Assets
Details of the items in the financial statements
In the part of the notes that follows all amounts are expressed in thousands of Eurs, with the exception of certain amounts expressed in millions of Eurs. Amounts in brackets refer to the corresponding amounts for 2009.
Intangible assets and their changes are described and commented on below:
| Intangible assets | 31/12/2010 | 31/12/2009 |
|---|---|---|
| (€ 000) |
|
|
| Intangible assets with a finite useful life | 953 | 555 |
| Intangible assets with an indefinite useful life | 90,163 | 90,975 |
| Total intangible assets | 91,116 | 91,530 |
The following two tables show the changes in intangible assets with a finite useful life in 2009 and 2010.
There is no restriction on the availability or use of the intangible assets recognised in the financial statements.
|
Intangible assets with finite useful lives
(€ 000) |
Software | Selling rights | Total |
|---|---|---|---|
| Cost at 01/01/2009 | 6,601 | 650 | 7,251 |
| Investments | 331 | - | 331 |
| Disposals | - | - | - |
| Other changes | - | - | - |
| Cost at 31/12/2009 | 6,932 | 650 | 7,582 |
| Accumulated amortisation and impairment losses at 01/01/2009 | 6,041 | 650 | 6,691 |
| Amortisation | 336 | - | 336 |
| Writedowns/reinstatement of value | - | - | - |
| Disposals | - | - | - |
| Other changes | - | - | - |
| Accumulated amortisation and impairment losses at 31/12/2009 | 6,377 | 650 | 7,027 |
| Net book value at 01/01/2009 | 560 | - | 560 |
| Net book value at 31/12/2009 | 555 | 0 | 555 |
|
Intangible assets with finite useful lives
(€ 000) |
Software | Selling rights | Total |
|---|---|---|---|
| Cost at 01/01/2010 | 6,932 | 650 | 7,582 |
| Investments | 767 | - | 767 |
| Disposals | - | - | 0 |
| Other changes | - | - | 0 |
| Cost at 31/12/2010 | 7,699 | 650 | 8,349 |
| Accumulated amortisation and impairment losses at 01/01/2010 | 6,377 | 650 | 7,027 |
| Amortisation | 369 | - | 369 |
| Writedowns/reinstatement of value | - | - | 0 |
| Disposals | - | - | 0 |
| Other changes | - | - | 0 |
| Accumulated amortisation and impairment losses at 31/12/2010 | 6,746 | 650 | 7,396 |
| Net book value at 01/01/2010 | 555 | - | 555 |
| Net book value at 31/12/2010 | 953 | 0 | 953 |
Investments during the year of €767 thousand, including €376 thousand for intangible assets that had not entered into use at 31 December 2010, refer to the cost of purchasing software.
The following two tables present the changes in intangible assets with indefinite useful lives in 2009 and 2010.
|
Intangible assets with indefinite useful lives
(€ 000) |
Titles |
Publishing imprints
|
Goodwill |
Total
|
|---|---|---|---|---|
| Cost at 01/01/2009 | 83,577 | 7,519 | 732 | 91,828 |
| Investments | - | 47 | - | 47 |
| Disposals | - | - | - | 0 |
| Other changes | - | - | - | 0 |
| Cost at 31/12/2009 | 83,577 | 7,566 | 732 | 91,875 |
| Impairment at 01/012009 | - | - | - | 0 |
| Writedowns/reinstatement of value | - | (900) | - | (900) |
| Impairment at 31/12/2009 | 0 | (900) | 0 | (900) |
| Net book value at 01/01/2009 | 83,577 | 7,519 | 732 | 91,828 |
| Net book value at 31/12/2009 | 83,577 | 6,666 | 732 | 90,975 |
|
Intangible assets with indefinite useful lives
(€ 000) |
Titles |
Imprints
|
Goodwill |
Total
|
|---|---|---|---|---|
| Cost at 01/01/2010 | 83,577 | 7,566 | 732 | 91,875 |
| Investments | - | - | - | 0 |
| Disposals | - | - | - | 0 |
| Other changes | - | - | - | 0 |
| Cost at 31/12/2010 | 83,577 | 7,566 | 732 | 91,875 |
| Impairment at 01/01/2010 | - | (900) | - | (900) |
| Writedowns/reinstatement of value | - | (812) | - | (812) |
| Impairment at 31/12/2010 | 0 | (1,712) | 0 | (1,712) |
| Net book value at 01/01/2010 | 83,577 | 6,666 | 732 | 90,975 |
| Net book value at 31/12/2010 | 83,577 | 5,854 | 732 | 90,163 |
Intangible assets with indefinite useful lives relate mainly to magazines (including, in particular, TV Sorrisi e Canzoni and Chi, each of which represents a different Cash Generating Unit) included in the purchase of the SBE business in 1994,
Amortisation, impairment and reinstatement of value of intangible assets
The following table summarises the amounts charged to the income statement, under the item “Amortisation and impairment of intangible assets”, for the amortisation of intangible assets with definite useful lives and the writedown and reinstatement of value of intangible assets with indefinite lives.
| Amortisation and impairment of intangible assets |
|
|
|---|---|---|
| (€ 000) | 2010 | 2009 |
| Software | 369 | 336 |
| Selling rights | - | - |
| Total amortisation and impairment of intangible assets | 369 | 336 |
| Writedowns of intangible assets | 812 | 900 |
| Reinstatement in value of intangible assets | - | - |
| Total writedowns (reinstatement) of intangible assets | 812 | 900 |
| Total amortisation and impairment of intangible assets | 1,181 | 1,236 |
As per IAS 36, intangible assets with indefinite lives and goodwill are not subject to amortisation but are subject to an impairment test at least once every year.
When carrying out the annual impairment test for magazine titles, imprints and goodwill, the recoverable amount of an asset was estimated by determining its value in use.
When estimating value in use, utilisation was made of the forecast data included in the three/five-year plans approved by the management of the Mondadori Group, which takes into account the macro-economic situation and the specific nature of the markets where the various business areas operate.
For magazine titles, partly in consideration of the presence of a net negative circulating capital as a result of the speed of collecting revenues, the operating results contained in the above-mentioned medium-term plans were adopted as the financial flows.
For the imprint values, since the Cash Generating Unit coincides with the legal entity, the operational cash flows contained in the above-mentioned medium-term plans were adopted as the financial flows.
The cash flow was considered to be constant for the period beyond the forecast (increase rate G equals zero).
The calculation of the cash flow relating to the individual assets or Cash Generating Units included in the impairment test was based on a bank rate gross of taxes, in line with the economics utilised, of 6.75%.
The cost of money was estimated using the capital asset pricing model, representing the specific risks of the individual units generating the cash flows, on the basis of the following elements:
- in order to calculate the cost of company capital, the returns on long-term treasury stocks in each of the countries or markets where the Group operates were taken as a benchmark and the beta was separated as follows: the Mondadori beta was used for Italy while for other countries it was based on the average of the betas of a panel made up of the main media companies listed on Eurpean markets. For the country risk, a correction factor of between 4% and 5% was used, based on market studies;
- in order to calculate the cost of third-party capital, the cost of money taken as an assumption in the medium-term plans was used.
When calculating value in use, an analysis of the sensitivity of the results was also carried out based on a 1% increase in the rate referred to above, which confirmed the previous results.
After the impairment test a writedown of €812 thousand was made for the “PC Professionale” imprint in order to adjust the carrying value to the market value, which was calculated based on the comparable royalty rate. The remaining values in use are higher than the respective carrying values.