ANNUAL REPORT 2013

FINANCIALS

11. Intangible assets


2013







Trademarks,
Other Construction


patents and
intangible in
EUR million Goodwill domain names Software assets progress Total
Historical cost, Jan 1 109.3 105.3 28.3 58.5 18.6 319.9
Translation differences -1.6 -0.1 -0.9 -1.1 0.0 -3.7
Royal Copenhagen acquisition 27.4 22.1


49.4
Additions
0.2 15.0 0.1 -0.5 14.7
Decreases

-0.1 -0.2 -0.0 -0.3
Transfers between asset groups

4.6 0.3 -4.8 0.0
Historical cost, Dec 31 135.1 127.4 46.9 57.5 13.3 380.1







Accumulated amortization, Jan 1 20.7 2.7 21.3 46.0
90.7
Translation differences -1.3 -0.0 -0.8 -1.1
-3.3
Amortization for the period
0.2 3.2 2.4
5.8
Impairment for the period 3.7

0.5
4.2
Decreases

-0.1 -0.1
-0.2
Transfers between asset groups





Accumulated amortization, Dec 31 23.1 2.8 23.5 47.7
97.2







Net book value, Dec 31 111.9 124.6 23.4 9.8 13.3 282.9







Investment commitments for intangible assets 3.6







2012







Trademarks,
Other Construction


patents and
intangible in
EUR million Goodwill domain names Software assets progress Total
Historical cost, Jan 1 110.1 105.2 20.9 57.2 6.9 300.2
Translation differences -0.8 -0.1 -0.4 0.9 -0.0 -0.3
Additions
0.2 7.0 0.2 12.5 19.9
Decreases

-0.1 -0.6 0.1 -0.6
Transfers between asset groups

0.9 0.8 -0.9 0.8
Historical cost, Dec 31 109.3 105.3 28.3 58.5 18.6 319.9







Accumulated amortization, Jan 1 21.4 2.6 19.7 43.3
86.9
Translation differences -0.8 -0.0 -0.4 0.3
-0.8
Amortization for the period -0.0 0.2 1.9 2.6
4.7
Decreases

-0.0 -0.4
-0.4
Transfers between asset groups

0.2 0.1
0.3
Accumulated amortization, Dec 31 20.7 2.7 21.3 46.0
90.6







Net book value, Dec 31 88.6 102.6 7.0 12.5 18.6 229.3







Investment commitments for intangible assets 3.3







Impairment tests

Goodwill is not amortized but is tested at least annually for impairment.

Goodwill allocated to cash-generating units:

EUR million 2013 2012
Home, excl. Royal Copenhagen 73.7 73.8
Royal Copenhagen 27.4
Garden 10.8 14.8
Total 111.9 88.6







Goodwill from acquisitions is allocated to Cash Generating Units (CGU). The business areas, which form the CGUs, are Home and Garden. Goodwill of Royal Copenhagen has been tested for impairment separately from the Home business area in 2013. From 2014 on, it will be tested as part of Home business area. The recoverable amounts from CGUs are determined with value in use method, using five-year discounted cash flow projections, based on strategic plans approved by management. Cash flows for the period extending over the planning period are calculated using the terminal value method. The discount rate is the weighted average post-tax cost of capital (WACC) as defined by Fiskars. The components of the WACC are risk-free rate, market risk premium, company-specific risk premium, industry specific equity beta, cost of debt and debt to equity ratio.


An impairment of goodwill of EUR 3.7 million was made in Q3 2013 due to divesting of Fiskars UK Sankey business which was a part of Garden EMEA business area.


On the basis of the impairment calculations made, there has been no need for other impairment of goodwill for any CGU for the period ended December 31, 2012 and 2013.


Since the benefits from trademarks are indefinite, they are not amortized but are tested at least annually for impairment using a relief from royalty method. Cash flows attributable to trademarks are derived by indentifying revenues from sales of products belonging to each trademark. The carrying amounts of trademarks are determined on a discounted cash flow method basis, derived from five-year cash flow projections, based on strategic plans approved by the management. Cash flows for the period extending over the planning period are calculated using the terminal value method. On the basis of the impairment calculations made, there has been no need for impairment of trademarks for the periods ended December 31, 2012 and 2013.


Key parameters applied in impairment testing




2013 2012
% Goodwill* Trademarks** Goodwill* Trademarks**
Increase in net sales on average 1.8 1.8 1.8 1.8
Steady growth rate in projecting terminal value 2.5 3.0 2.5 3.0
Discount rate, pre-tax, average 8.1 9.4 8.2 9.5







* The increases in net sales, used in impairment testings, are on average more moderate than strategic plans for the planning period. The EBIT used in impairment testing is the CGU's actual three previous years average EBIT-% of sales. This is consistently used for all periods in the five year discounted cash flow projections.

** Used one percentage point higher risk premium than in goodwill testing.

Sensitivity analyses

Sensitivity analyses of goodwill have been carried out for the valuation of each CGU by making downside scenarios for key parameters. The management views that no reasonably possible change in any of the key parameters would lead to impairment as the recoverable amounts exceed the carrying amounts considerably.


Sensitivity analyses of trademarks have been carried out for the valuation of each trademark by making downside scenarios for key parameters. The management views that excluding trademark Gingher, no reasonably possible change in any of the key parameters would lead to impairment. The recoverable amount of trademark Gingher currently exceeds its carrying amount of EUR 3.3 million by EUR 0.8 million, and an increase of 1.7 percentage point in pre-tax discount rate would result in the recoverable amount being equal to the carrying amount.