| |
| 3. |
INTANGIBLE ASSETS |
|
|
|
|
|
|
|
|
2009 |
Intellectual
property
R’million |
Development
costs
R’million |
Product
participation
and other
contractual
rights
R’million |
Drug
master files
R’million |
Computer
software
R’million |
|
Total
R’million |
|
|
Net carrying value |
|
|
|
|
|
|
|
|
|
Cost |
4 670,1 |
160,0 |
542,6 |
67,0 |
67,7 |
|
5 507,4 |
|
|
Accumulated amortisation |
(940,9) |
(20,3) |
(189,3) |
(38,9) |
(46,8) |
|
(1 236,2) |
|
|
Accumulated impairment losses |
(165,8) |
— |
— |
(1,8) |
— |
|
(167,6) |
|
|
Balance at the end of the year |
3 563,4 |
139,7 |
353,3 |
26,3 |
20,9 |
|
4 103,6 |
|
|
Movement in intangible assets |
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
3 330,8 |
94,9 |
170,7 |
89,4 |
19,9 |
|
3 705,7 |
|
|
Acquisition of subsidiary |
56,4 |
10,1 |
— |
13,4 |
0,7 |
|
80,6 |
|
|
Disposal of joint venture |
— |
— |
— |
(60,9) |
(0,2) |
|
(61,1) |
|
|
Reclassification between categories |
2,2 |
(2,2) |
— |
— |
— |
|
— |
|
|
Reclassification from property,
plant and equipment |
— |
— |
— |
— |
3,2 |
|
3,2 |
|
|
Additions – expansion |
329,6 |
3,6 |
238,7 |
— |
7,0 |
|
578,9 |
|
|
Additions – replacement |
— |
— |
— |
— |
0,1 |
|
0,1 |
|
|
Development costs capitalised |
— |
47,9 |
— |
— |
— |
|
47,9 |
|
|
Disposals |
(15,6) |
(0,7) |
— |
— |
(0,1) |
|
(16,4) |
|
|
Amortisation |
(54,5) |
(8,4) |
(23,5) |
(12,1) |
(5,9) |
|
(104,4) |
|
|
Impairment |
(19,4) |
(2,1) |
— |
— |
(3,3) |
|
(24,8) |
|
|
Reversal of impairment |
0,1 |
— |
— |
— |
— |
|
0,1 |
|
|
Effects of exchange rate changes |
(66,2) |
(3,4) |
(32,6) |
(3,5) |
(0,5) |
|
(106,2) |
|
|
Balance at the end of the year |
3 563,4 |
139,7 |
353,3 |
26,3 |
20,9 |
|
4 103,6 |
|
|
| |
|
Restated
2008 |
Intellectual
property
R’million |
Development
costs
R’million |
Product
participation
and other
contractual rights
R’million |
Drug
master files
R’million |
Computer
software
R’million |
|
Total
R’million |
|
|
Net carrying value |
|
|
|
|
|
|
|
|
|
Cost |
4 386,6 |
110,7 |
341,2 |
131,2 |
60,7 |
|
5 030,4 |
|
|
Accumulated amortisation |
(908,5) |
(12,3) |
(170,5) |
(40,9) |
(40,8) |
|
(1 173,0) |
|
|
Accumulated impairment losses |
(147,3) |
(3,5) |
— |
(0,9) |
— |
|
(151,7) |
|
|
Balance at the end of the year |
3 330,8 |
94,9 |
170,7 |
89,4 |
19,9 |
|
3 705,7 |
|
|
Movement in intangible assets |
|
|
|
|
|
|
|
|
|
Balance at the beginning of the year |
576,6 |
70,5 |
87,8 |
97,2 |
12,5 |
|
844,6 |
|
|
Acquisition of subsidiary |
82,5 |
— |
— |
— |
— |
|
82,5 |
|
|
Acquisition of joint ventures |
51,8 |
6,4 |
— |
— |
— |
|
58,2 |
|
|
Disposal of 51% of Co-pharma Ltd |
(4,9) |
— |
— |
— |
— |
|
(4,9) |
|
|
Reclassification between categories |
0,2 |
(1,0) |
— |
0,8 |
— |
|
— |
|
|
Reclassification to property, plant
and equipment |
— |
— |
— |
— |
13,1 |
|
13,1 |
|
|
Additions – expansion |
33,9 |
— |
104,5 |
— |
0,3 |
|
138,7 |
|
|
Additions – replacement |
— |
— |
— |
— |
3,7 |
|
3,7 |
|
|
Additions – GSK brands |
2 653,0 |
— |
— |
— |
— |
|
2 653,0 |
|
|
Development costs capitalised |
— |
23,6 |
— |
— |
— |
|
23,6 |
|
|
Disposals |
(13,3) |
— |
— |
— |
(0,9) |
|
(14,2) |
|
|
Amortisation |
(80,0) |
(5,1) |
(21,5) |
(12,3) |
(8,8) |
|
(127,7) |
|
|
Impairment |
(8,2) |
— |
— |
— |
— |
|
(8,2) |
|
|
Effects of exchange rate changes |
39,2 |
0,5 |
(0,1) |
3,7 |
— |
|
43,3 |
|
|
Balance at the end of the year |
3 330,8 |
94,9 |
170,7 |
89,4 |
19,9 |
|
3 705,7 |
|
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All intangible assets were acquired from third parties, except for development costs that are both internally generated and outsourced to third party development companies. |
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*The global brands consist of Eltroxin, Lanoxin, Imuran, Zyloric, Aggrastat, Indocid and Aldomet. Aspen has global distribution rights for these products, subject to specific contractual territory restrictions. |
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|
2009
R’million |
|
Restated
2008
R’million |
|
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Indefinite useful life intangible assets |
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An indefinite useful life intangible asset, is an intangible asset where there is no foreseeable limit
to the period over which the asset is expected to generate inflows for the Group. |
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Carrying amount of indefinite useful life intangible assets (included in intellectual property) |
2 825,1 |
|
— |
|
|
Intellectual property which is classified as an indefinite useful life intangible asset, will reflect a historical actual trend and a projected future trend of continuing positive contribution in the market in which it is sold or applied, where such asset forms part of the historical intangible asset base. Where such intangible assets constitute a new acquisition, a projected trend of continuing positive contribution must be demonstrated with reference to factors such as:
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high barriers to market entry for competitors; |
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a low probability for accelerated growth in the competitor base in the foreseeable future; |
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management’s commitment to continue to invest in the intangible assets’ base; |
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low probability of a significant change in the operating and regulatory environment which would negatively impact future supply of the intangible asset; and |
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the estimated indefinite life cycle and hence future growth prospects of the intangible asset. |
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A number of brands have been classified as indefinite useful life intangible assets, with the major brands being Eltroxin, Lanoxin, Imuran and Zyloric. These four global GSK brands had a carrying value of R2 635,6 million at the end of June 2009. |
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Impairment of intangible assets |
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The impairments can be split as follows |
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|
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South Africa |
19,1 |
|
8,2 |
|
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International |
5,7 |
|
— |
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|
24,8 |
|
8,2 |
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The carrying amount of intangible assets has been determined based on value-in-use calculations. South African and International consumer brands were the main contributors driven primarily by depressed retail markets. Discount rates used for the determination of the value-in-use were in the range of 11,1% to 24,2%. |
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Product participation and other contractual rights |
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Product participation and other contractual rights can be split into the following categories
for the purposes of amortisation |
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– Amortised on a straight-line basis |
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|
|
Net carrying value |
330,6 |
|
136,6 |
|
|
Amortisation |
13,9 |
|
10,1 |
|
|
– Amortised using the reverse sum of the digits method |
|
|
|
|
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Net carrying value |
22,7 |
|
34,1 |
|
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Amortisation |
9,6 |
|
11,4 |
|
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Capital commitments |
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Capital commitments include all projects for which specific Board approval has been obtained up to the reporting date. Projects still under investigation for which specific Board approval have not yet been obtained are excluded from the following |
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Authorised and contracted for |
5,8 |
|
— |
|
|
Authorised but not yet contracted for |
12,1 |
|
0,8 |
|
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Funding |
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Capital expenditure will be financed from funds generated out of normal business operations, existing borrowing facilities and specific project finance facilities. |
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