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:
Asset category Valuation methodology
Consulting Income (cost saving)
Software licence Income (incremental value plus loss of profits)
Trademarks Relief from royalty
Trade name Relief from royalty
Non Contractual customer relationships Excess earnings
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. This includes legal and similar
expenditure incurred in registering brands and trade names, which is capitalised, all other expenditure
is expensed as incurred.
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 2-15 years
Non Contractual customer relationships 4 years
At each reporting date, the Group assesses whether there is any indication that an asset may be
impaired. Where an indicator of impairment exists, the group makes an estimate of the recoverable
amount. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written
down to its recoverable amount. Recoverable amount is the higher of fair value less costs to sell and
value in use and is determined for an individual asset. If the asset does not generate cash inflows that
are largely independent of those from other assets or groups of assets, the recoverable amount of the
cash generating unit to which the asset belongs is determined. Discount rates reflecting the asset
specific risks and the time value of money are used for the value in use calculation.
For goodwill and trademarks that have an indefinite useful life, the recoverable amount is estimated
at each balance sheet date.
1.8 Dividends paid to holders of share capital
Dividend distributions payable to equity shareholders are included in "other short term financial
liabilities" when the dividends are approved in general meeting prior to the balance sheet date.