Turnover Turnover is measured at the fair value of the consideration received or receivable and represents amounts receivable for delivery services provided in the normal course of business, net of discounts, rebates and Value Added Tax. Sales are recognised only on the passing over of Downstream Access Mail to Royal Mail and other carriers for final distribution. Unaddressed Mail revenue is derived from client specific contractual arrangements, for delivery of marketing material and/or market research across a variety of distribution networks. Invoiced amounts, exclusive of Value Added Tax, are recognised within the profit and loss account in the month of delivery. Fulfilment turnover comprises revenue recognised by the company in respect services supplied during the year, exclusive of value added tax and trade discounts. Service revenue is recognised once the company has performed its service to the client. Recharge revenue represents a recovery of third party costs incurred by the company, but on behalf of it clients activity. Recharge revenue is recognised in the same period as the third party cost being charged. Revenue recognised but not billed for services delivered during the financial year has been recognised as accrued income in the statement of financial position. Business combinations and goodwill Business combinations are accounted for by applying the acquisition method. The cost of a business combination is the fair value of the consideration given, liabilities incurred or assumed and of equity instruments issued plus the costs directly attributable to the business combination. Purchased goodwill recognised represents the excess of the fair value of consideration and directly attributable costs of the purchase consideration over the fair values to the group’s interest in the identifiable net assets, liabilities and contingent liabilities acquired. Purchase goodwill is amortised over its expected useful life, management have estimated the useful life of the purchased goodwill to be 5 years. Where the consideration of the business combination does not exceed the fair value of the Group’s interest in the assets, liabilities and contingent liabilities acquired, negative goodwill arises. The Group, after consideration of the assets, liabilities and contingent liabilities acquired and the cost of the combination, recognises negative goodwill on the balance sheet and releases this to profit and loss, up to the fair value of non-monetary assets acquired, over the years in which the non-monetary assets are recovered and any excess over the fair value of non-monetary assets in the income statement over the year expected to benefit. Negative goodwill is amortised over its expected useful life, management have estimated the useful life of the negative goodwill to be 3 years. Goodwill is assessed annually for impairment and when there are indicators of impairment and any impairment is charged to the income statement. Intangible assets Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is charged to allocate the cost of intangibles less their residual values over their estimated useful lives. The intangible assets are amortised over the following useful economic lives:
Computer software/IT infrastructure - 3 to 5 years straight line Negative goodwill - 3 years straight line Purchased goodwill - 5 years straight line Other intangibles - 5 years straight line
Assets under construction, which consist of computer software under development, are included in the category of intangible assets at cost and are not depreciated. The expected useful lives of the assets are reassessed periodically in the light of the experience. Tangible Fixed assets Tangible fixed assets are measured at cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bring the asset to its working condition for intended use. Depreciation is calculated so as to write o the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Long leasehold property - Over term of lease Plant and machinery
- 5 to 10 years straight line
Fixtures and fittings Computer equipment
- 5 years straight line - 3 years straight line
Assets under construction, which consist of plant and machinery are included in the category of tangible assets at cost and are not depreciated.
40 Financials | Whistl Annual Report 2017
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