1. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
1.6 Intangible assets
Goodwill arising on an acquisition of a business is carried at cost as established at
the date of acquisition of the business less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill has been allocated to each of
the Group's Cash-Generating Units ("CGU") that is expected to benefit from the
synergies of the combination.
A CGU to which goodwill has been allocated is tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the CGU is less than its carrying amount, the impairment
loss is allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro rata based on the carrying amount
of each asset in the unit. Any impairment loss for goodwill is recognised directly
in profit or loss. An impairment loss recognised for goodwill is not reversed in
On disposal of the relevant CGU, the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
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) and impairment losses (see accounting
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 and magazine 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
Where, in the opinion of the Directors, the Group's expenditure in relation to
development of internet activities results in future economic benefits, these costs
are capitalised within software licences and amortised over the useful economic
life of the asset.
Development costs are capitalised only when it is probable that future economic
benefit will result from the project and the following criteria are met:
• The technical feasibility of the product has been ascertained;
• Adequate technical, financial and other resources are available to complete and
sell or use the intangible asset;
• The Group can demonstrate how the intangible asset will generate future
economic benefits and the ability to use or sell the intangible asset can
• It is the intention of management to complete the intangible asset and use it or
sell it; and
• The development costs can be measured reliably.
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 reporting date. Other intangible assets are amortised from the
date they are available for use. The estimated useful lives are as follows:
Software licence agreements 2-15 years
Capitalised development expenditure 3-5 years
Trademarks and trade names 12-15 years, or indefinite life
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
1.8 Dividends paid to holders of share capital
Dividend distributions payable to equity shareholders are recognised through equity
reserves on the date the dividend is paid.
1.9 Employee benefits
1.9.1 Pension costs
In some jurisdictions in which the Group has employees, there are government or
private schemes into which the employing company or branch must make payments
on a defined contribution basis, the contributions are shown in the profit or loss
account in the year.
1.9.2 Share-based payments
The Group has share-based payment schemes which allow certain employees and
contractors to acquire shares of the Company. The Group has accounted for these
under IFRS 2 Share-Based Payments.
Share option schemes
The fair value of options granted under the LTIP and MIP schemes will be
recognised as a share-based payment expense with a corresponding increase in
equity. The fair value is measured at grant date and spread over the period during
which the employees become unconditionally entitled to the options. The fair
value of the options granted are measured using either a binomial or Monte Carlo
valuation model. This valuation method takes into account the terms and conditions
upon which the options were granted. The amount recognised as an expense
is adjusted to reflect the actual number of share options that vest and market
conditions if applicable.