Note 8. Other Intangible Assets

Other intangible assets comprise the following:


(in millions)	2018		2017
Gross cost:
– Product rights	$	34.0	$	34.0
– Brand names		8.9		8.9
– Technology		55.1		55.1
– Customer and distributor relationships		125.6		127.5
– Patents		2.9		2.9
– Non-compete agreements		4.1		4.1
– Marketing related		22.1		22.1
– Internally developed software		41.9		41.2

		294.6		295.8


Accumulated amortization:
– Product rights		(20.1	)		(16.4	)
– Brand names		(5.4	)		(4.4	)
– Technology		(19.1	)		(15.7	)
– Customer and distributor relationships		(53.5	)		(43.2	)
– Patents		(2.9	)		(2.9	)
– Non-compete agreements		(4.1	)		(4.1	)
– Marketing related		(22.1	)		(22.1	)
– Internally developed software		(31.1	)		(23.7	)

		(158.3	)		(132.5	)

	$	136.3		$	163.3

Product rights

Following the acquisition of Chemsil on August 30, 2013, the Company recognized an intangible asset of $34.0 million in respect of Chemsil’s product rights portfolio. This asset has an expected life of 9 years and is being amortized on a straight-line basis over this period.

An amortization expense of $3.7 million was recognized in 2018 (2017 – $3.8 million) in selling, general and administrative expenses.

Brand names

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $6.0 million in respect of Independence’s brand name. This asset has an expected life of 10 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $2.9 million in respect of Bachman’s brand names. This asset had an expected life of 5 years and is now fully amortized.

An amortization expense of $1.0 million was recognized in 2018 (2017 – $1.2 million) in selling, general and administrative expenses.

Technology

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $26.0 million in respect of Independence’s product formulations. This asset has an expected life of 15 years and is being amortized on a straight-line basis over this period

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $8.5 million in respect of Bachman’s core chemistry know-how of oilfield chemicals. This asset has an expected life of 15 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $18.3 million in respect of technological know-how of the mixing and manufacturing process, patents which protect the technology and the associated product branding. This asset has an expected life of 16.5 years and is being amortized on a straight-line basis over this period

An amortization expense of $3.4 million was recognized in 2018 (2017 – $3.4 million) in cost of goods sold.

Customer and distributor relationships

On August 9, 2017, the Company acquired an intangible asset from Huntsman Holland B.V. for $4.2 million in respect of long-term customer and distributor relationships in ASPAC and America. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period.

On March 31, 2017 the Company recognized an intangible asset of $33.5 million in respect of long-term customer relationships relating to the Huntsman acquisition on December 30, 2016. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $29.2 million in respect of Independence’s long-term customer relationships. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $14.5 million in respect of Bachman’s long-term customer relationships. This asset has a weighted average expected life of 14.5 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $28.2 million in respect of long-term customer relationships. This asset has an expected life of 11.5 years and is being amortized on a straight-line basis over this period.

Following the acquisition of Finetex (now merged into Innospec Active Chemicals LLC) in January 2005, the Company recognized an intangible asset of $4.2 million in relation to customer lists acquired. This asset had an expected life of 13 years and is now fully amortized.

An amortization expense of $10.7 million was recognized in 2018 (2017 – $10.7 million) in selling, general and administrative expenses. The impact of foreign exchange translation on the balance sheet amortization is recognized as a cumulative translation adjustment within equity.

Non-compete agreements

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $2.6 million in respect of a non-compete agreement. This asset had an expected life of 3 years and is now fully amortized.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $1.5 million in respect of a non-compete agreement. This asset had an expected life of 2 years and is now fully amortized.

An amortization expense of $0.0 million was recognized in 2018 (2017 – $0.7 million) in selling, general and administrative expenses.

Marketing related

An intangible asset of $28.4 million was recognized in the second quarter of 2007 in respect of Ethyl Corporation foregoing their entitlement effective April 1, 2007 to a share of the future income stream under the sales and marketing agreements to market and sell TEL. In 2008, contract provisions no longer deemed necessary of $6.3 million were offset against the intangible asset. The amount attributed to the Octane Additives reporting segment was amortized on a straight-line basis to December 31, 2013 and the amount attributed to the Fuel Specialties reporting segment was amortized on a straight-line basis to December 31, 2017. The asset is now fully amortized.

An amortization expense of $0.0 million was recognized in 2018 (2017 - $0.9 million) in cost of goods sold.

Internally developed software

In 2018 we have completed the implementation of our new information system platform for our acquired Huntsman businesses. At December 31, 2018 we had capitalized $5.2 million (2017 – $4.4 million) in relation to this internally developed software. This asset has an expected life of 5 years and is being amortized on a straight-line basis over this period.

At December 31, 2018 we had capitalized $36.7 million (2017 – $36.7 million) in relation to the phased deployment of our company-wide information system platform to the majority of entities in the group which began in 2013. This asset has an expected life of 5 years from the point in time each deployment is completed and is being amortized on a straight-line basis over these periods.

An amortization expense of $7.5 million was recognized in 2018 (2017 – $7.6 million) in selling, general and administrative expenses.

Amortization expense

The aggregate of other intangible asset amortization expense was $26.3 million (excluding the impact of foreign exchange translation on the balance sheet), $28.3 million and $24.2 million in 2018, 2017 and 2016, respectively, of which $3.4 million, $4.3 million and $4.3 million, respectively, was recognized in cost of goods sold, and the remainder was recognized in selling, general and administrative expenses.

Future amortization expense is estimated to be as follows for the next five years:


(in millions)
2019	$	23.2
2020	$	22.7
2021	$	19.5
2022	$	17.8
2023	$	14.5