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- 1. Accounting Policies
- 2. Financial risk management
- 3. Segmental information
- 4. Exceptional operating items
- 5. Operating profit/(loss)
- 6. Employees and Directors
- 7. Finance Income and costs
- 8. Taxation on Loss on ordinary activites
- 9. Loss for the financial year
- 10. Earnings/(Loss) per Share
- 11. Goodwill
- 12. Intangible assets
- 13. Property, plant and equipment
- 14. Investments
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- 17. Trade and other payables
- 18. Borrowings
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- 21. Called-up share capital
- 22. Options and Warrants over Shares of Sinclair Pharma plc
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- 25. Cash Flows from Operating Activities
- 26. Operating lease commitments
- 27. Capital Commitments
- 28. Related Party Transactions
- corporate advisors
11. GOODWILL
| Cost | £'000 |
| At 1 July 2006 | 46,203 |
| Additions through business combinations | 368 |
| Purchase of minority interest in Sinclair Pharma AB | 74 |
| Exchange adjustments | (716) |
| At 30 June 2007 | 45,929 |
| Additions | 67 |
| Exchange adjustments | 4,993 |
| At 30 June 2008 | 50,989 |
| Accumulated amortisation and impairment | |
| At 1 July 2006, 30 June 2007 | 2,511 |
| Impairment charge (note 4) | 368 |
| At 30 June 2008 | 2,879 |
| Net book value | |
| At 30 June 2008 | 48,110 |
| At 30 June 2007 | 43,418 |
| At 30 June 2006 | 43,692 |
Accumulated amortisation and impairment represents amounts charged prior to 30 June 2004, before transition to IFRS.
Goodwill has been allocated to the following cash generating units:
£'000 |
|
| Marketing partners | 14,234 |
| Sinclair Italy | 4,493 |
| Sinclair France | 29,383 |
| Sinclair UK (formerly Ashbourne Pharmaceuticals) | — |
48,110 |
Exchange adjustments arise purely as a result of the impact of the difference in the Sterling: Euro exchange rate at the beginning and end of the year on balances denominated in Euros.
Additions in the year include £53,000 from a revision to the earn-out provision relating to the acquisition of Groupe CS Dermatologie, and £14,000 from paying up unpaid share capital in Sinclair Pharma Srl.
An impairment charge of £368,000 has been recorded against the goodwill arising on the acquisition of Sinclair Pharma UK Limited (formerly Ashborne Pharmaceuticals Limited), following the decision to restructure this operation and exit the dispensing doctors market in the UK.
The earn-out liability relating to the acquisition of Groupe CS Dermatologie was fixed at €800,000 during the year. €300,000 was paid in January 2008 with the remaining €500,000 included in other payables at 30 June 2008.
Goodwill is not amortised but tested annually for impairment or more frequently if there are indications that it may be impaired. Goodwill has been allocated to four separate cash generating units for the purpose of Impairment testing. Value in use calculations are utilised to calculate recoverable amount. Value in use is calculated as the net present value of the projected post tax cash flows of the cash generating unit. The discount rate applied ranges from 11% to 12.4% which is in line with the Group’s post tax weighted average cost of capital of approximately 12%. The cash flows, which have been approved by the Board, have been projected over five years and represent the Directors’ best estimate of future product revenues. Growth rate assumptions have been applied at an individual product level, and range from 0% for non core products to 20% for key brands. The Directors believe that any reasonably possible change in the key assumptions on which the recoverable amounts are based would not cause the carrying amount of goodwill to exceed its recoverable amount.
Company
The Company has no goodwill at either 30 June 2008 or 30 June 2007.