| In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Valuation of intangibles
Management assess whether there are any indicators of impairment on an annual basis. Where there are indicators of impairment, management estimate the recoverable amount of each asset based on expected future cash flows and using an appropriate discount rate to discount these. There were no indications of impairment.
Assumptions are made on the useful life of an intangible asset and if shortened, would increase the amortisation charge recognised in the income statement. There are a number of assumptions in estimating the present value of future cash flows including management's expectation of future revenue, renewals rates for customers, costs, timing and quantum of future capital expenditure, long term growth rates and discount rates.
Investments
To assess impairment, the recoverable amount is assessed by reviewing the operating results and future plans. Judgement is used in the assessment of future prospects. Management did not identify any impairments in their review and continue to monitor progress.
Deferred tax asset
Deferred tax assets are recognised only to the extent that is is probable future taxable profits will be available against which the temporary differences can be utilised. Management have determined that it is not appropriate to recognise a deferred tax asset at this point. |