Sisal Annual Report 2011 - Permira

Rights and licenses held under a finance lease, or linked to an agreement which,although not explicitly a finance lease, transfers substantially all the risks and rewardsincidental to ownership, are recorded in intangible assets at fair value netof any amounts contributable by the lessor, or, if lower, at the present value ofminimum lease payments, with a corresponding financial payable to the lessor beingrecorded in liabilities. The assets are amortised in the manner described. Whenthere is no reasonable certainty that the lessee will obtain ownership of the assetsat the end of the lease term, amortisation is made over the shorter of the leaseterm and the useful life of the assets. In the statement of comprehensive income,amortisation and the interest expense relating to the financial component of thelease instalment are recorded in the place of the lease instalments.The development costs relating to the Internet Site used for wagers on the webhave also been capitalised. In accordance with SIC 32 and IAS 38, such costs havebeen capitalised since it is believed that the estimated future economic benefitslinked to the wagers via internet can sustain the amount of the capitalised costs.GoodwillGoodwill recorded following a purchase or business combination is recognised initiallyat cost since it represents the excess of the cost of acquisition over the Group’sinterest in the net fair value of the assets acquired and liabilities and contingentliabilities assumed. Goodwill is an intangible asset with an indefinite life and, assuch, is not subject to amortization but is tested periodically for impairment toverify the adequacy of the carrying amount in the statement of financial position;the excess, if any, is recognised in the statement of comprehensive income. Thereversal of a previous writedown for the impairment of goodwill is not permitted.To test for impairment, the carrying amount of goodwill and the groups of relatednet assets separately capable of producing cash flows, the Cash-Generating Unit(CGU), are compared to the higher of the value in use of the CGU and the recoverableamount from disposal. The value in use is determined applying the discountedcash flow method by discounting the operating cash flows based on projectionsmade according to assumptions contained in business plans approved by management.57 CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011