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, 2023, and 2022, were as follows:

As at December 31, 2023, the ‘Patents & technology’ item consisted of patents amounting to EUR 2,169 thousand (Dec 31, 2022: EUR 3,744 thousand) and in the amount of EUR 13,067 thousand from technology (Dec 31, 2022: EUR 15,343 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 5,401 thousand (Dec 31, 2022: EUR 5,743 thousand) as well as internally generated software in the amount of EUR 470 thousand (Dec 31, 2022: EUR 238 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 estimated useful lives for other intangible assets are as follows:

•Patents: 5 to 10 years

•Customer lists: 4 to 20 years

•Technology: 10 to 20 years

•Licenses, rights: 3 to 5 years

•Trademarks: indefinite or 20 years

•Software: 3 to 5 years

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 28,869 thousand (2022: EUR 29,908 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 indefinite useful lives are subject to an annual impairment test in accordance with IAS 36 on the basis of the recoverable amount in accordance with the procedure described in NOTE 3. SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES – IMPAIRMENT OF NON-FINANCIAL ASSETS. As part of the application of the license price analogy, the fair value of the brands is determined using a notional license payment based on the respective brand-relevant sales derived from the planning. The assumption of future sales is based on the expectations of local management. For the NDS brand, a discount rate of 7.04% (2022: 6.75%) was applied in the detailed planning period of five years and a growth rate of 1.00% (2022: 1.00%) are taken into account. With regard to the impairment test of the NDS brand, there were no indications of impairment.

On December 31, 2023, and 2022, 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:

The change in goodwill is the result of currency effects.

The recoverable amount of a CGU is determined based on fair value less costs to dispose, which is calculated by discounting projected cash flows. In view of the input factors used for this valuation technique, the fair values determined are to be 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 detailed planning period are between 6.67% for CGU EMEA (2022: 6.51%), 8.07% for CGU Americas (2022: 5.66%) and for CGU Asia-Pacific 13.62% (2022: 9,93%). With regard to the average EBIT margin in the same planning period, this results in a ratio of 10.32% (2022: 9.97%) for CGU EMEA, 11.36% (2022: 11.66%) for CGU Americas and 11.55 % (2022: 11.13%) for the Asia-Pacific CGU.

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 corresponding pre-tax interest rates for the EMEA CGU are 13.62% (2022: 12.11%) for the CGU Americas, 11.63% (2022: 9.04%) and for the CGU Asia-Pacific 14.04% (2022: 12.71%).

The fair value less costs to sell is mainly determined by the terminal value (present value of the perpetual annuity), which is particularly sensitive to changes in the assumptions for the long-term growth rate and the discount rate.

Both assumptions are determined individually for each cash-generating unit. The discount rates are based on the concept of Weighted Average Cost of Capital (WACC).

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

The aforementioned assumptions relate to the goodwill impairment test performed as part of the annual impairment test regularly carried out as of September 30.

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. There was no need for impairment in any of the sensitivities identified.

Impairment of other intangible assets

No material impairment losses or reversals of impairment losses on intangible assets were recognized in the financial year 2023.