Notes to the Consolidated Financial Statement

 

15. Intangible assets  

 

€ 000

Goodwill

Development costs

Other intangible assets


Total 2010


Total 2009

Acquisition cost 1 January

89,382

2,487

23,550

115,419

115,488

Capitalised development costs

-

-

-

  -

-

Additions

-

-

244

  244

197

Disposals

-

-

-145

  -145

-

Acquisition of subsidiary

-

-

-

-

-267

Acquisition cost 31 December

89,382

2,487

23,649

115,518

115,419

 

 

 

 

 

 

Accumulated depreciation and amortisation 1 January

-23,837

-2,487

-12,517

-38,841

-12,444

Depreciation

-

-

-2,162

-2,162

-2,560

Amortisation

-

-

-

-

-23,837

Accumulated depreciation and amortisation 31 December

-23,837

-2,487

-14,679

-41,003

-38,841

 

 

 

 

 

 

Book value 1 January

65,545

0

11,003

76,578

103,044

Book value 31 December

65,545

0

8,970

74,514

76,578

           

The Group carries out annual impairment tests for goodwill and intangible assets with an indefinite useful life, in accordance with the IAS 36 standard.

The distribution of goodwill and values subject to testing between divisions on the balance sheet date was as follows:

€ 000

Specified
intangible assets

Unallocated
goodwill

Other items

Total value
subject to testing

Enterprise Solutions

3,515

43,244

4,552

51,311

Mobile Solutions

4,941

22,301

4,411

31,654

Total

8,456

65,545

8,963

82,964

 

The goodwill in the Enterprise Solutions segment was mainly associated to the acquisition of Sentera Plc and Digia Sweden Ab and Samstock Ltd. The goodwill in the Mobile Solutions division was mainly associated with the combination of Digia Inc. and SysOpen Plc, as well as the acquisition of Yomi Software Ltd and Sunrise Resources Ltd. Allocated goodwill is presented in the intangible asset group ‘Other intangible assets' and amortised over a period of 5–10 years.


The other items include the estimated working capital and fixed assets of the divisions.

Impairment testing

 

The Group has defined its business segments as cash-generating units (CGU). Goodwill impairment is tested by comparing the CGU fair value to the book value. The use values are based on the continuous use of an asset as well as on the financial plans and estimates of the CGU's future development, approved by the relevant CGU management.

Present values for the Enterprise Solutions segment were calculated for the forecast period based on the following assumptions: net sales for 2011 according to the latest forecast, after which annual growth of 3 per cent; operating profit for 2011 in accordance with the latest forecast and after that 10 per cent, with discount rates of 11.2 per cent. Cash flows following the forecast period are estimated by extrapolating the cash flows, using the assumptions given above.

Present values for the Mobile Solutions segment were calculated for the forecast period based on the following assumptions: net sales for 2011 according to the latest forecast, after which annual growth of 0 per cent; operating profit for 2011 in accordance with the latest forecast and after that 8 per cent, with discount rates of 14.7 per cent. Cash flows following the forecast period are estimated by extrapolating the cash flows, using the assumptions given above.

Net sales growth is reckoned to constitute the most critical factor in calculating the present values of cash flows. The amount of goodwill for Enterprise Solutions requires average annual growth of two per cent for business operations and five per cent profitability. For Mobile Solutions, the goodwill requires business to be maintained at the current level, with seven per cent profitability.

On the balance sheet date, the Enterprise Solutions segment's use value was EUR 70.6 million higher than the segment's book value. The Mobile Solutions segment's use value was EUR 7.4 million higher than the book value.