9. Intangible assets



Goodwill
Intangible rights¹
Other intangible assets²
Total
EUR million 2012 2011
2012 2011
2012 2011
2012 2011
Historical cost at 1 Jan 13.5 13.5
138.2 124.3
53.8 51.8
205.5 189.6
Additions


5.3 17.1
1.3 2.0
6.6 19.1
Disposals


-4.8 -3.1
-0.0 -0.0
-4.8 -3.1
Transfers between statement of financial position items


-0.0


-0.0
Translation differences


0.0 -0.0
0.0 0.0
0,0 -0.0
Historical cost at 31 Dec 13.5 13.5
138.7 138.2
55.1 53.8
207.3 205.5












Accumulated amortisation and impairments at 1 Jan


-71.7 -59.1
-49.0 -47.6
-120.7 -106.6
Accumulated amortisation on disposals


4.8 3.1
0.0
4.8 3.1
Amortisation for the period


-10.0 -9.5
-1.7 -1.5
-11.7 -10.9
Impairment


-3.8 -6.3



-3.8 -6.3
Translation differences


-0.0 0.0



0.0
Accumulated amortisation and impairment at 31 Dec


-80.7 -71.7
-50.7 -49.0
-131.4 -120.7












Carrying amount at 1 Jan 13.5 13.5
66.6 65.2
4.8 4.2
84.8 82.9
Carrying amount at 31 Dec 13.5 13.5
58.0 66.6
4.4 4.8
75.8 84.8












¹ Intangible rights comprise mainly product rights and marketing authorisations with carrying amount EUR 39.3 (2011: 47.8) million, and also software, trademarks, patents and paid-up policies.


² Other intangible assets include development costs for software paid to external parties and entry fees.


Besides goodwill, the Group has no other intangible assets with indefinite useful life. The Group has no internally produced intangible assets. All intangible assets have been obtained through acquisition.

Impairment testing of goodwill, property, plant and equipment and intangible assets


Goodwill


The goodwill of EUR 13.5 million originated from the acquisition of Farmos-Group Ltd. in 1990. In impairment testing, the goodwill is allocated to the cash generating units that form the Pharmaceuticals operating segment.


In the impairment tests, the recoverable amount is determined on the basis of the value-in-use calculation. The cash flow forecasts are based on the detailed five-year plans adopted by the management. The cash flows beyond the forecast period adopted by the management have been calculated cautiously assuming zero per cent growth. The management's forecasts are based on the growth of global pharmaceutical markets, market shares in sales of pharmaceuticals, and the trends expected in pharmaceutical markets and sales.


The discount rate used is the weighted average cost of capital (WACC), in which the special risks related to the cash generating unit have been taken into account. The discount rate is defined before taxes. The discount rate for the period is 4.7% (2011: 8.9%).


Based on impairment testing, there was no need to recognise any impairment of goodwill during the period.


A change in any of the main variables used would, reasonably judged, not lead to a situation in which the recoverable amounts of a group of cash-generating units were lower than their carrying amount.


Intangible assets not yet available for use


Intangible assets not yet available for use are tested for impairment annually. The recoverable amount is based on the value in use. Cash flow forecasts adopted by the management cover a 5–15 year period from taking asset into use. The use of forecasts for periods of over five years is based on the estimated useful life of products. Beyond the five-year period, the cash flow growth rate does not exceed the average growth rates of markets for the Company's products and the pharmaceutical industry. The discount rates for the period varied from 10% to 12%, and they are defined separately for each unit taking into account its risks.


The carrying amount of intangible assets not yet available for use was EUR 16.4 (2011: 19.1) million.


Impairment charges recognised in the period


During the period impairment charges totalling EUR 3.8 (2011: 6.3) million were recognised on the intangible rights of the Pharmaceuticals business. Intangible rights not yet available for use accounted for EUR 2.1 (2011: 3.7) million of the impairments. The most significant impairment charges relate to acquired rights to products the development of which has ceased, and to products that are already in markets, but for which the forecast recoverable cash flows were less than the carrying amount. The full carrying amount of rights to products the development of which has ceased has been recognised as an expense.


There were no other indications that the value of intangible assets might have been impaired during the period.


The official financial statement documents including notes to the parent company financial statements and unrounded figures are available in Finnish at www.orion.fi.