Dec 2008
Dec 2009
Dec 2010 700,000 600,000
100%
241,815
70,571 27,980 30,814 13,652
100,000 0
2007
2008
2009
2010 STOXX Europe 600
Purchase Price Paid (EURm)
The amount of booked goodwill impairment as of 2008 and 2009 appears to have not fully reflected the decline of market capitalisation. This result raises several questions: Why have companies not booked higher impairments? Is this caused by an insufficient level of capital, or does the market assume too conservative projections? As companies retained a significant portion of their profits, equity (calculated as the sum of common stock), additional paid in capital, and retained earnings increased for the STOXX Europe 600 companies by almost 14%. Too low capital should not have been such an issue in 2010. Hence, the answer to the question raised earlier is clear: Management teams appear to generally believe that the values of their companies 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).
11
Chart 6 Number of Companies with Goodwill Impairments by Industry

90 ... 80 70 Number of Companies 60 50 40 30 20 10 0 18 9 3 ADG 13 2 Automotive 4 BIG - Chemicals 4 BIG - Metals 22 12 BIG - Other 18 5 Business Services and Management Consulting Consumer Products, Food and Retail Energy 20 17 39 16 22 12 Engineering, Construction and Building Products FIG- Banks 13 FIG - Insurance 8 FIG - Other 4 Healthcare 9 Media, Sports and Entertainment 7 Real Estate, Lodging and Leisure Technology and IT 18 21 32 21 25 26 60 47 31
14 16 10 Telecommunications 3 Transportation
Number of companies with Goodwill Impairments (2010)

Sources: Capital IQ and annual reports.
Number of companies without Goodwill Impairments (2010)
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 showed this 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 of equity is still not supported by the market capitalisation for these companies. In general, impairments may be avoided only if the value in use equals at least the book value. In comparison to Houlihan Lokeys European Goodwill Impairment Study 2009 and 2010-2011, the crucial industries (Financial Institutions Group - Banks, Financial Institutions Group - Insurance, Financial Institutions Group Other as well as Real Estate, Lodging and Leisure) - with the exception of Automotive - are still the same.
12
Chart 7 Companies with Book Value of Equity Above or at Market Capitalisation*

Above 90%
100% 92% 80%

Market Capitalisation / Book Value of Equity
100% 99% 92% 92%
95% 86% 72% 65%
100% 100%
100%
96%
95%
75%
40%
0% 8% 20% 8% 8%
0%
1%
5% 14% 28% 35%
0%
0%
0%
4%
5%
25%
60%
Business Services and Management Consulting Consumer Products, Food and Retail Engineering, Construction and Building Products Media, Sports and Entertainment BIG - Chemicals Telecommunications Real Estate, Lodging and Leisure Technology and IT FIG - Insurance Transportation Automotive BIG - Metals BIG - Other FIG- Banks FIG - Other Healthcare Energy ADG
Below 90%
* 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 market capitalisation, which are in line with the ratios before the financial crisis (2006 to 2007). Three years after the investment bank Lehman Brothers filed for Chapter 11 bankruptcy, the market capitalisation to book 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?
13
Chart 8 Market Capitalisation in Relation to Book Value of Equity
2007
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 50% Btw. 50% and 90% Btw. 90% Btw. 110% and 110% and 150% Above 150% 2% 5% 5% 11% 77% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Less than 50% Btw. 50% and 90% 9% 22%
2008
46%
15% 9%
Btw. 90% Btw. 110% and 110% and 150%
Above 150%
2009
70% 59% 60% 50% 40% 30% 20% 12% 10% 2% 0% Less than 50% Btw. 50% and 90% Btw. 90% Btw. 110% and 110% and 150% Above 150% 10% 10% 0% Less than 50% 2% 17% 60% 50% 40% 30% 20% 11% 70%
2010
62%
16% 9%
Btw. 50% and 90%
Btw. 90% Btw. 110% and 110% and 150%
Above 150%
If the market capitalisations for companies do not support the goodwill, then the value in use must exceed the market values. In 2008 there were good reasons why the internal view (value in use) was often more appropriate than the external view (market capitalisation). But the number of companies with book values significantly above market capitalisations is still not at the level before the crisis, the current data suggest that 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, which preferably should be avoided.
14
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 1 Definition of Impairment Risk Factor
SUNNY PPP/MC-Ratio MC/BV-Ratio Score <0.25 >1.00 1
CLOUDY >0.25 >1.00 2
RAINY <0.25 <1.00 3
STORMY >0.25 <1.00 4
The potential impairment risk for each industry and its development compared to our 2010-2011 Study is represented in table 2.
15
Table 2 Impairment Risk Factor (IRF) by Industry Impairment Impairment Change of Percentage Number of Risk Factor Risk Factor Impairment Impairment of Stormy Stormy Dec 09 Dec 10 Risk Factor Forecast Companies Companies 2.0 1.7 8% 1
Industry Aerospace Defence and Government Services
Automotive
1.8
1.5
7%
Basic Industrials Group - Chemicals
1.3
1.0
0%
Basic Industrials Group - Metals
1.5
1.5
4%
Basic Industrials Group - Other
1.4
1.4
2%
Business Services and Management Consulting
1.6
1.4
0%
Consumer Products, Food and Retail
1.4
1.3
0%
Energy
1.5
1.6
8%
Engineering, Construction and Building Products
1.9
1.8
14%
Financial Institutions Group - Banks
2.7
2.8
40%
21
Financial Institutions Group - Insurance
2.4
2.4
29%
Financial Institutions Group - Other
2.1
2.0
10%
Healthcare
1.4
1.4
0%
Media, Sports and Entertainment
1.6
1.5
3%
Real Estate, Lodging and Leisure
2.4
2.3
28%
Technology and IT
1.5
1.4
0%
Telecommunications
1.6
1.3
0%
Transportation
1.6
1.4
0%
16
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.
17
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
18
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 3 Aerospace, Defence and Government ServicesCompanies Included
BAE Systems plc Finmeccanica SpA Safran S.A. Chemring Group plc Meggitt PLC Thales Cobham plc MTU Aero Engines Holding AG Ultra Electronics Holdings plc European Aeronautic Defence and Space Company EADS N.V. Rolls-Royce Group plc Zodiac S.A.
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.
19
Chart 9 Aerospace, Defence and Government ServicesDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 12,000
200%
10,000
8,000 150% 5,937 3,781 100% 4,000 50% 1,054 61 0% 2006 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 ADG 244 172 349 0 6,008 6,000
1,527 1,200
2,000
Goodwill Impairment Charges

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.
20
Chart 10 Aerospace, Defence and Government ServicesDistribution of Market Capitalisation and Book Value of Equity
90% 80% 70%

Percentage of Companies
10
60% 50% 40% 30% 3 20% 10% 0% 0% Less than 50% 0% 0% 1 8% 14% 0% 0 2 21% 1 8% Above 150% 64% 83%
Between 50% Between 90% Between 110% and 90% and 110% and 150% Market Capitalisation / Book Value of Equity Dec-09 Dec-10
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 11 Aerospace, Defence and Government ServicesIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%
Purchase Price Paid / Market Capitalisation

21
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 Q111, 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 nonrecurrence 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
22
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 betterpositioned 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 manufacturers fleet surpass the regulations 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 4 Automotive Companies Included
BMW Group Fiat Industrial Nokian Tyres Oyj Renault S.A. Compagnie Generale DES Etablissements Michelin SCA Fiat S.p.A. Pirelli & C. SpA Valeo S.A. Continental AG GKN plc Porsche Automobile Holding SE Volkswagen AG Daimler AG Inchcape PLC PSA Peugeot Citroen
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.
23
Chart 12 AutomotiveDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 23,669 200% Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 29,000
24,000
19,000 150% 14,000 100% 9,000 50% 1,445 189 0% 2006 2007 2008 Purchase Price Paide (EURm) 2009 STOXX Europe 600 2010 Automotive 35 3,746 302 4,301 4,000 889 26 662 (1,000)
Goodwill Impairment (EURm)
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.
24
Chart 13 AutomotiveDistribution of Market Capitalisation and Book Value of Equity
70% 9 60%
50% 40% 30% 3 20% 10% 0% Less than 50% 1 7% 1 7% 21% 13% 14% 0% 0% Between 50% Between 90% Between 110% and 90% and 110% and 150% Market Capitalisation / Book Value of Equity Dec-09 Dec-10 Above 150% 2 2 36% 20% 21% 3 3
5 60%
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 14 AutomotiveIRF Distribution
Market Capitalisation / Book Value of Equity 1000% Sunny Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

25
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 Q211, 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 Q311.66
Table 5 Basic Industrials Group - ChemicalsCompanies Included
Akzo Nobel N.V. Clariant AG K+S Aktiengesellschaft Rhodia S.A. Symrise AG Wacker Chemie AG Arkema S.A. Croda International plc Kemira Group Royal DSM N.V. Syngenta AG Yara International ASA BASF SE Givaudan AG Lanxess AG Sika AG Umicore S.A. Brenntag Johnson Matthey plc Novozymes A/S Solvay S.A. Victrex
Impairment Climate
The Chemicals industry performed well at the end of Q308, 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
26
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 15 Basic Industrials Group - ChemicalsDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment (in millions of Euro)
Jan 2006 250%
Jan 2007
Jan 2008
Dec 2008 15,003
Dec 2009
Dec 2010 16,000 14,000
200% 12,000 10,000 8,000 100% 3,751 3,329 50% 1,301 66 0% 2006 Goodwill Impairment (EURm)
150%
8,932
6,000 4,000 1,813 2,000 0
43 2007 2008 Purchase Price Paid (EURm)
409 2009 STOXX Europe 600
7 2010 Chemicals
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 more than 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
27
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 16 Basic Industrials Group - ChemicalsDistribution of Market Capitalisation and Book Value of Equity
90% 80% 70%

17 14
60% 50% 40% 70% 30% 4 20% 10% 0% 0% 0% Less than 50% 0% 1 5% 0% 1 5% 1 5% 20% 4 77%
18%
Above 150%
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.
28
Chart 17 Basic Industrials Group - ChemicalsIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

29
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
30
Table 6 Basic Industrials Group - MetalsCompanies Included
Acerinox S.A. Arcelor Mittal Eramet S.A. Kloeckner & Co SE Petropavlovsk PLC Salzgitter AG Voestalpine AG
Anglo American plc Aurubis AG Eurasian Natural Resources Corp Plc Lonmin plc Randgold Resources Ltd. SSAB AB Xstrata plc
Antofagasta plc BHP Billiton plc Fresnillo PLC Norsk Hydro ASA Rautaruukki Corporation ThyssenKrupp AG
Aperam Boliden AB Kazakhmys PLC Outokumpu Oyj Rio Tinto Group Vedanta Resources plc
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 18 Basic Industrials Group - MetalsDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 300% 42,464 250% Jan 2007 Jan 2008 44,721 40,000 Dec 2008 Dec 2009 Dec 2010
200%
19,439
30,000
150% 20,000 100% 10,000 5,235 1,630 0% 2006 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 Metals 307 772 3,800 171 0 4,269
50%
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
31
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; Bhler-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 19 Basic Industrials Group MetalsDistribution of Market Capitalisation and Book Value of Equity
70% 60% Percentage of Companies 50% 40% 30% 20% 10% 0% 0 0% 0 0% 0 0% 2 8% 5
17 14
65% 6 5 24% 56%
20%
2 8%
19%
Less than 50%
Above 150%
32
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 20 Basic Industrials Group - MetalsIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

33
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 Q211.85 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
34
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 - OtherCompanies Included
Aalberts Industries Andritz AG Cookson Group PLC Georg Fischer Kone Oyj Legrand S.A. Nexans S.A. Rexam plc Schindler Holding AG SKF AB Svenska Cellulosa Aktiebolaget, SCA Trelleborg AB Volvo AB
ABB Ltd. Atlas Copco Group DCC plc Hexagon AB Konecranes Plc Man SE Orkla ASA Rheinmetall AG Schneider Electric S.A. Smiths Group plc The Linde Group UPM-Kymmene Corp. Wrtsil Oyj Abp
Alfa Laval AB Bekaert S.A. Gamesa Corporacin Tecnolgica S.A. IMI plc Koninklijke Philips Electronics N.V. Metso Corp. Prysmian S.p.A. Sandvik AB SGL Carbon SE Stora Enso Corp. The Weir Group PLC Vallourec S.A. Zardoya Otis, S.A.
Alstom S.A. Charter International plc GEA Group AG Invensys plc L'Air Liquide S.A. Mondi plc Renewable Energy Corp. ASA Scania AB Siemens AG Sulzer, Ltd. Tognum AG Vestas Wind Systems A/S
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 industrys market value was still down almost 20% from its July 2007 peak.
35
Chart 21 Basic Industrials Group - OtherDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 31,716 30,000 200% 25,000 21,238 150% 16,664 20,000 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 35,000
100% 8,212 50% 1,205 4,368
15,000
10,000
5,000 260 0% 2006 2007 2008 Purchase Price Paid 2009 STOXX Europe 600 2010 BIG - Other 575 460 1,350 0

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&Ds 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.
36
Chart 22 Basic Industrials Group - OtherDistribution of Market Capitalisation and Book Value of Equity
90% 80% 70% Percentage of Companies 60% 50% 40% 30% 20% 10% 0% 0 0% 0 0% 4 8% 4 8% 3 6% 4 8% 4 8% 4 8% Above 150% 79% 76% 41 39
Less than 50%
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 23 Basic Industrials Group - OtherIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

37
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. 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 Q111, consulting firms experienced an
122 109
Furthermore, emerging markets represent a
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. Analysts forecast that the European market for consulting may grow nearly 5% in 2011 to 2012.123
38
Table 8 Business Services and Management ConsultingCompanies Included
Adecco S.A. Babcock International Group plc Experian plc Indra Sistemas, S.A. MITIE Group plc Serco Group plc
Aggreko plc Bureau Veritas S.A. G4S plc Intertek Group plc Randstad Holding N.V. SGS S.A.
Amadeus IT Holding Cap Gemini S.A. Hays plc Logica PLC Rentokil Initial plc Teleperformance
Atos Origin S.A. Capita Group plc HomeServe Plc Michael Page International plc Securitas AB
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 24 Business Services and Management ConsultingDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan -06 250% 6,916 7,000 200% 6,239 5,671 6,000 5,000 4,000 3,000 2,000 50% 941 379 42 0% 2006 Goodwill Impairment
Jul -06
Dec -06
Jul -07
Dec -07
Jun -08
Dec -08
Jun -09
Dec -09
Jun -10
Dec -10
Jun -11 8,000
150% 3,423 100%
1,010 1,000 239 147 0 2010 Business Services
2007
2008
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.
39
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 25 Business Services and Management ConsultingDistribution of Market Capitalisation and Book Value of Equity
100% 90% 80%

18
20
70% 60% 50% 40% 30% 20% 10% 0% 0 0% 0% 0 0% 0% 1 5% 1 4% 3 14% 9% Above 150% 82% 87%
Less than 50%
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.
40
Chart 26 Business Services and Management ConsultingIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

41
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 Q111 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
42
Table 9 Consumer Products, Food and RetailCompanies Included

Adidas AG Beiersdorf AG Bunzl plc Carrefour S.A. Coca-Cola Hellenic Bottling Company S.A. Danone Diageo plc Edenred Halfords Hennes & Mauritz AB Imperial Tobacco Group plc Kerry Group plc L'Oreal S.A. Marks & Spencer Group plc Next Group plc Parmalat SpA Reckitt Benckiser Group plc Sodexo Tate & Lyle plc Unilever plc Anheuser-Busch InBev British American Tobacco plc Burberry Group plc Casino Guichard Perrachon & Cie S.A. Compagnie Financiere Richemont S.A. Davide Campari Dixons Retail Electrolux AB Heineken Holding N.V. Hermes International S.A. Inditex S.A. Kesko Oyj Luxottica Group SpA Metro AG Nutreco Holding N.V. Pernod-Ricard S.A. SABMiller plc Suedzucker AG Tesco PLC Whitbread plc Aryzta AG Britvic C&C Group Associated British Foods plc Bulgari SpA Carlsberg A/S
Chocoladefabriken Lindt & Spruengli AG Christian Dior S.A. Compass Group plc Debenhams plc Dufry Group ETS Fr Colruyt S.A. Heineken N.V. Home Retail Group J. Sainsbury plc KingFisher plc LVMH Moet Hennessy Louis Vuitton Mitchells & Butlers plc Oriflame Cosmetics S.A. PPR S.A. SEB S.A. Swatch Group AG Travis Perkins plc Wm. Morrison Supermarkets plc CSM N.V. Delhaize Group Ebro Puleva S.A. Greene King plc Henkel AG & Co. KGaA Vz Husqvarna AB Jeronimo Martins SGPS S.A. Koninklijke Ahold N.V. Marine Harvest ASA Nestl S.A. Pandora Puma AG Rudolf Dassler Sport Societe Bic Swedish Match AB Unilever N.V. Wolseley plc
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.
43
Chart 27 Consumer Products, Food and RetailDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 88,716 200% Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 100,000 90,000 80,000 70,000 150% 43,302 100% 35,919 24,510 50% 2,381 2008 15,985 60,000 50,000 40,000 30,000 20,000 10,000 1,253 0 2006 Goodwill Impairment (EURm) 2007 2009 STOXX Europe 600 2010 Consumer Products, Food and Retail
377 0%
1,101
2,148
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
44
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 28 Consumer Products, Food and RetailDistribution of Market Capitalisation and Book Value of Equity
90% 80% 70%

64 55
60% 50% 40% 30% 20% 10% 0% 0% 0% Less than 50% 0% 7 1 1% 1 1% 10% 3 4% 14% 15% 10 12 75% 80%
Above 150%
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.
45
Chart 29 Consumer Products, Food and RetailIRF Distribution
1000% Market Capitalisation / Book Value of Equity
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

46
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. anticipated to be limited.
146 145
Additionally, non-OPEC growth in crude markets is
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
47
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 10 EnergyCompanies Included
A2A SpA AMEC plc Cairn Energy plc Drax Group plc. Electricit de France Enel SpA Fugro N.V. Iberdrola Renovables S.A. Lundin Petroleum AB OMV Aktiengesellschaft Premier Oil plc Royal Dutch Shell plc Scottish & Southern Energy plc StatoilHydro ASA Tenaris S.A. Tullow Oil plc Acciona S.A. BG Group plc Centrica plc E.ON AG Enagas S.A. Eni SpA Galp Energia SGPS SA. Iberdrola S.A. National Grid plc Pennon Group plc Public Power Corporation S.A. RWE AG SeaDrill Ltd. SUBSEA7 Terna Rete Elettrica Nazionale SpA United Utilities Group PLC Aker Solutions ASA Bourbon Compagnie Gnrale de Gophysique-Veritas EDP Renovveis Endesa S.A. Essar Energy Gas Natural SDG S.A. International Power plc Neste Oil Corp. Petrofac Ltd. Red Elctrica Corporacin S.A. Saipem SpA Severn Trent plc Suez Environnement S.A. TGS Nopec Geophysical Co ASA Veolia Environnement S.A. Alpiq Holding AG BP plc Dragon Oil PLC EDP-Energias de Portugal, S.A. ENEL Greenpower Fortum Oyj GDF Suez John Wood Group plc Northumbrian Water Group plc Petroleum Geo Services ASA Repsol YPF S.A. SBM Offshore N.V. SNAM Rete Gas SpA Technip Total S.A. Verbund AG
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.
48
Chart 30 EnergyDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 99,796 200% 100,000 89,686 80,000 150% 64,677 60,000 100% 40,000 25,911 50% 3,838 27,607 20,000 627 0% 2006 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 Energy 157 1,532 2,447 0 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 120,000

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 Suezs acquisition of Senoko Power in 2008 and a controlling interest in Aguas de Barcelona in 2010; Accionas acquisition of a stake in Endesa in 2007; Iberdrolas acquisition of Scottish Power in 2007; Enels acquisition of Endesa in 2008; Electricit de Frances acquisition of British Energy in 2009; Gas Naturals SDGs acquisition of Union Fenosa in 2009; RWEs acquisition of Essent in 2009, BPs acquisition of Devons Gulf of Mexico Deepwater properties in 2010, and Royal Dutch Shells 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.
49
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 31 EnergyDistribution of Market Capitalisation and Book Value of Equity
70% 44 60%
39
50% 40% 30% 16 20% 9 10% 0% Less than 50% 1 1% 1 2% 5 2 3% 2 3% 7% Above 150% 24% 14% 20% 13 65% 61%
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.
50
Chart 32 EnergyIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

51
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
52
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 ProductsCompanies Included
Actividades de Construccin y Servicios, Assa Abloy AB S.A Bouygues SA FLSmidth & Co. A/S HeidelbergCement AG Imerys SA Royal Boskalis Westminster N.V. Tecnicas Reunidas S.A. Carillion plc
Balfour Beatty plc CRH plc
Bilfinger Berger AG Eiffage S.A. Grupo Ferrovial S.A. Holmen AB Outotec Spirax-Sarco Engineering PLC YIT Oyj
Fomento de Construcciones y Contratas, Geberit AG S.A. Hochtief AG Imtech N.V. Saint Gobain Vinci S.A. Holcim Ltd. Lafarge S.A. Skanska AB Wienerberger Baustoffindustrie AG
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.
53
Chart 33 Engineering, Construction and Building ProductsDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 52,845 200% 50,000 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 60,000
40,000 150% 18,786 30,000 24,410 100% 20,000 50% 3,391 276 0% 2006 2007 Goodwill Impairment (EURm) STOXX Europe 600
5,435 550
10,000
130
566 2008
927 2009 Purchase Price Paid (EURm)
0 2010
Engineering, Construction and Building Products
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 Groups acquisition by Eiffage in 2006; Grupo Ferrovials acquisition of BAA in 2006; Vincis acquisition of Autoroutes Du Sud de La France in 2006; HeidelbergCement of Hanson in 2007; and Lafarges 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.
54
Chart 34 Engineering, Construction and Building ProductsDistribution of Market Capitalisation and Book Value of Equity
70% 17 60%
17
50% 40% 9 30% 20% 3 10% 0% 0 0% 0% 10% 14% 2 6% 5 4 2 7% Above 150% 29% 18% 55% 61%
Less than 50%
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 35 Engineering, Construction and Building ProductsIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

55
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
56
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 Q111, 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 - BanksCompanies Included
Banca Popolare dell'Emilia Romagna Scrl Banco Comercial Portugues S.A. Banco Popolare SC Bankinter S.A. Commerzbank AG Deutsche Bank AG Evrobanka EFG tedionica Investec plc Mediobanca S.p.A. Pohjola Bank plc Societe Generale Group Sydbank A/S Unione di Banche Italiane Scpa
Alpha Bank S.A. Banca Popolare di Milano Scrl Banco de Sabadell S.A. Banco Popular Espanol S.A. Barclays plc Credit Agricole S.A. Dexia SA HSBC Holdings plc Jyske Bank A/S National Bank of Greece S.A. Raiffeisen International Bank-Holding AG Standard Chartered PLC
Banca Carige SpA Banca Popolare di Sondrio SCARL Banco de Valencia S.A. Banco Santander, S.A. BNP Paribas Credit Suisse Group DnB NOR ASA ING Groep N.V. KBC Group N.V. Natixis Royal Bank of Scotland Group plc Svenska Handelsbanken AB
Banca Monte dei Paschi di Siena SpA Banco Bilbao Vizcaya Argentaria, S.A. Banco Espirito Santo S.A. Bank of Piraeus S.A. Close Brothers Group plc Danske Bank A/S Erste Group Bank AG Intesa Sanpaolo SpA Lloyds Banking Group plc Nordea Bank AB Skandinaviska Enskilda Banken AB Swedbank AB UniCredit S.p.A.
The Governor and Company of The Bank UBS AG of Ireland Valiant Holding AG
57
Impairment Climate
The market capitalisation of the FIGBank 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 - BanksDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 200% 176,609 170,000 150,000 150% 130,000 43,930 43,506 100% 68,973 110,000 90,000 70,000 50,000 50% 19,342 545 0% 2006 584 2007 2008 5,079 2009 2,027 2010 21,942 30,000 10,000 -10,000 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 190,000

STOXX Europe 600
FIG- Banks
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.
58
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 - BanksDistribution of Market Capitalisation and Book Value of Equity
45% 40% 35%

24
22
30% 25% 10 20% 15% 6 10% 5% 0% Less than 50% Between 50% and 90% Dec-09 Between 90% and 110% Dec-10 Between 110% and 150% Above 150% 11% 19% 18% 11% 6 18% 12% 42% 42% 10 10 23% 7 3 6% 12

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.
59
Chart 38 Financial Institutions Group - BanksIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

60
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 Q111.210 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
61
Table 13 Financial Institutions Group - InsuranceCompanies Included

Admiral Group plc Amlin plc Baloise-Holding Hannover Rckversicherung AG Mapfre S.A. RSA Insurance Group plc. Storebrand ASA TrygVesta A/S AEGON N.V. Assicurazioni Generali SpA Catlin Group Ltd. Helvetia Versicherungen AG Munich Re Group Sampo Oyj Swiss Life Holding Vienna Insurance Group Ageas Aviva plc CNP Assurances S.A. Jardine Lloyd Thompson Group plc Old Mutual plc SCOR SE Swiss Reinsurance Co. Zurich Financial Services AG Allianz SE AXA Delta Lloyd N.V. Legal & General Group Plc Prudential plc Standard Life plc Topdanmark A/S
Impairment Climate The Insurance industry has followed the STOXX Europe 600 fairly closely, and is 28% below its level of January 2006. Compared to its peak in May 2007, companies have lost almost 50% of their market value as of December 2010.
Chart 39 Financial Institutions Group - InsuranceDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% Jan 2007 Jan 2008 42,195 Dec 2008 Dec 2009 Dec 2010 45,000 40,000 200% 32,207 35,000 30,000 150% 25,000 19,052 100% 15,000 50% 10,000 2,017 5,000 0 2006 Goodwill Impairment (EURm)
Sources: Capital IQ, annual reports, and Bloomberg.
20,000
6,954 897 2008 Purchase Price Paid (EURm) 989
295 0%
430 2007
739 2009 STOXX Europe 600
2010 FIG - Insurance
62
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 AXAs acquisition of Winterthur in 2006; Fortiss acquisition of ABN AMRO in 2007; Old Mutuals acquisition of Skandia U.K. Holdings in 2008; Ceska Group acquisition by Assicurazioni Generali in 2008; The Midland Companys acquisition by Munich Re in 2008; and Erste Groups (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 - InsuranceDistribution of Market Capitalisation and Book Value of Equity
35% 30% Percentage of Companies 25% 20% 15% 10% 2 5% 6% 0% Less than 50% 1 3%
10 10 9 8 7 7 26% 32% 27% 23% 15% 21% 16% 5 30% 5
Above 150%
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.
63
Chart 41 Financial Institutions Group - InsuranceIRF Distribution
1000%
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

64
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-overquarter decrease in fixed income revenues in Q410.213 The performance of fixed income was offset by the 23% increase in underwriting and advisory businesses revenues in Q410 compared to Q310.214 Equities trading revenues decreased 9% quarter-over-quarter in Q410.215 For Q111, 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 Q111, 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 Q111, dollar volume of M&A activity in Europe increased 10% year-over-year, but decreased 17% compared to Q410, 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
65
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 mediumsized deals.233 Analysts forecast 10% growth in the value of European cash equities traded in 2011.234
Table 14 Financial Institutions Group - OtherCompanies Included
3i Group plc Bolsas y Mercados Espaoles S.A. EXOR Henderson Group PLC Intermediate Capital Group PLC London Stock Exchange Group plc Provident Financial plc Wendel
Aberdeen Asset Management PLC Criteria CaixaCorp, S.A. GAM Holding AG ICAP plc Investment AB Kinnevik Man Group plc Ratos AB
Ackermans & Van Haaren N.V. Deutsche Boerse AG Groupe Bruxelles Lambert S.A. IG Group Holdings Plc Investor AB Pargesa Holding S.A. Schroders plc
Ashmore Group PLC Eurazeo Hargreaves Lansdown Industrivrden Julius Br Gruppe AG Partners Group Holding AG Sofina S.A.
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.
66
Chart 42 Financial Institutions Group - OtherDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment (in millions of Euro)
Jan 2006 250% 9,979 200% Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 12,000
9,668
10,000
7,272 150%
8,000
6,000 100% 2,958 3,863 4,000
50% 629 58 0% 2006 Goodwill Impairment (EURm)

2,021
2,000 41 0
23 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600
2010 FIG - Other
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 Brse 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.
67
Chart 43 Financial Institutions Group - OtherDistribution of Market Capitalisation and Book Value of Equity
60% 15 50% Percentage of Companies 15
40% 9 7 20% 29% 10% 2 6% 0% 1 3% 24% 2 6% 10% 10% 10% 3 3 3 48% 52%
30%
Less than 50%
Above 150%
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 - OtherIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

68
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 sectors 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
69
Table 15 HealthcareCompanies Included
Actelion Ltd. Celesio AG Essilor International Getinge AB Hikma Pharmaceuticals Nobel Biocare Holding AG Qiagen N.V. Shire Ltd. Straumann Holding AG
AstraZeneca plc Coloplast A/S Fresenius Medical Care AG & Co. KGAA GlaxoSmithKline plc Lonza Group AG Novartis AG Rhoen Klinikum AG Smith & Nephew plc Synthes Inc.
Bayer AG Elan Corp. plc Fresenius SE GN Store Nord Meda AB Novo Nordisk A/S Roche Holding AG Sonova Holding AG UCB S.A.
BioMrieux S.A. Elekta AB Galenica Ltd. Grifols, S.A. Merck & Co. Inc. Orion Corp. Sanofi-Aventis Stada-Arzneimittel AG William Demant Holding A/S
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 45 HealthcareDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 66,168 200% 60,000 50,000 40,514 37,726 40,000 30,000 18,710 50% 10,000 30 0% 2006 2007 2008 Purchase Price Paid 2009 STOXX Europe 600 2010 Healthcare 59 383 1,075 32 0 20,000 Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 80,000 70,000
150%
100% 24,844

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.
70
Noteworthy deals include:253 Bayers acquisition of Schering in 2006; AstraZenecas acquisition of MedImmune in 2007; Novartiss acquisition of Alcon in 2008; GlaxoSmithKlines acquisition of Stiefel Laboratories in 2009; Merck & Co.s merger with Schering-Plough Corporation in 2009; Sanofi-Aventiss acquisition of Merial in 2009; and Novartis AGs 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 companys 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.
71
Chart 46 HealthcareDistribution of Market Capitalisation and Book Value of Equity
100% 90% 80%

Percentate of Companies
33
32
70% 60% 50% 89% 40% 30% 20% 10% 0% 0 0% 0 0% 0 0% 0 0% 1 0% 1 3% 4 11% 89%
3 8% Above 150%
Less than 50%
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 HealthcareIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

72
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
73
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 EntertainmentCompanies Included
Aegis Group plc Gestevision Telecinco S.A. Kabel Deutschland Metropole Television M6 Pearson plc Reed Elsevier plc Television Francaise 1 S.A. Wolters Kluwer N.V. British Sky Broadcasting Group plc Informa plc Ladbrokes PLC Modern Times Group Mtg AB Prosiebensat.1 Media Sanoma Oyj United Business Media plc WPP plc Daily Mail and General Trust plc ITV plc Lagardere SCA OPAP S.A. Publicis Groupe S.A. Schibsted ASA Vivendi Eutelsat Communications JCDecaux S.A. Mediaset SpA PagesJaunes Groupe Reed Elsevier N.V. Springer (Axel) William Hill plc
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.
74
Chart 48 Media, Sports and EntertainmentDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
24,132 200%
25,000
20,000 150% 13,438 10,902 100% 10,000 6,275 50% 3,384 1,890 200 0% 2006 Goodwill Impairment (EURm) 2007 2008 2009 STOXX Europe 600 2010 Media, Sports and Entertainment 233 183 0 4,426 5,000 15,000
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 Lottomaticas acquisition of GTECH Holdings in 2006; Publicis Groupes acquisition of Digitas in 2007; Thomsons acquisition of Reuters in 2008; and Vivendis 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.
75
Chart 49 Media, Sports and EntertainmentDistribution of Market Capitalisation and Book Value of Equity
90% 80% 70% Percenatage of Companies 60% 50% 40% 30% 20% 10% 0% 0 0% 0% 0% 0% 3 1 4% 2 7% 11% 2 7%
24
26
86%
87%
Less than 50%
Between 50% and 90%
Between 90% and 110% Dec-09 Dec-10
Between 110% and 150%
Above 150%

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 EntertainmentIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

76
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
77
Table 17 Real Estate, Lodging and LeisureCompanies Included

Accor S.A. Castellum AB Fonciere des Regions Intercontinental Hotels Group plc PSP Swiss Property AG TUI Travel PLC Immofinanz AG Great Portland Estates Berkeley Group Holdings plc Cofinimmo S.A. Gecina S.A. Klepierre S.A. Segro plc Wereldhave N.V. Taylor Wimpey PLC JM AB British Land Co. plc Corio N.V. Hammerson plc Land Securities Group plc Swiss Prime Site AG Unibail-Rodamco SE Capital Shopping Centres GRP National Express GRP Carnival plc Derwent London plc Icade Persimmon plc Thomas Cook Group plc Barratt Developments PLC Eurocommercial Properties Paddy Power
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 LeisureDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 16,099 16,000 200% 14,000 12,000 150% 10,000 7,117 8,000 6,000 50% 2,037 637 0% 2006 Goodwill Impairment (EURm)
Jan 2007
Jan 2008
Dec 2008
Dec 2009
Dec 2010 18,000
100%
6,402
3,634
3,738 1,807 831 492
4,000 2,000 0
2007
2008
2010 Real Estate, Lodging and Leisure
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:
78
Derwent Londons acquisition of London Merchant Securities in 2007; Klepierre SAs acquisition of Steen & Strm ASA in 2008; and Swiss Prime Sites 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 LeisureDistribution of Market Capitalisation and Book Value of Equity
35% 30%
10 9 10
25% 7 20% 15% 10% 5% 0% 30% 22% 20% 6
6 31% 33% 4 25% 19% 13% 1 3% 1 3% Between 50% and 90% Between 90% and 110% Between 110% and 150% Above 150%
Less than 50%
Market Capitalisation / Book Value of Equity Dec-09 Dec-10

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.
79
Chart 53 Real Estate, Lodging and LeisureIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%
80
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 Q111, the semiconductor and software sectors of the technology industry outperformed the overall European market.293 Semiconductor inventory in Q410 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 Q111.296 Analysts forecast global semiconductor revenues to increase by 14% in 2011.297 Additionally, PC and consumer electronics demand remained depressed in Q111, 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
81
Table 18 Technology and ITCompanies Included
Aixtron AG Autonomy Corp. plc Halma plc Meyer Burger Technology Nokia Corp. Software AG United Internet AG
Alcatel-Lucent Dassault Systemes S.A. Infineon Technologies AG Micro Focus International PLC Rotork plc Spectris Wincor Nixdorf AG
ARM Holdings plc Electrocomponents LM Ericsson Telephone Co. Misys plc Sage Group plc STMicroelectronics N.V.
ASML Holding N.V. Gemalto N.V. Logitech International S.A. Neopost S.A. SAP AG Temenos Group AG
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 ITDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
200%
19,537
20,000 15,616
150%
15,000
100%
8,661 6,350
6,876
10,000
50% 2,668 12 0% 2006 2007
3,285 912 0
5,000
0 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 Technology and IT

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.
82
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 Telephones acquisition of Bizitek in 2009; and SAP AGs 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 ITDistribution of Market Capitalisation and Book Value of Equity
100% 90% 80%

20
23
70% 60% 50% 40% 30% 20% 10% 0% 0 0% 0 0% 0 0% 0 0% 2 1 4% 9% 3 12% Above 150% 87% 88%
Less than 50%
0% Between 50% Between 90% Between 110% and 90% and 110% and 150% Market Capitalisation / Book Value of Equity Dec-09 Dec-10
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.
83
Chart 56 Technology and ITIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%
84
17. Telecommunications
The Telecommunications industry comprises companies engaged in telecommunication networks.
Economic Climate
In Q410, 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 Q410.310 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 Q111, European mobile service revenue decreased 2.7% compared to Q410, 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
85
Table 19 TelecommunicationsCompanies Included

Belgacom S.A. Deutsche Telekom AG Inmarsat Plc Royal KPN N.V. Tele2 AB Telenet Group Holding N.V. BT Group plc Elisa Oyj Mobistar S.A. SES S.A. Telecom Italia SpA Telenor ASA Cable & Wireless Worldwide France Telecom OTE Swisscom AG Telefonica S.A. TeliaSonera AB Cable and Wireless Communications Iliad S.A. Portugal Telecom SGPS S.A. TDC Telekom Austria AG Vodafone Group plc
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 57 TelecommunicationsDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% Jan 2007 45,512 37,927 200% 36,934 40,000 35,000 150% 17,662 22,639 26,336 30,000 25,000 100% 9,748 5,350 20,000 15,000 50% 3,539 800 0% 2006 Goodwill Impairment (EURm)
Jan 2008
Dec 2008
Dec 2009
Dec 2010 50,000 45,000
10,000 5,000 0 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 Telecommunications
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
86
Telefonicas acquisition of O2 in 2006 and its acquisition of Brasilcel (Euro 18 billion) in 2010; Vodafones acquisitions of ClearWave and VenFin in 2006 as well as its acquisition of CGP Investments Holdings in 2008 France Telecoms acquisition of Mobinil in 2010 as well as a 40% stake in Meditel in 2010; and Deutsche Telekoms 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 TelecommunicationsDistribution of Market Capitalisation and Book Value of Equity
100% 90% 80% Percentage of Companies 70% 60% 50% 40% 30% 20% 10% 0% 0 0% 0 0% 2 9% 1 4% 0% 1 4% 1 5% 0 3 13% Above 150% 86% 79% 19 19
Less than 50%
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.
87
Chart 59 TelecommunicationsIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

88
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 Q111 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 Europes 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
89
Table 20 TransportationCompanies Included
A.P. Mller - Mrsk A/S Atlantia SpA Deutsche Post AG Groupe Eurotunnel S.A. Royal Vopak N.V.
Abertis Infraestructuras S.A. Brisa - Auto-Estradas de Portugal S.A. DSV A/S Iberia Lineas Aereas de Espana S.A. Ryanair Holdings plc
Aeroports de Paris British Airways Plc Firstgroup plc Kuehne & Nagel International AG Stagecoach Group plc
Air France-KLM Deutsche Lufthansa AG Fraport AG PostNL N.V.
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 60 TransportationDevelopment of Market Capitalisation, Purchase Price Paid and Goodwill Impairment
Jan 2006 250% 8,806 200% Jan 2007 Jan 2008 Dec 2008 Dec 2009 Dec 2010 10,000 9,000 8,000 7,000 150% 4,963 100% 6,000 5,000 2,501 4,000 3,000 50% 685 15 0% 2006 Goodwill Impairment (EURm)
3,013
2,000 186 1,000 0 2007 2008 Purchase Price Paid (EURm) 2009 STOXX Europe 600 2010 Transportation
53
88
48
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.
90
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 61 TransportationDistribution of Market Capitalisation and Book Value of Equity
80% 70% 60% 50% 40% 12
13
68% 30% 4 20% 2 10% 0% 0% 0 0% 10% 1 5% 2 1 10% 5% Above 150% 20% 21% 4 60%
Less than 50%
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.
91
Chart 62 TransportationIRF Distribution
Sunny
Cloudy
100%
Rainy
Stormy
10% 0% 1% 10% 25% 100% 1000%

92
Appendix I About the Authors

Dr. Marc Hayn
Dr. Hayn is a Managing Director in Houlihan Lokeys Frankfurt office and Head of Northern Europes 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 Lokeys Frankfurt office, where he is a member of the firms 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.
93
E.W. (Sandy) Purcell

Mr. Purcell is a Senior Managing Director in Houlihan Lokeys 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.
94
Appendix II - Glossary
4G BVE In telecommunications 4G is the fourth generation of cellular wireless standards. Book value of equity: Written down value of an asset as shown on a firms balance sheet. Book value of equity is computed by deducting accumulated depreciation from the purchase price of the asset. According to GAAP provisions, an assets book value of equity cannot show any increase or decrease in the assets market value; it rarely reflects the assets true worth. EBT EU GAAP GDP IAS IFRS IRF Earnings before taxes European Union Generally Accepted Accounting Principles Gross domestic product International Accounting Standards International Financial Reporting Standards 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 firms actual size because a shares market price is based on trading in only a fraction of the firms total outstanding shares. OECD PPP Q STOXX Europe 600 Index Organisation for Economic Co-operation and Development Purchase price paid Quarter 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
95
Appendix III - List of Companies

Company 3i Group plc A.P. Mller - Mrsk A/S A2A SpA Aalberts Industries ABB Ltd. Aberdeen Asset Management PLC Abertis Infraestructuras S.A. Acciona S.A. Accor S.A. Acerinox S.A. Ackermans & Van Haaren N.V. Actelion Ltd. Actividades de Construccin y Servicios, S.A Adecco S.A. Adidas AG Admiral Group plc Aegis Group plc AEGON N.V. Aeroports de Paris AGEAS Aggreko plc Air France-KLM Aixtron AG Aker Solutions ASA Akzo Nobel N.V. Alcatel-Lucent Alfa Laval AB Allianz SE Alpha Bank S.A. Alpiq Holding AG Alstom S.A. Amadeus IT Holding AMEC plc Amlin plc Andritz AG Anglo American plc Anheuser-Busch InBev Antofagasta plc Aperam Arcelor Mittal Arkema S.A. ARM Holdings plc ARYZTA AG Ashmore Group PLC ASML Holding N.V. Assa Abloy AB Assicurazioni Generali SpA Associated British Foods plc Industry Financial Institutions Group Other Transportation Energy Basic Industrials Group Other Basic Industrials Group Other Financial Institutions Group Other Transportation Energy Real Estate, Lodging and Leisure Basic Industrials Group Metals Financial Institutions Group Other Healthcare Engineering, Construction and Building Products Business Services and Management Consulting Consumer Products, Food and Retail Financial Institutions Group Insurance Media, Sports and Entertainment Financial Institutions Group Insurance Transportation Financial Institutions Group Insurance Business Services and Management Consulting Transportation Technology and IT Energy Basic Industrials Group Chemicals Technology and IT Basic Industrials Group Other Financial Institutions Group Insurance Financial Institutions Group Banks Energy Basic Industrials Group Other Business Services and Management Consulting Energy Financial Institutions Group Insurance Basic Industrials Group Other Basic Industrials Group Metals Consumer Products, Food and Retail Basic Industrials Group Metals Basic Industrials Group Metals Basic Industrials Group Metals Basic Industrials Group Chemicals Technology and IT Consumer Products, Food and Retail Financial Institutions Group Other Technology and IT Engineering, Construction and Building Products Financial Institutions Group Insurance Consumer Products, Food and Retail
96
Company AstraZeneca plc Atlantia SpA Atlas Copco Group Atos Origin S.A. Aurubis AG Autonomy Corp. plc Aviva plc AXA Babcock International Group plc BAE Systems plc Balfour Beatty plc Baloise-Holding Banca Carige SpA Banca Monte dei Paschi di Siena SpA Banca Popolare dell'Emilia Romagna Scrl 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 Barratt Developments PLC BASF SE Bayer AG Beiersdorf AG Bekaert S.A. Belgacom S.A. Berkeley Group Holdings plc BG Group plc BHP Billiton plc Bilfinger Berger AG BioMrieux S.A. BMW Group BNP Paribas Boliden AB Bolsas y Mercados Espaoles S.A. Bourbon Bouygues SA BP plc Brenntag Brisa - Auto-Estradas de Portugal S.A. British Airways Plc British American Tobacco plc
Industry Healthcare Transportation Basic Industrials Group Other Business Services and Management Consulting Basic Industrials Group Metals Technology and IT Financial Institutions Group Insurance Financial Institutions Group Insurance Business Services and Management Consulting Aerospace, Defence and Government Services Engineering, Construction and Building Products Financial Institutions Group Insurance Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Financial Institutions Group Banks Real Estate, Lodging and Leisure Basic Industrials Group Chemicals Healthcare Consumer Products, Food and Retail Basic Industrials Group Other Telecommunications Real Estate, Lodging and Leisure Energy Basic Industrials Group Metals Engineering, Construction and Building Products Healthcare Automotive Financial Institutions Group Banks Basic Industrials Group Metals Financial Institutions Group Other Energy Engineering, Construction and Building Products Energy Basic Industrials Group Chemicals Transportation Transportation Consumer Products, Food and Retail
97
Company British Land Co. plc British Sky Broadcasting Group plc Britvic BT Group plc Bulgari SpA Bunzl plc Burberry Group plc Bureau Veritas S.A. C&C Group Cable & Wireless Worldwide Cable and Wireless Communications Cairn Energy plc Cap Gemini S.A. Capita Group plc Capital Shopping Centres GRP Carillion plc Carlsberg A/S Carnival plc Carrefour S.A. Casino Guichard Perrachon & Cie S.A. Castellum AB Catlin Group Ltd. Celesio AG Centrica plc Charter International plc Chemring Group plc Chocoladefabriken Lindt & Spruengli AG Christian Dior S.A. Clariant AG Close Brothers Group plc CNP Assurances S.A. Cobham plc Coca-Cola Hellenic Bottling Company S.A. Cofinimmo S.A. Coloplast A/S Commerzbank AG Compagnie Financiere Richemont S.A. Compagnie Gnrale de Gophysique-Veritas Compagnie Generale DES Etablissements Michelin SCA Compass Group plc Continental AG Cookson Group PLC Corio N.V. Credit Agricole S.A. Credit Suisse Group CRH plc Criteria CaixaCorp, S.A. Croda International plc CSM N.V. Daily Mail and General Trust plc
Industry Real Estate, Lodging and Leisure Media, Sports and Entertainment Consumer Products, Food and Retail Telecommunications Consumer Products, Food and Retail Consumer Products, Food and Retail Consumer Products, Food and Retail Business Services and Management Consulting Consumer Products, Food and Retail Telecommunications Telecommunications Energy Business Services and Management Consulting Business Services and Management Consulting Real Estate, Lodging and Leisure Engineering, Construction and Building Products Consumer Products, Food and Retail Real Estate, Lodging and Leisure Consumer Products, Food and Retail Consumer Products, Food and Retail Real Estate, Lodging and Leisure Financial Institutions Group Insurance Healthcare Energy Basic Industrials Group Other Aerospace, Defence and Government Services Consumer Products, Food and Retail Consumer Products, Food and Retail Basic Industrials Group Chemicals Financial Institutions Group Banks Financial Institutions Group Insurance Aerospace, Defence and Government Services Consumer Products, Food and Retail Real Estate, Lodging and Leisure Healthcare Financial Institutions Group Banks Consumer Products, Food and Retail Energy Automotive Consumer Products, Food and Retail Automotive Basic Industrials Group Other Real Estate, Lodging and Leisure Financial Institutions Group Banks Financial Institutions Group Banks Engineering, Construction and Building Products Financial Institutions Group Other Basic Industrials Group Chemicals Consumer Products, Food and Retail Media, Sports and Entertainment
98
Company Daimler AG Danone Danske Bank A/S Dassault Systemes S.A. Davide Campari DCC plc Debenhams plc Delhaize Group Delta Lloyd N.V. Derwent London plc Deutsche Bank AG Deutsche Boerse AG Deutsche Lufthansa AG Deutsche Post AG Deutsche Telekom AG Dexia SA Diageo plc Dixons Retail DnB NOR ASA Dragon Oil PLC Drax Group plc. DSV A/S Dufry Group E.ON AG Ebro Puleva S.A. Edenred EDP Renovveis EDP-Energias de Portugal, S.A. Eiffage S.A. Elan Corp. plc Electricit de France Electrocomponents Electrolux AB Elekta AB Elisa Oyj Enagas S.A. Endesa S.A. ENEL Greenpower Enel SpA Eni SpA Eramet S.A. Erste Group Bank AG Essar Energy Essilor International ETS Fr Colruyt S.A. Eurasian Natural Resources Corp Plc Eurazeo Eurocommercial Properties European Aeronautic Defence and Space Company EADS N.V. Eutelsat Communications
Industry Automotive Consumer Products, Food and Retail Financial Institutions Group Banks Technology and IT Consumer Products, Food and Retail Basic Industrials Group Other Consumer Products, Food and Retail Consumer Products, Food and Retail Financial Institutions Group Insurance Real Estate, Lodging and Leisure Financial Institutions Group Banks Financial Institutions Group Other Transportation Transportation Telecommunications Financial Institutions Group Banks Consumer Products, Food and Retail Consumer Products, Food and Retail Financial Institutions Group Banks Energy Energy Transportation Consumer Products, Food and Retail Energy Consumer Products, Food and Retail Consumer Products, Food and Retail Energy Energy Engineering, Construction and Building Products Healthcare Energy Technology and IT Consumer Products, Food and Retail Healthcare Telecommunications Energy Energy Energy Energy Energy Basic Industrials Group Metals Financial Institutions Group Banks Energy Healthcare Consumer Products, Food and Retail Basic Industrials Group Metals Financial Institutions Group Other Real Estate, Lodging and Leisure Aerospace, Defence and Government Services Media, Sports and Entertainment
99
Company Evrobanka EFG tedionica EXOR Experian plc Fiat Industrial Fiat S.p.A. Finmeccanica SpA Firstgroup plc FLSmidth & Co. A/S Fomento de Construcciones y Contratas, S.A. Fonciere des Regions Fortum Oyj France Telecom Fraport AG Fresenius Medical Care AG & Co. KGAA Fresenius SE Fresnillo PLC Fugro N.V. G4S plc Galenica Ltd. Galp Energia SGPS SA. GAM Holding AG Gamesa Corporacin Tecnolgica S.A. Gas Natural SDG S.A. GDF Suez GEA Group AG Geberit AG Gecina S.A. Gemalto N.V. Georg Fischer Gestevision Telecinco S.A. Getinge AB Givaudan AG GKN plc GlaxoSmithKline plc GN Store Nord Great Portland Estates Greene King plc Grifols, S.A. Groupe Bruxelles Lambert S.A. Groupe Eurotunnel S.A. Grupo Ferrovial S.A. Halfords Halma plc Hammerson plc Hannover Rckversicherung AG Hargreaves Lansdown Hays plc HeidelbergCement AG Heineken Holding N.V. Heineken N.V.
Industry Financial Institutions Group Banks Financial Institutions Group Other Business Services and Management Consulting Automotive Automotive Aerospace, Defence and Government Services Transportation Engineering, Construction and Building Products Engineering, Construction and Building Products Real Estate, Lodging and Leisure Energy Telecommunications Transportation Healthcare Healthcare Basic Industrials Group Metals Energy Business Services and Management Consulting Healthcare Energy Financial Institutions Group Other Basic Industrials Group Other Energy Energy Basic Industrials Group Other Engineering, Construction and Building Products Real Estate, Lodging and Leisure Technology and IT Basic Industrials Group Other Media, Sports and Entertainment Healthcare Basic Industrials Group Chemicals Automotive Healthcare Healthcare Real Estate, Lodging and Leisure Consumer Products, Food and Retail Healthcare Financial Institutions Group Other Transportation Engineering, Construction and Building Products Consumer Products, Food and Retail Technology and IT Real Estate, Lodging and Leisure Financial Institutions Group Insurance Financial Institutions Group Other Business Services and Management Consulting Engineering, Construction and Building Products Consumer Products, Food and Retail Consumer Products, Food and Retail
100
Company Helvetia Versicherungen AG Henderson Group PLC Henkel AG & Co. KGaA Vz Hennes & Mauritz AB Hermes International S.A. Hexagon AB Hikma Pharmaceuticals Hochtief AG Holcim Ltd. Holmen AB Home Retail Group Homeserve Plc HSBC Holdings plc Husqvarna AB Iberdrola Renovables S.A. Iberdrola S.A. Iberia Lineas Aereas de Espana S.A. Icade ICAP plc IG Group Holdings Plc Iliad S.A. Imerys SA IMI plc Immofinanz AG Imperial Tobacco Group plc Imtech N.V. Inchcape PLC Inditex S.A. Indra Sistemas, S.A. Industrivrden Infineon Technologies AG Informa plc ING Groep N.V. Inmarsat Plc Intercontinental Hotels Group plc Intermediate Capital Group PLC International Power plc Intertek Group plc Intesa Sanpaolo SpA Invensys plc Investec plc Investment AB Kinnevik Investor AB ITV plc J. Sainsbury plc Jardine Lloyd Thompson Group plc JCDecaux S.A. Jeronimo Martins SGPS S.A. JM AB John Wood Group plc
Industry Financial Institutions Group Insurance Financial Institutions Group Other Consumer Products, Food and Retail Consumer Products, Food and Retail Consumer Products, Food and Retail Basic Industrials Group Other Healthcare Engineering, Construction and Building Products Engineering, Construction and Building Products Engineering, Construction and Building Products Consumer Products, Food and Retail Business Services and Management Consulting Financial Institutions Group Banks Consumer Products, Food and Retail Energy Energy Transportation Real Estate, Lodging and Leisure Financial Institutions Group Other Financial Institutions Group Other Telecommunications Engineering, Construction and Building Products Basic Industrials Group Other Real Estate, Lodging and Leisure Consumer Products, Food and Retail Engineering, Construction and Building Products Automotive Consumer Products, Food and Retail Business Services and Management Consulting Financial Institutions Group Other Technology and IT Media, Sports and Entertainment Financial Institutions Group Banks Telecommunications Real Estate, Lodging and Leisure Financial Institutions Group Other Energy Business Services and Management Consulting Financial Institutions Group Banks Basic Industrials Group Other Financial Institutions Group Banks Financial Institutions Group Other Financial Institutions Group Other Media, Sports and Entertainment Consumer Products, Food and Retail Financial Institutions Group Insurance Media, Sports and Entertainment Consumer Products, Food and Retail Real Estate, Lodging and Leisure Energy
101
Company Johnson Matthey plc Julius Br Gruppe AG Jyske Bank A/S K+S Aktiengesellschaft Kabel Deutschland Kazakhmys PLC KBC Group N.V. Kemira Group Kerry Group plc Kesko Oyj KingFisher plc Klepierre S.A. Kloeckner & Co SE Kone Oyj Konecranes Plc Koninklijke Ahold N.V. Koninklijke Philips Electronics N.V. Kuehne & Nagel International AG Ladbrokes PLC Lafarge S.A. Lagardere SCA L'Air Liquide S.A. Land Securities Group plc Lanxess AG Legal & General Group Plc Legrand S.A. Lloyds Banking Group plc LM Ericsson Telephone Co. Logica PLC Logitech International S.A. London Stock Exchange Group plc Lonmin plc Lonza Group AG L'Oreal S.A. Lundin Petroleum AB Luxottica Group SpA LVMH Moet Hennessy Louis Vuitton Man Group plc Man SE Mapfre S.A. Marine Harvest ASA Marks & Spencer Group plc Meda AB Mediaset SpA Mediobanca S.p.A. Meggitt PLC Merck & Co. Inc. Metro AG Metropole Television M6 Metso Corp.
Industry Basic Industrials Group Chemicals Financial Institutions Group Other Financial Institutions Group Banks Basic Industrials Group Chemicals Media, Sports and Entertainment Basic Industrials Group Metals Financial Institutions Group Banks Basic Industrials Group Chemicals Consumer Products, Food and Retail Consumer Products, Food and Retail Consumer Products, Food and Retail Real Estate, Lodging and Leisure Basic Industrials Group Metals Basic Industrials Group Other Basic Industrials Group Other Consumer Products, Food and Retail Basic Industrials Group Other Transportation Media, Sports and Entertainment Engineering, Construction and Building Products Media, Sports and Entertainment Basic Industrials Group Other Real Estate, Lodging and Leisure Basic Industrials Group Chemicals Financial Institutions Group Insurance Basic Industrials Group Other Financial Institutions Group Banks Technology and IT Business Services and Management Consulting Technology and IT Financial Institutions Group Other Basic Industrials Group Metals Healthcare Consumer Products, Food and Retail Energy Consumer Products, Food and Retail Consumer Products, Food and Retail Financial Institutions Group Other Basic Industrials Group Other Financial Institutions Group Insurance Consumer Products, Food and Retail Consumer Products, Food and Retail Healthcare Media, Sports and Entertainment Financial Institutions Group Banks Aerospace, Defence and Government Services Healthcare Consumer Products, Food and Retail Media, Sports and Entertainment Basic Industrials Group Other
102
Company Meyer Burger Technology Michael Page International plc Micro Focus International PLC Misys plc Mitchells & Butlers plc Mitie Group plc Mobistar S.A. Modern Times Group Mtg AB Mondi plc MTU Aero Engines Holding AG Munich Re Group National Bank of Greece S.A. National Express GRP National Grid plc Natixis Neopost S.A. Neste Oil Corp. Nestl S.A. Nexans S.A. Next Group plc Nobel Biocare Holding AG Nokia Corp. Nokian Tyres Oyj Nordea Bank AB Norsk Hydro ASA Northumbrian Water Group plc Novartis AG Novo Nordisk A/S Novozymes A/S Nutreco Holding N.V. Old Mutual plc OMV Aktiengesellschaft OPAP S.A. Oriflame Cosmetics S.A. Orion Corp. Orkla ASA OTE Outokumpu Oyj Outotec Paddy Power PagesJaunes Groupe Pandora Pargesa Holding S.A. Parmalat SpA Partners Group Holding AG Pearson plc Pennon Group plc Pernod-Ricard S.A. Persimmon plc Petrofac Ltd.
Industry Technology and IT Business Services and Management Consulting Technology and IT Technology and IT Consumer Products, Food and Retail Business Services and Management Consulting Telecommunications Media, Sports and Entertainment Basic Industrials Group Other Aerospace, Defence and Government Services Financial Institutions Group Insurance Financial Institutions Group Banks Real Estate, Lodging and Leisure Energy Financial Institutions Group Banks Technology and IT Energy Consumer Products, Food and Retail Basic Industrials Group Other Consumer Products, Food and Retail Healthcare Technology and IT Automotive Financial Institutions Group Banks Basic Industrials Group Metals Energy Healthcare Healthcare Basic Industrials Group Chemicals Consumer Products, Food and Retail Financial Institutions Group Insurance Energy Media, Sports and Entertainment Consumer Products, Food and Retail Healthcare Basic Industrials Group Other Telecommunications Basic Industrials Group Metals Engineering, Construction and Building Products Real Estate, Lodging and Leisure Media, Sports and Entertainment Consumer Products, Food and Retail Financial Institutions Group Other Consumer Products, Food and Retail Financial Institutions Group Other Media, Sports and Entertainment Energy Consumer Products, Food and Retail Real Estate, Lodging and Leisure Energy
103
Company Petroleum Geo Services ASA Petropavlovsk PLC Pirelli & C. SpA Pohjola Bank plc Porsche Automobile Holding SE Portugal Telecom SGPS S.A. PostNL N.V. PPR S.A. Premier Oil plc Prosiebensat.1 Media Provident Financial plc Prudential plc Prysmian S.p.A. PSA Peugeot Citroen PSP Swiss Property AG Public Power Corporation S.A. Publicis Groupe S.A. Puma AG Rudolf Dassler Sport Qiagen N.V. Raiffeisen International Bank-Holding AG Randgold Resources Ltd. Randstad Holding N.V. Ratos AB Rautaruukki Corporation Reckitt Benckiser Group plc Red Elctrica Corporacin S.A. Reed Elsevier N.V. Reed Elsevier plc Renault S.A. Renewable Energy Corp. ASA Rentokil Initial plc Repsol YPF S.A. Rexam plc Rheinmetall AG Rhodia S.A. Rhoen Klinikum AG Rio Tinto plc Roche Holding AG Rolls-Royce Group plc Rotork plc Royal Bank of Scotland Group plc Royal Boskalis Westminster N.V. Royal DSM N.V. Royal Dutch Shell plc Royal KPN N.V. Royal Vopak N.V. RSA Insurance Group plc. RWE AG Ryanair Holdings plc SABMiller plc
Industry Energy Basic Industrials Group Metals Automotive Financial Institutions Group Banks Automotive Telecommunications Transportation Consumer Products, Food and Retail Energy Media, Sports and Entertainment Financial Institutions Group Other Financial Institutions Group Insurance Basic Industrials Group Other Automotive Real Estate, Lodging and Leisure Energy Media, Sports and Entertainment Consumer Products, Food and Retail Healthcare Financial Institutions Group Banks Basic Industrials Group Metals Business Services and Management Consulting Financial Institutions Group Other Basic Industrials Group Metals Consumer Products, Food and Retail Energy Media, Sports and Entertainment Media, Sports and Entertainment Automotive Basic Industrials Group Other Business Services and Management Consulting Energy Basic Industrials Group Other Basic Industrials Group Other Basic Industrials Group Chemicals Healthcare Basic Industrials Group Metals Healthcare Aerospace, Defence and Government Services Technology and IT Financial Institutions Group Banks Engineering, Construction and Building Products Basic Industrials Group Chemicals Energy Telecommunications Transportation Financial Institutions Group Insurance Energy Transportation Consumer Products, Food and Retail
104
Company Safran S.A. Sage Group plc Saint Gobain Saipem SpA Salzgitter AG Sampo Oyj Sandvik AB Sanofi-Aventis Sanoma Oyj SAP AG SBM Offshore N.V. Scania AB Schibsted ASA Schindler Holding AG Schneider Electric S.A. Schroders plc SCOR SE Scottish & Southern Energy plc SeaDrill Ltd. SEB S.A. Securitas AB SEGRO plc Serco Group plc SES S.A. Severn Trent plc SGL Carbon SE SGS S.A. Shire Ltd. Siemens AG Sika AG Skandinaviska Enskilda Banken AB Skanska AB SKF AB Smith & Nephew plc Smiths Group plc SNAM Rete Gas SpA Societe Bic Societe Generale Group Sodexo Sofina S.A. Software AG Solvay S.A. Sonova Holding AG Spectris Spirax-Sarco Engineering PLC Springer (Axel) SSAB AB Stada-Arzneimittel AG Stagecoach Group plc Standard Chartered PLC
Industry Aerospace, Defence and Government Services Technology and IT Engineering, Construction and Building Products Energy Basic Industrials Group Metals Financial Institutions Group Insurance Basic Industrials Group Other Healthcare Media, Sports and Entertainment Technology and IT Energy Basic Industrials Group Other Media, Sports and Entertainment Basic Industrials Group Other Basic Industrials Group Other Financial Institutions Group Other Financial Institutions Group Insurance Energy Energy Consumer Products, Food and Retail Business Services and Management Consulting Real Estate, Lodging and Leisure Business Services and Management Consulting Telecommunications Energy Basic Industrials Group Other Business Services and Management Consulting Healthcare Basic Industrials Group Other Basic Industrials Group Chemicals Financial Institutions Group Banks Engineering, Construction and Building Products Basic Industrials Group Other Healthcare Basic Industrials Group Other Energy Consumer Products, Food and Retail Financial Institutions Group Banks Consumer Products, Food and Retail Financial Institutions Group Other Technology and IT Basic Industrials Group Chemicals Healthcare Technology and IT Engineering, Construction and Building Products Media, Sports and Entertainment Basic Industrials Group Metals Healthcare Transportation Financial Institutions Group Banks
105
Company Standard Life plc StatoilHydro ASA STMicroelectronics N.V. Stora Enso Corp. Storebrand ASA Straumann Holding AG Subsea7 Suedzucker AG Suez Environnement S.A. Sulzer, Ltd. Svenska Cellulosa Aktiebolaget, SCA Svenska Handelsbanken AB Swatch Group AG Swedbank AB Swedish Match AB Swiss Life Holding Swiss Prime Site AG Swiss Reinsurance Co. Swisscom AG Sydbank A/S Symrise AG Syngenta AG Synthes Inc. Tate & Lyle plc Taylor Wimpey PLC TDC Technip Tecnicas Reunidas S.A. Tele2 AB Telecom Italia SpA Telefonica S.A. Telekom Austria AG Telenet Group Holding N.V. Telenor ASA Teleperformance Television Francaise 1 S.A. TeliaSonera AB Temenos Group AG Tenaris S.A. Terna Rete Elettrica Nazionale SpA Tesco PLC TGS Nopec Geophysical Co ASA Thales The Governor and Company of The Bank of Ireland The Linde Group The Weir Group PLC Thomas Cook Group plc ThyssenKrupp AG Tognum AG Topdanmark A/S
Industry Financial Institutions Group Insurance Energy Technology and IT Basic Industrials Group Other Financial Institutions Group Insurance Healthcare Energy Consumer Products, Food and Retail Energy Basic Industrials Group Other Basic Industrials Group Other Financial Institutions Group Banks Consumer Products, Food and Retail Financial Institutions Group Banks Consumer Products, Food and Retail Financial Institutions Group Insurance Real Estate, Lodging and Leisure Financial Institutions Group Insurance Telecommunications Financial Institutions Group Banks Basic Industrials Group Chemicals Basic Industrials Group Chemicals Healthcare Consumer Products, Food and Retail Real Estate, Lodging and Leisure Telecommunications Energy Engineering, Construction and Building Products Telecommunications Telecommunications Telecommunications Telecommunications Telecommunications Telecommunications Business Services and Management Consulting Media, Sports and Entertainment Telecommunications Technology and IT Energy Energy Consumer Products, Food and Retail Energy Aerospace, Defence and Government Services Financial Institutions Group Banks Basic Industrials Group Other Basic Industrials Group Other Real Estate, Lodging and Leisure Basic Industrials Group Metals Basic Industrials Group Other Financial Institutions Group Insurance
106
Company Total S.A. Travis Perkins plc Trelleborg AB TrygVesta A/S TUI Travel PLC Tullow Oil plc UBS AG UCB S.A. Ultra Electronics Holdings plc Umicore S.A. Unibail-Rodamco SE UniCredit S.p.A. Unilever N.V. Unilever plc Unione di Banche Italiane Scpa United Business Media plc United Internet AG United Utilities Group PLC UPM-Kymmene Corp. Valeo S.A. Valiant Holding AG Vallourec S.A. Vedanta Resources plc Veolia Environnement S.A. Verbund AG Vestas Wind Systems A/S Victrex Vienna Insurance Group Vinci S.A. Vivendi Vodafone Group plc Voestalpine AG Volkswagen AG Volvo AB Wacker Chemie AG Wrtsil Oyj Abp Wendel Wereldhave N.V. Whitbread plc Wienerberger Baustoffindustrie AG William Demant Holding A/S William Hill plc Wincor Nixdorf AG Wm. Morrison Supermarkets plc Wolseley plc Wolters Kluwer N.V. WPP plc Xstrata plc Yara International ASA YIT Oyj
Industry Energy Consumer Products, Food and Retail Basic Industrials Group Other Financial Institutions Group Insurance Real Estate, Lodging and Leisure Energy Financial Institutions Group Banks Healthcare Aerospace, Defence and Government Services Basic Industrials Group Chemicals Real Estate, Lodging and Leisure Financial Institutions Group Banks Consumer Products, Food and Retail Consumer Products, Food and Retail Financial Institutions Group Banks Media, Sports and Entertainment Technology and IT Energy Basic Industrials Group Other Automotive Financial Institutions Group Banks Basic Industrials Group Other Basic Industrials Group Metals Energy Energy Basic Industrials Group Other Basic Industrials Group Chemicals Financial Institutions Group Insurance Engineering, Construction and Building Products Media, Sports and Entertainment Telecommunications Basic Industrials Group Metals Automotive Basic Industrials Group Other Basic Industrials Group Chemicals Basic Industrials Group Other Financial Institutions Group Other Real Estate, Lodging and Leisure Consumer Products, Food and Retail Engineering, Construction and Building Products Healthcare Media, Sports and Entertainment Technology and IT Consumer Products, Food and Retail Consumer Products, Food and Retail Media, Sports and Entertainment Media, Sports and Entertainment Basic Industrials Group Metals Basic Industrials Group Chemicals Engineering, Construction and Building Products
107
Company Zardoya Otis, S.A. Zodiac S.A. Zurich Financial Services AG
Industry Basic Industrials Group Other Aerospace, Defence and Government Services Financial Institutions Group Insurance
108
Appendix IV - Endnotes
1 2 3 4 5 6
International Accounting Standards (IAS) 36.12. IAS 36.14. IAS 36.104. Calculated on the preceding 20 trading days (Sources: Bloomberg and Capital IQ). Datamonitor. Aerospace & Defense in Europe, October 2010. Stockholm International Peace Research Institute. Falling European Military SpendingA Threat to Our Security? April 11, 2011. Goldman Sachs. Europe: Aerospace & Defense. Defence Downturn Deepens for Europes Big Three; Thales to Sell, April 6, 2011. Goldman Sachs. Europe: Aerospace & Defense. Defence Downturn Deepens for Europes Big Three; Thales to Sell, April 6, 2011. Euronews. German Conscription Ends, July 5, 2011. Europolitics. EUs Defence and Space Agencies to Sign Cooperation Agreement, June 17, 2011. Europolitics. EUs Defence and Space Agencies to Sign Cooperation Agreement, June 17, 2011. Guardian.co.uk. Britain and France Sign Landmark 50-Year Defence Deal, November 2, 2010. Deutsche Bank. Global Markets Research: Commerical Aerospace. Quarterly HealthcheckQ110, April 26, 2010. Aerospace & Defence Association of Europe. Latest Figures from European General Aviation Manufacturers Show Signs of Recovery, May 19, 2011. Goldman Sachs. Europe: Aerospace & Defense. Civil Aerospace: U.S. Recovery to Drive More Outperformance in 2011, January 12, 2011. Citi. Equities: European Aerospace & Defense. Positive into Paris Air Show, May 18, 2011. Citi. Equities: European Aerospace & Defense. Positive into Paris Air Show, May 18, 2011. Citi. Equities: European Aerospace & Defense. Positive into Paris Air Show, May 18, 2011.
9 10 11 12 13 14
15
16 17 18
19
International Air Transport Association. Strong 2010 but Uncertainties in 2011 Severe Weather Dents Recovery, February 2, 2011.
International Air Transport Association. Strong 2010 but Uncertainties in 2011 Severe Weather Dents Recovery, February 2, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. International Air Transport Association. Air Travel Shrinks in March Events in Japan and MENA Impact Air Transport, May 3, 2011. International Air Transport Association. International Air Travel Rebounds in April, June 2, 2011. International Air Transport Association. Air Travel Shrinks in March Events in Japan and MENA Impact Air Transport, May 3, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Goldman Sachs. Europe: Aerospace & Defense. Civil Aerospace: U.S. Recovery to Drive More Outperformance in 2011, January 12, 2011. Capital IQ. European Automobile Manufacturers Association. Passenger Cars: Registrations in 2010 5.5% Lower than in 2009, January 14, 2011. European Automobile Manufacturers Association. Commerical Vehicles: Registrations Up 8% in 2010, January 25, 2011. Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. European Automobile Manufacturers Association. The Automobile Industry Pocket Guide, 2010. Deutsche Bank. Global Markets Research: European Autos. Q111 Previews, April 15, 2011. European Automobile Manufacturers Association. Passenger Cars: Registrations Slip 0.8% in January-May, June 17, 2011. Deutsche Bank. Global Markets Research: European Autos. Q111 Previews, April 15, 2011. J.P. Morgan. Europe Equity Research: European Auto Parts/Tires. Fundamentals for Auto Parts/Tires Still Strong, May 26, 2011.
20
21 22
23 24
25 26
27 28
29
30
31 32 33
34 35
109
36
Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. Barclays Capital. Equity Research: European Autos & Auto Parts. Mix Enrichment Continues in May, June 7, 2011. EUbusiness. European Car Sales Fall for Second Month, May 17, 2011. Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. Barclays Capital. Equity Research: European Autos & Auto Parts. Mix Enrichment Continues in May, June 7, 2011. Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. UniCredit. Automotive Compendium. Where the Rubber Meets the Road, April 2011. J.P. Morgan. Europe Equity Research: European Trucks. Q111 Preview: Fundamentals Improving, Slow Margin Development, April 18, 2011. Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. J.P. Morgan. Europe Equity Research: European Auto Components. Initiating Coverage on Faurecia (OW), Continental (OW) and Michelin (N), January 11, 2011. J.P. Morgan. Europe Equity Research: European Auto Components. Initiating Coverage on Faurecia (OW), Continental (OW) and Michelin (N), January 11, 2011. Deutsche Bank. Global Markets Research: European Automotive. Q4 Sector Preview: 2010 Looks to Have Ended on High, February 1, 2011. J.P. Morgan. Europe Equity Research: European Auto Components. Initiating Coverage on Faurecia (OW), Continental (OW) and Michelin (N), January 11, 2011. J.P. Morgan. Europe Equity Research: European Auto Components. Initiating Coverage on Faurecia (OW), Continental (OW) and Michelin (N), January 11, 2011. International Council on Clean Transportation. EU Standards for Light Commercial Vehicles, March 7, 2011. PublicServiceEurope. Electric cars stalled without government support, June 14, 2011. EUROPA. Reducing CO2 Emissions from Passenger Cars, December 2010. EUROPA. CO2 Emissions from New Cars Continue Steep Descent in 2010, June 29, 2011. Capital IQ. Cefic European Chemical Industry Council. Monthly Short Summary, March 2011, March 2, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, April 2011, April 6, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, March 2011, March 2, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, March 2011, March 2, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, April 2011, April 6, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, March 2011, March 2, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, March 2011, March 2, 2011. Citi. Equities: Chemicals. Citis Chemicals Quidnunc Fundamental Focus, May 27, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, July 2011, June 23, 2011. Cefic European Chemical Industry Council. Monthly Short Summary, July 2011, June 23, 2011. 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. 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. Capital IQ. PricewaterhouseCoopers. Industrial Products: Metals. Metals Deals: Forging Ahead 2010 Annual Review, 2011. PricewaterhouseCoopers. Industrial Products: Metals. Metals Deals: Forging Ahead 2010 Annual Review, 2011. PricewaterhouseCoopers. Industrial Products: Metals. Metals Deals: Forging Ahead 2010 Annual Review, 2011. Citi. Equities: Metals and Mining. Commodity Price Revisions, May 16, 2011. Deutsche Bank. Global Markets Research: Metals and Mining. A Bold 2011 for the Miners, January 11, 2011. Bank of America Merrill Lynch. European Steel. European Steel: 3 Themes for 2011, January 10, 2011. Bank of America Merrill Lynch. European Steel. European Steel: 3 Themes for 2011, January 10, 2011. BMO Capital Markets Research. Global Metals & Mining, February 2011. Deutsche Bank. Global Markets Research: Metals and Mining. A Bold 2011 for the Miners, January 11, 2011.
37 38 39
40 41
42 43
44
45
46
47
48
49
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
66
67 68 69 70 71 72 73 74 75 76
110
77 78 79 80 81 82 83 84 85 86 87 88 89
Deutsche Bank. Global Markets Research: Metals and Mining. A Bold 2011 for the Miners, January 11, 2011. Deutsche Bank. Global Markets Research: Metals and Mining. A Bold 2011 for the Miners, January 11, 2011. Deutsche Bank. Global Markets Research: Metals and Mining. A Bold 2011 for the Miners, January 11, 2011. Capital IQ. Datamonitor. Global Electrical Components & Equipment, May 25, 2011. Datamonitor. Global Electrical Components & Equipment, May 25, 2011. J.P. Morgan. Europe Equity Research: Electrical Engineers. Views and Expectation into Q2, July 7, 2011. J.P. Morgan. Europe Equity Research: Electrical Engineers. Views and Expectation into Q2, July 7, 2011. J.P. Morgan. Europe Equity Research: Electrical Engineers. Views and Expectation into Q2, July 7, 2011. J.P. Morgan. Europe Equity Research: Electrical Engineers. Views and Expectation into Q2, July 7, 2011. Societe Generale. Equity: Capital Goods. Riding the Cycle, January 10, 2011. Societe Generale. Equity: Capital Goods. Riding the Cycle, January 10, 2011. J.P. Morgan. Europe Equity Research: Electrical Equipment. EPG Conference Day 2: Siemens, ABB, Alstom and More, May 18, 2011. Bank of America Merrill Lynch. Capital Goods. Beyond the Sweet Spot, January 13, 2011. Deutsche Bank. Global Markets Research: Capital Goods. 2011 Outlook, January 5, 2011. Bank of America Merrill Lynch. Capital Goods. Beyond the Sweet Spot, January 13, 2011. Deutsche Bank. Global Markets Research: Capital Goods. 2011 Outlook, January 5, 2011. Barclays Capital. Equity Research. European Capital Goods: Initiation of Coverage, February 16, 2011. UniCredit. Equity Research: Capital Goods. Capital Goods Sector Outlook, June 24, 2011. Deutsche Bank. Global Markets Research: Capital Goods. 2011 Outlook, January 5, 2011. Bank of America Merrill Lynch. Capital Goods. Beyond the Sweet Spot, January 13, 2011. Bank of America Merrill Lynch. Capital Goods. Beyond the Sweet Spot, January 13, 2011. J.P. Morgan. Europe Equity Research: European Capital Goods. Q111 Survey and Previews Mechanicals: Outlook Statements Stabilising at a High Level, April 11, 2011. Datamonitor. Industrial Profile.Global Paper Products, April 2011. Credit Suisse. Equity Research: Paper & Packaging. Shifting to Second Gear, January 25, 2011. Credit Suisse. Equity Research: Paper & Packaging. Shifting to Second Gear, January 25, 2011. Credit Suisse. Equity Research: Paper & Packaging. Shifting to Second Gear, January 25, 2011. Credit Suisse. Equity Research: Paper & Packaging. Shifting to Second Gear, January 25, 2011. Credit Suisse. Equity Research: Paper & Packaging. Shifting to Second Gear, January 25, 2011. Datamonitor. Industrial Profile.Global Paper Products, April 2011. Capital IQ. RBC Capital Markets. Equity Research: Business Services Sector. Growth Potential Underappreciated, January 13, 2011. RBC Capital Markets. Equity Research: Business Services Sector. Growth Potential Underappreciated, January 13, 2011. RBC Capital Markets. Equity Research: Business Services Sector. Growth Potential Underappreciated, January 13, 2011. Bank of America Merrill Lynch. Business Services. Like Growth? Love Business Services, March 28, 2011. Bank of America Merrill Lynch. Business Services. Like Growth? Love Business Services, March 28, 2011. Bank of America Merrill Lynch. Business Services. Like Growth? Love Business Services, March 28, 2011. Bank of America Merrill Lynch. Business Services. Like Growth? Love Business Services, March 28, 2011. Bank of America Merrill Lynch. Business Services. Like Growth? Love Business Services, March 28, 2011. RBC Capital Markets. Equity Research: Business Services Sector. Growth Potential Underappreciated, January 13, 2011. Deutsche Bank. Global Markets Research: European Security Sector. Top Picks, January 14, 2011. Deutsche Bank. Global Markets Research: European Security Sector. Top Picks, January 14, 2011. Deutsche Bank. Global Markets Research: European Security Sector. Top Picks, January 14, 2011. Consultant-News.com. European Consulting Market Hits Almost Euro 25 Billion and New Report Says Set to Grow, June 23, 2011.
90 91 92 93 94 95 96 97 98 99
100 101 102 103 104 105 106 107 108
109
110
111 112 113 114 115 116
117 118 119 120
111
121 122 123
Bureau Veritas SA. Press Release, May 4, 2011. Bureau Veritas SA. Press Release, May 4, 2011. Consultant-News.com. European Consulting Market Hits Almost Euro 25 Billion and New Report Says Set to Grow, June 23, 2011. Capital IQ. Barclays Capital. European General Retail. UPDATE: Barclays Capital Retail Checkout Negative Trends Returning to the Market, June 7, 2011. Collins Stewart. Retail. The Sale Is Now On, June 8, 2011. Barclays Capital. European General Retail. UPDATE: Barclays Capital Retail Checkout Negative Trends Returning to the Market, June 7, 2011. Collins Stewart. Retail. The Sale Is Now On, June 8, 2011. Collins Stewart. Retail. The Sale Is Now On, June 8, 2011. Bank of America Merrill Lynch. European Consumer Staples. Commodities Not Yet a Tailwind, May 13, 2011. Bank of America Merrill Lynch. European Consumer Staples. Commodities Not Yet a Tailwind, May 13, 2011. Jeffries International Ltd. Consumer: Food Retailers. European Food Retail 2011 Views, January 7, 2011. UniCredit. Equity Research: Consumer Goods. Consumer Monthly, June 15, 2011. J.P. Morgan. Europe Equity Research: European Beverages. You Get What You Pay For, April 27, 2011. J.P. Morgan. Europe Equity Research: European Beverages. You Get What You Pay For, April 27, 2011. UniCredit. Equity Research: Consumer Goods. Consumer Monthly, June 15, 2011. Goldman Sachs. Europe Retail. Building GS SUSTAIN Analysis Into Our Investment Framework, March 5, 2010. UniCredit. Equity Research: Consumer. Consumer Monthly, May 13, 2011. UniCredit. Equity Research: Consumer Goods. Consumer Monthly, June 15, 2011. ESN. ESN Food & Beverage. Repeating the Message; Stay Defensive, April 13, 2011. Capital IQ. Jefferies. Equity Research Global: Clean Technology. Powering Europe in the 21st Century, April 19, 2011. Jefferies. Equity Research Global: Clean Technology. Powering Europe in the 21st Century, April 19, 2011. Europolitics. Industry. Output Edges Up in the EU, June 15, 2011. Deutsche Bank. Global Markets Research: European Integrated Oils. 2011 Outlook The Upcycle Takes Hold, January 6, 2011. Deutsche Bank. Global Markets Research: European Integrated Oils. 2011 Outlook The Upcycle Takes Hold, January 6, 2011. Deutsche Bank. Global Markets Research: European Utilities. Impact of an Oil Price Spike, March 3, 2011. Goldman Sachs. Europe: Utilities. Higher Energy Commodities and Intervention: Renewables to Benefit, June 14, 2011. Goldman Sachs. Europe: Utilities. Higher Energy Commodities and Intervention: Renewables to Benefit, June 14, 2011. Bank of America Merrill Lynch. The Oil Gusher #63. Nuclear Shutdowns to Impact European Gas Demand? June 13, 2011. Bank of America Merrill Lynch. The Oil Gusher #63. Nuclear Shutdowns to Impact European Gas Demand? June 13, 2011. Bank of America Merrill Lynch. The Oil Gusher #63. Nuclear Shutdowns to Impact European Gas Demand? June 13, 2011. Bank of America Merrill Lynch. The Oil Gusher #63. Nuclear Shutdowns to Impact European Gas Demand? June 13, 2011. Bank of America Merrill Lynch. The Oil Gusher #63. Nuclear Shutdowns to Impact European Gas Demand? June 13, 2011. Europa. Energy: Commission Presents its New Strategy Towards 2020, November 10, 2010. Jefferies. Equity Research Global: Clean Technology. Powering Europe in the 21st Century, April 19, 2011. European Commission. EEPR. European Energy Efficiency Fund (EEE-F), July 1, 2011. Capital IQ. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011.
124 125
126 127
128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145
146
147 148
149
150
151
152
153
154
155 156 157 158 159 160 161
112
162 163 164 165 166 167 168
Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Deutsche Bank. Global Markets Research: European Contractors. Cautiously Waiting for the Recovery, January 13, 2010. Citi. Citigroup Global Markets: Building Products. European Construction Outlook, June 30, 2010. Deutsche Bank. Global Markets Research: European Contractors. Cautiously Waiting for the Recovery, January 13, 2010. Deutsche Bank. Global Markets Research: European Contractors. Cautiously Waiting for the Recovery, January 13, 2010. Goldman Sachs. Europe: Construction. Addressing the Divergent Trends in Private and Public Construction, April 6, 2010. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. RBC Capital Markets. Equity Research: Construction & Services. Initiation of Coverage, February 21, 2011. RBC Capital Markets. Equity Research: Construction & Services. Initiation of Coverage, February 21, 2011. Credit Suisse. Equity Research: Engineering Services Sector. We Prefer Arcadis Over Imtech and WS Atkins, January 10, 2011. RBC Capital Markets. Equity Research: Construction & Services. Initiation of Coverage, February 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Goldman Sachs. Europe: Construction. A Long Grind, But with Material Upside Potential, April 21, 2011. Capital IQ. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. European Financial Stability Facility. About EFSF, 2010. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Bank for International Settlements. International Regulatory Framework for Banks (Basel III), 2011. Bank of America Merrill Lynch. European Banking Advisor. European Banks: 16% Sustainable Return (and priced for 12%), April 14, 2011. Barclays Capital. Equity Research: European Banks. Not So Fast, Regulators, June 1, 2010. Bank for International Settlements. International Regulatory Framework for Banks (Basel III), 2011. EUbusiness. EU Vows Transparency in Bank Stress Tests, July 13, 2010. Societe Generale. Equity: European Banks. Will the Upcoming EBA Bank Stress Tests Trigger Further Capital Raising? May 19, 2011. Societe Generale. Equity: European Banks. Will the Upcoming EBA Bank Stress Tests Trigger Further Capital Raising? May 19, 2011. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Bank of America Merrill Lynch. European Banking Advisor. European Banks: 16% Sustainable Return (and priced for 12%), April 14, 2011. Credit Suisse. Equity Research: European Banks. A Roadmap for the Sovereign/Bank Crisis, February 4, 2011. Bank of America Merrill Lynch. European Banking Advisor. European Banks: 16% Sustainable Return (and priced for 12%), April 14, 2011. Goldman Sachs. Europe: Banks. Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank, December 13, 2010. Goldman Sachs. Europe: Banks. Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank, December 13, 2010. Goldman Sachs. Europe: Banks. Primed for Growth, Priced for Opportunity: Buy HSBC and Erste Bank, December 13, 2010.
169 170
171
172
173 174 175 176 177
178 179 180 181 182 183 184 185 186 187 188 189
190 191 192 193
194
195 196
197 198
199
200
201
113
202 203 204 205 206 207 208
Capital IQ. CEA. Annual Report, 2010-2011. Credit Suisse. Equity Research: European Insurance 2011. A Year in Transition, January 19, 2011. CEA. Annual Report, 2010-2011. Goldman Sachs. Europe: Insurance. Solvency II: Is it Time to Be Realistic? April 16, 2010. EUROPA. Solvency II, 2011. J.P. Morgan. Europe Equity Research: European Insurance. Insurers Seeking Investment Alpha A Few Trends, May 24, 2011. CEA. Annual Report, 2010-2011. UniCredit. Equity Research: Insurance. European Insurers: The Pied Pipers, June 7, 2011. Credit Suisse. Equity Research: European Insurance 2011. A Year in Transition, January 19, 2011. Capital IQ. Barclays Capital. Equity Research: European Investment Banks. Trimming and Slimming, March 4, 2011. Barclays Capital. Equity Research: European Investment Banks. Trimming and Slimming, March 4, 2011. Barclays Capital. Equity Research: European Investment Banks. Trimming and Slimming, March 4, 2011. Barclays Capital. Equity Research: European Investment Banks. Risk of Further Earnings Downgrades, June 9, 2011. Barclays Capital. Equity Research: European Investment Banks. Trimming and Slimming, March 4, 2011. Barclays Capital. Equity Research: European Investment Banks. Risk of Further Earnings Downgrades, June 9, 2011. J.P. Morgan. Global Investment Banks. Regulatory Arbitrage Series: OW European over U.S. IBs, March 8, 2011. EFAMA. EFAMAs Fourth Annual Review. Asset Management in Europe, May 2011. EFAMA. EFAMAs Fourth Annual Review. Asset Management in Europe, May 2011. EFAMA. UCITS Experience Net Inflows in April due to Strong Net Sales of Equity Funds, June 14, 2011. Unquote. Private Equity Barometer Q111, April 20, 2011. Unquote. Private Equity Barometer Q111, April 20, 2011. Unquote. Private Equity Barometer Q111, April 20, 2011. The Wall Street Journal. Battered Europe Has the Strength to Merge, January 4, 2011. The Wall Street Journal. Europe M&A Activity Slowly Revives, March 31, 2011. Unquote. Secondary Buyouts on the Rise, June 20, 2011. Council of the European Union. Council Adopts EU Rules for Alternative Investment Fund Managers, May 27, 2011. Council of the European Union. Council Adopts EU Rules for Alternative Investment Fund Managers, May 27, 2011. Citi. Equities: European Exchanges. Battle for Growth, January 17, 2011. Citi. Equities: European Exchanges. Battle for Growth, January 17, 2011. Citi. Equities: European Exchanges. Battle for Growth, January 17, 2011. Citi. Equities: European Exchanges. Battle for Growth, January 17, 2011. Capital IQ. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011.
209 210 211 212 213 214 215 216
217 218
219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236
237
238
239
240
241
242
114
243
Deutsche Bank. Global Markets Research: European Medical Devices. 2011 Outlook: A Year of Some Strong Outperformers, January 12, 2011. Barclays Capital. Equity Research: European Pharmaceuticals. Biosimilars Opportunity or Threat? February 11, 2011. Citi. Equities: EU Pharmaceuticals 2011. Continuing Cremnophobia, January 13, 2011. Citi. Equities: EU Pharmaceuticals 2011. Continuing Cremnophobia, January 13, 2011. J.P. Morgan. Europe Equity Research: European Pharmaceuticals. The Diagnosis 2011 Outlook, January 6, 2011. J.P. Morgan. Europe Equity Research: European Pharmaceuticals. The Diagnosis 2011 Outlook, January 6, 2011. Citi. Equities: EU Pharmaceuticals 2011. Continuing Cremnophobia, January 13, 2011. Citi. Equities: EU Pharmaceuticals 2011. Continuing Cremnophobia, January 13, 2011. Deutsche Bank. Global Markets Research: European Pharmaceuticals. Emerging Markets for Beginners, February 4, 2011. Deutsche Bank. Global Markets Research: European Pharmaceuticals. Emerging Markets for Beginners, February 4, 2011. Capital IQ. Credit Suisse. Equity Research: Media. Reasons to Be Cheerful, January 18, 2011. Goldman Sachs. Europe: Media. 5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV, January 5, 2011. Deutsche Bank. Pan European Media Sector. Rolling into the Mid-Cycle, January 10, 2011. J.P. Morgan. Europe Equity Research: European Media. Stocks for Bulls and for Bears According to Our Media Quant Screen, June 10, 2011. J.P. Morgan. Europe Equity Research: European Media. Stocks for Bulls and for Bears According to Our Media Quant Screen, June 10, 2011. J.P. Morgan. Europe Equity Research: European Media. Stocks for Bulls and for Bears According to Our Media Quant Screen, June 10, 2011. J.P. Morgan. Europe Equity Research: European Media. Stocks for Bulls and for Bears According to Our Media Quant Screen, June 10, 2011. Barclays Capital. European Media. Ad Watch IV Slowdown Not Slump, June 21, 2011. Barclays Capital. European Media. Ad Watch IV Slowdown Not Slump, June 21, 2011. Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group. Technology, Media & Telecommunications Predictions 2011, 2011. Goldman Sachs. Europe: Media. 5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV, January 5, 2011. J.P. Morgan. Europe Equity Research: European Media. Stocks for Bulls and for Bears According to Our Media Quant Screen, June 10, 2011. Citi. European Media. Surprise, Surprise, January 19, 2011. Deutsche Bank. Pan European Media Sector. Rolling into the Mid-Cycle, January 10, 2011. Goldman Sachs. Europe: Media. 5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV, January 5, 2011. Deutsche Bank. European TV Sector. 2011: Focus Shifts to Pricing Power and Cost Discipline, January 7, 2011. Deutsche Bank. European TV Sector. 2011: Focus Shifts to Pricing Power and Cost Discipline, January 7, 2011. Deutsche Bank. European TV Sector. 2011: Focus Shifts to Pricing Power and Cost Discipline, January 7, 2011. Goldman Sachs. Europe: Media. 5 Key Themes Point to Outdoor, Exhibitions, Agencies, Some Free TV, January 5, 2011. Bank of America Merrill Lynch. Leisure Centre. 2011 The Year Ahead in Leisure, January 17, 2011. Bank of America Merrill Lynch. Leisure Centre. 2011 The Year Ahead in Leisure, January 17, 2011. Bank of America Merrill Lynch. Leisure Centre. 2011 The Year Ahead in Leisure, January 17, 2011. Capital IQ. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. Deutsche Bank. Global Markets Research: French Real Estate. Property A la Franaise Initiating French REITs, January 13, 2011. Goldman Sachs. Europe: Real Estate. Looking for Pockets of Growth or Discounts with Receding Risks, January 13, 2011.
244
245 246 247 248 249 250 251
252
253 254 255
256 257
258
259
260
261 262 263
264
265
266 267 268
269 270 271 272
273 274 275 276 277 278
279
115
280
Goldman Sachs. Europe: Real Estate. Looking for Pockets of Growth or Discounts with Receding Risks, January 13, 2011. Goldman Sachs. Europe: Real Estate. Looking for Pockets of Growth or Discounts with Receding Risks, January 13, 2011. Goldman Sachs. Europe: Real Estate. Looking for Pockets of Growth or Discounts with Receding Risks, January 13, 2011. Barclays Capital. Equity Research. Global Real Estate Securities Monitor, April 5, 2011. Barclays Capital. Equity Research. Global Real Estate Securities Monitor, April 5, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. PricewaterhouseCoopers and Urban Land Institute. Emerging Trends in Real Estate. Europe, 2011. Capital IQ. UniCredit. Equity Research: European Technology. From Disruptions in Japan to New M&A Momentum, April 8, 2011. J.P. Morgan. Europe Equity Research: European Semiconductors. In a Stock Picking Environment, April 7, 2011. UniCredit. Equity Research: European Technology. From Disruptions in Japan to New M&A Momentum, April 8, 2011. UniCredit. Equity Research: European Technology. From Disruptions in Japan to New M&A Momentum, April 8, 2011. Goldman Sachs. European Semiconductors & Tech Hardware. 2Q11, June 9, 2011. J.P. Morgan. Europe Equity Research: European Semiconductors. In a Stock Picking Environment, April 7, 2011. Citi. Equities: European Semiconductors. 1Q11 Results Preview, April 25, 2011. Barclays Capital. European Technology Hardware. BarCap Global Communication Media and Technology Conference Guide, May 23, 2011. Citi. Equities: European Semiconductors. 1Q11 Results Preview, April 25, 2011. Goldman Sachs. European Semiconductors & Tech Hardware. 2Q11, June 9, 2011. Goldman Sachs. European Semiconductors & Tech Hardware. 2Q11, June 9, 2011. Citi. Equities: European Semiconductors. 1Q11 Results Preview, April 25, 2011. Credit Suisse. Equity Research: European Software and Services. European Software and Services 2011 Outlook, January 11, 2011. Credit Suisse. Equity Research: European Software and Services. European Software and Services 2011 Outlook, January 11, 2011. Bank of America Merrill Lynch. European Technology. The IT Services Handbook, June 3, 2011. Capital IQ. Credit Suisse. Equity Research: European Telecoms. Data Growth Slowing, Auctions Coming, April 5, 2011. Credit Suisse. Equity Research: European Telecoms. Data Growth Slowing, Auctions Coming, April 5, 2011. Societe Generale. Diversified Telecom Services. European Cables Gilded Age: Pipe Dreams No Longer, April 21, 2011. Bank of America Merrill Lynch. European Telecoms. Disliked and Underweight, June 3, 2011. Credit Suisse. Equity Research: European Telecoms. Data Growth Slowing, Auctions Coming, April 5, 2011. Bank of America Merrill Lynch. European Telecoms. Q1 Can Be the Cruelest Quarter, June 6, 2011. Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group. Technology, Media & Telecommunications Predictions 2011, 2011. Deloitte. The Deloitte Touche Tohmatsu Global Technology, Media & Telecommunications Industry Group. Technology, Media & Telecommunications Predictions 2011, 2011. Bank of America Merrill Lynch. European Telecoms. European Net Neutrality: Very Different from the U.S., February 23, 2011. Bank of America Merrill Lynch. European Telecoms. European Net Neutrality: Very Different from the U.S., February 23, 2011.
281
282
283 284 285 286 287 288 289 290 291 292 293
294 295
296
297 298 299 300
301 302 303 304 305
306
307 308 309 310 311
312 313 314 315
316
317
318
116
319
Bank of America Merrill Lynch. European Telecoms. European Net Neutrality: Very Different from the U.S., February 23, 2011. The Financial Times Ltd. Telecoms. Europe Telecom Groups Target Google, April 26, 2011. Bloomberg. YouTube in Network Deal Talks With Operators, Manufacturers, June 8, 2011. Bank of America Merrill Lynch. European Telecoms. Q1 Can Be the Cruelest Quarter, June 6, 2011. Bank of America Merrill Lynch. European Telecoms. Disliked and Underweight, June 3, 2011. Capital IQ. Deutsche Bank. Industrial Transportation. Sustainable Growth in 2011 After a Buoyant 2010, February 2, 2011. Europa. Conference Intelligent Transport Systems in Action, June 6, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Citi. European Airports and Airport Operators. Increasing Sector Interest Expected from 2H11, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Goldman Sachs. Europe: Transportation: Shipping. The Good, the Bad, the Ugly: A Closer Look at Shipping Cycles, June 8, 2011. Deutsche Bank. Industrial Transportation. Sustainable Growth in 2011 After a Buoyant 2010, February 2, 2011. Europa. Transport 2050: Commission Outlines Ambitious Plan to Increase Mobility and Reduce Emissions, March 28, 2011. Europa. Transport 2050: Commission Outlines Ambitious Plan to Increase Mobility and Reduce Emissions, March 28, 2011. Europa. Transport: EU to Join International Rail Organization, June 23, 2011. Capital IQ.
320 321 322 323 324 325 326 327 328 329 330 331 332
333
334
335
336
337
338
339 340
341
342 343
117
IMPORTANT NOTICE
2011 Houlihan Lokey. All rights reserved. This material may not be reproduced in any format by any means or redistributed without the prior written consent of Houlihan Lokey. Houlihan Lokey is a trade name for Houlihan Lokey, Inc. and its subsidiaries and affiliates which include: Houlihan Lokey Financial Advisors, Inc., a California corporation, a registered investment advisor, which provides investment advisory, fairness opinion, solvency opinion, valuation opinion, restructuring advisory and portfolio management services; Houlihan Lokey Capital, Inc., a California corporation, a registered brokerdealer and SIPC member firm, which provides investment banking, private placement, merger, acquisition and divestiture services; and Houlihan Lokey (Europe) Limited, a company incorporated in England which is authorized and regulated by the U.K. Financial Services Authority and Houlihan Lokey (China) Limited, a company incorporated in Hong Kong SAR which is licensed in Hong Kong by the Securities and Futures Commission, which provide investment banking, restructuring advisory, merger, acquisition and divestiture services, valuation opinion and private placement services and which may direct this communication within the European Economic Area and Hong Kong, respectively, to intended recipients including professional investors, high-net-worth companies or other institutional investors. Houlihan Lokey gathers its data from sources it considers reliable; however, it does not guarantee the accuracy or completeness of the information provided within this presentation. The material presented reflects information known to the authors at the time this presentation was written, and this information is subject to change. Houlihan Lokey makes no representations or warranties, expressed or implied, regarding the accuracy of this material. The views expressed in this material accurately reflect the personal views of the authors regarding the subject securities and issuers and do not necessarily coincide with those of Houlihan Lokey. Officers, directors and partners in the Houlihan Lokey group of companies may have positions in the securities of the companies discussed. This presentation does not constitute advice or a recommendation, offer or solicitation with respect to the securities of any company discussed herein, is not intended to provide information upon which to base an investment decision, and should not be construed as such. Houlihan Lokey or its affiliates may from time to time provide investment banking or related services to these companies. Like all Houlihan Lokey employees, the authors of this presentation receive compensation that is affected by overall firm profitability.
118
Houlihan Lokey is a trade name for Houlihan Lokey, Inc. and its subsidiaries and affiliates which include: Houlihan Lokey Financial Advisors, Inc., a California corporation, a registered investment advisor, which provides investment advisory, fairness opinion, solvency opinion, valuation opinion, restructuring advisory and portfolio management services; Houlihan Lokey Capital, Inc., a California corporation, a registered broker-dealer and SIPC member firm, which provides investment banking, private placement, merger, acquisition and divestiture services; and Houlihan Lokey (Europe) Limited, a company incorporated in England which is authorized and regulated by the U.K. Financial Services Authority and Houlihan Lokey (China) Limited, a company incorporated in Hong Kong SAR which is licensed in Hong Kong by the Securities and Futures Commission, which provide investment banking, restructuring advisory, merger, acquisition and divestiture services, valuation opinion and private placement services and which may direct this communication within the European Economic Area and Hong Kong, respectively, to intended recipients including professional investors, high-net-worth companies or other institutional investors. 1011
Houlihan Lokey is an international investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and valuation. The firm is ranked globally as the No. 1 restructuring advisor, the No. 1 M&A fairness opinion advisor over the past 10 years, and the No. 1 M&A advisor for U.S. transactions under $1 billion, according to Thomson Reuters. Houlihan Lokey has 14 offices and more than 800 employees in the United States, Europe and Asia. The firm serves more than 1,000 clients each year, ranging from closely held companies to Global 500 corporations. For more information, visit www.HL.com. For more inFormation on HouLiHan Lokeys tax & FinanciaL reporting VaLuation serVices, pLease contact:
europe
e.w. (Sandy) purcell

Senior Managing Director 83 Pall Mall London, SW1Y 5ES +44 (0) 207 747 1464 SPurcell@HL.com
dr. marc hayn

Managing Director Taunusanlage 1 (Skyper) 60329 Frankfurt am Main +49 (0) 69 256 246 128 MHayn@HL.com
dr. Tim laas

Senior Vice President Taunusanlage 1 (Skyper) 60329 Frankfurt am Main +49 (0) 69 256 246 129 TLaas@HL.com
didier Saintot
Vice President 32 boulevard Haussmann 75009 Paris +33 (0) 1 53 43 38 19 DSaintot@HL.com
norTh america
Sam w. clark, iV
Managing Director 200 Crescent Ct. Suite 1900 Dallas, Texas 75201 +1 214.220.8489 SClark@HL.com
william (wick) Smith

Managing Director 3455 Peachtree Rd. NE Suite 2000, 20th Fl. Atlanta, GA 30326 +1 404.495.7019 WSmith@HL.com
aSia
ryuta Fujino
Managing Director World Trade Center Building 31st Fl. 2-4-1 Hamamatsu-cho Minato-ku Tokyo 105-6131 +81 (0) 3 4577 6001 RFujino@HL.com
weimin chen
Managing Director 1118 South Tower Beijing Kerry Centre 1 Guang Hua Rd. Chaoyang District Beijing 100020 PRC +86 (10) 852 3551 2338 WChen@hl.com
HL.com

The European Goodwill Impairment Study 2011-2012

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

The European Goodwill Impairment Study 2011-2012

Загружено:

Авторское право:

Доступные форматы

The european Goodwill impairmenT STudy