1.6 Intangible assets
Acquired goodwill represents the excess of the cost of a business combination over the Group’s
interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree at
the date of acquisition. Goodwill is tested at least annually for impairment and carried at cost less
accumulated impairment losses. At the date of acquisition, goodwill is allocated to cash generating
units for the purpose of impairment testing. Negative goodwill arising on an acquisition is recognised
directly in profit or loss.
1.6.2 Other intangible assets
Other intangible assets that are acquired by the Group are stated at cost less accumulated
amortisation (see 1.6.4 below) and impairment losses (see accounting policy 1.7).
The cost of intangible assets acquired in a business combination is the fair value at acquisition date.
The valuation methodology used for each type of identifiable asset category is detailed below:
Consulting Income (cost saving)
Software licence Income (incremental value plus loss of profits)
Trademarks Relief from royalty
Goodwill Residual balance
Expenditure on internally generated goodwill and brands is recognised in the income statement as an
expense is incurred.
1.6.3 Subsequent expenditure
Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives
of intangible assets unless such lives are indefinite. Goodwill and trademarks with an indefinite useful
life are systematically tested for impairment at each balance sheet date. Other intangible assets are
amortised from the date they are available for use. The estimated useful lives are as follows:
Consulting agreements 3-5 years
Capitalised development costs 2-4 years
Software licence agreements 3-15 years