| XLS |
|
|
|
|
|
|
|
|
|
|
Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other |
Goodwill |
Software |
Advance payments |
Total |
|
|
€ million |
Finite useful life |
Indefinite useful life |
|
|
|
|
|
Cost at January 1, 2012 |
11,057.1 |
513.2 |
4,758.8 |
332.2 |
26.0 |
16,687.3 |
|
Changes in scope of consolidation |
6.1 |
– |
8.0 |
– |
– |
14.1 |
|
Additions |
42.8 |
81.0 |
– |
5.4 |
32.0 |
161.2 |
|
Disposals |
–1.9 |
– |
–42.5 |
–82.3 |
–0.9 |
–127.6 |
|
Transfers |
–2.2 |
– |
– |
36.6 |
–21.7 |
12.7 |
|
Classification as held for sale or transfer to a disposal group |
– |
– |
– |
– |
– |
– |
|
Currency translation |
–31.0 |
–0.1 |
–28.6 |
–3.8 |
– |
–63.5 |
|
December 31, 2012 |
11,070.9 |
594.1 |
4,695.7 |
288.1 |
35.4 |
16,684.2 |
|
|
|
|
|
|
|
|
|
Accumulated amortization and impairment losses January 1, 2012 |
–4,245.0 |
–425.3 |
–42.4 |
–210.3 |
– |
–4,923.0 |
|
Changes in scope of consolidation |
– |
– |
– |
– |
– |
– |
|
Amortization |
–871.6 |
– |
– |
–51.3 |
– |
–922.9 |
|
Impairment losses |
–8.5 |
–12.3 |
– |
–8.7 |
– |
–29.5 |
|
Disposals |
1.8 |
– |
42.5 |
78.3 |
– |
122.6 |
|
Transfers |
0.4 |
– |
– |
–0.4 |
– |
– |
|
Reversals of impairment losses |
– |
– |
– |
– |
– |
– |
|
Classification as held for sale or transfer to a disposal group |
– |
– |
– |
– |
– |
– |
|
Currency translation |
9.8 |
0.1 |
–0.1 |
3.3 |
– |
13.1 |
|
December 31, 2012 |
–5,113.1 |
–437.5 |
– |
–189.1 |
– |
–5,739.7 |
|
|
|
|
|
|
|
|
|
Net carrying amount as of December 31, 2012 |
5,957.8 |
156.6 |
4,695.7 |
99.0 |
35.4 |
10,944.5 |
|
|
|
|
|
|
|
|
|
Cost at January 1, 2013 |
11,070.9 |
594.1 |
4,695.7 |
288.1 |
35.4 |
16,684.2 |
|
Changes in scope of consolidation |
– |
– |
– |
– |
– |
– |
|
Additions |
7.0 |
64.5 |
– |
1.8 |
36.3 |
109.6 |
|
Disposals |
–13.5 |
–1.5 |
–30.1 |
–11.2 |
–0.1 |
–56.4 |
|
Transfers |
1.0 |
–0.8 |
– |
36.3 |
–29.2 |
7.3 |
|
Classification as held for sale or transfer to a disposal group |
–46.6 |
– |
–16.5 |
– |
– |
–63.1 |
|
Currency translation |
–86.1 |
–0.3 |
–65.9 |
–10.7 |
–0.1 |
–163.1 |
|
December 31, 2013 |
10,932.7 |
656.0 |
4,583.2 |
304.3 |
42.3 |
16,518.5 |
|
|
|
|
|
|
|
|
|
Accumulated amortization and impairment losses January 1, 2013 |
–5,113.1 |
–437.5 |
– |
–189.1 |
– |
–5,739.7 |
|
Changes in scope of consolidation |
– |
– |
– |
– |
– |
– |
|
Amortization |
–813.5 |
– |
– |
–42.5 |
– |
–856.0 |
|
Impairment losses |
–155.5 |
–1.3 |
–17.3 |
–4.3 |
– |
–178.4 |
|
Disposals |
13.4 |
1.5 |
17.3 |
11.2 |
– |
43.4 |
|
Transfers |
4.2 |
–4.1 |
– |
–1.7 |
– |
–1.6 |
|
Reversals of impairment losses |
– |
– |
– |
– |
– |
– |
|
Classification as held for sale or transfer to a disposal group |
41.0 |
– |
– |
– |
– |
41.0 |
|
Currency translation |
30.9 |
0.3 |
– |
8.8 |
– |
40.0 |
|
December 31, 2013 |
–5,992.6 |
–441.1 |
– |
–217.6 |
– |
–6,651.3 |
|
|
|
|
|
|
|
|
|
Net carrying amount as of December 31, 2013 |
4,940.1 |
214.9 |
4,583.2 |
86.7 |
42.3 |
9,867.2 |
Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other
The net carrying amount of “Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other” with finite useful lives amounting to € 4,940.1 million (2012: € 5,957.8 million) mainly included the identified and capitalized assets from the purchase price allocations for the acquisitions of Serono SA and the Millipore Corporation. The vast majority was attributable to marketing authorizations of active pharmaceutical ingredients and technologies. The remaining useful lives of these assets ranged between 0.5 and 11.0 years. This item also included licenses from these acquisitions with a remaining useful life of up to one year.
The additions to intangible assets with finite useful lives amounted to € 7.0 million in 2013 (2012: € 42.8 million).
In connection with the forthcoming sale of the marketing rights to Egrifta® (tesamorelin for injection) to Theratechnologies Inc., Canada, as of December 31, 2013, intangible assets with a definite useful life in the amount of € 5.6 million were reclassified to “assets held for sale”.
The item “Marketing authorizations, patents, licenses and similar rights, brand names, trademarks and other” with indefinite useful lives primarily related to rights that Merck had acquired for active ingredients, products or technologies that were still in the research and development stage. Owing to the uncertainty as to the extent to which these projects will ultimately lead to marketable products, the period for which the resulting capitalized assets would generate an economic benefit for the company could not yet be determined. Amortization will only begin once the products receive marketing approval and is carried out on a straight-line basis over the shorter period of the patent or contract term or the expected useful life.
In 2013, additions to intangible assets with indefinite useful lives amounted to € 64.5 million (2012: € 81.0 million) and related exclusively to the Merck Serono division. The acquisition of the rights to the active ingredient TH-302 as well as a licensing agreement with BeiGene Co. Ltd., China, accounted for the vast majority of this amount. Further additions were attributable to the acquisition of a license to an oncological compound from Symphogen A/S, Denmark and to milestone payments to Open Monoclonal Technology, Inc. (OMT), USA, and to Ablynx N.V., Belgium.
Goodwill
Goodwill was incurred mainly in connection with the acquisitions of Serono SA and the Millipore Corporation. The changes in goodwill caused by foreign exchange rates resulted almost exclusively from translating the goodwill of the Millipore Corporation, part of which is carried in U.S. dollars, into the reporting currency.
In connection with the forthcoming sale of the Discovery and Development Solutions business field of the Merck Millipore division to Eurofins Scientific S.A., Luxembourg, on December 31, 2013, goodwill allocated to the business field in the amount of € 16.5 million was reclassified to “assets held for sale”.
The disposal in the amount of € 30.1 million is due to the closure of the effect pigments production facility Suzhou Taizhu Technology Development Co. Ltd., Taicang, China, and to the goodwill allocated to the Discovery and Development Solutions business field.
The carrying amounts of “Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other” as well as goodwill were attributable to the divisions as follows:
| XLS |
|
|
|
|
|
|
|
|
|
|
€ million |
Remaining useful life in years |
Merck Serono |
Consumer Health |
Performance Materials |
Merck Millipore |
Total Dec. 31, 2013 |
Total Dec. 31, 2012 |
|
Marketing authorizations, patents, licenses and similar rights, brands, trademarks and other |
|
|
|
|
|
|
|
|
Finite useful life |
|
3,059.5 |
11.0 |
28.3 |
1,841.3 |
4,940.1 |
5,957.8 |
|
Rebif® |
6.0 |
2,209.0 |
– |
– |
– |
2,209.0 |
2,577.0 |
|
Gonal-f® |
5.0 |
474.7 |
– |
– |
– |
474.7 |
569.7 |
|
Saizen® |
6.0 |
184.4 |
– |
– |
– |
184.4 |
215.1 |
|
Humira® |
0.5 |
19.1 |
– |
– |
– |
19.1 |
184.8 |
|
Avonex® |
– |
– |
– |
– |
– |
– |
23.8 |
|
Puregon® |
1.0 |
11.5 |
– |
– |
– |
11.5 |
22.9 |
|
Technologies |
0.5–14.0 |
159.8 |
0.1 |
27.7 |
431.8 |
619.4 |
742.2 |
|
Brands |
0.6–10.5 |
– |
10.9 |
0.4 |
244.2 |
255.5 |
295.0 |
|
Customer relationships |
1.0–13.5 |
1.0 |
– |
0.2 |
1,165.3 |
1,166.5 |
1,327.3 |
|
|
|
|
|
|
|
|
|
|
Indefinite useful life |
– |
212.6 |
– |
1.9 |
0.4 |
214.9 |
156.6 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
– |
1,680.0 |
164.1 |
8.2 |
2,730.9 |
4,583.2 |
4,695.7 |
Information on impairment tests of intangible assets with indefinite useful lives
Since goodwill and other intangible assets with indefinite useful lives are not amortized, these are subjected to an impairment test if there are indications of impairment, or at least once a year. In fiscal 2013, the goodwill assigned to the Discovery and Development Solutions business field of the Merck Millipore division was impaired by € 17.3 million.
For intangible assets with indefinite useful lives there was an impairment loss in 2013 in the amount of € 1.3 million (2012: € 12.3 million) for a license in the Merck Serono division. The impairment loss was reported in other operating expenses under impairment losses.
Goodwill and intangible assets with indefinite useful lives which do not generate own cash flows are allocated to cash-generating units for impairment testing. A cash-generating unit is a division as presented in the Segment reporting.
When testing for potential impairments of these assets, Merck determines the recoverable amount by discounting expected cash flows and therefore uses the value-in-use method. Reference is made to the latest forecasts approved by the company management. Among other things, market observations, and – if available – market data, constant target-actual deviations, detailed plans as well as past experience form the basis for cash flow forecasts. Above all, assumptions on existing and future customers, future realizable selling prices and volumes and corresponding costs are made. The existing plans normally cover a period of four years. Cash flows for periods in excess of this are included using an individualized long-term growth rate for the specific cash-generating unit.
In the business plan, a long-term growth rate of 2.8% was used to measure the goodwill of the Merck Millipore division (2012: 2.8%). The long-term growth rates used for the other divisions are as follows: Merck Serono 0.0% (2012: 1.5%), Consumer Health 2.5% (2012: 2.5%) and Performance Materials 1.0% (2012: 1.0%). The use of division-specific long-term growth rates is suited to taking the specific business and the imminent growth expectations thereof into account.
The expected future cash flows were discounted using a weighted average cost of capital (WACC) of 7.0% (2012: 7.0%).
A 10% reduction in the long-term growth rate was assumed when calculating sensitivity; furthermore sensitivities were calculated for the case that the weighted average cost of capital increases by 10%. Even if the actual long-term growth rate was 10% lower than the expected growth rate, there would be no need to record impairment losses for goodwill. Likewise, there would be no need to record impairment losses if future cash flows were discounted by a weighted average cost of capital that was 10% higher.
Information on impairment losses of intangible assets with finite useful lives
Impairment losses of intangible assets with finite useful lives amounted to € 155.5 million in 2013 (2012: € 8.5 million).
Of this amount, an impairment of € 153.5 million was recorded in the income statement as a one-time item under other operating expenses.
An impairment loss was required to be recognized in the amount of € 126.5 million for the intangible asset identified and capitalized for Humira® in connection with the acquisition of Serono SA. This occurred after Merck, based on an out-of-court settlement with AbbVie Biotechnology Ltd., Bermuda, and Abbott GmbH & Co. KG, Germany (collectively “AbbVie”), from the second half of 2014 is to receive no further license payments from AbbVie. An additional impairment loss of € 27.0 million in the Merck Serono division which was classified as a one-time item related to Egrifta® (tesamorelin for injection) and resulted from the agreement for the transfer of marketing rights to Theratechnologies Inc., Canada. Moreover, an impairment of € 1.1 million was attributable to customer relationships in the Performance Materials division and € 0.9 million to marketing rights in the Merck Serono division, which were recorded in the income statement as impairment losses under other operating expenses.
In fiscal 2013, software impairments of € 4.3 million (2012: € 8.7 million) were recognized. Thereof, the € 3.3 million in connection with the transfer of the research and development activities from Switzerland to the United States was recognized in the income statement within other operating expenses under one-time items. The additional € 1.0 million was recorded in other operating expenses under impairments.
In 2013, no intangible assets were pledged as security for liabilities.