Note 21 – Intangible assets

Group Parent Company
SEK m 2017 2016 2017 2016
Goodwill
Acquisition values
Opening acquisition values 1 577 1 455 2 053 2 053
Investments
Increase through business acquisitions 37 104
Sales and disposals
Translation differences 3 18
Closing accumulated acquisition values 1 617 1 577 2 053 2 053
Amortization
Opening accumulated amortization -2 053 -1 953
Amortization for the year -100
Sales and disposals
Translation differences
Closing accumulated amortization 0 0 -2 053 -2 053
Closing book value 1 617 1 577 0 0
Group Parent Company
SEK m 2017  2016 2017 2016
Other intangible fixed assets, customer relations
Acquisition values
Opening acquisition values 322 261
Investments
Increase through business acquisitions 20 46
Sales and disposals
Translation differences 6 15
Closing accumulated acquisition values 348 322 0 0
Amortization
Opening accumulated amortization -72 -41
Amortization for the year -34 -29
Sales and disposals
Translation differences -2 -2
Closing accumulated amortization -108 -72 0 0
Closing book value 240 250 0 0
Group Parent Company
SEK m 2017 2016 2017  2016
Trademarks, software and licenses
Acquisition values
Opening acquisition values 52 64 34 53
Investments 15 1 14
Increase through business acquisitions 1 1
Sales and disposals
Reclassifications 2 -14 2 -19
Translation differences 1
Closing accumulated acquisition values 70 52 50 34
Amortization
Opening accumulated amortization -39 -48 -25 -43
Amortization for the year -6 -7 -4 -3
Business acquisitions 0
Sales and disposals
Reclassifications 17 21
Translation differences -1
Closing accumulated amortization -45 -39 -29 -25
Closing book value 25 14 21 9
Group Parent Company
SEK m 2017  2016 2017  2016
Capitalized development expenses
Acquisition values
Opening acquisition values 160 151 130 118
Investments 1 12 1 11
Increase through business acquisitions
Decrease through divestments 0
Sales and disposals -23 -23
Reclassifications -2 19 -2 24
Translation differences 1 1
Closing accumulated acquisition values 160 160 129 130
Amortization
Opening accumulated amortization -120 -113 -103 -96
Amortization for the year -10 -12 -7 -9
Increase through divestment 0
Sales and disposals 23 23
Reclassifications -16 -21
Translation differences -1 -1
Closing accumulated amortization -130 -120 -110 -103
Impairment
Opening accumulated impairment 0 0 0 0
Impairment for the year
Disposals
Translation differences
Closing accumulated impairment 0 0 0 0
Closing book value 30 40 19 27
Intangible assets, total 1 911 1 881 40 36

In 2005, the EU introduced an emission rights system as a method for restricting carbon dioxide emissions. For the period 2013 up to and including 2020, Rexcell Tissue & Airlaid AB has been allocated a total of 166,246 metric tons. The allocation for 2017 is 0 metric tons for Dals Långed and 18,438 metric tons for Skåpafors. The total number of emission rights will diminish each year up to 2020, when Dals Långed will have emission rights corresponding to 0 metric tons per year, and Skåpafors 17,349 metric tons per year.  The production plant in Dals Långed is dormant and, when no production takes place, no emission rights are utilized. The allocation of emission rights by the County Administrative Board will be dormant as from 2017, but can be resumed up to 2020 upon application. In total, 13,308 metric tons were consumed in Skåpafors in 2017, compared with 11,367 metric tons in 2016. Received emission rights are reported as intangible assets recognized at an acquisition value of zero.

Impairment testing for goodwill

Impairment testing is performed for goodwill at the end of each financial year. With the implementation of IFRS, allocation of the Group’s goodwill items has taken place through allocation ratios; see Note 4.2.

In 2017, Sharp Serviettes in New Zealand was acquired with an acquisition goodwill of SEK 37 m. In 2016, Terinex Siam in Thailand was acquired with an acquisition goodwill of SEK 104 m. In 2014, Duni acquired Paper+Design Group, giving rise to an acquisition goodwill of SEK 197 m. During 2013, Duni acquired the assets of Song Seng Associates Pte Ltd, giving rise to an acquisition goodwill of SEK 50 m. For more information, see previous annual reports.

Goodwill is allocated to the Group’s cash-generating units identified per business area as follows:

SEK m 2017 2016
Table Top  1 199 1 199
Consumer  215 209
New Markets  203 169
Total  1 617 1 577

Impairment testing for goodwill is performed annually for and when there are indications of impairment. Recoverable amounts for cash-generating units are determined based on estimated values in use. The calculations are based on estimated future cash flows before tax, based on financial forecasts approved by company management and which cover the current year as well as a five-year period. Cash flows beyond this period are extrapolated using an estimated growth rate. The growth rate does not exceed the long-term growth rate for the industry as a whole.

The table below shows the rate of growth (on average) used in the calculation for each business area, the figures in brackets show what growth rate was used in last year’s calculation.

 

 Growth rate Year 1 Year 2–5 Beyond the forecast period
Table Top 2% (4%) 2% (2%) 1% (1%)
Consumer 2% (0%) 3% (3%) 1% (1%)
New Markets 2% (2%) 3% (3%) 1% (1%)
 Discount rate before tax used per business area
Table Top 8.1% (7.4%)
Consumer 9.3% (8.7%)
New Markets 11.1% (10.4%)

 

Significant assumptions which are used for calculations of values in use are primarily profit margin, growth rate and a nominal discount rate. Which discount rate is used for each business area can be seen in the table above. The discount rate before tax is used in conjunction with present value calculation of estimated future cash flows.

Company management has established the profit margin and growth rate based on previous income and its expectations as regards market growth. The discount rates used are stated before tax and reflect specific risks in the business area. Company management believes that the Group’s operations are stable and there are therefore not any individual significant assumptions that could impact the profit margin. The estimated growth rate is applied in all essential respects to net sales and free cash flow.

Company management believes that reasonably possible changes in the significant assumptions used in the calculations would not have such a major impact as to individually reduce the recoverable amount to a value which is below the carrying amount.