Notes to the Balance Sheet
18 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 cashgenerating units. These correspond to the segments. The carrying amounts of the goodwill associated with the cash-generating units Press and Postpress total € 93,596 thousand (previous year: € 93,620 thousand) and € 9,609 thousand (previous year: € 9,609 thousand) respectively.
According to IAS 36, in line with the impairment test the recoverable amount of the cashgenerating units is determined based on the higher of the fair value less the cost 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 balance sheet date. The value in use is the present value of the estimated future cash flows that can be anticipated from the continued use of 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 medium-term planning for a period of five years. This planning process is based on past experience as well as expectations of future market development. As a result, as in the previous year, there were no impairment requirements for the Press, Postpress, or Financial Services cash-generating units.
The discount rates used in impairment testing are developed on the basis of market data and amount to 8.0 percent (previous year: 7.6 percent) after taxes for the cash-generating units. Before taxes, the discount rates amount to 11.0 percent (previous year: 11.0 percent). To extrapolate cash flows beyond the detailed planning period, Heidelberg uses steady growth rates of 0 percent to 1 percent to show expected inflation.
Capitalized development costs relate for the most part to the development of machinery in the Press Division. Non-capitalized development costs from all divisions – including research expenses – amount to € 182,199 thousand in the reporting year (previous year: € 209,716 thousand).