Annual Report 2010 - Frauenthal Holding AG

Consolidated Financial Statements Frauenthal Holding Group 2010
In 2009 goodwill impairment of EUR 59,000 and of EUR 242,000 was recognised in the Styria Group and the Linnemann-
Schnetzer Group, respectively, due to declining orders in the Automotive Components Division. The impairment is entirely
attributable to the Automotive Components Division.
Goodwill in EUR ‚000 31 dec. 2008 Additions Disposals Amortisation 31 dec. 2009
Styria Group 11,606 0 0 -59 11,547
Linnemann-Schnetzer Group 242 0 0 -242 0
Pol-Necks Sp.zo.o. 2,000 0 0 0 2,000
SHT Haustechnik Group 8,307 0 0 0 8,307
Frauenthal group 22,154 0 0 -301 21,854
The impairments recognised in 2009 refl ected the restructuring actions which led to the closure of some cash generating
units, as well as conservative assumptions as to future market developments which made it questionable whether the use
of some non-current assets would continue to generate cash infl ows. Each cash-generating unit relates to one product line.
Goodwill impairment was disclosed under the “Depreciation, amortisation and impairment” income statement item. The
earnings forecasts were reassessed in the light of the changed market situation encountered by the Automotive Components
Division.
The brands and rights to supply customers, licences and software capitalised by the various sub-groups are another important
intangible asset category. The breakdown of these assets is as follows:
Brands and rights to supply customers,
licences and software
31 dec. 2009 Additions Disposals
Reclas sifi
cations
Amortisation 31 dec. 2010
Frauenthal group 17,974 458 0 4 -1,691 16,745
Impairments of EUR 77,000 (2009: EUR 103,000) were recognised in respect of brands and rights to supply customers with
indefi nite useful lives, which make up part of the statement of fi nancial position item shown in the table. These brand rights
relate to internally generated brands that form part of the product range, and which the Group does not currently intend
to change or retire. The rights to supply customers are of unlimited duration and can only be ended by termination of contract.
Impairment is recognised as soon as any of these rights are terminated. The impairment losses are reported under the
“Depreciation, amortisation and impairment” item in the income statement. They relate entirely to the Wholesale Plumbing
Supplies Division. The carrying value of these brands and rights at the end of the reporting period was EUR 14,201,000 (31
Dec. 2009: 14,278,000).
In 2009 the breakdown of “Brands and rights to supply customers, licences and software” was as follows:
Brands and rights to supply customers,
licences and software
31 dec. 2008
Additions Disposals
Reclas sifi
cations
Amortisation 31 dec. 2009
Frauenthal group 18,667 886 -46 269 -1,802 17,974
The brands and rights to supply customers were measured according to their value in use. The carrying value was originally
calculated using the discounted cash fl ow (DCF) method. The main infl uence on the cash fl ow forecast used to value the
brand and customer supply rights is the revenue generated by the product or customer segment projected by the annual
budget. The discount rate is 8.67 % (2009: 8.67 %), and the forecasting period is usually fi ve years (2009: fi ve years). Due
to the long contractual terms, an exception is made in the case of the rights to supply customers, and a period of 20 years
(2009: 20 years) is applied. The parameters applied are based on experience and are reviewed on an annual basis.
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