Note 16 Intangible assets

Intangible assets, external purchase Intangible assets, internally developed
Group 2018‚ MSEK Goodwill Brands Customer relations Tenancies gravel and rock quarries Other intangible assets Balanced development costs Total
Immateriella tillgångar, externt förvärvade Immateriella tillgångar, internt utvecklade
Koncernen 2018. Mkr Goodwill Varumärken Kundrelationer Nyttjanderätter grus- och bergtäkter Övriga immateriella tillgångar Balanserade utvecklingsutgifter Totalt
Opening acquisition value Ingående anskaffningsvärde 1,844 306 51 202 73 39 2,515
Purchases Inköp 66 34 100
Purchases through acquired companies Inköp via förvärvade företag 16 16
Sales and disposals Försäljningar och utrangeringar -21 -1 -3 -25
Exchange rate differences Valutakursdifferens 7 3 1 11
Closing accumulated acquisition value Utgående ackumulerade anskaffningsvärden 1,867 288 50 202 137 73 2,617
Opening depreciation Ingående avskrivningar -163 -39 -72 -17 -16 -307
Sales and disposals Försäljningar och utrangeringar 8 1 9
Depreciation 1) Avskrivningar 1) -17 -3 -8 -6 -4 -38
Exchange rate differences Valutakursdifferens -1 -1
Closing accumulated depreciation Utgående ackumulerade avskrivningar -173 -41 -80 -23 -20 -337
Opening write-downs Ingående nedskrivningar -24 -11 -6 -41
Sales and disposals Försäljningar och utrangeringar 12 12
Exchange rate differences Valutakursdifferens -1 -1
Closing accumulated write-downs Utgående ackumulerade nedskrivningar -24 -6 -30
Closing recognized value Utgående redovisat värde 1,843 115 9 122 114 47 2,250

 

Intangible assets, external purchase Intangible assets, internally developed
Group 2017‚ MSEK Goodwill Brands Customer relations Tenancies gravel and rock quarries Other intangible assets Balanced development costs Total
Immateriella tillgångar, externt förvärvade Immateriella tillgångar, internt utvecklade
Koncernen 2017. Mkr Goodwill Varumärken Kundrelationer Nyttjanderätter grus- och bergtäkter Övriga immateriella tillgångar Balanserade utvecklingsutgifter Totalt
Opening acquisition value Ingående anskaffningsvärde  1,783 263 61 202 28 22 2,359
Purchases Inköp  39 17 56
Purchases through acquired companies Inköp via förvärvade företag  67 54 6 127
Sales and disposals Försäljningar och utrangeringar -5 -10 -15
Exchange rate differences Valutakursdifferens -6 -6 -12
Closing accumulated acquisition value Utgående ackumulerade anskaffningsvärden  1,844 306 51 202 73 39 2,515
Opening depreciation Ingående avskrivningar  –  -155 -46 -64 -13  -16  -294
Sales and disposals Försäljningar och utrangeringar  5 10 15
Depreciation 1) Avskrivningar 1) -16 -3 -8 -4 -1 -32
Reclassifications Omklassificeringar 1 1
Exchange rate differences Valutakursdifferens 3 3
Closing accumulated depreciation Utgående ackumulerade avskrivningar -163 -39 -72 -17 -16 -307
Opening write-downs Ingående nedskrivningar  -24  –  –  –  – -5  -29
Write-downs 2) Nedskrivningar 2) -11 -11
Reclassifications Omklassificeringar -1 -1
Closing accumulated write-downs Utgående ackumulerade nedskrivningar  -24  -11  – -6 -41
Closing recognized value Utgående redovisat värde 1,820 132 12 130 56 17 2,167

1) Depreciation is recognized in the following lines of the income statement:

MSEK 2018 2017
Mkr 2018 2017
Production costs Kostnader för produktion -34 -31
Sales and administrative expenses Försäljnings- och administrationskostnader -4 -1
Total Summa -38 -32

2) Write-downs are recognized in the following line of the income statement:

MSEK 2018 2017
Mkr 2018 2017
Production costs Kostnader för produktion -11
Total Summa -11

Goodwill impairment testing in cash generating units

The Peab Group balance sheet 2018-12-31 included total goodwill of SEK 1,843 million (1,820). The table below shows goodwill per group of cash generating units for which goodwill is tested for impairment.

MSEK 2018 2017
Mkr 2018 2017
Construction Bygg
Construction Sweden Bygg Sverige 68  68
Construction Finland Bygg Finland 66  63
Construction Norway Bygg Norge 155 151
Civil Engineering Anläggning
Civil Engineering Sweden Anläggning Sverige 165 165
Civil Engineering Norway Anläggning Norge 7 6
Industry Industri
Business area level, when repurchased by Peab 2008 Affärsområdesnivå, vid Peabs återköp 2008 1,274 1,274
Industry Sweden Industri Sverige 66 51
Project Development Projektutveckling
Property Development Sweden Fastighetsutveckling Sverige 21 21
Housing Development Sweden Bostadsutveckling Sverige 14 14
Housing Development Norway Bostadsutveckling Norge 7 7
Total Summa 1,843 1,820

Goodwill write-downs

Group goodwill has not been written down in 2018 or in 2017. For the cash generating units where a calculation of the recovery value was made and no write-down need was identified, executive management has assessed that no feasible possible changes in important assumptions would result in a recovery value lower than the recognized value.

Method for calculating recovery value

The recovery value for all goodwill values has been derived by calculating the useful value for the cash generating units. The calculation model is based on a discount of forecasted future cash flows compared to the unit’s reported values. These future cash flows are based on 5 year forecasts produced by the management of the respective group of cash generating units. Goodwill impairment tests have an infinite time horizon and extrapolation of cash flow for the years after the forecast was calculated based on a growth rate from year 6 onwards of approximately 2 percent.

Important variables when calculating useful value

The following variables are important and common to all cash generating units in calculation of useful value:

Net sales: The business’ historical development, expected changes in the construction business cycle, general socioeconomic developments, investment plans of public and municipal customers, interest rate levels and local market conditions.

Operating margin: Historic profitability levels and operative efficiency, access to key personnel and qualified manpower, access to internal resources and hikes in salary, material and subcontractor costs.

Working capital requirements: Individual case assessment of whether the working capital reflects the company’s needs or whether it should be adjusted for the forecast period. A reasonable or cautious assumption for future development is that it parallels net sales growth. A high level of internally developed projects may entail a greater need for working capital.

Investment needs: The company’s investment needs are assessed on the investments required to achieve the initially forecasted cash flow, i.e. not including expansion investments.

Tax burden: The tax rate in forecasts is based on Peab’s expected tax situation in Sweden, Norway and Finland with regards to tax rates, loss carry-forwards etc.

Discount rate: Forecasted cash flows and residual values are discounted to current value applying a weighted average cost of capital (WACC). Interest rates on borrowed capital have been market adjusted to each country. The required return on equity is based on the Capital Asset Pricing Model. A weighted discount rate after tax has been used in calculating useful values. The discount rate after tax used on cash generating units in Sweden is on average 7.9 percent (8.7), in Norway 9.0 percent (9.4) and in Finland 8.4 percent (9.2) The corresponding pre-tax discount in Sweden was on average 8.0 percent (8.8), in Norway 9.3 percent (9.4) and in Finland 8.5 percent (9.3).

Intangible assets, external purchase Intangible assets, internally developed
Parent company 2018‚ MSEK Other intangible assets Balanced development costs Total
Immateriella tillgångar, externt förvärvade Immateriella tillgångar, internt utvecklade
Moderbolaget 2018. Mkr Övriga immateriella tillgångar Balanserade utvecklingsutgifter Totalt
Opening acquisition value Ingående anskaffningsvärde 22 17 39
Purchases Inköp 8 8 16
Closing accumulated acquisition value Utgående ackumulerade anskaffningsvärden 30 25 55
Opening depreciation Ingående avskrivningar -1 -1
Depreciation 1) Avskrivningar 1) -3 -3
Closing accumulated depreciation Utgående ackumulerade avskrivningar -4 -4
Closing recognized value Utgående redovisat värde 30 21 51
Intangible assets, external purchase Intangible assets, internally developed
Parent company 2017‚ MSEK Other intangible assets Balanced development costs Total
Immateriella tillgångar, externt förvärvade Immateriella tillgångar, internt utvecklade
Moderbolaget 2017. Mkr Övriga immateriella tillgångar Balanserade utvecklingsutgifter Totalt
Opening acquisition value Ingående anskaffningsvärde
Purchases Inköp 22 17 39
Closing accumulated acquisition value Utgående ackumulerade anskaffningsvärden 22 17 39
Opening depreciation Ingående avskrivningar
Depreciation 1) Avskrivningar 1) -1 -1
Closing accumulated depreciation Utgående ackumulerade avskrivningar -1 -1
Closing recognized value Utgående redovisat värde 22 16 38
1) Depreciation is recognized in the following line of the income statement:
1) Avskrivningar ingår i följande rad i resultaträkningen:
MSEK 2018 2017
Mkr 2018 2017
Administration expenses Administrationskostnader -3 -1
Total Summa -3 -1