Note 12 - Impairment test of goodwill

Audited by PwC
The carrying amount of goodwill was tested for impairment at December 31, 2010. Goodwill relates to three cash-generating units: Enzyme Business, Microorganisms, and Biopharmaceutical ingredients. The impairment test did not reveal any need to write down the carrying amounts for impairment (2009: DKK 0 million). Refer to the Company profile for a description of the individual business areas.
The impairment tests compared the discounted cash flow of the individual cash-generating units to the carrying amounts of the units. Cash flow is based on budgets and business plans for the period 2011–2025.
For Enzyme Business no impairment test has been performed as the expected profit within this business area in 2011 significantly exceeds the value of goodwill, DKK 205 million (2009: DKK 183 million). The expected profit is based on the growth rates stated in the expectations for 2011.
Material assumptions used in calculating the discounted cash flow are based on an assessment of the individual unit as follows:
2010     Microorganisms    Biopharmaceutical ingredients  
Goodwill   128  180 
Expected sales growth   7.6% 10–15%
Sales growth, terminal value   3.0% 0.7%
2009     Microorganisms    Biopharmaceutical ingredients  
Goodwill 109    151 
Expected sales growth   7.5%   10–15%
Sales growth, terminal value   3.0%   0.8%
In 2010, a lower discount rate after tax (5.6%) was used for all segments compared to 2009 (7.0%), primarily because the risk-free interest rate decreased during 2010. The test for impairment in 2010 included a sensitivity analysis based on a discount rate on par with 2009. A test on this basis would not give rise to impairment losses.

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