21 INTANGIBLE ASSETS AND GOODWILL

For 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 with 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.

The Group performed impairment tests on cash-generating units containing goodwill in June 2024, using the following key assumptions:

In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet launched on the market on August 31, 2024.

Based on the impairment tests 2024, 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.

A profound review of the of the product portfolio triggered an aperiodic impairment test in the area of reagents. The tests showed that a product launched in 2022 did not meet the expectations of the original business case. Consequently, the Group recognized an impairment of CHF 5.6 million on the capitalized development costs which was charged to the business segment ‘Life Sciences Business’. The recoverable amount of the asset was determined based on its value in use, which was CHF 0 million.

The Group performed impairment tests on cash-generating units containing goodwill in June 2023, using the following key assumptions:

In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet launched on the market on August 31, 2023.

Based on the impairment tests 2023, there was no need for the recognition of any impairment.