Notes to the Financial Statements Note 8: Intangible Assets continued Intellectual property Intellectual property (IP) acquired in a business combination is initially measured at fair value. Intellectual property internally developed or acquired separately is initially measured at cost. Following initial recognition, it is carried at cost less any accumulated amortisation and impairment. Amortisation is calculated on a unit-of-production or diminishing balance basis over periods generally ranging from 5 to 20 years, except where it is considered that the economic life is indefinite. Contingent consideration in connection with the purchase of individual assets outside of business combinations is recognised as a financial liability only when a non-contingent obligation arises (i.e. when milestone is met). The determination of whether a contingent payment is capitalised or expensed is based on the substance of the arrangement and whether the payment is expected to generate future economic benefits for the Group. Payments that are directly attributable to acquiring, developing or bringing an asset to the condition necessary for its intended use, including development, regulatory and commercial milestone payments, are generally capitalised as part of the cost of the intangible asset. In contrast, payments that relate to the ongoing use or commercial performance of the asset are generally recognised as an expense when incurred. Changes in the fair value of contingent consideration liabilities acquired in a business combination in subsequent periods are recognised in research and development expenses for early-stage products and as cost of sales for currently marketed products. The effect of unwinding the discount over time for contingent consideration liabilities is recognised in finance costs. Software Costs incurred in developing or acquiring software licenses and information systems that contribute future financial benefits are capitalised. These include external direct costs of materials and service and payroll costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 10 years. IT development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility, where the Group has the intention and ability to use the asset. Amortisation of intangible assets The useful lives of intangible assets are assessed to be either finite or indefinite. The amortisation period and method is reviewed at each financial year end at a minimum. Intangible assets with indefinite useful lives are not amortised. The useful life of these intangibles is reviewed each reporting period, including consideration of climate-related risks where relevant. Impairment of intangible assets Assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Intangible assets that have an indefinite useful life (including goodwill) or not yet available for use are tested annually for impairment, and more frequently if events or changes in circumstances indicate that they may be impaired. An impairment loss is recognised in the statement of comprehensive income for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units), other than goodwill which is monitored at the segment level. Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash generating units, and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. Climate-related risks are incorporated into recoverable amount assessments where they can be reliably estimated, primarily through assumptions used in value in use cash flow projections. Based on the assessments performed, no changes to impairment conclusions were required as a result of climate-related risks for the year ended 30 June 2026. Refer to Note 3 for details of impairment charges recognised during the year ended 30 June 2026, including the key judgements, assumptions and sensitivities underpinning the impairment assessments. 110 110 Financial Report
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