Note 1 - Beerenberg

Intangible assets and Goodwill
The Beerenberg Corp. AS Group has recorded goodwill to
the amount of 187,788. This goodwill is primarily allocated
to the employees, corporate culture, know-how and synergies
that can be realised in connection with the acquisition
of and subsequent merger with Bjørge Norcoat AS. Stable operative
management is achieved through the active ownership
of key personnel in the acquired company. This will help
generate positive cash flows in the business areas acquired
by Beerenberg Corp. AS in March 2007. The company has
a good order portfolio and is developing technology that
will help the company develop vertically and horizontally
throughout the value chain, including by developing the
Ekofisk contract and increasing the volume of technologybased
services. Intangible assets are measured on the basis
that the asset will give future economic benefits, that the acquisition
cost is identifiable, and that it has a long useful life.
By exploiting existing synergies, the company will be able
to make use of the market opportunities they offer through
improved access to expert personnel.
On that basis and on the basis of estimated future revenues,
budgets, strategy documents etc. we can justify that acquired
goodwill will have a value in excess of the book value
based on budgets and strategy plans for the cash-generating
unit to which the goodwill has been allocated.
In accordance with IAS 36 it has in 2012 been performed test
for impairment. According to this standard the company
shall estimate recoverable amount, and compare this to
book values including Goodwill. The standards best definition
of recoverable amount is a binding agreement of sale
less deduction of transaction costs.
The Group has a book value of Goodwill distributed between
the two Cash-generating Units:
CGU Bergen/North West CGU - MNOK 0
CGU Stavanger/North Sea CGU - MNOK 187,8
The last test for impairment did not identify indications of
impairment. There are no events during the year resulting in
significant changes in the assumptions used in the prior period
test of recoverable amount. Previous period’s test of the
recoverable amount present a value that was significantly
higher than the book value, both overall and isolated for the
two CGU’s. The recoverable amount was in the prior period
test distributed approximately equal between the Group’s
two CGU’s.
There are no events in the period since the last impairment
test that makes the ratio change between the CGU Bergen
and Stavanger CGU in terms of expected future income.
Based on this, the Company has conducted an impairment
test on the basis of the transaction made ​by the shareholders
of the parent company Beerenberg Holding AS who have
entered into an agreement to sell their shares to Segulah
IV LP. The agreement between the parties is confidential,
but the valuation basis for the transaction exceeds the book
value of assets and liabilities of the Group, which underpins
that the fair value of the company is significantly higher than
the book value of the company, including goodwill.
The carrying value of intangible asset related to Prototype
GT is in-house developed cutting technology primarily designed
for the Decomissioning market in the Gulf of Mexico.
Due to delays in the start up of the project, the budgeted
revenue was not reached in 2012. Entering into 2013, a cooperation
agreement with a larger player in the business has
been signed, which leaves the Group with expectations to realize
the potential in this business area. However, since the
budget was not reached in 2012, an indicator of possible need
for impairment was identified. In connection with preparing
the annual accounts, a test for impairment was performed.
The conclusion of the test for impairment was that expected
cashflow justifies the book value of the intangbible asset
and related equipment. Budget and prognosis approved by
managment for the next 5 years was the basis for this test.
In this period expected EBIT-margin for this business area
ranges between -8 % in 2013 to approximately 14 %. A terminal
growth rate of 2,5 % and a required rate of return of 11,8
% is applied. The required rate of return is built up using the
WACC method (weighted average cost of capital). Applied assumptions
are: risk-free rate of 2 %, the company’s borrowing
margin above the risk free interest rate of 4 %, debt ratio
of apprx. 87 %, equity market premium of 5.0 %, an equity
beta of 1.15 and alpha-premium of 15,5 %, and a tax rate of 28
%. The sensitivity for the impairment test for 2012 are, if the
operating profit in the business area in coming years will be
reduced by 45 % compared to what is assumed in the budget
/ forecast, or if the required rate of return (currently 11,8 %)
is increased to more than 18 %, the Group would have to assess
impairment of part of this investment.
Beerenberg CORP. AS Group group accounts 2012
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