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13 Intangible assets and goodwill

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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:

  • 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%;

  • 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;

  • 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.