Notes to the Consolidated Financial Statements

In 2016, the orig­i­nal cash gen­er­at­ing units (CGU) were com­bined into a sin­gle CGU and only a sin­gle good­will item is now tested for im­pair­ment. For fur­ther de­tails see Note 1. The fol­low­ing table lists the car­ry­ing amounts and pa­ra­me­ters of the items that are ma­te­r­ial for the Group.

The dis­counted cash­flow method is ap­plied to test the good­will for im­pair­ment. The Group bases the im­pair­ment test on the cur­rent busi­ness plan (for a four-year pe­riod) and its as­sump­tions re­gard­ing price, mar­ket and mar­ket share de­vel­op­ments. Growth rates after the end of the plan­ning pe­riod are based on Eu­ro­con­struct fore­casts and the Group's own as­sump­tions based on past ex­pe­ri­ence re­gard­ing price and mar­ket share trends. A dis­count rate based on the Group's weighted cost of cap­i­tal is used to cal­cu­late the dis­counted fu­ture cash­flows. Man­age­ment re­gards the dis­count rate, growth rates and de­vel­op­ment of the op­er­at­ing mar­gin as the key fac­tors in cal­cu­lat­ing the re­cov­er­able amount.

Trade­marks are tested using the re­lief from roy­alty method. The item “Var­i­ous other trade­marks” mainly in­cludes the trade­marks Ifö, Kera­mag, Kolo, IDO, Twyford, Allia and Sphinx. Im­pair­ment is tested against the Group’s es­ti­mated net sales at­trib­ut­able to the trade­marks ac­cord­ing to the cur­rent busi­ness plan (four-year pe­riod). Growth rates after the end of the plan­ning pe­riod are based on Eu­ro­con­struct fore­casts and the Group's own as­sump­tions based on past ex­pe­ri­ence re­gard­ing price and mar­ket share trends. Dis­counted fu­ture cash­flows are cal­cu­lated using dis­count rates based on the Group’s weighted cost of cap­i­tal tak­ing into ac­count coun­try- and cur­rency-spe­cific risks.

The sen­si­tiv­ity analy­sis shows that changes to the ma­te­r­ial as­sump­tions (dis­count rate +0.5% and growth rate -1.0%) that are pos­si­ble and re­al­is­tic from today's per­spec­tive would not re­sult in any need to im­pair the good­will or the trade­marks.