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Note 9 Intangible assets


In € millions

Goodwill

Brands

Customer lists

Other intangibles

Total

 

 

 

 

 

 

1

Including amortization of National Starch.

2

Mainly National Starch.

Balance at January 1, 2009

 

 

 

 

 

Acquisition cost

4,822

2,247

1,253

345

8,667

Cost of internally developed intangibles

32

32

Accumulated amortization/impairment

(1,258)

(100)

(139)

(30)

(1,527)

Carrying value

3,564

2,147

1,114

347

7,172

 

 

 

 

 

 

Movements in 2009

 

 

 

 

 

Acquisitions through business combinations

33

4

47

10

94

Other investments – including internally developed intangibles

1

41

42

Amortization1

(16)

(106)

(37)

(159)

Impairments1

(9)

(9)

Changes in exchange rates

106

91

28

23

248

Total changes

139

79

(30)

28

216

 

 

 

 

 

 

Balance at December 31, 2009

 

 

 

 

 

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 at year-end 2009

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

Divestments2

(84)

(60)

(313)

(107)

(564)

Amortization1

(20)

(102)

(39)

(161)

Changes in exchange rates

193

173

109

38

513

Total changes

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

Amortization and impairment charges per cost category

 

 

 

 

 

 

 

In € millions

Amortization

Impairment

Total

 

 

 

 

 

 

 

 

2009

2010

2009

2010

2009

2010

Cost of sales

(6)

(7)

(6)

(7)

Selling expenses

(99)

(106)

(99)

(106)

General and administrative expenses

(24)

(36)

(24)

(36)

Research and development expenses

(6)

(6)

(6)

(6)

Other operating income/(expenses)

(8)

(8)

Discontinued operations

(24)

(6)

(1)

(25)

(6)

Total

(159)

(161)

(9)

(168)

(161)

Other intangibles include licenses, know-how, intellectual property rights and development cost. Both at year-end 2010 and 2009, 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

 

 

 

 

 

 

 

In € millions

Goodwill

Brands with indefinite
useful lives1

Other intangibles with finite useful lives

 

 

 

 

 

 

 

 

2009

2010

2009

2010

2009

2010

1

Mainly Dulux. Due to its global presence, high recognition and strategic nature, we have determined that the useful life of the Dulux brand is indefinite.

Decorative Paints

2,515

2,556

1,760

1,874

798

783

Performance Coatings

529

621

213

295

Specialty Chemicals

581

642

26

464

511

Discontinued operations

78

56

394

Total

3,703

3,819

1,816

1,900

1,869

1,589

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. In 2010, no impairment was recorded for any business unit (2009: no impairment).

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.

Revenue growth and margin development projections are extrapolated beyond this five-year explicit forecast period for another five years with reduced growth rates.

Average revenue growth rates per forecast period per Business Area

 

 

 

in %/year

2011 – 2015

2016 – 2020

 

 

 

Decorative Paints

7.7

5.1

Performance Coatings

5.8

3.6

Specialty Chemicals

3.6

2.7

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 8.5 percent to 20.4 percent, with an average of 10.5 percent.

The outcome of a sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates or higher discount rates respectively) did not result in a different outcome of the impairment test for the vast majority of our businesses.

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