18. Goodwill and other intangible assets

The acquisition costs as well as accumulated amortization and impairment of intangible assets consist of the following:

The carrying amounts for intangible assets as of December 31, 2021, and 2020, were as follows:

The item ‘Patents and technology’ on December 31, 2021, consists of patents worth EUR 5.311 thousand (Dec 31,2020 : EUR 6.911 thousand) and technology worth EUR 17.402 thousand (Dec 31, 2020: EUR 18.514 thousand). Unpatented technologies contain specific process know-how in the production process identified in the course of company acquisitions.

Internally generated intangible assets include development costs for technologies in the amount of EUR 6.890 thousand (Dec 31, 2020: EUR 7.862 thousand) as well as internally generated software in the amount of EUR 2.885 thousand (Dec 31, 2020: EUR 4.206 thousand).

The item ‘Intangible assets, other’ consists mainly of prepayments.

In addition to additions and disposals and scheduled amortization, the changes in intangible assets also resulted from positive exchange rate effects, in particular from the US dollar region.

The change in goodwill is summarized as follows:

Besides the goodwill, there are intangible assets within trademarks with an indefinite useful life in the amount of EUR 28.165 thousand (2020: EUR 25.996 thousand) resulting from the acquisition of NDS in 2014. From a market perspective, NORMA Group assumed an indefinite useful life for these acquired trademarks, which mainly include the corporate brand NDS®, because these brands have been established in the market for a number of years and there is no foreseeable end to their useful life, therefore useful lives are indefinite. Trademarks with indefinite useful lives are fully allocated to the cash-generating unit (CGU) Americas.

Trademarks with an unknown term of use are subjected to an annual impairment test pursuant to IAS 36 on the basis of the recoverable amount pursuant to the procedure described in note 3 ‘Summary of Significant Accounting Policies – Impairment of Non-Financial Assets’.

On December 31, 2021, and 2020, the intangible assets were unsecured.

Impairment Tests for Goodwill

Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to geographical areas. A summary of the goodwill allocation is presented below:

Goodwill for the CGU Americas increased in 2021 mainly due to currency effects.

The recoverable amount of a CGU is determined based on fair value less costs to sell, which is calculated by discounting projected cash flows. Based on the inputs used for this valuation technique, fair values are classified as level 3 fair values. note 3 ‘Summary of Significant Accounting Policies – Fair Value Estimation’ The determination of future cash flows is based on internal corporate planning, which is prepared with the bottom-up method using certain uniform Group-wide assumptions and covers a period of five years. The underlying parameters, such as sales growth and margins, are determined on the basis of expertise gained in the past, current economic results and forecasts by external industry experts such as the VDMA industry association, the German Association of the Automotive Industry (VDA) and the LMC Automotive (LMCA). The average growth rates of sales in the planning period are between 6.4 percent and 11.6 percent.

For the extrapolation of cash flows beyond this five-year period, the estimated growth rates given below are used. NORMA Group believes that these growth rates do not exceed the long-term average growth rate for the geographical area of the respective CGU.

The discount rates used are after-tax rates and reflect the specific risk of each CGU. The respective before-tax rates are 8.38% (2020: 12.1%) for the CGU EMEA, 6.24% (2019: 8.41%) for the CGU Americas and 8.71% (2020: 12.46%) for the CGU Asia-Pacific.

The key assumptions used for fair value less costs to sell calculations are as follows:

A sensitivity analysis for the individual CGUs takes into account any changes in the key assumptions that are considered possible. The sensitivity analysis was performed in isolation for all significant influencing factors, i.e., a change in the fair value of a cash-generating unit is only caused by a reduction or increase in the respective influencing factor.

Impairment Losses on Other Intangible Assets

No significant impairment losses or reversals of impairment losses were recognized for intangible assets in fiscal year 2021.