RTRSY » Topics » Analysis of development & software licence impact in 2004

This excerpt taken from the RTRSY 6-K filed Mar 11, 2005.

Analysis of development & software licence impact in 2004

                                How does this all impact our 2004 numbers?  As you can see from the slide in your booklet, we spent £132 million on development and
acquired software licences in 2004.  Under UK GAAP all of this was expensed as incurred.  IFRS, however, requires £23 million of these development
costs and all £4 million of the software licence costs expensed to be capitalised.  Now we have gone back and reviewed development expenditure and
software licence costs over the last five years, and this resulted in the recognition of an intangible asset on adoption of IFRS at the beginning of 2004 of
£51 million, and the amortisation charge in respect of these previously capitalised costs now in 2004 under IFRS was £13 million.

                                

However, IFRS also requires that all capital assets, whether acquired or internally generated, be subject to impairment review, if something happens
which causes us to question that asset’s carrying value.  As part of this process, we have carried out impairment reviews on all development costs
capitalised under IFRS over the last  five years, all of which, as I have said, have been previously expensed through the P&L under UK GAAP.  

We have concluded that it is appropriate to take an impairment charge of £34  million in 2004 against the carrying value of these capitalised assets.  Part
of this relates to the development of Reuters Knowledge for Investment Banking, which we eventually abandoned in favour of the acquired Multex
platform, which gave us the Knowledge product we are selling so successfully today.  

                                

The other asset we capitalised and subsequently impaired is our new order entry billing system which is currently being thoroughly reviewed with a view
to scaling the project back to more manageable proportions.  It is this large and one-off charge that causes the £20 million decrease in 2004 profits from
this particular IFRS change.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki