Annual report 2012 - Comrod

More documents

Recommendations

Info

Annual report 2012 42/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesNote 11 - Intangible assetsComrod Communication Group has the following intangible assets:Intangible assets(NOK 1000)CostGoodwillPatentesandlicencesTechnologyCustomerrelationshipsDevelopmentcostsOpening balance 41 981 470 10 714 18 593 36 176 107 935 102 358Additions from purchase of companies 0 0 0 0 0 0 4 436Additions 0 44 0 0 541 585 1 518Translation differences -1 648 -25 -33 -624 -452 -2 782 -3782012Total2011TotalAcquisition cost 31 Dec 40 333 489 10 681 17 969 36 266 105 738 107 935Accumulated amortization andimpairmentOpening balance 20 908 439 4 721 10 153 17 067 53 288 27 288Amortization and impairment for the year 11 802 40 851 1 920 3 897 18 510 26 153Translation differences -1 241 -24 -2 -353 -122 -1 741 -153Accumulated depreciation and impairments 31 469 455 5 571 11 720 20 843 70 056 53 28831 DecNet carrying amount 8 864 35 5 110 6 249 15 423 35 681 54 647Deprectiation rate None 5-50% 12,5-20% 10-50% 12,5-33%Useful life Indefinite 2-17 yrs 5 - 8 yrs 2-10 yrs 3 - 8 yrsDepreciation method None StraightlineStraight-line StraightlineStraightlineAddition for the year of Development cost is related to product developments on the Antenna, Mast and Power Supply products. Thedepreciation of the costs will start once the development of the assets have been finalized and the assets are ready for use.The opening balance on goodwill is related to;Comrod AS’ purchase of Power supply division of Eltek on 1 March 2006. This acquisition also added Technology and Customerrelationships. Comrod France SAS (prior Lerc SAS) in September 2006. This acquisition also added intangible assets relating to customerrelationships.Comrod AS’ purchase of 100% of the shares in the Hungarian company Norworks Kft on 07 May 2008. (renamed to Comrod Hungary Kft)Purchase of 80% of the shares of WIBE Telescopic Mast AB in Sweden (renamed to Comrod Sweden). This acquisition also addedTecnology and Trade Marks (Included into Customer Relationship).In November 2012 Comrod Communication ASA acquired the remaining 20% of the shares in Comrod Sweden.Impairment testingGoodwill is not amortised but is subject to annual impairment testing to determine whether the recoverable amountis lower than the carrying amount.The goodwill amounts of the following cash-generating entities are subject to impairment testing as of December 31;42
Annual report 2012 43/92Strategies and values | Group | Parent company | Corporate governance | ContactAnnual report Financial statement NotesCont. Note 11 - Intangible assetsName (NOK 1000) 2012 2011Power supply 8 500 8 500Comrod France 0 10 802Comrod Sweden 0 1 407Comrod Hungary 364 364Total goodwill 8 864 21 073The recoverable amount is based on value in use for the Group and is estimated by discounting future cash flows. Present value calculations are based on expected future cash flows for the different cash-generating units. Comrod France SAS, Comrod Sweden ABand Comrod Hungary Kft are separate subsidiaries. Power supply is a separate division in the Comrod AS subsidiary.In December 2012 the productionline of Comrod Sweden AB was moved to Comrod France SAS. The opening balance of goodwillin Comrod Sweden AB is included in the impairment test of Comrod France SAS as per year end 2012.Cash flow projections are based on reasonable and supportable assumptions that represent management’s best estimate of futureperformance.The growth rates in the extrapolation period do not exceed the growth rates for the products, industry or country in which the entityoperates.None of the projected cash flows includes cash inflows or outflows expected to arise from future restructurings or from improving orenhancing the asset’s performance. The explicit forecast period cover a period of five years. Cash flow projections after five years areextrapolated using a constant growth rate of 2 -2,25 %.Key assumptions:* Operating margin* Growth rate* Discount rateOperating margins and growth rates are based on average values achieved the last years and managements assumptions for the comingfive years.Discount rates represent the current market assessment of the risks specific to each cash-generating unit, regarding the time value ofmoney and individual risks of the underlying assets which have not been incorporated in the cash flow estimates. The discount ratecalculation is based on the specific circumstances of the Group and its operating segments and derived from its weighted average cost ofcapital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return oninvestment by the Group’s investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service.A discount rate before tax (Power Supply 13.2 % and Comrod France SAS 13.5%) has been applied to the units. The discount rates aremade up of a risk-free interest rate of 2.1% for Power Supply and 1.6 % for Comrod France, a market return of 6.0 % and a beta of 0.9 totake into account specific risk.For Power Supply a variation of +/- 1% in WACC does not materially affect the conclusion.Based on the above test a non-recurring impairment loss of goodwill of 11.8 MNOK related to the purchase of Comrod France andComrod Sweden has been booked in the 4th quarter of 2012. This is due to the continuing weak performance in the Business UnitComrod rance and Comrod Sweden. A change in WACC could have an impact on this conclusion. The difference between the loss ofgoodwill of 11.8 MNOK and the goodwill amount of Comrod France and Comrod Sweden as per 31.12.2011 is due to translation difference.43
Page 2 and 3: Annual report 2012 2/92Strategies a
Page 10 and 11: Annual report 2012 10/92Strategies
Page 14: Annual report 2012 14/92Strategies
Page 41: Annual report 2012 41/92Strategies

Annual report 2012 - Comrod

Create successful ePaper yourself

Delete template?

Save as template?