IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

Chapter 35 / Bu sin ess Combination s (l FRS 3)

415

February 10 2006 Intangible assets subject to amortization: Technology related intangible assets Otherintangible assets

38 22 60 45 16

Deferred tax assets Other noncurrent assets Noncurrent assets Goodwill Current assets Total assets acquired Deferred tax liabilities Othernoncurrent liabilities Noncurrent liabilities Current liabilities Total liabilities assumed Net assets acquired

121 290 42 453 23 I 24 104 128 325

The goodwill of EUR 290 million has been allocated to the Enterprise Solutions segment. The goodwill is attributable to assembled workforce and the significant synergies expected to arise sub– sequent to the acquisition. None of the goodwill acquired is expected to be deductible for tax pur– poses. In 2006, the Group acquired ownership interests or increased its existing ownership interests in the following three entities for total consideration of EUR 366 million, of which EUR 347 million was in cash, EUR 5 million in directly attributable costs and EUR 14 million in deferred cash con– sideration: • Nokia Telecommunications Ltd., based in BDA, Bejing, a leading mobile communications manufacturer in China. The Group acquired an additional 22% ownership interest in Nokia Telecommunications Ltd. on June 30, 2006. • Loudeye Corporation, based in Bristol, England, a global leader of digital music platforms and digital media distribution services. The Group acquired a 100% ownership interested in Loudeye Corporation on October 16, 2006. • gateS AG, based in Berlin, Germany, a leading supplier of mapping, routing, and navigation software and services. The Group acquired a 100% ownership interest in gateS AG on Octo– ber IS, 2006. Goodwill and aggrega te net assets acquired in these three transactions amounted to EUR 198 million and EUR 168 million, respectively. Goodwill has been allocated to the Multimedia segment and to the Mobile Phone segment. The goodwill arising from these acquisitions is attributable to as– sembled workforce and postacquisition synergies. None of the goodw ill recognized in these trans– actions is expected to be tax deductible. Goodwill is allocated to the Group' s cash-generating units (CGU) for the purpose of impair– ment testing. The allocation is made to those cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The carrying amount of goodwill allocated to the Intellisync CGU amounts to EUR 223 million and is significant relative to the Group's total carrying amount of goodwill. The Intellisync CGU is part of the Enterprise Solutions segment. The carrying amount of goodwill allocated to other Group CGU' s are not individually significant to the Group' s total carrying amount of goodwill . The recoverable amount of the Intellisync CGU is determined based on a value-in-use calcula– tion. The pretax cash flow projections employed in the value-in-use calculation are based on finan– cial plans approved by management. These projections are consistent with external sources of in– formation. Cash flows beyond the explicit forecast period are extrapolated using an estimated ter– minal growth rate of 4.9%. The terminal growth rate does not exceed the long-term average growth rates for the industry and economies in which the Intellisync CGU operates. Management expects that moderate market share growth in a high-growth industry segment will drive strong revenue growth. Increased volume is expected to cause operating profit margins to improve to prevailing levels in the industry. The pretax cash flow projections are discounted using a pretax discount rate of 18.5%. The aggregate carrying amount of goodwill allocated across multiple CGU' s amounts to EUR 309 million at the end of 2006 and the amount allocated to each individual CGU is not indi– vidually significant.