	June 30,	December 31,
	2013	2012
	$’M	$’M
	____________	____________
Goodwill arising on businesses acquired	611.6	644.5
	____________	____________

In the six months to June 30, 2013 the Company completed the acquisitions of SARcode, Premacure and Lotus, which resulted in goodwill with a value of $86.6 million, $29.6 million and $54.1 million, respectively (see Note 2). On an Interim basis the goodwill of SARcode has been assigned to the SP operating segment and the goodwill of Premacure and Lotus has been assigned to the HGT operating segment.

At June 30, 2013 goodwill of $376.8 million (December 31, 2012: $291.1 million) is held in the SP segment, $234.8 million (December 31, 2012: $154.5 million) in the HGT segment and $nil (December 31, 2012: $198.9 million) is held in the RM segment. The Company is continuing to assess the impact of the ongoing “One Shire” realignment on its operating and reportable segments (see note 18 for details) and the related impact on the allocation of goodwill.

	2013	2012
	$’M	$’M
	____________	____________
As at January 1,	644.5	592.6
Acquisitions	170.3	48.1
Goodwill impairment charge	(198.9)	-
Foreign currency translation	(4.3)	(4.7)
	____________	____________
As at June 30,	611.6	636.0
	____________	____________

Goodwill is tested for impairment at least annually as at October 1 each year. This assessment is also performed whenever there is a change in circumstances that indicates the carrying value of these assets may be impaired.

As at October 1, 2012 the Company determined that the fair value of all reporting units exceeded their book value, indicating that the goodwill allocated to each reporting unit was not impaired.

In the first quarter of 2013 the Company identified circumstances which indicated that the carrying value of goodwill in the RM reporting unit may not be recoverable, which triggered an impairment test in advance of the annual testing date.

These circumstances included the results of an independent market research study of the DERMAGRAFT sales potential, commissioned by the Company, which was finalized late in the first quarter of 2013. In addition, while the Company still expects DERMAGRAFT to return to growth over coming quarters, the recently completed restructuring of the RM sales and marketing organization and the implementation of a new commercial model had a more pronounced impact than previously expected. As a result of these and other factors forecast future sales are now lower than at the time of acquisition.

The results of the Company's March 31, 2013 impairment test showed that the carrying amount of the RM reporting unit exceeded its fair value and the implied value of the goodwill was $nil. As a result the Company recorded an impairment charge of $198.9 million related to the goodwill allocated to the RM reporting unit. The RM goodwill impairment charge is not deductible for tax purposes. This is the primary reason that the effective rate of tax in the first half of 2013 (29%) is higher than the same period in 2012 (18%). Accumulated goodwill impairment as at June 30, 2013 was $198.9 million (December 31, 2012: $nil).

Key assumptions used to determine the fair value of the RM reporting unit included expected cash flows for the period from March 31, 2013 to December 31, 2023 and the associated discount rate of 15.1%, which was derived from management's best estimate of the after-tax weighted average cost of capital for the RM reporting unit.

The Company determined the estimated fair value of the RM reporting unit using discounted cash flow analyses. Discounted cash flow analyses are dependent upon a number of quantitative and qualitative factors including estimates of forecasted revenue, profitability, earnings before interest, taxes, depreciation and amortization, and terminal values. The discount rates applied in the discounted cash flow analyses also have an impact on the estimates of fair value, as use of a higher rate will result in a lower estimate of fair value.