Nutreco

(14) Intangible assets
(EUR x million)	Goodwill	Conces- sions, licences and quota	Develop- ment costs	Software	Brand names	Customer relation- ships	Total

Cost
Balance at 1 January 2008	214.8	50.6	8.0	17.7	23.2	42.5	356.8
Capital expenditure	-	-	-	4.0	-	-	4.0
Final calculation acquisitions previous year	2.0	-	-	1.7	-	-	3.7
Disposals	-	-	-	-1.5	-	-	-1.5
Acquisitions through business combinations	3.8	-	-	0.1	-	1.7	5.6
Effect of movement in foreign exchange rates	-18.3	-8.1	-1.2	-0.9	-3.7	-6.1	-38.3
Balance at 31 December 2008	202.3	42.5	6.8	21.1	19.5	38.1	330.3

Balance at 1 January 2009	202.3	42.5	6.8	21.1	19.5	38.1	330.3
Capital expenditure	-	-	-	4.0	-	-	4.0
Disposals	-0.8	-0.5	-	-0.2	-	-	-1.5
Acquisitions through business combinations	3.4	-	-	-	2.4	1.6	7.4
Transfer from PP&E				1.4			1.4
Effect of movement in foreign exchange rates	13.5	5.7	0.8	0.8	2.5	4.1	27.4
Balance at 31 December 2009	218.4	47.7	7.6	27.1	24.4	43.8	369.0

Accumulated amortisation and impairment losses
Balance at 1 January 2008	-28.1	-0.7	-0.5	-6.3	-	-2.7	-38.3
Disposals	-	-	-	1.2	-	-	1.2
Amortisation continuing operations	-	-	-0.7	-4.4	-	-5.7	-10.8
Effect of movement in foreign exchange rates	1.8	-	0.2	0.7	-	1.1	3.8
Balance at 31 December 2008	-26.3	-0.7	-1.0	-8.8	-	-7.3	-44.1

Balance at 1 January 2009	-26.3	-0.7	-1.0	-8.8	-	-7.3	-44.1
Disposals	-	-	-	-	-	-	-
Impairment losses continuing operations	-	-0.3	-	-	-	-	-0.3
Amortisation continuing operations	-	-	-1.1	-5.3	-	-5.7	-12.1
Effect of movement in foreign exchange rates	-0.6	-	-0.2	-0.3	-	-1.0	-2.1
Balance at 31 December 2009	-26.9	-1.0	-2.3	-14.4	-	-14.0	-58.6

Carrying amount at 1 January 2008	186.7	49.9	7.5	11.4	23.2	39.8	318.5
Carrying amount at 31 December 2008	176.0	41.8	5.8	12.3	19.5	30.8	286.2
Carrying amount at 1 January 2009	176.0	41.8	5.8	12.3	19.5	30.8	286.2

Carrying amount at 31 December 2009	191.5	46.7	5.3	12.7	24.4	29.8	310.4
At 31 December 2009, Nutreco has internally generated intangibles of EUR 1.0 million (2008: EUR 0.8 million). The amortisation is allocated to the ‘depreciation and amortisation expenses’ of the income statement. Impairment tests for assets with indefinite useful lives Goodwill, quota and part of the brand names are assets with an indefinite useful life. These assets are allocated to Nutreco’s cash-generating units or groups of cash-generating units for the purpose of impairment testing. Goodwill is allocated to those cash-generating units that are expected to benefit from the business combination. Cash-generating units are operating divisions within the reportable segments representing the smallest identifiable group of assets that generate cash flows that are largely independent of the cash flows from other assets or group of assets. The carrying amounts for assets with indefinite useful lives have been allocated to the reportable segments as follows:

(EUR x million)	2009				2008
	Goodwill	Conces- sions, licences and quota	Brand names	Total	Goodwill	Conces- sions, licences and quota	Brand names	Total
Segment
Premix and Feed Specialties	57.7	-	0.3	58.0	56.9	0.2	0.3	57.4
Fish Feed	20.9	0.1	-	21.0	18.0	0.2	-	18.2
Compound Feed Europe	5.4	-	-	5.4	5.4	-	-	5.4
Animal Nutrition Canada	89.0	-	21.8	110.8	80.8	-	19.2	100.0
Meat and Other	18.5	46.6	-	65.1	14.9	41.4	-	56.3
Carrying amount of intangible assets with indefinite useful lives	191.5	46.7	22.1	260.3	176.0	41.8	19.5	237.3

Carrying amount of intangible assets with definite useful lives	-	-	2.3	2.3	-	-	-	-

Total	191.5	46.7	24.4	262.6	176.0	41.8	19.5	237.3
The recoverable amount of a cash-generating unit with goodwill, quota or brand names is determined based on a value-in-use assessment. These assessments use cash flow projections based on three-year development plans which are approved by management. The three-year cash flow projections basis applies to all cash-generating units, except for Nutreco Canada, which has a time horizon longer than five years. In determining the recoverable amount of Nutreco Canada, the same time horizon has been used as in the assumptions at acquisition date. Management believes that this longer forecast period is justified due to the long-term nature of the business. The main assumptions applied in these value-in-use assessments for the most significant cash-generating units per segment are:

Segment	Revenue growth %	EBITA/revenue margin	Pre-tax discount rates

Premix and Feed Specialties	0.7 – 15.8%	3.8 – 11.1%	10.3 – 18.6%
Fish Feed	0.7 – 7.2%	7.3 – 8.3%	10.3 – 11.8%
Compound Feed Europe	1.9%	1.2%	10.2%
Animal Nutrition Canada	1.3%	6.0%	8.4%
Meat and Other	1.3%	6.0%	8.4%
Cash flows beyond that period are extrapolated using limited or no growth. Management determined the financial projections based on past performance and its expectations of market and business developments. The cash flow projections are discounted to their present value using a discount rate that reflects the market assessments of the time value of money and the risks of the asset. All assumptions are in line with normal business practice. Nutreco concluded that there were no reasons to recognise impairment losses. Management also performed sensitivity analysis around the current assumptions for the most material cash-generating units, and concluded that no reasonably possible changes in key assumptions would cause the carrying amount of goodwill, quota and/or brand names to exceed its recoverable amount. Goodwill Goodwill of EUR 191.5 million at year-end is mainly related to the acquisition of Nutreco Canada for an amount of EUR 107.5 million (2008: EUR 97.0 million). The goodwill related to the acquisition of Nutreco Canada has been recognised for an amount of EUR 89.0 million (2008: EUR 80.8 million) within the segment Animal Nutrition Canada and for EUR 18.5 million (2008: EUR 14.9 million) within the segment Meat and Other. Trouw Nutrition USA for an amount of EUR 24.1 million (2008: EUR 24.6 million) and Skretting Australia for an amount of EUR 15.0 million (2008: EUR 11.8 million). The increase of EUR 3.4 million relates to the acquisition of Fri-Ribe in 2009 (increase 2008 of EUR 3.8 million relates to Silver Cup). The gross carrying value of goodwill is in total EUR 191.5 million (2008: EUR 176.0 million). There are no (accumulated) impairment losses in the goodwill balance as per 31 December 2009 and 31 December 2008. The carrying amounts for goodwill have been allocated to the geographical segments as follows:

(EUR x million)	2009	2008

Canada	91.2	80.3
USA	44.4	45.4
Australia	15.0	11.8
Netherlands	12.4	12.4
Mexico	7.3	7.1
China	6.9	7.1
Belgium	5.4	6.2
Brazil	3.4	-
Hungary	2.1	2.2
Japan	2.0	2.1
Other	1.4	1.4
Total	191.5	176.0
Concessions, licenses and quota In 2009, concessions, licenses and quota amount to EUR 46.7 million at year-end and consist mainly of quota which have been acquired in 2007 as part of the acquisition of Nutreco Canada. Quota are acquired rights to sell poultry products in markets in which sales of these products are regulated and limited by the government. Quota have an indefinite useful life as there is no indication to rescind the quota system. In 2009, an impairment of EUR 0.3 million has been recognised on the quotum for Canada. Brand names The useful lives of brand names have been determined on the basic factors, such as the economic environment, the expected use of an asset and related assets or groups of assets and legal or other provisions that might limit the useful life. The main part of the brand names has an indefinite useful live. The brand names of EUR 24.4 million are mainly related to the acquisition of Nutreco Canada’s brand names Shur-Gain and Landmark Feeds in 2007 and the brand name Fri-Ribe related to the acquisition in 2009. Customer relationships The remaining average amortisation period for customer relationships is five years. The increase in 2009 of EUR 1.6 million relates to Fri-Ribe. The increase in 2008 of EUR 1.7 million relates to the acquisition of Silver Cup and Biofaktory. There are no intangible assets whose titles are restricted or are pledged as security for liabilities. Back to the top ↑

Nutreco Annual Report 2009