Notes to the Consolidated Statement of Financial Position
19 Intangible assets
goodwill includes amounts arising from the acquisition of businesses (asset deals) and from capital consolidation. For the purpose of impairment testing, assets are allocated to cash-generating units. These correspond to the new segment structure from April 1, 2010 (see note 37); the figures for the previous year have been restated accordingly. The carrying amounts of the goodwill associated with the cash-generating units Heidelberg Equipment and Heidelberg Services total € 47,527 thousand (previous year: € 47,412 thousand) and € 75,371 thousand (previous year: € 75,139 thousand) respectively.
According to IAS 36, in line with the impairment test the recoverable amount of the cash-generating units is determined based on the higher of the fair value less costs to sell and the value in use. The fair value here reflects the best estimate of the amount for which an independent third party would acquire the cash-generating units at the end of the reporting period. The value in use is the present value of the estimated future cash flows expected from the cash-generating unit. Calculation of the value in use on the basis of the discounted cash flow method is based on the planning authorized by the Management Board, which in turn is based on mediumterm planning for the result of operating activities for a period of five (previous year: five) financial years. This planning process is based on past experience as well as expectations of future market development. As a result, there were no impairment requirements for the Heidelberg Equipment, Heidelberg Services and Heidelberg Financial Services cash-generating units – as was the case in the previous year with the operating segments prior to restructuring.
The calculated cash flows were discounted on the basis of market data using weighted average costs of capital (WACC) before taxes of 9.7 percent for the Heidelberg Equipment cash-generating unit and of 10.0 percent for the Heidelberg Services cash-generating unit. In the previous year, the weighted average costs of capital before taxes for the Press and Postpress cash-generating units was 9.7 percent. To extrapolate cash flows beyond the detailed planning period, Heidelberg uses constant growth rates of 1 percent to show expected inflation.
Capitalized development costs relate for the most part to the development of machinery in the Heidelberg Equipment segment. Non-capitalized development costs from all segments – including research expenses – amount to € 121,470 thousand in the reporting year (previous year: € 118,267 thousand).