NOTE 13
| € million | Goodwill | Trademarks | Other intangible assets |
Prepayments | Total 2009 |
| Cost | |||||
| Cos at 1 Jan. 2009 | 115.3 | 71.1 | 142.5 | 10.4 | 339.4 |
| Currency translation differences | 6.8 | 5.6 | 4.8 | 17.1 | |
| Additions | 2.2 | 28.7 | 6.0 | 36.9 | |
| Acquisition of subsidiary | 0.0 | ||||
| Disposals | -0.9 | -0.7 | -15.2 | -0.6 | -17.5 |
| Transfers between items | -3.3 | -5.9 | -9.2 | ||
| Cost at 31 Dec. 2009 | 123.3 | 75.9 | 157.4 | 10.0 | 366.6 |
| Accumulated amortisation and impairment | |||||
| Accumulated amortisation and impairment at 1 Jan. 2009 | -43.3 | -28.6 | -97.9 | -169.7 | |
| Currency translation differences | -6.7 | -1.3 | -1.6 | -9.6 | |
| Accumulated amortisation of disposals and transfers | 0.2 | 22.0 | 22.1 | ||
| Amortisation for the period | -24.7 | -24.7 | |||
| Impairments | |||||
| Accumulated amortisation and impairment at 31 Dec. 2009 | -49.9 | -29.8 | -102.2 | -181.9 | |
| Carrying amount at 1 Jan. 2009 | 72.1 | 42.5 | 44.6 | 10.4 | 169.6 |
| Carrying amount at 31 Dec. 2009 | 73.5 | 46.1 | 55.2 | 10.0 | 184.8 |
| € million | Total 2008 | ||||
| Cost | |||||
| Cos at 1 Jan. 2008 | 163.3 | 78.3 | 124.5 | 13.4 | 379.6 |
| Currency translation differences | -7.6 | -7.2 | -5.3 | -1.3 | -21.4 |
| Additions | 6.4 | 36.8 | 7.4 | 50.6 | |
| Acquisition of subsidiary | 0.0 | 0.0 | |||
| Disposals | -46.7 | -16.7 | -1.5 | -64.9 | |
| Transfers between items | -0.1 | 3.1 | -7.6 | -4.6 | |
| Cost at 31 Dec. 2008 | 115.3 | 71.1 | 142.5 | 10.4 | 339.4 |
| Accumulated amortisation and impairment | |||||
| Accumulated amortisation and impairment at 1 Jan. 2008 | -29.0 | -21.3 | -77.2 | -127.5 | |
| Currency translation differences | 5.9 | 1.3 | 1.6 | 8.8 | |
| Accumulated amortisation of disposals and transfers | 16.9 | 6.0 | 22.9 | ||
| Amortisation for the period | -28.3 | -28.3 | |||
| Impairments | -37.0 | -8.6 | -45.6 | ||
| Accumulated amortisation and impairment at 31 Dec. 2008 | -43.3 | -28.6 | -97.9 | -169.7 | |
| Carrying amount at 1 Jan. 2008 | 134.3 | 57.0 | 47.3 | 13.4 | 252.2 |
| Carrying amount at 31 Dec. 2008 | 72.1 | 42.5 | 44.6 | 10.4 | 169.6 |
| Goodwill and intangible rights by segment | ||||||
| Intangible assets * |
Goodwill | Discount rate (WACC) ** |
Intangible assets * |
Goodwill | Discount rate (WACC) ** |
|
| € million | 2009 | 2009 | 2009 | 2008 | 2008 | 2008 |
| Building and home improvement trade | ||||||
| Byggmakker, Norway | 28.3 | 8.0 % | 24.7 | 8.0 % | ||
| Rautakesko, Estonia | 1.1 | 13.0 % | 1.1 | 11.0 % | ||
| Senukai, Lithuania | 17.2 | 14.0 % | 17.2 | 11.5 % | ||
| Stroymaster, Russia | 14.2 | 15.0 % | 14.1 | 12.0 % | ||
| Real estate companies | 7.1 | 5.7 | ||||
| Home and speciality goods trade | ||||||
| Anttila, Finland | 23.4 | 7.0 % | 23.4 | 7.0 % | ||
| Indoor, Finland | 17.8 | 4.1 | 7.0 % | 17.8 | 4.1 | 7.0 % |
| Car and machinery trade | 4.4 | 8.0 % | 4.2 | 8.0 % | ||
| Others | 2.1 | 2.2 | ||||
| Total | 46.1 | 73.5 | 42.5 | 72.1 | ||
Cash generating units have been identified at a level lower than the reportable segments. The units have been identified by chain/country, and most of them are legal entities.
The useful lives of trademarks (brands) included in intangible assets have been classified as indefinite because it has been estimated that they will affect the generation of cash flows over an indefinite period. This is because no foreseeable limit to the period over which they are expected to generate net cash inflows for the Group can be seen. Trademarks are part of assets purchased in connection with acquisitions.
Intangible assets with indefinite useful lives are tested annually for possible impairment and whenever there is an indication of impairment.
During the 2008 financial period, Byggsenteret, part of the Norwegian Byggmakker group, was sold, and the allocated goodwill was €9.5 million.
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash flow projections based on financial plans approved by the management covering a period of 3 years. The key assumptions used for the plans are total market development and profitability, changes in store site network, product and service selection, pricing and trends in operating costs. Cash flows beyond the period have been extrapolated mainly based on 1.5–4% (1–4%) forecast growth rates, allowing for country-specific differences.
The discount rate used is the WACC, specifed for each segment and country after tax, which is adjusted by tax effects in connection with the test. The WACC formula inputs are risk-free rate of return, market risk premium, industry-specific beta factor, target capital structure, borrowing cost and country risks. Compared with the previous year, discount rates in Russia and the Baltic countries rose as a result of higher country risks and interest rate levels.
For the 2009 accounting period, there were no impairments in goodwill or intangible rights.
For the 2008 accounting period, an impairment charge of €45.6 million was made against Byggmakker Norge's intangible assets. Of this amount €37.0 million was allocated to goodwill and €8.6 million to a trademark. The impairment charge was reported as a non-recurring item. The impairment loss was due to weaker-than-expected profitability development. In addition, it was estimated that revenue expectations concerning Byggmakker had declined. Byggmakker Norge constitutes a separate cash-generating unit and belongs to the building and home improvement trade segment.
The key variables used in impairment testing are the EBITDA rate and the discount rate.
The most sensitive to changes in assumptions are the intangible assets relating to the operations of Byggmakker, Indoor and Rauta-kesko Estonia.
A one percentage point rise in the discount rate would not cause an impairment of any cash generating unit.
For Byggmakker and Rautakesko Estonia, a reduction of residual EBITDA by over 0.8 pp would cause a need for impairment. For Indoor, a reduction of residual EBITDA by over 1.2 pp would cause a need for impairment.
When the other cash generating units are estimated according to the management's assumptions, a foreseeable change in any key variable would not create a situation in which the unit's recoverable amount would be smaller than its carrying amount.