12. Intangible fixed assets
Goodwill | Customer base | Brands and licenses | Development costs | Other intangible fixed assets | Total | |
1 January 2021 | ||||||
Acquisition prices | 73.2 | 22.6 | 33.2 | 41.6 | 64.9 | 235.5 |
Cumulative amortization/impairments | -3.1 | -17.8 | -8.7 | -10.2 | -30.0 | -69.8 |
Book value | 70.1 | 4.8 | 24.5 | 31.4 | 34.9 | 165.7 |
Movements | ||||||
Capital expenditure | 2.6 | 11.5 | 14.1 | |||
Exchange rate differences | 4.5 | 0.1 | 0.2 | 0.5 | 0.2 | 5.5 |
Acquisition of group companies | 3.1 | 2.0 | 0.1 | 2.9 | 8.1 | |
Amortization | -0.8 | -0.5 | -3.3 | -8.5 | -13.1 | |
Impairment | -19.9 | -3.4 | -23.3 | |||
Other | 0.9 | 0.9 | ||||
Net movement in book value | 7.6 | 1.3 | -20.1 | -0.7 | 4.1 | -7.8 |
31 December 2021 | ||||||
Acquisition prices | 81.0 | 25.6 | 34.1 | 47.9 | 75.5 | 264.1 |
Cumulative amortization/impairments | -3.3 | -19.5 | -29.7 | -17.2 | -36.5 | -106.2 |
Book value | 77.7 | 6.1 | 4.4 | 30.7 | 39.0 | 157.9 |
Movements | ||||||
Capital expenditure | 0.7 | 13.9 | 14.6 | |||
Exchange rate differences | 5.8 | 0.7 | 0.2 | 0.2 | 0.2 | 7.1 |
Amortization | -1.0 | -0.6 | -3.7 | -10.4 | -15.7 | |
Other | -0.3 | -0.3 | ||||
Net movement in book value | 5.8 | -0.3 | -0.4 | -3.1 | 3.7 | 5.7 |
31 December 2022 | ||||||
Acquisition prices | 87.0 | 27.2 | 34.8 | 49.2 | 90.1 | 288.3 |
Cumulative amortization/impairments | -3.5 | -21.4 | -30.8 | -21.6 | -47.4 | -124.7 |
Book value | 83.5 | 5.8 | 4.0 | 27.6 | 42.7 | 163.6 |
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 operating segments Sustainable Food Solutions and Lactic Acid & Specialties represent the levels to which company goodwill is allocated for the purposes of impairment testing. The Algae Ingredients and Incubator segments do not contain any goodwill.
Key reasons for this approach are:
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It represents a non-arbitrary, reasonable, and consistent basis for the allocation of goodwill.
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The allocation is in line with the expected synergies at the time of an acquisition with benefits for more than one entity.
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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 31-12-2022 | As at 31-12-2021 | |
Sustainable Food Solutions | 81.3 | 75.5 |
Lactic Acid & Specialties | 2.2 | 2.2 |
Total operations | 83.5 | 77.7 |
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 2023 which have been approved by the Board of Management. From 2024 onwards a stable growth of 1% (consistent with the goodwill impairment test in prior year) 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 31-12-2022 | As at 31-12-2021 | |||
pre-tax | post-tax | pre-tax | post-tax | |
Sustainable Food Solutions | 10.4% | 8.4% | 6.9% | 5.8% |
Lactic Acid & Specialties | 11.9% | 9.5% | 7.2% | 5.8% |
In addition, sensitivity analyses have been carried out in respect of the assumptions using:
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terminal value growth of 0%;
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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
In 2022, no impairments were recorded.
In 2021, the following impairments were recorded:
FiberLive
A partial impairment of € 19.6 million (recorded partly in the 'Brands and licenses' and partly in the 'Development costs' category) related to our FiberLive activities (part of the Lactic Acid & Specialties segment). This was based on a reassessment of volume development and timing due to slower than expected technological developments. The impairment on the intangible fixed assets has been recorded on the income statement line item 'Research and development costs'. Further, an impairment of € 2.0 million on Property, plant, and equipment has been recorded on the income statement line item 'Cost of sales'.
The recoverable amount (based on the value-in-use method) of the projected cash flows underlying the impairment calculation amounts to € 2.4 million and is sensitive to various assumptions, especially the volume, technological, and price development.
FDCA
A full impairment of € 3.8 million (recorded in the 'Brands and licenses' category) related to our FDCA business (part of the Incubator segment) based on a reassessment of volume development and timing due to slower than expected technological developments. The impairment has been recorded on the income statement line item 'Research and development costs'.