NOTE 14
| € million | Goodwill | Trademarks | Other intangible assets |
Prepayments | Total 2011 |
| Cost | |||||
| Cost at 1 Jan. 2011 | 151.9 | 78.3 | 170.6 | 2.7 | 403.5 |
| Currency translation differences | 0.3 | 0.2 | 0.0 | 0.5 | |
| Additions | 27.0 | 2.4 | 29.4 | ||
| Disposals | -17.4 | -0.5 | -17.8 | ||
| Transfers between items | 4.5 | -1.1 | 3.3 | ||
| Cost at 31 Dec. 2011 | 152.2 | 78.5 | 184.7 | 3.5 | 419.0 |
| Accumulated depreciation, amortisation and impairment charges |
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| Accumulated depreciation, amortisation and impairment charges at 1 Jan. 2011 |
-88.0 | -30.3 | -105.4 | -223.7 | |
| Currency translation differences | -0.3 | -0.1 | -0.1 | -0.5 | |
| Accumulated depreciation of disposals and transfers | 14.2 | 14.2 | |||
| Depreciation charge for the year | -19.5 | -19.5 | |||
| Impairments | |||||
| Accumulated depreciation, amortisation and impairment charges at 31 Dec. 2011 |
-88.3 | -30.4 | -110.9 | -229.5 | |
| Carrying amount at 1 Jan. 2011 | 63.9 | 48.0 | 65.2 | 2.7 | 179.8 |
| Carrying amount at 31 Dec. 2011 | 63.9 | 48.1 | 73.8 | 3.5 | 189.4 |
Other intangible assets include other long-term costs, of which €32.5 million (€43.7 million) is generated by software and licences. |
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| € million | Goodwill | Trademarks | Other intangible assets |
Prepayments | Total 2010 |
| Cost | |||||
| Cost at 1 Jan. 2010 | 149.1 | 75.9 | 157.4 | 10.0 | 392.4 |
| Currency translation differences | 2.9 | 2.4 | 3.1 | 8.3 | |
| Additions | 29.3 | -0.4 | 28.9 | ||
| Disposals | -19.9 | -19.9 | |||
| Transfers between items | 0.6 | -6.8 | -6.2 | ||
| Cost at 31 Dec. 2010 | 151.9 | 78.3 | 170.6 | 2.7 | 403.5 |
| Accumulated depreciation, amortisation and impairment charges |
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| Accumulated depreciation, amortisation and impairment charges at 1 Jan. 2010 |
-85.0 | -29.8 | -102.2 | -217.0 | |
| Currency translation differences | -2.9 | -0.5 | -1.2 | -4.7 | |
| Accumulated depreciation of disposals and transfers | -0.1 | 26.2 | 26.1 | ||
| Depreciation charge for the year | -26.1 | -26.1 | |||
| Impairments | -2.0 | -2.0 | |||
| Accumulated depreciation, amortisation and impairment charges at 31 Dec. 2010 |
-88.0 | -30.3 | -105.4 | -223.6 | |
| Carrying amount at 1 Jan. 2010 | 64.1 | 46.1 | 55.2 | 10.0 | 175.4 |
| Carrying amount at 31 Dec. 2010 | 63.9 | 48.0 | 65.2 | 2.7 | 179.8 |
Goodwill and intangible rights by segment |
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| € million | Trademarks* 2011 | Goodwill 2011 |
Discount rate (WACC)** 2011 |
Trademarks* 2010 | Goodwill 2010 |
Discount rate (WACC)** 2010 |
| Building and home improvement trade | ||||||
| Byggmakker, Norway | 30.3 | 7.0% | 30.2 | 7.5% | ||
| Rautakesko, Estonia | 1.1 | 9.0% | 1.1 | 10.4% | ||
| Senukai, Lithuania | 17.2 | 11.5% | 17.2 | 13.0% | ||
| Stroymaster, Russia | 14.1 | 13.0% | 14.1 | 15.0% | ||
| Home and speciality goods trade | ||||||
| Anttila, Finland | 23.4 | 6.0% | 23.4 | 6.0% | ||
| Indoor, Finland | 17.8 | 4.1 | 6.0% | 17.8 | 4.1 | 6.0% |
| Car and machinery trade | ||||||
| Machinery trade | 3.8 | 7.0% | 3.8 | 7.5% | ||
| Others | 0.2 | 0.2 | ||||
| Yhteensä | 48.1 | 63.9 | 48.0 | 63.9 | ||
* Intangible assets with indefinite useful lives |
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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 the period over which they generate cash inflows is indefinite. 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.
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 management, covering a period of 3 years. The key assumptions used for the plans are total market growth and profitability trends, changes in store site network, product and service selection, pricing and movements in operating costs. Cash flows beyond this period have been extrapolated mainly based on 2.0–4.0% (1.5–4.0%) forecast growth rates, allowing for country-specific differences.
The discount rate used is the WACC, specified 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 to the previous year, discount rates fell in the Nordic countries, Russia, the Baltic countries and Finland, as a result of general lowering of interest rates.
In the financial years 2011 and 2010, there were no impairments in goodwill or intangible rights.
The key variables used in impairment testing are the EBITDA rate and the discount rate.
A one percentage point rise in the discount rate would not cause an impairment of any cash generating unit.
The most sensitive to changes in assumptions is goodwill relating to the operations of Rautakesko Estonia. A reduction of the remaining EBITDA by over 0.6 pp would cause an impairment. When other cash generating units are estimated according to 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.