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18 Intangible assets
MEUR
2013 Goodwill Other
intangible
assets
Total
Gross carrying amount at 1 January 2013 11 154 165
Exchange differences - 0 0
Additions - 14 14
Disposals - -5 -5
Reclassifications - 0 0
Gross carrying amount at 31 December 2013 11 163 174
Accumulated amortization and impairment losses at 1 January 2013 - 104 104
Exchange differences - 0 0
Disposals - 0 0
Reclassifications - 0 0
Amortization for the period - 8 8
Accumulated amortization and impairment losses at 31 December 2013 - 112 112
Carrying amount at 1 January 2013 11 50 61
Carrying amount at 31 December 2013 11 51 62
MEUR
2012 Goodwill Other
intangible
assets
Total
Gross carrying amount at 1 January 2012 11 143 154
Exchange differences - 0 0
Additions - 22 22
Disposals - -18 -18
Reclassifications - 7 7
Reclassified as non-current asset held for sale - 0 0
Gross carrying amount at 31 December 2012 11 154 165
Accumulated amortization and impairment losses at 1 January 2012 - 99 99
Exchange differences - 0 0
Disposals - -4 -4
Reclassifications - 0 0
Amortization for the period - 9 9
On non-current assets reclassified as held for sale - 0 0
Accumulated amortization and impairment losses at 31 December 2012 - 104 104
Carrying amount at 1 January 2012 11 44 55
Carrying amount at 31 December 2012 11 50 61
Emission allowances
Neste Oil's Porvoo and Naantali refineries come under the European Union's greenhouse gas emission trading system, and were granted a total of 18.7 million tons emission allowances for the period 2013-2020. Emission allowances, which are purchased to cover future periods deficit are accounted for as intangible assets and measured at cost, and emission allowances received free of charge are accounted for at nominal value, i.e. at zero.
A provision is recognized to cover the obligation to buy emission allowances if emission allowances received free of charge and to cover the deficit of purchased emission allowances do not cover actual emissions. The provision is measured at its probable settlement amount. The difference between emissions made and emission allowances received, as well as the change in the probable amount of the provision, are reflected in operating profit.
As at 31 December 2013 Intangible assets include emission allowances amounting to EUR 4.0 million (2012: EUR 6.7 million). The actual amount of CO2 emissions in 2013 were 3.3 million tons (2012: 3.1 million tons). The Group has traded emission allowances for net amount of –0.2 million tons during the financial period ended 31 December 2013 (2012: 1.4 million tons).
Impairment test of goodwill
Goodwill is allocated to Group's cash-generating units (CGU's). From 10 identified CGU's goodwill is allocated to the following: Traffic Fuels within Oil Products segment and Neste Jacobs sub-group within Others segment.
A segment-level summary of the goodwill allocation is presented below:
MEUR 2013 2012
Oil Products 2 2
Other 9 9
11 11
The recoverable amount of a cash-generating unit is determined based on value-in-use calculations. These calculations use cash flow projections based on financial plans approved by the management covering a period of three years. The discount rate used is 7.0%, representing the WACC specified for the business area in question after tax, which is adjusted by tax effects in connection with the test. The WACC formula inputs are risk-free rate of return, market risk premium, industry-specific beta factor, target capital structure, borrowing cost and country risks. Cash flows beyond the three-year period are extrapolated by using 2.5 percent nominal growth rate.
The key assumptions used for the plans in Neste Jacobs are the demand and the price level for engineering services within oil refining and chemicals industries, as well as the billability rate. The key assumptions used in the impairment test are the billability rate affecting the EBITDA, and the discount rate. A reasonably possible change in the key assumptions would not create a situation in which the carrying amounts of the cash generating units would exceed their recoverable amounts.