Intangible assets are accounted for at acquisition cost. After initial recognition, intangible assets are accounted for at cost less accumulated amortization and any accumulated impairment losses. Intangible assets are amortised on a straight-line basis over the best estimate of their useful lives. The amortisation period and the amortisation method are reviewed annually at each financial year-end.

Concessions, industrial rights and similar rights and values

Amounts paid for concessions, industrial rights and similar rights and values are capitalised and then amortised on a straight-line basis over the expected periods of benefit. The expected useful lives vary from 3 to 15 years.

Business Combinations and Goodwill

For business combinations occurring on or after 31 March 2004 IFRS 3 has been applied. According to this standard goodwill is measured as the residual cost of the business combination after recognising the acquiree’s identifiable, assets, liabilities and contingent liabilities. Any goodwill arising from business combinations is not amortized. Goodwill is tested for impairment in accordance with IAS 36 annually, or more frequently if events or changes in circumstances indicate that it might be impaired. In determining whether an impairment write-down is required, goodwill is allocated to the cash-generating units that are expected to benefit from the synergies of the combination and the recoverable amount is compared with its carrying amount.

After reassessment of the identification and the measurement of the acquirees’s identifiable assets, liabilities and contingent liabilities and the measurement of cost of the combination, any negative goodwill is recognised in profit or loss immediately.

For any goodwill arising from business combinations effected before 31 March 2004 IFRS 3 has not been applied for the business year ended 31 December 2004. Goodwill arising from these combinations is carried at cost less accumulated amortisation and accumulated impairment losses. The amortisation is calculated on a straight-line basis over its useful life. The amortisation period ranges from 7 to 15 years. The unamortised balances are reviewed at each balance sheet date by assessing the probability of continuing future benefits. If there is an indication that goodwill may be impaired, the recoverable amount is determined for the cash-generating unit to which the goodwill belongs. If the carrying amount is higher than the recoverable amount, an impairment loss is recognised. Beginning with the business year 2005 according to transitional provisions of IFRS 3 the amortisation will be discontinued and the carrying amount of accumulated depreciation will be eliminated against the carrying amount of goodwill. The impairment tests according to IAS 36 will be performed annually.

Goodwill and negative goodwill arising from business combinations effected before 1 January 1995 were charged or credited directly to equity.