Sulzer Annual Report 2024

13 Goodwill and other intangible assets

	2024
millions of CHF	Goodwill	Trademarks and licenses	Research and development	Computer software	Customer relationship	Total
Acquisition cost
Balance as of January 1	977.9	88.0	18.6	53.4	378.5	1’516.3
Acquired through business combination	10.8	2.4	0.6	–	3.9	17.8
Additions	–	0.1	2.2	6.6	0.9	9.7
Disposals	–	–0.0	–	–0.4	–1.5	–1.9
Reclassifications	–	–	–	0.4	–	0.4
Currency translation differences	12.6	3.2	0.1	0.6	4.2	20.8
Balance as of December 31	1’001.4	93.6	21.5	60.6	385.9	1’563.1

Accumulated amortization and impairment losses
Balance as of January 1	340.0	51.3	10.6	31.5	248.1	681.5
Additions 1)	–	8.1	1.4	4.2	24.8	38.5
Disposals	–	–0.0	–	–0.4	–1.5	–1.9
Currency translation differences	–	2.2	0.0	0.3	2.5	5.1
Balance as of December 31	340.0	61.6	12.0	35.7	273.9	723.2

Net book value
As of January 1	637.9	36.6	8.0	21.8	130.4	834.8
As of December 31	661.4	32.1	9.5	24.9	112.1	839.9

1) In the consolidated income statement, the amortization expense for trademark and licenses is recognized in “Research and development expense” and in “Selling and distribution expense”, the amortization expense for Customer relationship is primarily recognized in “Selling and distribution expense”.

	2023
millions of CHF	Goodwill	Trademarks and licenses	Research and development	Computer software	Customer relationship	Total
Acquisition cost
Balance as of January 1	1’016.9	92.5	16.1	50.7	399.5	1’575.6
Additions	–	–	0.0	5.1	0.9	6.1
Disposals	–	–	–	–0.7	–3.3	–4.0
Reclassifications	–	–	2.6	0.0	0.5	3.1
Currency translation differences	–38.9	–4.6	–0.1	–1.7	–19.2	–64.5
Balance as of December 31	977.9	88.0	18.6	53.4	378.5	1’516.3

Accumulated amortization and impairment losses
Balance as of January 1	340.0	45.8	9.3	30.7	238.6	664.5
Additions 1)	–	7.9	1.3	2.8	24.6	36.6
Disposals	–	–	–	–0.7	–3.3	–4.0
Currency translation differences	–	–2.4	–0.0	–1.2	–11.9	–15.5
Balance as of December 31	340.0	51.3	10.6	31.5	248.1	681.5

Net book value
As of January 1	676.9	46.7	6.7	20.0	160.8	911.2
As of December 31	637.9	36.6	8.0	21.8	130.4	834.8

Goodwill impairment test

	2024
millions of CHF	Goodwill	Headroom	Growth rate residual value	Pretax discount rate
Flow	375.4	647.7	2.0%	12.7%
Services	202.1	1’087.1	2.0%	14.1%
Chemtech	83.9	1’085.8	2.0%	11.9%
Total as of December 31	661.4	2’820.7

	2023
millions of CHF	Goodwill	Headroom	Growth rate residual value	Pretax discount rate
Flow	362.3	628.5	2.0%	9.9%
Services	193.8	1’620.3	2.0%	10.8%
Chemtech	81.8	830.0	2.0%	10.9%
Total as of December 31	637.9	3’078.8

Goodwill is allocated to the smallest cash-generating unit (CGU) 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. A five-year strategic plan approved by the Board of Directors in February 2024 forms the basis for the projected cash flows. Cash flows beyond the planning period are extrapolated using a terminal value including a growth rate as stated above.

The calculated value-in-use exceeded the carrying amount of the cash-generating unit with a substantial margin (i.e., headroom) and an update of the impairment test at the end of the year would not have resulted in any goodwill impairment. As of December 31, 2024, there is no indication of a 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).

Sensitivity analyses were performed with regards to key assumptions, that would not change the conclusions of the impairment test. An increase of the discount rate by 5.0 percentage points or a decrease of the terminal growth rate by 5.0 percentage points would still lead to a recoverable amount exceeding the carrying amount for all CGU’s.