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15Goodwill and other intangible assets

 

 

2022

millions of CHF

 

Goodwill

 

Trademarks and licenses

 

Research and development

 

Computer software

 

Customer relationship

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

1’067.3

 

93.8

 

9.8

 

47.2

 

449.5

 

1’667.6

Divestitures of subsidiaries

 

 

 

 

–0.3

 

–1.4

 

–1.7

Classification as held for sale 1)

 

–8.6

 

 

 

–0.8

 

–12.6

 

–22.0

Additions

 

 

 

2.2

 

6.4

 

0.1

 

8.7

Disposals

 

 

 

 

–4.1

 

–8.6

 

–12.6

Reclassifications

 

 

 

4.1

 

1.8

 

0.2

 

6.0

Currency translation differences

 

–41.8

 

–1.3

 

–0.0

 

0.5

 

–27.7

 

–70.3

Balance as of December 31

 

1’016.9

 

92.5

 

16.1

 

50.7

 

399.5

 

1’575.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization and impairment losses

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

340.0

 

38.1

 

8.2

 

33.3

 

244.2

 

663.8

Divestitures of subsidiaries

 

 

 

 

–0.3

 

–1.4

 

–1.7

Classification as held for sale 1)

 

 

 

 

–0.3

 

–6.4

 

–6.7

Additions

 

 

8.4

 

1.1

 

2.3

 

27.0

 

38.8

Disposals

 

 

 

 

–4.1

 

–8.6

 

–12.6

Currency translation differences

 

 

–0.7

 

–0.0

 

–0.2

 

–16.2

 

–17.1

Balance as of December 31

 

340.0

 

45.8

 

9.3

 

30.7

 

238.6

 

664.5

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1

 

727.3

 

55.7

 

1.6

 

14.0

 

205.3

 

1’003.8

As of December 31

 

676.9

 

46.7

 

6.7

 

20.0

 

160.8

 

911.2

1) In 2022, Goodwill in the amount of CHF 8.6 million and other intangible assets with a net book value of 6.7 million were allocated to the Russian disposal group and fully impaired; reference is made to note 6. The impairments of CHF 15.3m are recorded in other operating expenses (see note 12).

 

 

2021

millions of CHF

 

Goodwill

 

Trademarks and licenses

 

Research and development

 

Computer software

 

Customer relationship

 

Total

Acquisition cost

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

1’286.0

 

221.6

 

15.3

 

58.3

 

628.4

 

2’209.6

Acquired through business combination

 

56.6

 

11.0

 

 

 

68.7

 

136.3

Derecognized as discontinued operations

 

–265.4

 

–78.8

 

–5.8

 

–16.7

 

–239.8

 

–606.6

Additions

 

 

 

0.3

 

6.7

 

0.0

 

6.9

Disposals

 

 

–61.2

 

–0.0

 

–2.4

 

–0.7

 

–64.4

Currency translation differences

 

–9.9

 

1.2

 

–0.0

 

1.4

 

–7.1

 

–14.4

Balance as of December 31

 

1’067.3

 

93.8

 

9.8

 

47.2

 

449.5

 

1’667.6

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortization and impairment losses

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1

 

340.0

 

148.7

 

11.4

 

46.5

 

316.1

 

862.6

Derecognized as discontinued operations

 

 

–66.2

 

–4.4

 

–13.9

 

–112.7

 

–197.2

Additions

 

 

16.9

 

1.3

 

2.8

 

45.9

 

66.8

Disposals

 

 

–61.2

 

–0.0

 

–2.3

 

–0.7

 

–64.2

Impairments

 

 

 

 

 

0.2

 

0.2

Currency translation differences

 

 

–0.1

 

–0.0

 

0.2

 

–4.6

 

–4.5

Balance as of December 31

 

340.0

 

38.1

 

8.2

 

33.3

 

244.2

 

663.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1

 

946.0

 

73.0

 

4.0

 

11.8

 

312.3

 

1’347.0

As of December 31

 

727.3

 

55.7

 

1.6

 

14.0

 

205.3

 

1’003.8

Goodwill impairment test

 

 

2022

millions of CHF

 

Goodwill

 

Headroom

 

Growth rate residual value

 

Pretax discount rate

Flow Equipment

 

384.9

 

605.7

 

2.0%

 

8.9%

Services

 

205.0

 

1’275.5

 

2.0%

 

10.2%

Chemtech

 

87.0

 

717.6

 

2.0%

 

10.5%

Total as of December 31

 

676.9

 

2’598.8

 

 

 

 

 

 

2021

millions of CHF

 

Goodwill

 

Headroom

 

Growth rate residual value

 

Pretax discount rate

Flow Equipment

 

416.3

 

545.0

 

2.0%

 

8.3%

Services

 

222.0

 

1’208.2

 

2.0%

 

10.5%

Chemtech

 

88.9

 

684.2

 

2.0%

 

9.5%

Discontinued operations

 

 

 

n/a

 

n/a

Total as of December 31

 

727.3

 

2’437.4

 

 

 

 

Goodwill is allocated to the smallest cash-generating unit at which goodwill is monitored for internal management purposes (i.e., division). The recoverable amount has been determined based on a value-in-use calculation. The three-year strategic plan approved by the Board of Directors in the first quarter of the year forms the basis for the projected cash flows, with two additional periods based on a management calculation. These cash flow projections were updated by management in the middle of the year following the classification of the Russian business as held for sale and the associated write-downs. These updated cash flow projections cover a period of four and a half years. Cash flows beyond the planning period are extrapolated using a terminal value including a growth rate as stated above. 

As of December 31, 2022, there is no indication of goodwill impairment. Updating the impairment test would not have resulted in any goodwill impairment.

Sensitivity analyses

The recoverable amount from cash-generating units is measured on the basis of value-in-use calculations significantly impacted by the terminal growth rate used to determine the residual value, the discount rate and the projected cash flows. The table above shows the amount by which the estimated recoverable amount of the CGU exceeds its carrying amount (headroom).

Management identified that for the CGU Flow Equipment, a reasonably possible decrease in the terminal growth rate by 6.6 percentage points could cause the carrying amount to exceed the recoverable amount (2021: decrease by 5.0 percentage points).

Management determined there are no other reasonably possible changes in key assumptions that would result in a goodwill impairment.