13. Intangible assets
| € million |
Goodwill |
Lease-related intangibles |
Software |
Customer relationships |
Under development |
Other |
Total |
| As of December 31, 2006 |
|
|
|
|
|
|
|
| At cost |
2,205 |
219 |
476 |
262 |
52 |
208 |
3,422 |
| Accumulated amortization and impairment losses |
(21) |
(94) |
(397) |
(187) |
– |
(69) |
(768) |
| Carrying amount |
2,184 |
125 |
79 |
75 |
52 |
139 |
2,654 |
Year ended December 30, 2007 |
|
|
|
|
|
|
|
| Acquisitions/additions |
27 |
3 |
50 |
8 |
10 |
32 |
130 |
| Amortization |
– |
(10) |
(43) |
(19) |
– |
(21) |
(93) |
| Impairment losses |
(2) |
(2) |
(3) |
– |
(2) |
(1) |
(10) |
| Classified as held for sale or sold |
(1,905) |
(8) |
(23) |
(48) |
(19) |
(13) |
(2,016) |
| Other movements |
– |
17 |
6 |
3 |
(1) |
(8) |
17 |
| Exchange rate differences |
(52) |
(12) |
(5) |
(3) |
(1) |
(6) |
(79) |
| Closing carrying amount |
252 |
113 |
61 |
16 |
39 |
122 |
603 |
As of December 30, 2007 |
|
|
|
|
|
|
|
| At cost |
261 |
212 |
417 |
39 |
39 |
213 |
1,181 |
| Accumulated amortization and impairment losses |
(9) |
(99) |
(356) |
(23) |
– |
(91) |
(578) |
| Carrying amount |
252 |
113 |
61 |
16 |
39 |
122 |
603 |
Year ended December 28, 2008 |
|
|
|
|
|
|
|
| Additions |
– |
1 |
39 |
– |
22 |
36 |
98 |
| Acquisitions through business combinations |
5 |
13 |
– |
1 |
– |
1 |
20 |
| Amortization |
– |
(10) |
(30) |
(4) |
– |
(10) |
(54) |
| Impairment losses |
– |
(1) |
– |
– |
(2) |
– |
(3) |
| Classified as held for sale or sold |
(9) |
– |
(6) |
– |
(1) |
(62) |
(78) |
| Other movements |
– |
– |
3 |
(2) |
2 |
(3) |
– |
| Exchange rate differences |
3 |
4 |
1 |
1 |
1 |
2 |
12 |
| Closing carrying amount |
251 |
120 |
68 |
12 |
61 |
86 |
598 |
As of December 28, 2008 |
|
|
|
|
|
|
|
| At cost |
254 |
229 |
426 |
39 |
61 |
121 |
1,130 |
| Accumulated amortization and impairment losses |
(3) |
(109) |
(358) |
(27) |
– |
(35) |
(532) |
| Carrying amount |
251 |
120 |
68 |
12 |
61 |
86 |
598 |
Goodwill recognized upon acquisitions in 2008 and 2007 relates mainly to acquisitions of individual stores at Giant-Carlisle, Albert Heijn and Schuitema.
Goodwill acquired in business combinations is allocated, at acquisition, to the cash generating units (“CGUs”) or groups of CGUs expected to benefit from that business combination. The carrying amounts of goodwill allocated to CGUs within Ahold’s segments are as follows:
| € million |
|
December 28, 2008 |
December 30, 2007 |
| Segment |
CGU |
|
|
| Stop & Shop / Giant-Landover |
Peapod |
18 |
18 |
| Giant-Carlisle |
Giant-Carlisle |
57 |
51 |
| Albert Heijn |
Albert Heijn |
146 |
142 |
| |
Etos |
4 |
3 |
| |
Gall & Gall |
1 |
– |
| Albert / Hypernova |
Czech Republic |
25 |
25 |
| Schuitema |
Schuitema |
– |
13 |
| Ahold Group |
|
251 |
252 |
CGUs to which goodwill has been allocated are tested for impairment annually or more frequently if there are indications that a particular CGU might be impaired. The recoverable amount of each CGU is determined based on value-in-use or fair value less costs to sell calculations. Value-in-use calculations use cash flow projections generally covering a maximum period of five years that are based on three-year financial budgets approved by Company management. Cash flows beyond this three-year period are extrapolated using estimated growth rates that do not exceed the long-term average growth rate for the retail trade business in which the CGU operates and are consistent with forecasts included in industry reports. The rates used to discount the projected cash flows reflect specific risks relating to relevant CGUs and are 7.6 percent for the United States, 7.3 percent for the Netherlands, and 8.7 percent for the Czech Republic.
Lease-related intangible assets consist primarily of favorable operating lease contracts acquired in business acquisitions. Customer relationships consist primarily of pharmacy scripts. Intangible assets under development relates mainly to software development. “Other” mainly includes intangible assets related to location development rights, deed restrictions and similar assets.