Annual Report 2010 - CDON Group

72 CDON Group AB
Annual report 2010
CDON Group AB
Annual report 2010
Impairment testing for cash-generating units containing trademarks
The following cash-generating units, which coincide with the Group’s reporting segments, recognise significant values for trademarks in
relation to the Group’s total recognised value for trademarks:
(SEK thousands) 2010 2009
Sports & Health 48,896 38,873
Entertainment 5,138 -
Total 54,034 38,873
Impairment testing
Impairment testing for trademarks 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 trademarks. 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
trademarks.
Note 10 Property, plant, and equipment
Group
Equipment 2010 2009
Opening accumulated cost 5,856 4,082
Investments 3,201 1,662
Investments through business combinations 152 -
Reclassifications - 125
Divestments -23 -
Translation differences - -13
Closing accumulated acquisition value 9,186 5,856
Opening accumulated depreciation -3,903 -2,703
Year's depreciation -1,581 -1,006
Depreciation through acquisition -61 -
Impairment for the year - -106
Reclassifications - -96
Divestments 19 -
Translation differences - 8
Closing accumulated depreciation -5,526 -3,903
Carrying amount 3,660 1,953
Depreciation expenses of SEK 1,581 thousand (1,006) are included in sales & administrative expenses. Impairment expenses of SEK 0
thousand (106) are included in sales & administrative expenses.