AAK Annual Report 2017

71 NOTE 15 – INTANGIBLE ASSETS Group Goodwill Patents and other intangible assets Total Cost at January 1, 2016 1,567 597 2,164 Investments - 11 11 Acquired through business combination 46 - 46 Disposals - -6 -6 Reclassifications - -9 -9 Exchange differences 73 15 88 Accumulated cost at December 31, 2016 1,686 608 2,294 Cost at January 1, 2017 1,686 608 2,294 Investments - 37 37 Disposals - -1 -1 Reclassifications - -6 -6 Exchange differences -85 -15 -100 Accumulated cost at December 31, 2017 1,601 623 2,224 Amortization and impairment loss at January 1, 2016 0 220 220 Impairment losses for the year - 34 34 Disposals - -6 -6 Exchange differences - 3 3 Accumulated amortization and impairment loss at December 31, 2016 0 251 251 Amortization and impairment loss at January 1, 2017 0 251 251 Impairment losses for the year - 29 29 Disposals - -1 -1 Reclassifications - -6 -6 Exchange differences - 1 1 Accumulated amortization and impairment loss at December 31, 2017 0 274 274 Residual value at December 31, 2016 1,686 357 2,043 Residual value at December 31, 2017 1,601 349 1,950 Reviewing impairment of goodwill In preparing the financial statements for 2017, the Group has reviewed impairment of goodwill. Goodwill is allocated to cash-generating units. The recoverable amount for a cash-generating unit is determined by calculat- ing its value in use. These calculations are based on estimated future cash flow as stated in budgets and forecasts covering a five-year period. Cash flow beyond this period has been extrapolated by no more than 3 percent (3) in any case. Working capital beyond the five-year period is estimated at the same level as year five. Discount rates are assumed to be 9 percent (9) after tax and 12.8 percent (12.8) before tax. Goodwill testing of the Swedish, Danish, Belgian and Dutch units was done at an aggregate level, whereby the four production units were considered as a single cash-generating unit. Other goodwill testing considered cash-generating units at country level. Approximately 35 percent of goodwill is attributable to the business area Chocolate & Confectionery Fats and the remaining approximately 65 percent to Food Ingredients. Testing has not demonstrated any need for impairment. The sensitivity in these calculations indicates that recognized goodwill is still intact even if the discount rate increases by 1 percent or if long-term growth is 1 percent less. Goodwill by cash-generating unit 2017 2016 Sweden, Denmark, Belgium and the Netherlands 545 535 United Kingdom 65 66 Turkey 44 52 USA 630 700 Colombia 47 51 Mexico 41 43 India 229 239 Total 1,601 1,686