Annual Report 2010 - CDON Group

CDON Group AB
Annual report 2010
Customer relationships 2010 2009
Opening accumulated cost - -
Investments 1,171 -
Reclassifications 11,504 -
Closing accumulated acquisition value 12,675 -
Opening accumulated amortisation - -
Year's amortisation -3,052 -
Reclassifications -5,512 -
Closing accumulated amortisation -8,564 -
Carrying amount 4,111 -
The item refers to identifiable customer relationships from the acquisitions of Gymgrossisten Sweden AB and Lekmer AB.
Amortisation expenses of SEK 3,052 thousand (0) are included in sales & administrative expenses.
Goodwill 2010 2009
Opening accumulated cost 189,865 184,895
Investments 4,764 6,264
Additional acquisition expenses 687 -
Other -3,225 -
Translation differences -3,125 -1,294
Closing accumulated acquisition value 188,966 189,865
Carrying amount 188,966 189,865
Goodwill refers to goodwill that originated from the acquisition of Gymgrossisten Sweden AB, Lekmer AB, NLY Scandinavia AB, and
Linus&Lotta Postorder AB.
Impairment testing for cash-generating units containing goodwill
The following cash-generating units, which coincide with the Group’s reporting segments, recognise significant goodwill values in relation
to the Group’s total recognised goodwill value:
(SEK thousands) 2010 2009
Sports & Health 139,940 139,256
Entertainment 24,969 23,325
Fashion 24,057 27,284
Total 188,966 189,865
Impairment testing
Impairment testing for goodwill for cash-generating units in the segment is based on recoverable value (value in use), calculated using a
discounted cash flow model. The model includes terminal value, market growth rate, and working capital requirements. These cash flow
projections calculated over a five year period are based on actual operating results, forecasts and financial projections, historical trends,
general market conditions, industry trends, and other available information.
Cash flow projections are based on a sustainable growth rate that is individually calculated based on the each unit’s outlook. Individual
assumptions are also made on expenses and capital turnover development. The cash flow is discounted for each unit using an appropriate
discount rate, taking into consideration the cost of capital and risk, and with individual consideration taken only in special circumstances.
The cash flow calculated for each segment after the first five years was based on an annual growth rate of 2.5%. The calculated cash flow
has been calculated at present value at a discount rate of 9.3% before tax.
Sensitivity
The impairment testing performed does not indicate any need to take an impairment loss. Impairment testing generally has a margin such
that any adverse changes in individual parameters reasonably possible would not cause the value in use to fall below the book value.
However, the cash flow projections are uncertain and may also be influenced by factors not in control by the company. Even if the
estimated growth rate applied after the forecasted 5-year period had been 1.5% instead of the management estimate of 2.5%, there
would be no need to recognise an impairment loss for goodwill. Even if the estimated discount rate for tax applied for discounted cash
flows had been 10.3% instead of the management estimate of 9.3%, there would be no need to recognise an impairment loss on goodwill.
71