Annual Report - Sonova Holding AG

1,000 CHF
Cost
Balance April 1
Change in accounting principles (IFRS 3)
Changes through business combinations
Additions
Disposals
Exchange differences
Balance March 31
Accumulated amortization
Balance April 1
Change in accounting principles (IFRS 3)
Changes through business combinations
Additions
Disposals
Exchange differences
Balance March 31
Net book value
Balance April 1
Balance March 31
70 Consolidated Financial Statements
Goodwill
247,791
(117,189)
573
131,175
117,296
(117,296)
130,495
131,175
Software
15,673
3,472
(1,711)
(181)
17,253
9,130
3,520
(1,711)
(309)
10,630
6,543
6,623
Intangibles
relating to
acquisitions
1,224
1,224
33
33
1,191
Other
intangibles
2,360
35
15
2,410
2,228
26
4
2,258
132
152
Total
intangible
assets
31.3.2005
265,824
(117,189)
1,224
3,507
(1,711)
407
152,062
128,654
(117,296)
33
3,546
(1,711)
(305)
12,921
137,170
139,141
No internally generated intangible assets have been capitalized during financial years 2005/06 and 2004/05. Goodwill has an indefinite
life. Other intangibles and software have finite lives.
In accordance with the requirements of IFRS 3, the Group has eliminated the accumulated amortization of goodwill at March 31, 2004,
with a corresponding decrease in cost of goodwill. Negative goodwill of CHF 107,000 has been derecognized with a corresponding
adjustment of the opening balance of retained earnings.
The Group has performed an impairment test on goodwill in the first half of the financial year 2005/06. For the purpose of impairment
testing, goodwill is allocated to a cash-generating unit or to a group of cash-generating units, which are expected to benefit from
the synergies of the corresponding business combination. For the impairment test, the recoverable amount of a cash-generating unit
(higher of the cash-generating unit’s fair value less selling costs and its value in use) is compared to the carrying amount of the
corresponding cash-generating unit. Future cash flows are discounted with the Weighted Average Cost of Capital (WACC) including
the use of the Capital Asset Pricing Model (CAPM). Value in use is normally assumed to be higher than the fair value less selling
costs, therefore, fair value less selling costs is only investigated when value in use is lower than the carrying amount of the cash
generating unit.
The cash flow projections are based on a five-year period. Cash flows beyond the five-year period are extrapolated using estimated
long-term growth rates. The growth rates do not exceed the long-term average growth rate for the hearing instruments industry in
which the cash-generating units operate.