We're still on the quest to change the EBITDA in the segmental tab into EBIT so that we can start to tie things up with some of the gaps that we've generated earlier.

We've generated depreciation, which is a good step forward, but now we need to generate amortization so that we can take the product of that with a bit of adjustment to the segmental tab, apportion it to the segments, allow those segments to move from EBITDA to EBIT so that we can tie things up.

Now to get amortization, we're going to have to figure out what the company is spending on its r and d.

And the reason is because part of that r and d spend, what with Keyon being an IFS company, will end up in the asset and part of the r and d spend will end up in ebitda.

What we can do is calculate the overall r and d spend, and you can see that the r and d spend is quite high at 3.3%.

Some companies have even higher say in automotive, but this is a fair amount of money to spend on r and d.

Now that's a proportion of revenue, so we're going to point it at the overall revenue of the company and we're going to find that the overall r and d spend is 380.

We're now going to apportion that into what ends up in assets IE capitalized and want it ends up in the p and LI on research costs in ebitda.

To do that, what we're going to do is use this proportion where historically Keon tends to put about a third of its r and d spend into assets.

We are going to let that continue and say that about a third of their r and d spend will end up being capitalized and then we can find the balance and find out that that will hit the p and l.

Now, in terms of what happens to those figures, um, this amount is already in EBITDA and has been predicted by the EBITDA margin, so we don't need to do anything with it unless it's handy for metrics later.

We don't, for example, need to go and add it or deduct it from the income statement.

It's already in there or will be when we hook everything up with the segments.

The capitalized r and d though, what we're gonna do is we're going to add that to the intangibles as if, if were a purchase for intangibles, because in fact it is.

So we are adding to the intangibles by spending and adding to the intangibles. By capitalizing. What we need to do is then create another base account here This time I'll start things off from the ending here, pull that forwards and then let that equal the last ending, pull that forwards.

Okay, and the reason that I've done that, you might recall from PP and e, that that helps us to close a loop with some of our assumptions.

Again, if you were Eagle Eye, you may have noticed that amortization was not working historically as a percentage of opening and it should say intangibles there.

And you can see that the forecast now makes a bit more sense because it's a continuation of what tends to happen in the past.

So you would say that the intangibles in this company have a life of about 12 years or so.

Intangibles get added through addition as well.

So the purchase of intangibles perhaps by purchasing outright other intangibles as part of small acquisitions or purchasing intangibles that can be valued very easily, licenses, that kind of thing.

These are being modeled as a percentage of revenue.

So we'll go and attach, I need to be a little careful there.

We'll go and attach that to revenue.

And we have our second edition now going to amortize that and we said that the amortization would be in the region of 9% and that would be as a percentage of opening.

And we now have our intangible base working nicely and we'll find that later on. This causes issues of comparability because the company is putting away costs that would hit a US gap company directly in their p and l.

And there's a second impact, which is that this company has perhaps higher amortization than a US Gap company would have.

'cause it's releasing the value of its capitalized intangibles in the form of amortization.