annual Report 2009 - STRATEC Biomedical AG

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The recoverable amount of the unit has been calculated on the basis of its use value. Use values have been based on the future cash flows of the cash generating units determined using the discounted cash flow method. The cash flow forecasts are based on a detailed budget period of three years. They are calculated on a pre-tax basis at a discount rate of 10.04 %. Cash flows beyond the detailed budget period are presented as perpetuity based on a free cash flow growth rate of 1.5 %. This growth rate reflects the estimates made by the Board of Management and local management by reference to market studies. The results of the impairment test were as follows: in v thousand 2009 Goodwill carrying amount 1,488 CGU carrying amount, including goodwill 3,845 Recoverable amount 5,396 Impairment loss 0 Other intangible assets Intangible assets acquired in return for payment have been measured at cost, less scheduled straight-line amortization. The useful life of intangible assets is limited and generally amounts to three years, and to three to eight years in the case of the intangible assets acquired with Sanguin International Ltd. The useful lives for the intangible assets of technology and customer relationships identified upon the acquisition of Invitek amount to around eight and around five years respectively. For current development projects, a useful life of around nine years starting from the expected date of completion has been assumed. Research and development expenses have been recognized as expenses in the period in which they were incurred. Pursuant to IAS 38, development expenses cumulatively meeting the following criteria have been exempted from such treatment: • The product or process can be clearly and unambiguously delineated and the corresponding costs can be clearly allocated and reliably determined, • the technical feasibility has been proven, • the product will be either marketed or put to internal use, • the assets will generate future economic benefits (for example, there is a market for the product or, in the case of internal use, the benefit of the product for the company can be demonstrated), • sufficient technical, financial and other resources are available to complete the project. As in the previous year, internally motivated development activities as defined in IAS 38 were not capitalized in the 2009 financial year, as the above recognition requirements were not cumulatively met. Customer-specific development services performed by STRATEC AG and individual subsidiaries account for a major share of the STRATEC Group’s development activities. These have been capitalized at cost as unfinished services within inventories. Amortization of intangible assets has been recognized in the statement of comprehensive income under “Amortization of intangible assets and depreciation of property, plant and equipment”. 64 stratec Annual Report 2009
Report of the board of Management Report of the supervisory board THE share Corporate Governance Group Management report Consolidated financial statements Service Property, plant and equipment Property, plant and equipment have been measured at cost and, where depreciable, including scheduled depreciation. Depreciation is recognized on a scheduled basis in line with the decline in utility of the assets. The straight-line method is applied in most cases. Manufacturing costs of assets generated internally include all direct costs and a commensurate share of productionrelated material and production overheads, including depreciation. Borrowing costs must generally be recognized for acquisition and manufacturing processes beginning after January 1, 2009 to the extent that these are incurred in the period up to completion of the relevant asset. The borrowing costs eligible for capitalization in the 2009 financial year were not material, as a result of which capitalization has been foregone. Due to materiality considerations, assets with costs of acquisition of between u 150.00 and u 1,000.00 are recognized as a collective item and uniformly subject to straight-line depreciation over five years. Investment grants have been deducted upon capitalization of the relevant assets. Non-repayable grants received as project subsidies for development expenses already incurred have been carried in the income statement and recognized under other operating income (gross statement). Leases Virtually all of the STRATEC Group’s leasing arrangements are operating leases. A leasing arrangement is classified as an operating lease in cases where all major risks and rewards relating to ownership remain with the lessor. The corresponding leasing payments are recognized in the statement of comprehensive income as expenses over the term of the leasing arrangement (under “Other operating expenses”). Impairment Any impairment in the value of intangible assets and property, plant and equipment is accounted for by recognizing impairment losses as of the balance sheet date. Pursuant to IAS 36, impairment exists when the recoverable amount of the respective asset is lower than its carrying amount. The assets are reviewed using qualitative tests at each balance sheet date to assess whether any events or changes in circumstances indicate that the carrying amount of the respective assets may no longer be recoverable. Goodwill, current development projects and assets with indefinite useful lives are assessed for impairment on an annual basis using quantitative tests. Financial assets Financial assets include interests in associates, investments, receivables, securities, and cash and cash equivalents. Pursuant to IAS 39, financial assets have been recognized and measured within one of the following categories: • Financial assets measured at fair value through profit or loss consist of financial assets held for trading. These relate to publicly listed shares. • Loans and receivables are non-derivative financial assets not listed on active markets. They are measured at cost using the effective interest rate method. Trade receivables, future receivables from construction contracts, the financial receivables included under other financial assets, and cash and cash equivalents are allocated to this measurement category. • Financial investments held to maturity are non-derivative financial assets with fixed or determinable payments and a fixed maturity date until which they are held. These investments are measured at amortized cost using the effective interest rate method. To date, no assets have been classified as financial investments held to maturity. • Available for sale financial assets include those non-derivative financial assets not allocated to any of the previous categories. Equity securities are allocated to this category. stratec Annual Report 2009 65
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