17. Goodwill and other intangible assets

At the closing date, the breakdown of goodwill among the major cash-generating units was as shown below:

Expected future cash flows are based on a qualified planning process under consideration of intra-group experience as well as macroeconomic data collected by third-party sources. The detailed planning period generally spans 3 years, with various scenarios being derived and analysed with regard to their appropriateness for the impairment test. The detailed planning period can generally be extended by up to 2 further planning years for units undergoing a transformation process, but no use was made of this option in financial year 2022/23. Following the detailed planning period, a growth rate of 1.25% is assumed, as in the previous year. The capitalisation rate as the weighted average cost of capital (WACC) is determined using the capital asset pricing model. In the process, an individual peer group is assumed for all groups of cash-generating units operating in the same business segment. In addition, the capitalisation rates are determined on the basis of an assumed basic interest rate of 2.45% (30/9/2022: 1.5%) and a market risk premium of 6.97% (30/9/2022: 8.0%) in Germany as well as a beta factor of 0.86 (30/9/2022: 0.88). Country-specific risk premiums are applied to the equity cost of capital and to the borrowing costs.

Considering the continued consistent implementation of the sCore strategy, we assume significant sales and EBITDA growth for all companies in the detailed planning phase. For the units with goodwill considered to be significant, this results in the following development of sales and EBITDA until the end of the detailed planning period.

An addition to goodwill in the amount of €65 million resulted from the acquisition of Johan i Hallen & Bergfalk, which had decreased by €3 million as of the closing date for currency-related reasons. Disposals of goodwill arise due to changes in the consolidation group and are reported at the time of deconsolidation.

The development of intangible assets is shown in the following table.

The acquired brand rights changed as follows:

Trademark rights generally represent assets with an indefinite useful life. The expected useful life of the trademark rights is generally indeterminable, because METRO can use these rights without restrictions and abandoning them is not envisaged in the future. The carrying amounts of these brands are reviewed annually for units to which goodwill is not simultaneously allocated in line with the procedure for the respective purchase price allocations using the licence price analogy method. Level 3 input parameters of the fair value hierarchy are applied here. The mandatory annual impairment test confirmed the recoverability of the carrying amounts.

Other intangible assets include €23 million (2021/22: €13 million) in software purchased from third parties and still in development and €7 million (2021/22: €13 million) in concessions, rights and licences.

Research and development expenses recognised in expenses essentially concern internally generated software and amounted to €42 million (2021/22: €42 million).

As in the previous year, there are no material restrictions on title or right to dispose of intangible assets. Purchasing obligations for intangible assets amounting to €2 million (30/9/2022: €2 million) were recorded.