Notes to the Accounts For the year ended 31 December 2007
11. Intangible assets
| 2007 | 2006 | |||||
|---|---|---|---|---|---|---|
| Group | Computer software £ '000 |
Goodwill £ '000 |
Total £ '000 |
Computer software £ '000 |
Goodwill £ '000 |
Total £ '000 |
| Cost | ||||||
| At 1 January | 5,931 | 1,539 | 7,470 | 5,347 | 1,539 | 6,886 |
| Additions | 1,579 | – | 1,579 | 737 | – | 737 |
| Disposals | (517) | – | (517) | (3) | – | (3) |
| Effect of movements in foreign exchange | 347 | – | 347 | (150) | – | (150) |
| At 31 December | 7,340 | 1,539 | 8,879 | 5,931 | 1,539 | 7,470 |
| Amortisation | ||||||
| At 1 January | 3,872 | – | 3,872 | 3,135 | – | 3,135 |
| Charge for the year | 934 | – | 934 | 815 | – | 815 |
| Disposals | (470) | – | (470) | (2) | – | (2) |
| Effect of movements in foreign exchange | 247 | – | 247 | (76) | – | (76) |
| At 31 December | 4,583 | – | 4,583 | 3,872 | – | 3,872 |
| Net book value | ||||||
| At 31 December | 2,757 | 1,539 | 4,296 | 2,059 | 1,539 | 3,598 |
Impairment tests for goodwill
Goodwill is allocated to the Group's cash-generating units (CGUs) identified according to the country of operation.
A summary of the goodwill allocation is presented below.
| 2007 £ '000 |
2006 £ '000 |
|
|---|---|---|
| UK | 1,274 | 1,274 |
| USA | 214 | 214 |
| Singapore | 51 | 51 |
| 1,539 | 1,539 |
In assessing value in use, the estimated future cash flows are calculated by preparing cash flow forecasts derived from the most recent financial budget and an assumed growth rate of 5%, which does not exceed the long-term average growth rate of the relevant markets. The terminal value of the cash flow is then calculated by discounting using the Group's weighted average cost of capital (8%). If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense.
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. It is the opinion of the Directors that at 31 December 2007 there was no impairment of intangible assets.