Kesko's year 2007

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100 Kesko's year 2007 Goodwill and intangible assets by segment Intangible assets * Goodwill The useful lives of trademarks (brands) included in intangible assets have been classified as indefinite because it has been estimated that they will affect the generation of cash flows over an indefinite period. This is because no foreseeable limit to the period over which they are expected to generate net cash inflows for the Group can be seen. Trademarks are part of assets purchased in connection with acquisitions. Intangible assets with indefinite lives are tested annually for possible impairment and whenever there is an indication of impairment. Impairment test for goodwill and intangible assets The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash flow projections based on financial plans approved by the management covering a period of 3–5 years. The key assumptions used for the plans are total market development and profitability, changes in store network, product and service selection and pricing. Cash flows beyond the period are extrapolated using mainly 1–2% growth rates. The discount rate used is the WACC, specifed for each division and country after tax, which is adjusted by tax effects in connection with the test. The WACC formula inputs are risk-free rate of return, market risk premium, industry-specific beta factor, target capital structure, borrowing cost and country risks. Impairment losses During the 2007 accounting period, impairment was not allocated to goodwill and trademarks with indefinite useful lives. For the 2006 accounting period, an impairment charge of €30.3 million was made against intangible assets relating to Indoor Group operations (Finland). Of this amount €21.3 million was allocated to trademarks and €9.0 million to goodwill, with both amounts reported as non-recur- Discount rate (WACC) ** Intangible assets * Goodwill Discount rate (WACC) ** € million 2007 2007 2007 2006 2006 2006 Rautakesko Other Nordic countries 39.2 48.9 7.5% 37.9 46.8 7.0% Baltic countries 18.3 9.0–11.0% 18.3 9.0% Others 14.0 12.0% 13.9 12.0% Anttila Finland 23.4 7.0% 17.8 23.4 6.5% Other operating activities Finland 17.8 29.8 7.0–7.5% 28.4 6.5–7.0% Other countries 1.5 Total 57.0 134.3 55.7 130.8 * intangible assets with indefinite useful lives ** after tax Cash-generating units have mainly been identified at a level lower than business segments. The units have been identified by chain/country, which substantially corresponds to the legal structure. ring items. The impairment loss was due to weaker-than-expected profitability and a tightened competitive situation especially in the Greater Helsinki area. In addition, retail sales failed to meet expectations despite the expanded retail network. Consequently, revenue expectations concerning Indoor Group were estimated to have declined. Indoor Group's operations and its existing retail chains will be developed by investing heavily in its competitiveness any by increasing the stores' selling areas. Investments will be made in the trademarks in order to improve their appeal. Indoor Group is a separate cash generating unit and belongs to the Other operating activities segment. Additionally, an impairment charge of €0.6 million relating to the Intersport operations was made for the period, due to the business being transferred outside the Group without compensation. Sensitivity analysis The key variables used in the impairment test are EBITDA percentage and discount rate. When cash generating units are estimated according to the management's assumptions, a foreseeable possible change in any key variable would not create a situation in which the recoverable amounts of cash generating units would be less than their carrying amounts. The intangible assets related to Indoor Group's and Bryggmakker's operating activities are the most sensitive to changes in assumptions. A change of 1 percentage point in their discount rates would not cause impairment. A 0.5 percentage point change in future years' operating margins would not result in impairment either.
Year 2007 Note 12 Tangible assets € million Divisions The Group Financial statements Further information 101 Land and water Buildings Machinery and equipment Other tangible assets Pre-payments and purchases in progress Cost Cost at 1 January 2007 212.7 1,079.4 465.8 25.7 25.1 1,808.6 Currency translation differences -0.8 -1.4 -0.6 -0.1 -0.2 -3.1 Additions 22.6 56.6 82.5 6.1 29.9 197.7 Acquisition of subsidiary 1.6 6.6 2.5 0.0 1.8 12.5 Disposals -7.7 -27.0 -67.7 -0.4 -1.2 -104.0 Transfers between groups -5.2 26.3 -1.1 4.9 -25.5 -0.6 Cost at 31 December 2007 223.2 1,140.7 481.4 36.2 29.9 1,911.3 Accumulated depreciation Accumulated depreciation and impairment at 1 January 2007 -2.4 -376.8 -305.5 -9.0 -693.9 Currency translation differences Accumulated depreciation of disposals and 0.3 0.3 0.6 transfers -1.3 3.8 28.4 -2.4 28.5 Depreciation for the period -41.4 -48.9 -2.7 -92.8 Impairment -0.5 -0.5 Accumulated depreciation at 31 December 2007 -3.7 -414.1 -326.3 -14.1 -758.2 Carrying amount at 1 January 2007 210.3 702.6 160.3 16.7 25.1 1,114.7 Carrying amount at 31 December 2007 219.5 726.5 155.1 22.1 29.9 1,153.1 Total 2006 Cost Cost at 1 January 2006 185.1 1,150.3 509.8 27.9 18.7 1,891.7 Currency translation differences 0.1 0.0 0.2 0.0 0.1 0.4 Additions 44.0 58.2 85.2 3.6 34.4 225.4 Acquisition of subsidiary 1.2 12.3 0.4 0.0 0.0 13.9 Disposals -38.2 -227.8 -130.0 -9.4 -0.9 -406.3 Transfers between groups 20.5 86.4 0.2 3.6 -27.2 83.5 Cost at 31 December 2006 212.7 1,079.4 465.8 25.7 25.1 1,808.6 Accumulated depreciation Accumulated depreciation and impairment at 1 January 2006 -2.5 -425.2 -308.9 -10.9 -1.5 -749.1 Currency translation differences Accumulated depreciation of disposals -0.1 -0.1 -0.2 and transfers 0.2 96.0 68.4 4.8 1.6 171.1 Depreciation for the period -48.3 -64.8 -2.7 -0.3 -116.1 Impairment -0.1 0.8 -0.1 -0.2 0.4 Accumulated depreciation at 31 December 2006 -2.4 -376.8 -305.5 -9.0 -0.2 -693.9 Carrying amount at 1 January 2006 182.6 725.1 200.9 17.0 17.2 1,142.7 Carrying amount at 31 December 2006 210.4 702.6 160.3 16.7 24.9 1,115.1 Total 2007
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Kesko’s year 2007
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Year 2007 Contents Divisions The Gr
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Year 2007 the best offers Divisions
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Year 2007 Financial highlights for
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Year 2007 list. In 2008, we intend
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Year 2007 Competitive environment F
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Year 2007 Rautakesko Divisions The
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Year 2007 Heini a suitable price in
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Year 2007 Kesko Agro Kesko Agro’s
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Year 2007 Kesko Agro Divisions The
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Year 2007 Other operating activitie
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Year 2007 high quality Divisions Th
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Year 2007 Real estate operations in
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Page 69 and 70: Year 2007 Maarit Näkyvä b. 1953,
Page 71 and 72: Year 2007 Pekka Lahti b. 1955, M.Sc
Page 81 and 82: Year 2007 Key indicators Group’s
Page 85 and 86: Year 2007 Consolidated cash flow st
Page 95 and 96: Year 2007 Business segments 2006, c
Page 97 and 98: Year 2007 Note 3 Divisions The Grou
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Page 107 and 108: Year 2007 Changes in deferred taxes
Page 109 and 110: Year 2007 Note 19 Inventories Divis
Page 111 and 112: Year 2007 Note 26 Changes in share
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Page 117 and 118: Year 2007 Note 35 Contingent liabil
Page 127 and 128: Year 2007 Economic value added form
Page 131 and 132: Year 2007 Consolidated operations D
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Page 145 and 146: Year 2007 Shares and shareholders D
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Year 2007 Divisions The Group Infor
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Year 2007 Latvia Rautakesko A/S Ren
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Year 2007 Logistics is a process in
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Design and layout: Incognito Photos
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