8.9 Property and equipment
| Cost |
| Balance at 1 January 2006 |
251 |
29 |
124 |
87 |
11 |
| Acquisitions/disposals of subsidiaries |
3 |
|
2 |
1 |
|
| Additions |
39 |
2 |
25 |
11 |
1 |
| Disposals |
-34 |
-2 |
-17 |
-14 |
-1 |
| Exchange differences |
-2 |
|
-1 |
-1 |
|
| Balance at 1 January 2007 |
257 |
29 |
133 |
84 |
11 |
| Acquisitions of subsidiaries |
1 |
|
1 |
|
|
| Additions |
39 |
3 |
23 |
11 |
2 |
| Disposals |
-25 |
-1 |
-16 |
-7 |
-1 |
| Exchange differences |
-7 |
-1 |
-3 |
-3 |
|
| Balance at 31 December 2007 |
265 |
30 |
138 |
85 |
12 |
|
|
|
|
|
Accumulated depreciation and
impairment losses |
|
|
|
|
|
| Balance at 1 January 2006 |
-181 |
-18 |
-89 |
-69 |
-5 |
| Depreciation for the year |
-27 |
-2 |
-13 |
-10 |
-2 |
| Disposals |
31 |
1 |
15 |
14 |
1 |
| Exchange differences |
2 |
|
1 |
1 |
|
| Balance at 1 January 2007 |
-175 |
-19 |
-86 |
-64 |
-6 |
| Depreciation for the year |
-28 |
-2 |
-16 |
-10 |
|
| Disposals |
23 |
1 |
15 |
6 |
1 |
| Exchange differences |
6 |
1 |
2 |
3 |
|
| Balance at 31 December 2007 |
-174 |
-19 |
-85 |
-65 |
-5 |
|
|
|
|
|
|
| Carrying amounts |
|
|
|
|
|
| At 1 January 2006 |
70 |
11 |
35 |
18 |
6 |
| At 31 December 2006 |
82 |
10 |
47 |
20 |
5 |
| At 31 December 2007 |
91 |
11 |
53 |
20 |
7 |
The carrying amount of the buildings and land approximates the fair value per year end 2007.
8.10 Goodwill and intangible assets
| Cost |
| Balance at 1 January 2006 |
940 |
94 |
| Acquisition of subsidiaries |
169 |
3 |
| Fair value change deferred consideration |
4 |
|
| Additions |
|
14 |
| Disposals |
|
-21 |
| Exchange differences |
-31 |
-1 |
| Balance at 1 January 2007 |
1,082 |
89 |
| Acquisition of subsidiaries |
148 |
1 |
| Fair value change deferred consideration business combinations |
16 |
|
| Additions |
|
12 |
| Disposals |
|
-4 |
| Exchange differences |
-64 |
-2 |
| Balance at 31 December 2007 |
1,182 |
96 |
|
|
|
| Accumulated amortisation |
|
|
| Balance at 1 January 2006 |
|
-71 |
| Amortisation for the year |
|
-9 |
| Disposals |
|
21 |
| Exchange differences |
|
1 |
| Balance at 1 January 2007 |
|
-58 |
| Amortisation for the year |
|
-11 |
| Disposals |
|
4 |
| Exchange differences |
|
2 |
| Balance at 31 December 2007 |
|
-63 |
|
|
|
| Carrying amounts |
|
|
| At 1 January 2006 |
940 |
23 |
| At 31 December 2006 |
1,082 |
31 |
| At 31 December 2007 |
1,182 |
33 |
Intangible assets consist of software and relates to computer software which is not an integral part of the related hardware. Computer software which is an integral part of the hardware is classified as Computer hardware under Property and equipment. Amortisation of intangible assets and any impairment losses are recognised as operating expenses in the Income Statement.
Goodwill impairment testing Goodwill is tested for impairment annually. For the purpose of impairment testing, goodwill is allocated to cash-generating units. If the recoverable amount of the cash-generating unit is less than the carrying amount, the impairment loss is allocated first to reduce the carrying amount of goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. On disposal of a subsidiary, the amount of goodwill that is attributable to the subsidiary is included in the determination of the profit or loss on disposal.
Impairment tests
The carrying amount of goodwill is allocated to reporting segments as follows:
|
| France |
47 |
47 |
| UK |
417 |
438 |
| Netherlands |
74 |
68 |
| Belgium |
2 |
2 |
| Spain |
11 |
11 |
| Other Europe |
109 |
60 |
| USA |
304 |
253 |
| Australia & New Zealand |
108 |
108 |
| Canada |
77 |
64 |
| Latin America, Asia, Middle East & Africa |
33 |
31 |
| Total |
1,182 |
1,082 |
Vedior tests goodwill for impairment annually, or more frequently if there are indications that goodwill might be impaired, using the discounted cash flow method. Impairment is tested based on the cash flow projections for the specific cash generating units using the budget for the year 2008 and forecasts for the following 4 years. Key assumptions are those regarding the discount rates, growth rates and expected changes to sales, gross margin and expenses during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the cash generating unit. The growth rates are based on industry growth forecasts and after five years a percentage rate of 2 is used. Changes in sales and direct costs are based on past practices and expectations of future changes in the market.
The rate used to discount the forecasted cash flows varies by geography from 8.5% to 15.0%.
8.11 Investments in associates The Group’s investments in associates consist of investments in the following companies:
| Company name |
| Routes Healthcare |
UK |
33% |
33% |
| Fairplace Consulting Plc |
UK |
|
25% |
| Pixid |
France |
33% |
33% |
In 2007 the 25% interest in Fairplace Consulting was sold, the result on the disposal is included in the share of result of associates.
Summarised financial information in respect of the Group’s associates is set out below:
|
| Total assets |
9 |
9 |
| Total liabilities |
-4 |
-5 |
| Net assets |
5 |
4 |
|
|
|
| Group’s share of associates’ net assets |
2 |
2 |
|
| Total sales associates |
5 |
13 |
| Total result associates for the period |
-2 |
-4 |
|
|
|
| Group’s share of associates’ result for the period |
-1 |
-1 |