21 INTANGIBLE ASSETS AND GOODWILL
21.1 AMOUNTS RECOGNIZED IN THE FINANCIAL STATEMENTS
| Software | Develop- | Patents | Acquired brand | Acquired client relationships | Acquired technology | Goodwill | Total 2020 |
CHF 1,000 |
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At cost |
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Balance at January 1, 2020 | 32,422 | 90,041 | 352 | 6,027 | 28,049 | 22,264 | 142,729 | 321,884 |
Internally developed | 2,201 | 15,318 | - | - | - | - | - | 17,519 |
Disposal | - | (102) | - | - | - | - | - | (102) |
Translation differences | (23) | (373) | (11) | (432) | (1,629) | (1,164) | (6,631) | (10,263) |
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Balance at December 31, 2020 | 34,600 | 104,884 | 341 | 5,595 | 26,420 | 21,100 | 136,098 | 329,038 |
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Accumulated amortization and impairment losses |
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Balance at January 1, 2020 | 26,705 | 57,522 | 332 | 1,226 | 6,689 | 6,445 | - | 98,919 |
Annual amortization | 1,323 | 9,049 | 20 | 517 | 1,860 | 2,287 | - | 15,056 |
Impairment | - | 2,051 | - | - | - | - | - | 2,051 |
Disposal | - | (102) | - | - | - | - | - | (102) |
Translation differences | (5) | - | (11) | (87) | (382) | (309) | - | (794) |
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Balance at December 31, 2020 | 28,023 | 68,520 | 341 | 1,656 | 8,167 | 8,423 | - | 115,130 |
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Net book value | 6,577 | 36,364 | - | 3,939 | 18,253 | 12,677 | 136,098 | 213,908 |
| Software | Develop- | Patents | Acquired order backlog | Acquired brand | Acquired client relationships | Acquired technology | Goodwill | Total 2021 |
CHF 1,000 |
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At cost |
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Balance at January 1, 2021 | 34,600 | 104,884 | 341 | - | 5,595 | 26,420 | 21,100 | 136,098 | 329,038 |
Acquisition through business combination | - | - | - | 16,218 | 11,597 | 224,692 | 58,801 | 624,901 | 936,209 |
Internally developed | 3,004 | 9,579 | - | - | - | - | - | - | 12,583 |
Translation differences | (6) | 136 | 4 | 123 | 194 | 2,018 | 660 | 6,099 | 9,228 |
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Balance at December 31, 2021 | 37,598 | 114,599 | 345 | 16,341 | 17,386 | 253,130 | 80,561 | 767,098 | 1,287,058 |
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Accumulated amortization and impairment losses |
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Balance at January 1, 2021 | 28,023 | 68,520 | 341 | - | 1,656 | 8,167 | 8,423 | - | 115,130 |
Annual amortization | 1,471 | 8,107 | - | 13,637 | 977 | 6,049 | 3,943 | - | 34,184 |
Translation differences | (16) | (20) | 4 | (19) | 5 | 34 | (13) | - | (25) |
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Balance at December 31, 2021 | 29,478 | 76,607 | 345 | 13,618 | 2,638 | 14,250 | 12,353 | - | 149,289 |
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Net book value | 8,120 | 37,992 | - | 2,723 | 14,748 | 238,880 | 68,208 | 767,098 | 1,137,769 |
The amortization / impairment charge is recognized in the following line items of the statement of profit or loss:
| 2020 | 2021 |
CHF 1,000 |
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Cost of sales | - | 13,637 |
Sales and marketing | 2,377 | 7,026 |
Research and development | 13,407 | 12,050 |
General and administration | 1,323 | 1,471 |
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Total amortization | 17,107 | 34,184 |
21.2 IMPAIRMENT TESTS
For the purpose of impairment testing, goodwill is allocated to a cash-generating unit or to a group of cash-generating units that are expected to benefit from the synergies of the corresponding business combination. Subsequently, the recoverable amount of the cash-generating unit (higher of fair value less costs of disposal and value in use) is compared to its carrying amount. An impairment loss is only recognized if the carrying amount of the cash-generating unit exceeds its recoverable amount. Value in use is normally assumed to be higher than the fair value less costs of disposal; therefore, fair value less costs of disposal is only investigated when value in use is lower than the carrying amount of the cash-generating unit.
Value in use is calculated according to the discounted cash flow method. The cash flow projections are based on a five-year financial planning period. Cash flows beyond the five-year period are extrapolated applying the estimated long-term growth rates stated below. The expected growth in sales is based on external market studies and internal assessments prepared by management. Future cash flows are discounted using the weighted average cost of capital (WACC). The discount rates applied are pre-tax.
21.2.1 Financial year 2021
The Group performed impairment tests on cash-generating units containing goodwill in June and December 2021, using the following key assumptions:
Goodwill Cash-generating unit | Method | Carrying amount (CHF 1,000) | Last test date | Basis for | Pre-tax discount rate | Projection period | Long-term growth rate |
Goodwill Life Sciences Business Life Sciences Business | DCF-method | 110,966 | June 2021 | Value in use | 7.8% | 5 years | 0.0% |
Goodwill Partnering Business Partnering Business | DCF-method | 656,132 | December 2021 | Value in use | 7.2% | 5 years | 0.0 % |
In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet launched on the market at August 31, 2021.
Based on the impairment tests 2021, there was no need for the recognition of any impairment. Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying amount of the cash-generating unit to materially exceed its recoverable amount.
21.2.2 Financial year 2020
The Group performed impairment tests on cash-generating units containing goodwill in June 2020, using the following key assumptions:
Goodwill Cash-generating unit | Method | Carrying amount (CHF 1,000) | Test date | Basis for | Pre-tax discount rate | Projection period | Long-term growth rate |
Goodwill Life Sciences Business Life Sciences Business | DCF-method | 109,843 | June 2020 | Value in use | 7.9% | 5 years | 0.0% |
Goodwill Partnering Business Partnering Business | DCF-method | 26,255 | June 2020 | Value in use | 7.8% | 5 years | 0.0 % |
In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet launched on the market at August 31, 2020.
Based on the impairment tests 2020, there was no need for the recognition of any impairment.
Certain product lines were adversely affected by lockdowns as customers closed or restricted access to their facilities due to the COVID-19 pandemic. A review of the detection products line, one of those significantly affected, has triggered an aperiodic impairment test for products launched in recent years. The tests have shown that one product which was introduced in 2019 did not meet the expectations of the original launch plan anymore. Consequently, the Group recognized an impairment on the capitalized development costs of CHF 2.1 million, which was charged to the segment Life Sciences Business. The recoverable amount of the assets corresponded to their value in use (CHF 1.7 million).
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