EUR 000 | Goodwill | Customer relationships and similar items | Software | Internally developed software | Licences | Total |
Balance at 1 October 2019: | ||||||
Cost | 6,395 | 1,586 | 16,738 | 19,757 | 544 | 45,020 |
Accumulated amortisation and impairment | – | 1,586 | 9,371 | 2,991 | 16 | 13,964 |
Carrying amount | 6,395 | - | 7,367 | 16,766 | 528 | 31,056 |
Movements during 2019/2020: | ||||||
Additions | – | – | 901 | 9,221 | – | 10,122 |
Amortisation | – | – | -1,989 | -3,600 | – | -5,589 |
Impairment | – | – | – | -20,211 | – | -20,211 |
Reversal of impairment | – | – | – | 356 | – | 356 |
Disposals cost | – | -1,586 | – | -24,834 | – | -26,420 |
Disposals accumulated amortisation | – | 1,586 | – | 24,834 | – | 26,420 |
Balance at 30 September 2020 | 6,395 | – | 6,279 | 2,532 | 528 | 15,734 |
Cost | 6,395 | – | 17,639 | 5,283 | 544 | 29,861 |
Accumulated amortisation and impairment | – | – | 11,360 | 2,751 | 16 | 14,127 |
Balance at 30 September 2020 | 6,395 | – | 6,279 | 2,532 | 528 | 15,734 |
Movements during 2020/2021: | ||||||
Additions | – | – | 461 | 673 | – | 1,134 |
Amortisation | – | – | -1,624 | -998 | – | -2,622 |
Disposals cost | – | – | -335 | -1,985 | – | -2,320 |
Disposals accumulated amortisation | – | – | 335 | 1,985 | – | 2,320 |
Balance at 30 September 2021 | 6,395 | – | 5,116 | 2,207 | 528 | 14,246 |
Cost | 6,395 | – | 17,765 | 3,971 | 544 | 28,675 |
Accumulated amortisation and impairment | – | – | 12,649 | 1,764 | 16 | 14,429 |
Balance at 30 September 2021 | 6,395 | – | 5,116 | 2,207 | 528 | 14,246 |
Software
Software mainly relates to backoffice systems. The remaining period of amortisation as at 30 September 2021 is 2 to8 years (30 September 2020: 2 to 8 years).
Internally developed software
Internally developed software mainly relates to digital risk software. During 2020/2021 an amount of EUR 673 was capitalised (2019/2020: EUR 9,221).
Impairment loss
In 2020/2021, no impairment loss was recognised with respect to intangible fixed assets (2019/2020: a loss of EUR 20,211).
Impairments 2019/2020
The majority of the total impairment loss in 2019/2020 relates to the internally developed advanced digital risk platform DRP (EUR 18,418). In addition, an amount of EUR 1,401 is related to innovation software. Furthermore, EUR 392 of the total impairment loss in 2019/2020 is related to internally developed valuation software.
In 2019/2020, a reversal of impairment of EUR 356 was recognised with respect to intangible fixed assets, related to the internally developed digital risk software Sofy.
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating units (CGUs). The aggregate carrying amounts of goodwill allocated to each CGU are as follows:
EUR 000 | 30 September 2021 | 30 September 2020 |
KPMG Advisory | 6,395 | 6,395 |
On an annual basis, the Group carries out impairment tests on capitalised goodwill, which are based on the estimated cash flows of the related CGU. The CGU represents the lowest level within the Group at which the goodwill is monitored for internal management purposes, which is not higher than the Group’s operating segment as reported in Note 4 Segment reporting. The recoverable amount of the relevant CGU is determined on the basis of its value in use. Determination of the value in use is performed by using estimated future cash flows, based on the 2021/2022 business plan approved by the Board of Management and further financial projections for the financial years through 2023/2024. Cash flows after this period are extrapolated by using a growth rate to calculate the terminal value.
The key assumptions in the cash flow projections are:
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Total revenue growth and result development: based on historical performance, expected future market developments, and the 2021/2022 business plan. For the period 2021/2022, a revenue growth of 11% is included, and for the period thereafter, a growth of 0%;
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A discount rate of 8.3% (2019/2020: 10.8%) to calculate the present value of the estimated future cash flows, to which pre-tax discount rates have been applied. The pre-tax discount rates are determined on the basis of the individual post-tax weighted average cost of capital calculated;
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An indefinite growth rate of 0% (2019/2020: 0%).
The values assigned to the key assumptions represent management’s assessment of future trends in the respective markets and are based on both external and internal sources (historical and forward looking data).
A sensitivity analysis has been performed, which took a change in the pre‑tax weighted average cost of capital into consideration. An increase of 5 percentage point confirms sufficient headroom in the cash generating unit.
Based on the outcome of the impairment tests, no impairments have been recorded.