Financial Statements
Strategic Report
Governance Report
Other Information
13. Intangible assets continued
b. Computer software
The Directors do not believe that any reasonably possible change would result in an impairment; however, to provide additional analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised. • An increase of the pre-tax discount rate of 8% (FY23: 4%), from 14% to 22%, would result in an impairment. • The perpetuity growth rate would need to reduce by 15% (FY23: 6%), from 2% to (13%), to result in an impairment. • The forecast pre-tax cash inflows would need to reduce by 36% (FY23: 23%) each year to result in an impairment. Adroit Based on a value-in-use calculation, the recoverable amount of the Adroit CGU at 30 June 2024 was £12,854,000 (FY23: £12,121,000), giving a surplus over the Adroit CGU carrying amount of £2,769,000 indicating that there is no impairment. A pre-tax discount rate of 14% (FY23: 15%) has been used, based on the Group’s assessment of the risk-free rate of interest and specific risks relating to Adroit. The key input in forecasting revenue is based on new business, which is forecast to grow based on new business targets, attrition and estimated impact of market performance. The revenue growth forecasts range between 9% and 15% annually over the five- year period. Revenue growth is forecast using new business targets, expected outflows and estimated impact of market performance on AUM. The inputs to the forecast cash inflows over the next five financial years reflect historic actual growth and planned management activities and are considered to be reasonable in the current market and industry conditions. The 2% long-term growth rate applied is considered prudent in the context of the long-term average growth rate for the funds, investment management and financial planning industries in which the CGU operates. The Directors do not believe that any reasonably possible change would result in an impairment; however, to provide additional analysis, sensitivity analysis has been performed to show what may be required for an impairment to be recognised. • An increase of the pre-tax discount rate of 3% (FY23: 1%), from 14% to 17%, would result in an impairment. • The perpetuity growth rate would need to reduce by 4% (FY23: 6%), from 2% to (2%), to result in an impairment. • The forecast pre-tax cash inflows would need to reduce by 9% (FY23: 8%) each year to result in an impairment.
Costs incurred on internally developed computer software are initially recognised at cost and, when the software is available for use, the costs are amortised on a straight-line basis over an estimated useful life of four years, with some specific projects amortised over longer useful economic lives (“UELs”) based on their size and usability. c. Acquired client relationship contracts This asset represents the fair value of future benefits accruing to the Group from acquired client relationship contracts. The amortisation of client relationships is charged to the Consolidated statement of comprehensive income on a straight-line basis over their estimated useful lives (6 to 20 years). During the prior year ended 30 June 2023, the Group acquired client relationship contracts totalling £3,156,000 and £2,931,000, as part of the Integrity and Adroit acquisitions, respectively (Note 10), which were recognised as separately identifiable intangible assets in the Condensed consolidated statement of financial position, with UEL of 15 years. d. Contracts acquired with fund managers This asset represents the fair value of the future benefits accruing to the Group from contracts acquired with fund managers. Payments made to acquire such contracts are stated at cost and amortised on a straight-line basis over a UEL of five years.
Brooks Macdonald Group plc Annual Report and Accounts 2024
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