|
In € millions |
Goodwill |
Brands |
Customer lists |
Other intangibles |
Total | |||||
|
|
|
|
|
|
| |||||
|
Balance at January 1, 2010 |
|
|
|
|
| |||||
|
Acquisition cost |
5,063 |
2,338 |
1,334 |
473 |
9,208 | |||||
|
Cost of internally developed intangibles |
– |
– |
– |
39 |
39 | |||||
|
Accumulated amortization/impairment |
(1,360) |
(112) |
(250) |
(137) |
(1,859) | |||||
|
Carrying value |
3,703 |
2,226 |
1,084 |
375 |
7,388 | |||||
|
|
|
|
|
|
| |||||
|
Movements in 2010 |
|
|
|
|
| |||||
|
Acquisitions through business combinations |
7 |
3 |
40 |
16 |
66 | |||||
|
Other investments – including internally developed intangibles |
– |
1 |
1 |
64 |
66 | |||||
|
Divestments |
(84) |
(60) |
(313) |
(107) |
(564) | |||||
|
Amortization |
– |
(20) |
(102) |
(39) |
(161) | |||||
|
Changes in exchange rates |
193 |
173 |
109 |
38 |
513 | |||||
|
Total movements |
116 |
97 |
(265) |
(28) |
(80) | |||||
|
|
|
|
|
|
| |||||
|
Balance at December 31, 2010 |
|
|
|
|
| |||||
|
Acquisition cost |
4,834 |
2,465 |
1,168 |
452 |
8,919 | |||||
|
Cost of internally developed intangibles |
– |
– |
– |
46 |
46 | |||||
|
Accumulated amortization/impairment |
(1,015) |
(142) |
(349) |
(151) |
(1,657) | |||||
|
Carrying value at year-end 2010 |
3,819 |
2,323 |
819 |
347 |
7,308 | |||||
|
|
|
|
|
|
| |||||
|
Movements in 2011 |
|
|
|
|
| |||||
|
Acquisitions through business combinations |
49 |
10 |
74 |
15 |
148 | |||||
|
Other investments – including internally developed intangibles |
1 |
– |
– |
54 |
55 | |||||
|
Amortization |
– |
(18) |
(107) |
(45) |
(170) | |||||
|
Changes in exchange rates |
(4) |
39 |
7 |
9 |
51 | |||||
|
Total movements |
46 |
31 |
(26) |
33 |
84 | |||||
|
|
|
|
|
|
| |||||
|
Balance at December 31, 2011 |
|
|
|
|
| |||||
|
Acquisition cost |
4,890 |
2,514 |
1,256 |
431 |
9,091 | |||||
|
Cost of internally developed intangibles |
– |
– |
– |
141 |
141 | |||||
|
Accumulated amortization/impairment |
(1,025) |
(160) |
(463) |
(192) |
(1,840) | |||||
|
Carrying value at year-end 2011 |
3,865 |
2,354 |
793 |
380 |
7,392 |
|
Amortization charges per cost category | ||||
|
|
|
| ||
|
|
Amortization | |||
|
In € millions |
2010 |
2011 | ||
|
Cost of sales |
(7) |
(9) | ||
|
Selling expenses |
(106) |
(125) | ||
|
General and administrative expenses |
(36) |
(30) | ||
|
Research and development expenses |
(6) |
(6) | ||
|
Discontinued operations |
(6) |
– | ||
|
Total |
(161) |
(170) | ||
Dulux is the major brand with an indefinite useful life, due to its global presence, high recognition and strategic nature. Other intangibles include licenses, know-how, intellectual property rights and development cost. Both at year-end 2011 and 2010, there were no purchase commitments for individual intangible assets. No intangible assets were registered as security for bank loans.
|
Goodwill and other intangibles per segment | ||||||||||||
|
|
|
|
|
|
|
| ||||||
|
|
Goodwill |
Brands with indefinite |
Other intangibles with finite useful lives | |||||||||
|
In € millions |
2010 |
2011 |
2010 |
2011 |
2010 |
2011 | ||||||
|
Decorative Paints |
2,556 |
2,532 |
1,874 |
1,904 |
783 |
751 | ||||||
|
Performance Coatings |
621 |
678 |
– |
– |
295 |
354 | ||||||
|
Specialty Chemicals |
642 |
655 |
26 |
25 |
511 |
493 | ||||||
|
Total |
3,819 |
3,865 |
1,900 |
1,929 |
1,589 |
1,598 | ||||||
Impairment
Goodwill and other intangibles with indefinite useful lives are tested for impairment per business unit (one level below segment level) in the fourth quarter or whenever an impairment trigger exists. No impairment was recorded for any business unit in 2010 and 2011. The impairment test is based on cash flow projections of the five-year plan. The key assumptions used in the projections are:
- Revenue growth: based on actual experience, an analysis of market growth and the expected development of market share.
- Margin development: based on actual experience and management’s long-term projections.
|
Average revenue growth rates per forecast period | ||||
|
|
|
| ||
|
In % per year |
2012-2016 |
2017-2021 | ||
|
Decorative Paints |
9.0 |
5.1 | ||
|
Performance Coatings |
5.3 |
3.5 | ||
|
Specialty Chemicals |
3.8 |
2.5 | ||
For virtually all business units, a terminal value was calculated using a long-term average market growth rate that did not exceed 2 percent. The estimated pre-tax cash flows are discounted to their present value using a pre-tax weighted average cost of capital. The discount rates are determined for each business unit and range from 8.4 percent to 19.3 percent, with a weighted average of 9.7 percent.
Reducing growth assumptions by 50 percent maintains comfortable headroom in almost all businesses, except for Deco North America. This business would in the situation that growth would be 50 percent lower or the discount rate would be 1 percentage point higher result in a recoverable amount around €150 to €200 million below the carrying amount. Under IFRS, restructurings not yet enacted are not taken into account in the impairment test. However, we have announced restructuring activities in Deco North America in January 2012 that would have created sufficient headroom if enacted at the date of the impairment test.
