AAK Annual Report 2018

Reviewing impairment of goodwill In preparing the financial statements for 2018, the Group has reviewed impairment of goodwill. Goodwill is allocated to the following cash-generating units; Business Area Food Ingredients, Chocolate & Confectionery Fats and Technical Products & Feed. These cash-generating units correspond to the operating segments of AAK. The Group Land and buildings Plant and machinery Equipment, tools and fixtures and fittings Non-current assets under construction Total Cost at January 1, 2017 1,851 8,108 576 1,474 12,009 Investments 37 193 23 525 778 Disposals -29 -132 -28 -4 -193 Reclassification to tax assets - - - -87 -87 Reclassifications 397 721 10 -1,076 52 Exchange differences -69 -157 -16 -65 -307 Accumulated cost at December 31, 2017 2,187 8,733 565 767 12,252 Cost at January 1, 2018 2,187 8,733 565 767 12,252 Investments 50 306 56 290 702 Disposals - -33 -6 - -39 Reclassification to tax assets - - - -8 -8 Reclassifications 116 174 38 -329 -1 Exchange differences 41 252 19 19 331 Accumulated cost at December 31, 2018 2,394 9,432 672 739 13,237 recoverable amount for a cash-generating unit is determined by calculating 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 Goodwill by cash-generating unit 2018 2017 Food Ingredients 1,080 1,025 Chocolate & Confectionery Fats 586 576 Technical Products & Feed - - Total 1,666 1,601 15 16 Note Intangible assets Note Property, plant and equipment 91 assumed to be 8 percent (9) after tax and 11.4 percent (12.8) before tax. 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.