Notes to the accounts
11. Intangible assets
| Computer software $m |
Purchased goodwill $m |
Total $m |
|
|---|---|---|---|
| Cost: | |||
| At 28 January 2006 | 15.7 | 30.6 | 46.3 |
| Additions | 7.5 | – | 7.5 |
| Disposals | (0.2) | – | (0.2) |
| Transfers | 0.6 | – | 0.6 |
| Translation differences | 0.9 | – | 0.9 |
| At 3 February 2007 | 24.5 | 30.6 | 55.1 |
| At 3 February 2007 | 24.5 | 30.6 | 55.1 |
| Additions | 11.3 | – | 11.3 |
| Transfers | (2.6) | – | (2.6) |
| At 2 February 2008 | 33.2 | 30.6 | 63.8 |
| Amortisation: | |||
| At 28 January 2006 | 5.8 | – | 5.8 |
| Charged in period | 2.4 | – | 2.4 |
| Disposals | (0.2) | – | (0.2) |
| Transfers | 0.2 | – | 0.2 |
| Translation differences | 0.6 | – | 0.6 |
| At 3 February 2007 | 8.8 | – | 8.8 |
| At 3 February 2007 | 8.8 | – | 8.8 |
| Charged in period | 4.7 | – | 4.7 |
| Transfers | (2.2) | – | (2.2) |
| Translation differences | (0.1) | – | (0.1) |
| At 2 February 2008 | 11.2 | – | 11.2 |
| Net book value: | |||
| At 2 February 2008 | 22.0 | 30.6 | 52.6 |
| At 3 February 2007 | 15.7 | 30.6 | 46.3 |
| At 28 January 2006 | 9.9 | 30.6 | 40.5 |
The purchased goodwill above arose on the acquisition of Marks & Morgan on 31 July 2000. In accordance with IFRS, goodwill is carried at cost with impairment reviews carried out annually and when there are indications that the carrying value may not be recoverable. Under the transitional arrangements, Signet applied IFRS 3 'Business combinations' from the transition date of 31 January 2004. Consequently, all prior purchased goodwill was frozen at $30.6 million at this date, subject to impairment testing. An impairment review was performed at 2 February 2008, concluding that the carrying value of $30.6 million does not require an impairment adjustment.
For the purpose of goodwill impairment testing, Marks & Morgan is regarded as a single cash generating unit. The recoverable amount is based on value in use calculations using cash flow projections from a three year business plan approved by management. Growth rates consistent with those in the plan have been used to extrapolate beyond the period covered by the plan. A discount rate of 8.8% has been applied to the projected cash flows.
Computer software that is not an integral part of the related hardware is classified as an intangible asset and is stated at cost less accumulated amortisation. Amortisation charges are recorded in administrative expenses in the income statement.