Strategic report Governance Financial statements Other information SECTION 2: ASSETS AND LIABILITIES NOTES TO THE GROUP FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2.1 Goodwill 2.2 Other intangible assets Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s Other intangible assets comprise customer lists, computer software and the Group’s key interest in the fair value of the identifiable assets and liabilities of a subsidiary at the date of operating system, which are stated at cost less amortisation and any recognised impairment loss. acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost Amortisation is provided, where material, on all intangible assets excluding goodwill at rates less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired calculated to write off the cost or valuation, less estimated residual value, of each asset evenly in a business combination is allocated to the cash generating unit expected to benefit from the using a straight line method over its estimated useful life as follows: synergies of the combination. Customer list – eight years Cash generating units to which goodwill has been allocated are reviewed for impairment at least The customer list relates to acquired books of business and does not include internally generated annually as a matter of course, and whenever an event or change in circumstances occurs which client lists. The carrying value of the assets is reviewed for impairment at least every 12 months, or indicates potential impairment. The carrying value of goodwill is compared to the recoverable when events or changes in circumstances indicate that the carrying value may not be recoverable. amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment Computer software – over three to eight years is recognised immediately in profit or loss and is not subsequently reversed. Computer software relates to purchases of licences and software, in line with the requirements of On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of IAS 38. The carrying values of computer software are reviewed for impairment when events or the profit or loss on disposal. changes in circumstances indicate that the carrying value may not be recoverable. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales Year ended Year ended proceeds and the carrying amount of the asset and is recognised in the consolidated income 30 June 2021 30 June 2020 statement. £m £m Cost – at beginning and end of year 1.5 1.5 Internally developed software – eight years Accumulated impairment losses IT development costs are capitalised only to the extent that they have led to the creation of At beginning and end of year 0.2 0.2 enduring assets, which deliver benefits at least as great as the amount capitalised and in Carrying amount – at end of year 1.3 1.3 accordance with the recognition criteria of IAS 38 intangible assets. When assessing projects for capitalisation we apply IAS 38’s recognition and measurement criteria The net carrying value of goodwill relates entirely to the acquisition of Hargreaves Lansdown Pensions for internally generated intangible assets to development expenditure that is both propositional in Direct Limited (HLPD) now named Hargreaves Lansdown Advisory Services Limited (HLAS). nature (as opposed to regulatory or administrative), and which is, or is expected to be, material over the life of the project. The Group has prepared financial forecasts for the business for the period to June 2023 that show the Group as a whole is expected to remain profitable and cash generative. HLAS made a loss in the Development work has been undertaken in house by IT staff and management to enhance the key financial year, but has a net asset position as at 30 June 2021 and forecasts to June 2023 show a return operating system. The key operating system is fundamental to the operation of the platform, to profitability. As a result there are no significant indicators that goodwill is impaired. which holds client assets, enabling revenue to be earned. In house development work has also been undertaken in Hargreaves Lansdown Savings Limited to develop a digital cash savings product. Development commenced in the year to 30 June 2016. The Group launched the service in December 2019 to a limited number of clients and is committed to providing the financial resources required to see it through to expected profitability, having since grown the number of clients to approximately 91,000. 152 Hargreaves Lansdown Report and Financial Statements 2021