Chart

19  Intangible assets and goodwill

 

19.1  Overview

 

Software

Development

costs

Patents

Acquired brand

Acquired technology

Acquired client relationships

Goodwill

Total 2017

CHF 1,000

 

 

 

 

 

 

 

 

At cost

 

 

 

 

 

 

 

 

Balance at January 1, 2017

 28,207 

 55,887 

 180 

 1,708 

 11,086 

 25,294 

 98,230 

 220,592 

Acquisition through business

  combination

 – 

 – 

 – 

 – 

 2,187 

 – 

 3,021 

 5,208 

Additions

 – 

 – 

 148 

 – 

 – 

 – 

 – 

 148 

Internally developed 

 1,277 

 10,074 

 – 

 – 

 – 

 – 

 – 

 11,351 

Disposal

 (336) 

 (586) 

 

 

 

 

 

 (922) 

Translation differences

 39 

 44 

 (2) 

 63 

 165 

 (182) 

 363 

 490 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 29,187 

 65,419 

 326 

 1,771 

 13,438 

 25,112 

 101,614 

 236,867 

 

 

 

 

 

 

 

 

 

Accumulated amortization and 

  impairment losses 

 

 

 

 

 

 

 

 

Balance at January 1, 2017

 23,470 

 28,683 

 62 

 458 

 1,349 

 1,885 

 – 

 55,907 

Annual amortization

 1,246 

 11,916 

 99 

 358 

 1,294 

 1,810 

 – 

 16,723 

Impairment loss

 – 

 647 

 – 

 – 

 – 

 – 

 – 

 647 

Disposal

 (336) 

 (586) 

 – 

 – 

 – 

 – 

 – 

 (922) 

Translation differences

 10 

 5 

 – 

 23 

 96 

 75 

 – 

 209 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2017

 24,390 

 40,665 

 161 

 839 

 2,739 

 3,770 

 – 

 72,564 

 

 

 

 

 

 

 

 

 

Net book value

 4,797 

 24,754 

 165 

 932 

 10,699 

 21,342 

 101,614 

 164,303 

 

 

Software

Development

costs

Patents

Acquired brand

Acquired technology

Acquired client relationships

Goodwill

Total 2018

CHF 1,000

 

 

 

 

 

 

 

 

At cost

 

 

 

 

 

 

 

 

Balance at January 1, 2018

29,187

65,419

326

1,771

13,438

25,112

101,614

236,867

Acquisition through business

  combination

4,795

7,927

32,218

44,940

Additions

Internally developed 

1,559

12,834

14,393

Disposal

 (510) 

(409)

(919)

Reclassification

28

28

Translation differences

(17)

(22)

1

(11)

(92)

(139)

(334)

(614)

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

30,729

77,721

355

6,146

21,273

24,973

133,498

294,695

 

 

 

 

 

 

 

 

 

Accumulated amortization and 

  impairment losses 

 

 

 

 

 

 

 

 

Balance at January 1, 2018

24,390

40,665

161

839

2,739

3,770

72,564

Annual amortization

1,477

8,786

87

297

1,614

1,809

14,070

Disposal

(510)

(409)

(919)

Reclassification

28

28

Translation differences

(8)

(8)

(13)

(61)

(84)

(174)

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

25,859

48,933

276

714

4,292

5,495

85,569

 

 

 

 

 

 

 

 

 

Net book value

4,870

28,788

79

5,432

16,981

19,478

133,498

209,126

 

The amortization charge is recognized in the following line items of the statement of profit or loss:

 

 

2017

2018

CHF 1,000

 

 

Cost of sales

Sales and marketing 

 2,168 

 2,106 

Research and development

 

 

  Annual amortization

 13,310 

10,487

  Impairment

 647 

General and administration

 1,245 

1,477

 

 

 

Total amortization

 17,370 

14,070

19.2  Impairment tests

For the purpose of impairment testing, goodwill is allocated to a cash-generating unit or to a group of cash-generating units that are expected to benefit from the synergies of the corresponding business combination. Subsequently, the recoverable amount of the cash-generating unit (higher of fair value less costs of disposal and value in use) is compared to its carrying amount. An impairment loss is only recognized if the carrying amount of the cash-generating unit exceeds its recoverable amount. Value in use is normally assumed to be higher than the fair value less costs of disposal; therefore, fair value less costs of disposal is only investigated when value in use is lower than the carrying amount of the cash-generating unit.

 

Value in use is calculated according to the discounted cash flow method. The cash flow projections are based on a five-year financial planning period. Cash flows beyond the five-year period are extrapolated applying the estimated long-term growth rates stated below. The expected growth in sales is based on external market studies and internal assessments prepared by management. Future cash flows are discounted using the weighted average cost of capital (WACC). The discount rates applied are pre-tax.

 

19.2.1  Financial year 2018

The Group performed impairment tests on cash-generating units containing goodwill in June and December 2018, using the following key assumptions:

 

Goodwill 

Cash-generating unit

Method

Carrying amount (CHF 1,000)

Test 

date

Basis for recoverable amount

Pre-tax 

discount rate

Projection 

period

Long-term 

growth rate

Goodwill Life Sciences Business

Life Sciences Business

DCF-method

117,781

December 2018

Value in use

10.1%

5 years

0.0%

Goodwill Partnering Business

Partnering Business

DCF-method

15,717

June 2018

Value in use

10.2%

5 years

0.0%

In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet

launched on the market, on August 31, 2018.

 

Based on the impairment tests 2018, there was no need for the recognition of any impairment. Management believes that no reasonably

 

possible change in any of the above key assumptions would cause the carrying amount of the cash-generating unit to materially exceed

its recoverable amount.

 

19.2.2 Financial year 2017

The Group performed impairment tests on cash-generating units containing goodwill in June 2017, using the following key assumptions:

 

Goodwill 

Cash-generating unit

Method

Carrying amount (CHF 1,000)

Test 

date

Basis for recoverable amount

Pre-tax 

discount rate

Projection 

period

Long-term 

growth rate

Goodwill Life Sciences Business

Life Sciences Business

DCF-method

85,897

June 2017

Value in use

10.2%

5 years

0.0%

Goodwill Partnering Business

Partnering Business

DCF-method

15,717

June 2017

Value in use

10.2%

5 years

0.0%

 

In addition, the Group prepared mandatory impairment tests for capitalized development costs relating to products that are not yet launched on the market, on August 31, 2017.

 

Based on the impairment tests 2017, there was no need for the recognition of any impairment. However, one development project of the business segment ‘Life Science Business’ was abandoned and the related capitalized development costs of CHF 0.6 million fully impaired during the second half of 2017.