AmazonScience/document-haystack

1As of 31 December 2023, there was an impairment loss on internally generated software 2amounting to € 3 million (31 December 2022: impairment loss of € 3 million) reflected under 3general and administrative expenses in the consolidated statement of income which is mainly 4due to the decommissioning and divestment of applications that the Group no longer uses.5Amortizing Intangible Assets 6The total amortization of intangibles amounting to € 25 million (2022: € 28 million) is 7reflected under general and administrative expenses in the consolidated Statement of 8Income.9Useful life of amortized intangible assets by asset class10Useful life in years11Software up to 1012Customer-related intangible assets up to 2013Contract-based intangible assets up to 814Trademarks up to 2015Unamortized Intangible Assets16Within this asset class, the Group recognizes certain contract-based intangible assets, which 17are deemed to have an indefinite useful life. 18The asset class comprises the below detailed investment management agreements related to 19retail mutual funds. Due to the specific nature of these intangible assets, market prices are 20ordinarily not observable and, therefore, the Group values such assets based on the income 21approach, using a post-tax discounted cash-flow methodology. 22Retail investment management agreements – These assets, amounting to € 716 million, 23relate to the Group’s US retail mutual fund business. Retail investment management 24agreements are contracts that give the Group the exclusive right to manage a variety of 25mutual funds for a specified period. Since these contracts have a long history of renewal at 26minimal cost, these agreements are not expected to have a foreseeable limit on the contract 27period. Therefore, the rights to manage the associated assets under management are 28expected to generate cash flows for an indefinite period of time. This intangible asset was 29recorded at fair value based upon a valuation provided by a third party at the date of 30acquisition of Zurich Scudder Investments, Inc. in 2002. 31The recoverable amount was calculated as fair value less costs of disposal using the multi-32period excess earnings method applying a five-year plan. The fair value measurement was 33categorized as level 3 in the fair value hierarchy. 34The key assumptions in determining the fair value less costs of disposal include the asset mix, 35the flows forecast, the effective fee rate and discount rate as well as the terminal value 36growth rate. The discount rate (cost of equity) applied in the annual calculation was 10.9% in 372023 (10.6% in 2022). The terminal value growth rate was 3.4% (for 2022 3.8%). Based on the 38annual impairment assessment as per 1 October 2023, performed in the fourth quarter 2023 39and predominantly due to lower asset under management, an impairment loss in the amount 40of € 93 million was recognized in the income statement as impairment of goodwill and 41impairment (impairment reversal) of other intangible assets. The trigger test as of year-end 42identified an indicator for impairment reversal as compared to prior period impairment losses. 43A change in the Federal Reserve’s interest rate policy outlook mid-December 2023 resulted in 44a significant increase in the asset under management of the underlying contracts and 45therefore projected revenues, a reversal of prior period impairments of € 93 million were 46recognized and recorded at the end of the year to the income statement under impairment of 47goodwill and impairment (impairment reversal) of other intangible assets. The discount rate 48used was 10.8% and the terminal value growth rate was 3.4%. Any adverse movement in the 49key assumptions could lead to an indication that the carrying value may be impaired. 50As of 31 December 2022, and impairment loss of € 68 million was recognized in the Group’s 51income statement within impairment of goodwill and impairment (impairment reversal) of 52other intangible assets, due to net outflows and change in the discount rate to 10.9% in the 53fourth quarter 2022.54         55To our 56Shareholders57Summarised 58Management Report59Consolidated 60Financial Statements Compensation Report Corporate Govern-61ance Statement62Supplementary 63Information DWS 2023 Annual Report64 65Notes to the Consolidated Balance Sheet66104 12 – Goodwill and Other Intangible Assets