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 amortized on a straight-line basis over the best estimate of their useful lives. The amortization period and the amortization 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 and goodwills 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.  From 2005 on any goodwill arising from business combinations is no longer 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 business combination. If the carrying amount exceeds the value in use, that is calculated by using a discounted cash-flow (DCF) calculation - based on future cash-flows projected by the Managing Board - an impairment loss is recognised. An impairment loss recognised for goodwill will not be reversed in a subsequent period. The discount rate used for DCF calculation is based on an interest rate, which represents actual assessment of possible changes of exchange rates as well as specific risks of an asset. In Euro land a discount rate of 8.68% is used.

At acquisition date substantial goddwills have been allocated to existent cash-generating units of Andritz AG (1999) as well as to the pulp mill division acquired by the Andritz - Ahlstrom Group (2000/2001).

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.

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