No power train without Miba technology

C. Accounting Principles and Valuation Rules
The financial statements of all consolidated companies were prepared in accordance with
standard reporting and valuation principles. The statements of the companies that have
been consolidated according to the equity method were adjusted to the Group’s standard
valuation guidelines in case of material entries.
1. Non-current assets
Intangible assets are valued in accordance with IAS 38 at cost minus scheduled straightline
amortization (useful life of three to 15 years). According to IAS 38.54, research expenses
are not capitalized. Company development costs do not meet all criteria required
by IAS 38.57 and are therefore not capitalized either. During the 2009-2010 business year,
research and development costs of EUR 18.7 million (previous year: EUR 19.1 million)
were charged as expenses.
For goodwill, an impairment test is carried out as defined in IAS 36. This is done at least
once a year and whenever internal or external indicators suggest amortization.
In order to determine whether a depreciation based on a decrease in value is required, any
cash-generating units (CGU) that will profit from the anticipated synergy potential of the
company merger are allocated to goodwill. In the Miba AG Group, the legally independent
company units each form a CGU.
If the carrying amount exceeds the utility value as determined using the discounted
cash flow calculation (DCF), based on future financial planning forecast by the Board of
Management, a corresponding depreciation is taken. Later reversal of an impairment loss
is not permitted.
The discount interest rate used in the DCF calculation corresponds to the interest rate that
reflects the current market assessments of the interest rate effect as well as the specific
risks to which the assets are subjected. For the 2009-2010 business year, a discount rate
of 7.5 percent was used (previous year: 8.0 percent).
Based on the impairment tests performed during the business year, unscheduled goodwill
impairment amounting to TEUR 1,472 (previous year: TEUR 0) was recorded. All impairment
pertains to the Friction segment.
85