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Financial statements

12. Intangible fixed assets

 

Goodwill

Customer base

Brands and licenses

Development costs

Other intangible fixed assets

Total

1 January 2018

      

Acquisition prices

61.7

17.5

33.5

52.1

34.8

199.6

Cumulative amortization/impairments

-2.9

-11.9

-7.5

-20.7

-26.3

-69.3

Book value

58.8

5.6

26.0

31.4

8.5

130.3

       

Movements

      

Capital expenditure

   

1.9

10.2

12.1

Acquisition of group companies

    

0.1

0.1

Exchange rate differences

2.5

0.1

0.2

0.1

 

2.9

Amortization

 

-2.0

-0.5

-1.8

-1.9

-6.2

Net movement in book value

2.5

-1.9

-0.3

0.2

8.4

8.9

       

31 December 2018

      

Acquisition prices

64.4

18.0

33.9

54.1

45.4

215.8

Cumulative amortization/impairments

-3.1

-14.3

-8.2

-22.5

-28.5

-76.6

Book value

61.3

3.7

25.7

31.6

16.9

139.2

       

Movements

      

Capital expenditure

   

2.4

12.9

15.3

Acquisition of group companies

18.4

8.0

   

26.4

Exchange rate differences

0.7

-0.2

  

0.1

0.6

Amortization

 

-2.7

-0.5

-2.1

-2.9

-8.2

Impairment

   

-0.4

 

-0.4

Net movement in book value

19.1

5.1

-0.5

-0.1

10.1

33.7

       

31 December 2019

      

Acquisition prices

83.8

26.0

34.1

56.5

52.3

252.7

Cumulative amortization/impairments

-3.4

-17.2

-8.9

-25.0

-25.3

-79.8

Book value

80.4

8.8

25.2

31.5

27.0

172.9

Amortization rates

 

7 - 20%

5 - 10%

5 - 33.3%

33.3%

 

Goodwill impairment test

Goodwill is allocated to Corbion's cash generating units identified as the operating segments. The Food and Biochemicals operating segments represent the levels to which company goodwill is allocated for the purposes of impairment testing. The Innovation Platforms unit does not contain any goodwill.

Key reasons for this approach are:

  • It represents a non-arbitrary, reasonable, and consistent basis for the allocation of goodwill.

  • The allocation is in line with the expected synergies at the time of an acquisition with benefits for more than one entity.

  • The allocation represents the lowest level where goodwill is monitored by the Board of Management, while not being larger than the operating segments.

Breakdown of the book value of the goodwill by segment

 

As at 31-12-2019

As at 31-12-2018

Food

78.2

59.1

Biochemicals

2.2

2.2

Total operations

80.4

61.3

The recoverable amount of both segments is determined using a value-in-use method. The main assumptions used are derived from the financial and business plans for 2020 which have been approved by the Board of Management. From 2021 onwards a stable growth of 1% is taken into account in combination with a relatively constant cost structure.

The future cash flows are discounted on the basis of the WACC before tax.

Overview of the WACC used

 

As at 31-12-2019

 

As at 31-12-2018

 
 

pre-tax

post-tax

pre-tax

post-tax

Food

8.2%

6.6%

9.2%

7.1%

Biochemicals

8.5%

6.9%

9.3%

7.3%

In addition, sensitivity analyses have been carried out in respect of the assumptions using:

  • A terminal value growth of 0%.

  • A discount rate of +1%.

Both assumptions applicable at the same time would not lead to any impairment.

Given the above assumptions and the outcome of analyses, the Board of Management has concluded that the value in use of both segments is not lower than the book value of the segments including goodwill.

The majority of the brands and licenses consist of assets not yet available for use.

Impairment testing other intangible fixed assets

An impairment of € 0.4 million was recorded related to our Algae business (part of the Innovation platforms segment) on our US based development costs based on a reassessment of volume development and timing of the expected Algae related sales.