Cosalt plc Annual report & financial statements 2008

Financial statements Notes to the financial statements
13. Intangible assets
Customer
and supplier
contracts and Computer
Goodwill relationships software Total
£000 £000 £000 £000
Cost
At 29 October 2006 3,759 – 2,944 6,703
Additions 23 – 260 283
Acquisition of subsidiary undertakings 23,404 15,417 – 38,821
Exchange differences 285 117 – 402
At 28 October 2007 27,471 15,534 3,204 46,209
Additions – – 416 416
Acquisition of subsidiary undertakings 5,976 5,638 27 11,641
Disposals (773) – (1,246) (2,019)
Exchange differences 743 189 1 933
At 26 October 2008 33,417 21,361 2,402 57,180
Accumulated amortisation
At 29 October 2006 491 – 1,625 2,116
Amortisation charge for the year – 689 338 1,027
Exchange differences – 26 – 26
At 30 October 2007 491 715 1,963 3,169
Amortisation charge for the year – 2,083 608 2,691
Disposals (133) – (1,064) (1,197)
Exchange differences – 134 1 135
At 26 October 2008 358 2,932 1,508 4,798
Net Book value
At 26 October 2008 33,059 18,429 894 52,382
At 28 October 2007 26,980 14,819 1,241 43,040
At 29 October 2006 3,268 – 1,319 4,587
Goodwill
As at 26 October 2008, the Consolidated balance sheet included Goodwill of £32,191,000. Goodwill is allocated to the Group’s
cash generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the business
combination that gave rise to the goodwill as follows:
2008 2007
Cash Generating Units (CGU) Primary reporting segment £000 £000
GTC Group Offshore 17,184 17,184
Bofort SSM Marine 7,389 6,505
Marine safety Marine 1,823 1,808
Safety workwear Marine 827 827
Myhre-Maritime Offshore 5,836 –
Schoolwear Schoolwear – 656
33,059 26,980
Impairment of goodwill
Goodwill arising on business combinations is not amortised, being reviewed for impairment on an annual basis or more
frequently if there are indications that goodwill may be impaired. Goodwill acquired in a business combination is allocated
to cash-generating units.
Recoverable amounts for cash-generating units are based on value in use, which is calculated from cash flow projections for
two years. The key assumptions for the value in use calculations are those regarding discount rates, growth rates and expected
changes in margins. Discount rates are estimate using pre-tax rates that reflect current market assessment of the time value
of money and the risks specific to the cash-generating units.
The forecasts are extrapolated beyond two years based on estimated growth rates (generally 3% – 4%).
The pre-tax discount rates used to calculate the value in use range from 10% – 12% (2007: 10% – 12%). This discount rate
is derived from the Group’s pre-tax weighted average cost of capital, which at 26 October 2008 was 10.3%.
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