|
|
9 Intangible assets
| |
Goodwill
£000 |
Patents
£000 |
Licenses
£000 |
Developed
technology
£000 |
Existing
agreements
and customer
relationships
£000 |
Core
technology
£000 |
Trademarks
£000 |
Order
backlog
£000 |
Total
£000 |
| Cost |
|
|
|
|
|
|
|
|
|
| At 1 January 2007 |
352,563 |
8,196 |
5,906 |
29,676 |
42,827 |
11,802 |
3,707 |
1,635 |
456,312 |
| Additions |
– |
– |
2,549 |
– |
– |
– |
– |
– |
2,549 |
| Additions (Falanx) |
17 |
– |
– |
– |
– |
– |
– |
– |
17 |
| Additions (Soisic) |
205 |
– |
– |
– |
– |
– |
– |
– |
205 |
| Additions (KEG) |
588 |
– |
– |
– |
– |
– |
– |
– |
588 |
| Additions (KSI) |
186 |
– |
– |
– |
– |
– |
– |
– |
186 |
| Exchange differences |
(5,576) |
– |
– |
84 |
(627) |
(198) |
(63) |
(27) |
(6,407) |
| At 31 December 2007 |
347,983 |
8,196 |
8,455 |
29,760 |
42,200 |
11,604 |
3,644 |
1,608 |
453,450 |
| Aggregate amortization |
|
|
|
|
|
|
|
|
|
| At 1 January 2007 |
3,320 |
8,151 |
5,327 |
10,595 |
15,661 |
4,771 |
1,582 |
1,635 |
51,042 |
| Charge for the year |
– |
45 |
431 |
6,730 |
8,344 |
2,304 |
848 |
– |
18,702 |
| Exchange differences |
– |
– |
– |
(43) |
(180) |
(62) |
(20) |
(27) |
(332) |
| At 31 December 2007 |
3,320 |
8,196 |
5,758 |
17,282 |
23,825 |
7,013 |
2,410 |
1,608 |
69,412 |
Net book value
At 31 December 2007 |
344,663 |
– |
2,697 |
12,478 |
18,375 |
4,591 |
1,234 |
– |
384,038 |
| At 31 December 2006 |
349,243 |
45 |
579 |
19,081 |
27,166 |
7,031 |
2,125 |
– |
405,270 |
Amortization charged to income for the years ended 31 December 2005, 2006 and 2007 was £20,310,000, £18,917,000 and £18,702,000 respectively.
Licenses to use technology are being amortized over periods of three to ten years. The amortization periods for licenses have been determined according to their estimated useful economic life.
Patents are being amortized over four to five years, developed and core technology (the main IP of the company existent at acquisition and generating revenue) over five years and customer relationships (relationships with customers which were generating revenue at acquisition) over two to six years, being the periods over which the Company is expected to derive benefit from them.
The estimated amortization expense of intangible assets in each of the next five years is set forth below:
|
£000 |
| 2008 |
17,609 |
| 2009 |
11,179 |
| 2010 |
7,885 |
| 2011 |
1,363 |
| 2012 |
255 |
| Thereafter |
1,084 |
In accordance with FAS 142, goodwill is no longer amortized, and is tested for impairment at least annually.
The split of goodwill by segment is shown below. Additions in the year relating to Keil and Falanx have been allocated to the Systems Design and Processor divisions respectively. Additions to Soisic have been allocated between the Processor and Physical IP divisions. The foreign exchange difference arises as goodwill on Artisan, Axys and KSI is denominated in US dollars and on Soisic in euros and thus is subject to revaluation at the period-end rates. Changes in the carrying amount for the year are as follows:
| |
Processor
Division
£000 |
Physical IP
Division
£000 |
Systems
Design
Division
£000 |
Total
£000 |
| Balance at 1 January 2007 |
109,096 |
227,361 |
12,786 |
349,243 |
| Additions (KEG) |
– |
– |
588 |
588 |
| Additions (KSI) |
– |
– |
186 |
186 |
| Additions (Falanx) |
17 |
– |
– |
17 |
| Additions (Soisic) |
– |
205 |
– |
205 |
| Exchange differences |
(1,635) |
(3,810) |
(131) |
(5,576) |
| Balance at 31 December 2007 |
107,478 |
223,756 |
13,429 |
344,663 |
|