- Independent auditors' report
- Consolidated income statement
- Consolidated statement of recognised income and expense
- Consolidated balance sheet
- Consolidated cash flow statement
- Company balance sheet
- Company statement of recognised income and expense and cash flow statement
- Notes to the financial statements
Notes to the financial statements
15.Intangible assets
| Goodwill €'000 |
Other intangibles See note (a) €'000 |
Software costs €'000 |
Development costs €'000 |
Total €'000 |
|||||
|---|---|---|---|---|---|---|---|---|---|
| Year ended 29 December 2007 | |||||||||
| Opening net book amount | 85,132 | 25,935 | 24,112 | 3,545 | 138,724 | ||||
| Exchange differences | (6,761) | (1,820) | (287) | (286) | (9,154) | ||||
| Additions | 360 | 91 | 1,341 | 1,804 | 3,596 | ||||
| Adjustments re acquisitions | (189) | - | - | - | (189) | ||||
| Acquisition of subsidiaries | 6,125 | 5,545 | - | - | 11,670 | ||||
| Reclassification | - | - | (266) | - | (266) | ||||
| Amortisation | - | (2,363) | (3,824) | (629) | (6,816) | ||||
| Previously stated closing net book amount | 84,667 | 27,388 | 21,076 | 4,434 | 137,565 | ||||
| Final intellectual property valuation adjustment | 3,356 | (3,356) | - | - | - | ||||
| Restated closing net book amount | 88,023 | 24,032 | 21,076 | 4,434 | 137,565 | ||||
| At 29 December 2007 | |||||||||
| Cost | 88,023 | 27,827 | 41,887 | 5,277 | 163,014 | ||||
| Accumulated amortisation | - | (3,795) | (20,811) | (843) | (25,449) | ||||
| Net book amount | 88,023 | 24,032 | 21,076 | 4,434 | 137,565 | ||||
| Year ended 3 January 2009 | |||||||||
| Opening net book amount | 88,023 | 24,032 | 21,076 | 4,434 | 137,565 | ||||
| Exchange differences | 5,515 | 10,336 | 157 | 342 | 16,350 | ||||
| Acquisition of subsidiaries (note 41) | 58,065 | 154,028 | - | - | 212,093 | ||||
| Additions | 77 | - | 4,376 | 3,253 | 7,706 | ||||
| Reclassification | - | - | 233 | - | 233 | ||||
| Write-off of goodwill/intangibles | (635) | (282) | - | - | (917) | ||||
| Reduction in contingent consideration (note 41) | (5,461) | - | - | - | (5,461) | ||||
| Amortisation | - | (3,817) | (3,685) | (855) | (8,357) | ||||
| Closing net book amount | 145,584 | 184,297 | 22,157 | 7,174 | 359,212 | ||||
| At 3 January 2009 | |||||||||
| Cost | 145,584 | 191,909 | 46,653 | 8,872 | 393,018 | ||||
| Accumulated amortisation | - | (7,612) | (24,496) | (1,698) | (33,806) | ||||
| Net book amount | 145,584 | 184,297 | 22,157 | 7,174 | 359,212 |
| Note (a) - other intangibles | |||||||
|---|---|---|---|---|---|---|---|
| Brands/ know-how €'000 |
Customer relationships €'000 |
Other €'000 |
Total other intangibles €'000 |
||||
| At 29 December 2007 | |||||||
| Cost | 11,080 | 13,149 | 6,954 | 31,183 | |||
| Accumulated amortisation | (1,673) | (1,781) | (341) | (3,795) | |||
| Previously stated closing net book amount | 9,407 | 11,368 | 6,613 | 27,388 | |||
| Final intellectual property valuation adjustment | - | - | (3,356) | (3,356) | |||
| Restated closing net book amount | 9,407 | 11,368 | 3,257 | 24,032 | |||
| Year ended 3 January 2009 | |||||||
| Opening net book amount | 9,407 | 11,368 | 3,257 | 24,032 | |||
| Exchange differences | 5,681 | 5,119 | (464) | 10,336 | |||
| Acquisition of subsidiaries (note 41) | 82,855 | 71,173 | - | 154,028 | |||
| Write-off of intangibles | - | - | (282) | (282) | |||
| Amortisation | (749) | (2,908) | (160) | (3,817) | |||
| Closing net book amount | 97,194 | 84,752 | 2,351 | 184,297 | |||
| At 3 January 2009 | |||||||
| Cost | 99,616 | 89,441 | 2,852 | 191,909 | |||
| Accumulated amortisation | (2,422) | (4,689) | (501) | (7,612) | |||
| Net book amount | 97,194 | 84,752 | 2,351 | 184,297 | |||
Included in intangibles is a carrying value of €88.35 million relating primarily to brands/know-how with indefinite useful lives. In arriving at the conclusion that brands/know-how have indefinite useful lives, it has been determined that these assets will contribute indefinitely to the cash flows of the Group. The factors that result in the durability of brands/know how capitalised is that there are no known material legal, regulatory, contractual or other factors that limit the useful life of these intangibles.
Impairment tests for goodwill
Goodwill is allocated to the Group's cash generating units. A summary of the goodwill allocation by principle cash generating units is as follows:
| 2008 €'000 |
2007 €'000 |
||
|---|---|---|---|
| Glanbia Nutritionals Deutschland GmbH | 11,297 | 11,297 | |
| Seltzer Companies, Inc. | 57,921 | 54,604 | |
| Optimum Nutrition, Inc. | 61,915 | - | |
| 131,133 | 65,901 | ||
| Multiple units without individual significant amounts of goodwill | 14,451 | 18,766 | |
| 145,584 | 84,667 |
The recoverable amount allocated to a cash generating unit is determined based on value in use calculations. These calculations use cash flow projections based on financial budgets approved by management covering a three year period. Cash flows beyond the three year period are extrapolated using estimated growth rates which are not in excess of forecast inflation. A rate of zero percent has been used to estimate cash flow growth between three and ten years, which is consistent with prior years. Key assumptions include management's estimates of future profitability, capital expenditure requirements and working capital investment. Capital expenditure requirements are based on the Group's strategic plans and broadly assume that historic investment patterns will be maintained. Working capital requirements are forecast to increase in line with activity. Discount rates used reflect specific risks relating to relevant cash generating units.
The value in use calculations are prepared using a pre tax discount rate of 6.5%, which is the Group's weighted average cost of capital, and incorporate terminal values. The above rate is consistent for each cash generating unit. The indefinite useful lives have been included in the Optimum Nutrition, Inc. cash generating unit for the purposes of impairment testing. In forecasting terminal values, a multiple of five to ten times EBITDA is generally used.