Kesko's Annual Report 2009

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104 Kesko financial statements 2009 Notes to the consolidated statement of financial position NOTE 13 Intangible assets € million Goodwill Trademarks Other intangible assets Prepayments Total 2009 Cost Cos at 1 Jan. 2009 115.3 71.1 142.5 10.4 339.4 Currency translation differences 6.8 5.6 4.8 17.1 Additions 2.2 28.7 6.0 36.9 Acquisition of subsidiary 0.0 Disposals -0.9 -0.7 -15.2 -0.6 -17.5 Transfers between items -3.3 -5.9 -9.2 Cost at 31 Dec. 2009 123.3 75.9 157.4 10.0 366.6 Accumulated amortisation and impairment Accumulated amortisation and impairment at 1 Jan. 2009 -43.3 -28.6 -97.9 -169.7 Currency translation differences -6.7 -1.3 -1.6 -9.6 Accumulated amortisation of disposals and transfers 0.2 22.0 22.1 Amortisation for the period Impairments -24.7 -24.7 Accumulated amortisation and impairment at 31 Dec. 2009 -49.9 -29.8 -102.2 -181.9 Carrying amount at 1 Jan. 2009 72.1 42.5 44.6 10.4 169.6 Carrying amount at 31 Dec. 2009 73.5 46.1 55.2 10.0 184.8 € million Cost Total 2008 Cos at 1 Jan. 2008 163.3 78.3 124.5 13.4 379.6 Currency translation differences -7.6 -7.2 -5.3 -1.3 -21.4 Additions 6.4 36.8 7.4 50.6 Acquisition of subsidiary 0.0 0.0 Disposals -46.7 -16.7 -1.5 -64.9 Transfers between items -0.1 3.1 -7.6 -4.6 Cost at 31 Dec. 2008 115.3 71.1 142.5 10.4 339.4 Accumulated amortisation and impairment Accumulated amortisation and impairment at 1 Jan. 2008 -29.0 -21.3 -77.2 -127.5 Currency translation differences 5.9 1.3 1.6 8.8 Accumulated amortisation of disposals and transfers 16.9 6.0 22.9 Amortisation for the period -28.3 -28.3 Impairments -37.0 -8.6 -45.6 Accumulated amortisation and impairment at 31 Dec. 2008 -43.3 -28.6 -97.9 -169.7 Carrying amount at 1 Jan. 2008 134.3 57.0 47.3 13.4 252.2 Carrying amount at 31 Dec. 2008 72.1 42.5 44.6 10.4 169.6
Goodwill and intangible rights by segment Intangible assets * Goodwill Cash generating units have been identified at a level lower than the reportable segments. The units have been identified by chain/country, and most of them are legal entities. 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 useful lives are tested annually for possible impairment and whenever there is an indication of impairment. During the 2008 financial period, Byggsenteret, part of the Norwegian Byggmakker group, was sold, and the allocated goodwill was €9.5 million. 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 years. The key assumptions used for the plans are total market development and profitability, changes in store site network, product and service selection, pricing and trends in operating costs. Cash flows beyond the period have been extrapolated mainly based on 1.5–4% (1–4%) forecast growth rates, allowing for country-specific differences. The discount rate used is the WACC, specifed for each segment 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. Compared with the previous year, discount rates in Russia and the Baltic countries rose as a result of higher country risks and interest rate levels. Discount rate (WACC) ** Kesko financial statements 2009 Intangible assets * Goodwill 105 Discount rate (WACC) ** € million 2009 2009 2009 2008 2008 2008 Building and home improvement trade Byggmakker, Norway 28.3 8.0% 24.7 8.0% Rautakesko, Estonia 1.1 13.0% 1.1 11.0% Senukai, Lithuania 17.2 14.0% 17.2 11.5% Stroymaster, Russia 14.2 15.0% 14.1 12.0% Real estate companies 7.1 5.7 Home and speciality goods trade Anttila, Finland 23.4 7.0% 23.4 7.0% Indoor, Finland 17.8 4.1 7.0% 17.8 4.1 7.0% Car and machinery trade 4.4 8.0% 4.2 8.0% Others 2.1 2.2 Total 46.1 73.5 42.5 72.1 * intangible assets with indefinite useful lives ** after tax Impairment losses For the 2009 accounting period, there were no impairments in goodwill or intangible rights. For the 2008 accounting period, an impairment charge of €45.6 million was made against Byggmakker Norge's intangible assets. Of this amount €37.0 million was allocated to goodwill and €8.6 million to a trademark. The impairment charge was reported as a non-recurring item. The impairment loss was due to weaker-than-expected profitability development. In addition, it was estimated that revenue expectations concerning Byggmakker had declined. Byggmakker Norge constitutes a separate cash-generating unit and belongs to the building and home improvement trade segment. Sensitivity analysis The key variables used in impairment testing are the EBITDA rate and the discount rate. The most sensitive to changes in assumptions are the intangible assets relating to the operations of Byggmakker, Indoor and Rauta-kesko Estonia. A one percentage point rise in the discount rate would not cause an impairment of any cash generating unit. For Byggmakker and Rautakesko Estonia, a reduction of residual EBITDA by over 0.8 pp would cause a need for impairment. For Indoor, a reduction of residual EBITDA by over 1.2 pp would cause a need for impairment. When the other cash generating units are estimated according to the management's assumptions, a foreseeable change in any key variable would not create a situation in which the unit's recoverable amount would be smaller than its carrying amount.
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Kesko’s year
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2 Kesko’s year 2009 Kesko in brie
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4 Kesko’s year 2009 Review by the
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6 Kesko’s year 2009 Year 2009 in
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Kesko is a highly valued listed tra
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uct and service benefits to custome
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the Pirkka magazine continued to in
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16 Kesko’s year 2009 K-food store
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18 Kesko’s year 2009 High-quality
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Kesko’s home and speciality goods
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Year 2009 In 2009, the net sales of
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Market shares and competitors Hyper
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28 Kesko’s year 2009 Products and
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30 Kesko’s year 2009 Through its
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32 Kesko’s year 2009 Responsibili
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VV-Auto and Konekesko make up the c
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market for agricultural machinery i
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Market shares VV-Auto Finland: Volk
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Real estate operations indicators f
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44 Kesko’s year 2009 Kesko is a g
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46 Kesko’s year 2009 The widest v
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Principles and indicators of respon
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effective stakeholder interaction w
Page 55 and 56: compare the responsibility practice
Page 57 and 58: member and expiring at the close of
Page 59 and 60: Decision-making, activities and mee
Page 61 and 62: A written managing director’s ser
Page 63 and 64: made by the Remuneration Committee
Page 65 and 66: programmes, for their competitive t
Page 67 and 68: the Audit Committee, and reports on
Page 69 and 70: Mikko Kosonen b. 1957, D.Sc. (Econ.
Page 71 and 72: Notice period and severance pay: 6
Page 73 and 74: Report by the Board of Directors Ja
Page 75 and 76: In January-December, two new K-raut
Page 77 and 78: The retail sales of the K-rauta and
Page 79 and 80: Significant risks and uncertainties
Page 81 and 82: Group performance indicators Kesko
Page 83 and 84: Net sales by segment, continuing op
Page 85 and 86: Calculation of performance indicato
Page 87 and 88: Consolidated Financial Statements C
Page 89 and 90: Consolidated statement of cash flow
Page 91 and 92: NOTE 1 Accounting policies for the
Page 93 and 94: Foreign currency items The consolid
Page 95 and 96: Other intangible assets The cost of
Page 97 and 98: exceed 10 percent of the higher rat
Page 99 and 100: cating resources, has been identifi
Page 101 and 102: Segment information 2008 Income sta
Page 103 and 104: Net assets of discontinued operatio
Page 105: Exchange differences recognised in
Page 109 and 110: Property, plant and equipment inclu
Page 111 and 112: NOTE 18 Finance lease receivables K
Page 113 and 114: NOTE 20 Kesko financial statements
Page 115 and 116: A total amount of €12.6 million (
Page 117 and 118: Kesko financial statements 2009 Rev
Page 119 and 120: NOTE 29 Finance lease liabilities K
Page 121 and 122: Group as the lessor Minimum lease p
Page 123 and 124: Movements in quantities and exercis
Page 125 and 126: NOTE 41 Financial risk management W
Page 127 and 128: Liquidity risk and sensitivity anal
Page 129 and 130: Kesko financial statements 2009 Bre
Page 131 and 132: Fair values of derivative financial
Page 133 and 134: with regard to business operations,
Page 135 and 136: In addition, the other operating ex
Page 137 and 138: Owned by other Group companies Domi
Page 139 and 140: Parent's balance sheet (FAS) € 31
Page 141 and 142: Kesko financial statements 2009 Not
Page 143 and 144: € million 2009 2008 Accumulated d
Page 145 and 146: Increase in share capital During th
Page 147 and 148: Signatures Signatures Helsinki, 4 F
Page 149 and 150: the record date, and whose custodia
Page 151 and 152: Share performance indicators Tradin
Page 153 and 154: Prices and trading of Kesko A and B
Page 155 and 156: Share capital and shares Kesko fina
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Information about Kesko for investo
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Kenkäkesko Ltd Kutojantie 4, FI-02
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Operations control system (ERP Ente
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www.kesko.fi Business ID 0109862-8
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Kesko's Annual Report 2009

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