1 Intangible assets

Intangible assets have been stated at cost of acquisition. They are subject to scheduled straight-line amortisation on the basis of their respective useful lives.

The research and development expenses of the MVV Energie Group constitute period expenses pursuant to IAS 38. The requirements for them to be capitalised were therefore not fulfilled. These expenses amounted to Euro 3,577 thousand in the 2004/05 financial year (previous year: Euro 3,674 thousand). Research and development expenses focus on activities aimed at achieving an ongoing improvement in working processes, product development and technological enhancements.

The concessions, industrial property rights and similar rights and values consist of software and of contractually agreed grants to customers and suppliers. The term of such rights is based on the respective economic aspects and contractual stipulations and ranges from 3 to 20 years.

Goodwill stated as a result of business combinations undertaken prior to 31 March 2004 was amortised over a period of between 10 and 20 years up to 30 September 2004.

In order to undertake the goodwill impairment tests required by IAS 36, cashgenerating units were formed on the level of the individual legal units, or on the basis of subgroups consisting of legal units in the same geographical area.

The higher of the use value or the attributable current value, less sales expenses, represents the achievable value of the cash-generating unit in question. The use values of the cash-generating units are calculated on the basis of cash flow forecasts approved by the management and supervisory bodies. The cash flow forecasts are based on experience and on previous years’ results, as well as on expectations as to future market developments.

The cash flow forecasts involve a detailed budgeting period of five years. The results for subsequent financial years are extrapolated on the basis of the final year of the detailed budgeting period. Growth rates of 0.0% to 1.0% were applied in this respect. The growth rates correspond to the long-term average growth rates in the markets in which the companies are active. They are in agreement with external sources of information concerning expected market developments.

To determine the use value, the expected cash flows are discounted using discount rates of 6.25% to 9.85% after taxes. These discount rates have been calculated on the basis of observable market data. The book value of goodwill showed the following developments:

Euro 000s	30.9.2005	30.9.2004

Stadtwerke Solingen	68,238	68,238

Energieversorgung Offenbach	65,066	69,458

Stadtwerke Ingolstadt	64,332	64,332

MVV Czech Republic	4,368	-5,741

MVV Poland	4,343	2,082

Other	8,164	6,934

	214,511	205,303

The negative goodwill eliminated without any impact on earnings within the framework of the transition to IFRS 3 amounts to Euro 5,396 thousand. There has been a reduction in goodwill at Energieversorgung Offenbach on account of the deconsolidation of 3T Telekommunikationsgesellschaft mbH, Offenbach. At MVV Polska Sp. z o.o., the release of negative goodwill without any impact on earnings at the beginning of the financial year led to an increase in its book value. This resulted in an impairment requirement amounting to Euro 1,387 thousand, given that the discontinuation of negative goodwill resulted in an increase in the net assets of the cash-generating unit.

Given the changes currently thought possible in the principal assumptions underlying the determination of the achievable value, no further value adjustment is currently to be expected. Were the city of Offenbach to exercise its put option concerning its shares in Energieversorgung Offenbach AG, however, which is currently not expected, then this would result in a future impairment requirement. Reference is made to Note 16 for further details.

There were no indications of any requirement for write-backs pursuant to IAS 36.

There are no constraints on the ownership rights to the intangible assets, neither have any intangible assets been provided as security for liabilities.

Intangible assets Euro 000s	Concessions, industrial property rights and similar rights and values	Goodwill	Advance payments	Total

Gross value at 1.10.2004	202,258	249,902	1,933	454,093

Additions: shareholdings	2	-3,091	–	-3,089

Disposals: shareholdings	-2,787	6,129	-30	3,312

Currency adjustments	226	-520	4	-290

Investments	3,520	–	3,840	7,360

Disposals	-5,432	–	–	-5,432

Transition from IAS 22 to IFRS 3	–	8,232	–	8,232

Reclassifications	1,392	–	-926	466

Gross value at 30.9.2005	199,179	260,652	4,821	464,652


Amortisation at 1.10.2004	93,574	44,599	2	138,175

Additions: shareholdings	–	–	–	–

Disposals: shareholdings	-2,518	704	–	-1,814

Currency adjustments	195	-205	1	-9

Amortisation	14,602	-1,793	–	12,809

Disposals	-5,016	–	–	-5,016

Transition from IAS 22 to IFRS 3	–	2,836	–	2,836

Reclassifications	149	–	–	149

Amortisation at 30.9.2005	100,986	46,141	3	147,130


Subsidies at 1.10.2004	60	–	–	60

Disposals: shareholdings	-23	–	–	-23

Subsidies at 30.9.2005	37	–	–	37


Net values at 30.9.2005	98,156	214,511	4,818	317,485


Net values at 30.9.2004	108,624	205,303	1,931	315,858