ALTANA

Intangible Assets

In 2015, additions to patents, licenses and similar rights related to REACH expenses mainly in the BYK Additives & Instruments division. Additions of € 6.9 million related to SAP projects, mainly in the BYK Additives & Instruments division and the ECKART Effect Pigments division. The change in reporting entities of € 0.2 million related to the subsequent adjustment of the allocation of the consideration transferred from the acquisition of Brazilian companies in the ACTEGA Coatings & Sealants division.

In 2014, additions of € 1.1 million to patents, licenses and similar rights related to REACH expenses, mainly in the BYK Additives & Instruments division. Additions of € 1.8 million related to SAP projects, mainly in the ECKART Effect Pigments division and the BYK Additives & Instruments division. The change in reporting entities related to the acquisition of Brazilian companies in the ACTEGA Coatings & Sealants division (see note 3) with € 26.7 million and to a subsequent adjustment of the allocation of the consideration transferred for the acquisition of the rheology business in the BYK Additives & Instruments division with € 6.4 million.

In 2015, an impairment loss of € 9.2 million was recognized for a Chinese production facility in the ECKART Effect Pigments division due to a slowdown in the growth momentum of the economy. Of this amount, € 0.3 million related to intangible assets and € 8.9 million to property, plant and equipment (see note 14).

In 2014, the competition-driven negative development in the ACTEGA Coatings & Sealants division’s business with water-based flexo and gravure inks continued. Due to this development an impairment loss of € 10.0 million was recognized for the European sites because the carrying amount of the sites exceeded their value in use. Of this amount € 6.8 million related to intangible assets and € 3.2 million to property, plant and equipment (see note 14).

The following table presents expected amortization expense related to patents, licenses and similar rights as well as software for each of the following periods. The actual amortization expense may differ from the expected amortization expense:

As of December 31, 2015 and 2014, patents, licenses and similar rights include brand names with indefinite useful lives of € 19.4 million and € 21.5 million, respectively. These were classified as intangible assets with indefinite useful lives based on an analysis of the product life cycles and other relevant factors indicating that the future positive cash flows are expected to be generated for an indefinite period of time.

Notes to Consolidated Financial Statements The carrying amount of goodwill by cash-generating unit was as follows:

Impairment Test for Goodwill
The Company performed impairment tests on goodwill. Impairment tests are performed at least once a year in the fourth quarter based on long-term planning. The recently performed tests were based on the financial budgets for the years 2016 to 2020. These budgets were based on historical experience and represent management’s best estimates about future developments. The weighted average growth rates used in the budgets were derived from corresponding industry forecasts. In order to perform impairment tests, the Company estimated cash flow projections beyond the budgets by extrapolating the projections using a steady growth rate for subsequent years. The Company then calculated the fair value less costs to sell for each cash-generating unit by applying the discounted cash flow method. The following parameters were applied: discount rate after income taxes of 7.5 %; growth rates: BYK Additives & Instruments 2.0 %; ECKART Effect Pigments, ELANTAS Electrical Insulation and ACTEGA Coatings & Sealants 1.5 %. The fair value calculated was then compared to the carrying amount of the cash-generating unit.

The impairment tests were performed based on fair values less costs to sell. Furthermore, to support the results of these impairment tests, the Company calculated the value in use for each cash-generating unit.

In 2015, no impairment loss on goodwill was recognized. Sensitivity analyses for the BYK Additives & Instruments division, the ELANTAS Electrical Insulation division and the ACTEGA Coatings & Sealants division indicated that even a reasonably likely change in the underlying parameters would not have resulted in an impairment loss. The fair value of the ECKART Effect Pigments division did not exceed the carrying value as clearly as in the other divisions. If the EBIT that is used for the impairment test was 10 % lower than estimated, this would result in an insignificant impairment loss. The same applies to an increase of the discount rate to 8.25 %. As a result of the initiated restructuring measures the probability that an impairment loss will occur is deemed to be low.

In the period since the performance of the impairment test until December 31, 2015, no impairment indicators were identified.

Impairment Test for Intangible Assets Other Than Goodwill
In 2015, an impairment loss on a brand name in the ACTEGA Coatings & Sealants division of € 2.4 million was recognized, because the brand name will no longer be used in the future.

In 2014, no impairment losses on intangible assets with an indefinite useful life were recognized.