F.1. Intangible assets
| In CZK million, as at 31 December | 2014 | 2013 |
|---|---|---|
| Software | 1,076 | 1,291 |
| Other intangible assets | 7 | 30 |
| Goodwill | 463 | 472 |
| Total intangible assets | 1,546 | 1,793 |
The Company has outsourced a part of its IT operations to the related party Generali Infrastructure Services s.c.a.r.l. In relation to this business decision intangible assets in the total amount of CZK 114 million were sold to the company, software in the amount of CZK 92 million and other intangible assets in the amount of CZK 22 million. A profit of CZK 11 million has been realised.
On acquisition of insurance business in Poland in 2012 goodwill was recognised. The cash-generating unit (CGU) to which goodwill has been allocated is tested for impairment annually by comparing the carrying amount of the CGU, including the goodwill, with the recoverable amount of the unit. The recoverable amount is calculated on the basis of value in use i.e. the present value of the future cash-flows expected to be derived from the cash-generating unit.
The model calculates the present value of the estimated future cash inflows and outflows, considering projections on budgets/forecasts approved by management (15 years). Key assumptions used for value in use calculations to test the recoverability of goodwill are the earnings projection, long term growth rate (2%) and discount rate (7.6%). The gross combined ratio is the indicator summarizing the earning projections in the best way. The ratio is expected to improve from 116.1% in 2014 to 98.9% in 2017. Such improvement is a consequence of both better claims ratio and expected economy of scale following the planned increase in volumes, which shall reduce the expense ratio.
Annual impairment review resulted in no impairment charge neither for 2014 nor 2013. As at 31 December 2014 the value of goodwill decreased by CZK 9 million as a consequence of foreign currency revaluation.
F.1.1. Software
| In CZK million, as at 31 December | 2014 | 2013 |
|---|---|---|
| Acquisition cost as at the beginning of the year | 5,864 | 5,666 |
| Amortisation as at the beginning of the year | (4,573) | (4,287) |
| Carrying amount as at the beginning of the year | 1,291 | 1,379 |
| Additions | 233 | 317 |
| Disposals | (115) | (32) |
| Amortisation for the period | (333) | (375) |
| Foreign currency translation | — | 2 |
| Acquisition cost as at the end of the year | 5,593 | 5,864 |
| Amortisation as at the end of the year | (4,517) | (4,573) |
| Carrying amount as at the end of the year | 1,076 | 1,291 |
F.1.2. Other intangible assets
| In CZK million, for the year ended 31 December | 2014 | 2013 |
|---|---|---|
| Acquisition cost as at the beginning of the year | 178 | 152 |
| Amortisation and impairment as at the beginning of the year | (148) | (128) |
| Carrying amount as at the beginning of the year | 30 | 24 |
| Additions | 16 | 26 |
| Disposals | (22) | — |
| Amortisation for the period | (17) | (20) |
| Acquisition cost as at the end of the year | 59 | 178 |
| Amortisation and impairment as at the end of the year | (52) | (148) |
| Carrying amount as at the end of the year | 7 | 30 |