Note 14 – Goodwill Cash-generating units with goodwill Goodwill Sverige BE Produktion Lecor Finland Group total Opening balance, January 1, 2014 314 4 67 225 610 Exchange difference – – – 6 6 Closing balance, December 31, 2014 314 4 67 231 616 Opening balance, January 1, 2015 314 4 67 231 616 Write-down – -4 -50 – -54 Exchange difference – – – -4 -4 Closing balance, December 31, 2015 314 – 17 227 558 Recoverable amount 752 43 67 658 – Carrying amount 574 40 52 426 – Difference 178 3 15 232 – Impairment testing Cash generating units The cash generating unit Sweden consists of the company BE Group Sverige AB. The cash generating unit BE Produktion consists of the company BE Group Produktion Eskilstuna AB and Lecor Stålteknik consists of Lecor Stålteknik AB. Both of these companies are included in Other Units. The cash generating unit Finland consists of the company BE Group Oy Ab. Recoverable amounts Goodwill is tested for impairment at least once annually. This testing compares the recoverable amount with the carrying amount. In the third quarter, it was noted that the operations would not achieve the set targets for the year. In light of this, a new assessment was done of the development for the upcoming years. The overall conclusion was that impairment requirements existed. Goodwill in Lecor Stålteknik was therefore written-down by SEK 50 M, from SEK 67 M to SEK 17 M. Goodwill in BE Produktion was written-down in its entirety by SEK 4 M. Impairment testing was updated on December 31. No further impairment requirement has been identified. The table above shows the difference between recoverable amount and carrying amount per cash flow generating unit. The recoverable amount of the cash generating units is determined by calculating their value in use. In calculating the value in use, a model is applied including a forecast of cash flow for the next five years. Following the forecast period, cash flow is assumed to grow at 2 percent annually. The forecasts for 2016 for each business area are based on established business plans and, for the next four years, on a forecast approved by Group management. The carrying amount is equal to the respective company’s working capital at December 31. The carrying amount for Sweden was adjusted for the value of participations in joint ventures as this holding is subject to separate measurement (see Note 18). For the calculation of value in use, estimated cash flows are discounted by a factor of 9.6 percent (9.4) before tax. The discount factor was determined using a model where the capital cost of the Company’s equity is weighed together with the cost of the Company’s interest bearing liability based on the debt/equity ratio. The cost of equity is assessed based on the risk-free interest rate, market and company-specific risk premium, and the Company’s assessed Beta value, which is a measurement of how the Company’s risk correlates to market risk. The Company has deemed that the same discount factor is applicable to all units in the Group. Sensitivity analysis A sensitivity analysis has been done where the variables included in the value-in-use model were changed and the effect on the recoverable amount was analyzed. For the units with remaining goodwill items, the discount factor and the growth at the end of the forecast period were tested and a negative change of 1 percent entails no further impairment requirements. Cash flow forecasts for the respective unit presuppose no major improvements in underlying profitability or working capital tied up. BE Produktion was not included in the sensitivity analysis as goodwill is fully impaired.