EUR 000 | Goodwill | Software | Internally developed software | Licences | Total |
Balance at 1 October 2021: | |||||
Cost | 6,395 | 17,765 | 3,971 | 544 | 28,675 |
Accumulated amortization and impairment | – | 12,649 | 1,764 | 16 | 14,429 |
Carrying amount | 6,395 | 5,116 | 2,207 | 528 | 14,246 |
Movements during 2021/2022: | |||||
Additions | – | 1,428 | 146 | – | 1,574 |
Amortization | – | -962 | -776 | – | -1,738 |
Disposals cost | – | – | -528 | -528 | |
Impairment | – | -10,839 | -62 | -544 | -11,445 |
Disposals accumulated amortization | – | 10,839 | 62 | 544 | 11,445 |
Balance at 30 September 2022 | 6,395 | 5,582 | 1,577 | – | 13,554 |
Cost | 6,395 | 8,354 | 4,055 | – | 18,804 |
Accumulated amortization and impairment | – | 2,772 | 2,478 | – | 5,250 |
Balance at 30 September 2022 | 6,395 | 5,582 | 1,577 | – | 13,554 |
Movements during 2022/2023: | |||||
Additions | – | 2,243 | 335 | – | 2,578 |
Amortization | – | -1,245 | -894 | – | -2,139 |
Impairment | -88 | – | – | -88 | |
Disposals cost | – | -164 | -367 | – | -531 |
Disposals accumulated amortization | – | 164 | 367 | – | 531 |
Balance at 30 September 2023 | 6,395 | 6,492 | 1,018 | – | 13,905 |
Cost | 6,395 | 10,433 | 4,023 | – | 20,851 |
Accumulated amortization and impairment | – | 3,941 | 3,005 | – | 6,946 |
Balance at 30 September 2023 | 6,395 | 6,492 | 1,018 | – | 13,905 |
Software
Software mainly relates to back-office systems. The remaining period of amortization as at 30September 2023 is two to eight years (30September 2022: two to eight years).
Internally developed software
Internally developed software mainly relates to digital risk software. During 2022/2023 an amount of EUR335 was capitalized (2021/2022: EUR146).
Impairment loss
In 2022/2023, an impairment of EUR 88 was recorded with respect to backup software that became economically obsolete and is no longer in use.
The impairment loss in 2021/2022 relates to a perpetual license in respect of cultural software, consisting of an app that was used to provide examples on how to surpass cultural differences when working together. The app became economically obsolete and is no longer in use. For this reason, the license was impaired to nil.
Impairment testing for cash-generating units containing goodwill
For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating units (CGUs). The aggregate carrying amounts of goodwill allocated to eachCGU are as follows:
EUR 000 | 30 September 2023 | 30 September 2022 |
KPMG Advisory | 6,395 | 6,395 |
On an annual basis, the Group carries out impairment tests on capitalized goodwill, which are based on the estimated cash flows of the related CGU. The CGU represents the lowest level within the Group at which the goodwill is monitored for internal management purposes, which is not higher than the Group’s operating segment as reported in Note4 Segment reporting. The recoverable amount of the relevant CGU isdetermined on the basis of its value in use. Determination of the value in use is performed by using estimated future cash flows, based on the 2022/2023 business plan approved by the Board of Management and further financial projections for the financial years through 2024/2025. Cash flows after this period are extrapolated by using a growth rate to calculate the terminal value.
The key assumptions in the cash flow projections are:
Total revenue growth and result development, which is based on historical performance, expected future market developments, and the 2023/2024 business plan. For the period 2023/2024, a real revenue growth of 9.0% is included. For the period thereafter, KPMG has used a real growth of 0%, in addition to an inflation component based on inflation forecasts derived from the Economist Intelligence Group (IEU);
A discount rate of 8.1% (2021/2022: 8.1%) to calculate the present value of the estimated future cash flows, to which pre-tax discount rates have been applied. The pre-tax discount rates are determined on the basis of the individual post-tax weighted average cost of capital calculated;
An indefinite growth rate, including an inflation correction, based on the lowest of the risk-free rate assumed in the weighted average cost of capital and the long-term inflation forecasts derived from IEU: 2% (2021/2022: 2%).
The values assigned to the key assumptions represent management’s assessment of future trends in the respective markets, and are based on both external and internal sources (historical and forward-looking data).
A sensitivity analysis has been performed, taking a change in the pre‑tax weighted average cost of capital and the revenue growth expectations into consideration. An increase of 5 percentage points in the discount rate confirms sufficient headroom in the cash-generating unit.
Based on the outcome of the impairment tests, no impairments have been recorded.
