Intangibles assets and goodwill

12 Months Ended

Dec. 31, 2020

Disclosure Of Reconciliation Of Changes In Intangible Assets And Goodwill [Abstract]

10	Intangible assets and goodwill

Changes in the carrying amount of intangible assets and goodwill for the years ended December 31, 2020 and 2019 are analysed in the following tables.

	Trademarks, patents and other			Software			Goodwill			Total
Cost as at December 31, 2018		14,021			29,617			3,947			47,585
Additions		66			847			—			913
Disposals		—			—			—			—
Effect of translation adjustments		(1	)		7			121			127
Cost as at December 31, 2019		14,086			30,471			4,068			48,625
Additions		107			685			—			792
Impairment of goodwill		—			—			(1,866	)		(1,866	)
Reclassifications to assets held for sale		(174	)		(53	)		—			(227	)
Effect of translation adjustments		3			(113	)		(281	)		(391	)
Cost as at December 31, 2020		14,022			30,990			1,921			46,933

Accumulated amortization as at December 31, 2018		(13,709	)		(27,984	)		—			(41,693	)
Amortisation		(150	)		(767	)		—			(917	)
Disposals		—			—			—			—
Effect of translation adjustments		225			(219	)		—			6
Accumulated amortization as at December 31, 2019		(13,634	)		(28,970	)		—			(42,604	)
Amortisation		(145	)		(762	)		—			(907	)
Disposals		—			—			—			—
Reclassifications to assets held for sale		167			51			—			218
Effect of translation adjustments		7			110			—			117
Accumulated amortization as at December 31, 2020		(13,605	)		(29,571	)		—			(43,176	)

Net book value as at December 31, 2018		312			1,633			3,947			5,892
Net book value as at December 31, 2019		452			1,501			4,068			6,021
Net book value as at December 31, 2020		417			1,419			1,921			3,757

As at December 31, 2020, goodwill of 1,921 only relates to the “Italy - retail stores” CGU. It arose on the 2017 acquisition by the Parent of four “Divani&Divani by Natuzzi” stores located in the North East of Italy. This acquisition was performed with a related party at arm’s length conditions.

Impairment tests have been performed on goodwill in 2020 and 2019.

As result of such impairment tests in 2020, the goodwill of 1,866 related to “Mexico – retail stores” CGU was fully impaired. In fact, in 2020, this CGU was severely affected by the COVID-19 pandemic and the restriction measures taken to contain it, including the lockdown period. The recoverable amount of this CGU was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of the CGU. The carrying amount of such CGU was determined to be higher than its recoverable amount and an impairment loss of 1,866 was recognised in profit or loss for the year ended December 31, 2020. The impairment loss was fully allocated to goodwill and it is included in “selling expenses” of profit or loss for the year ended December 31, 2020.

The significant assumptions that were used in performing the 2020 and 2019 impairment tests for goodwill are as follows.

December 31, 2020

CGU	Net book value after impairment test		Long-term growth rate	WACC	Annual sales growth rate 2021	Annual sales growth rate 2022–2025
Italy – retail stores		1,921	0.90%	8.92%	8.03%	2.50%
Mexico – retail stores		—	3.57%	13.31%	18.00%	2.13%
Total goodwill		1,921

December 31, 2019

CGU	Net book value after impairment test		Long-term growth rate			WACC			Annual sales growth rate 2020-2024
Italy – retail stores		1,921		1.0	%		9.05	%		8.5	%
Mexico – retail stores		2,147		3.4	%		13.92	%		9.3	%
Total goodwill		4,068

Further, the cash flows included specific estimates for five years and a long-term growth rate thereafter. Cash flows projections have been derived from the business plan approved by the Board of Directors. The estimated recoverable amount of Italy – retail stores CGU exceeded its carrying amount with an adequate cushion.

Research and development costs recognised as an expense for the years ended December 31, 2020, 2019 and 2018 amount to 3,137, 3,700 and 3,362, respectively.