An extract from the key matters in the auditors report. As at 30...

An extract from the key matters in the auditors report.

As at 30 June 2020, the Group had goodwill with a carrying amount of $149 million relating to its numerous acquisitions in recent yearsAs required by AASB 136 Impairment of Assets,management has performed an impairment assessment over the goodwill balance as at 30 June 2020 by:• calculating the recoverable amount of the cash generating unit (“CGU”), which was determined to be the value in use of the CGU, using a discounted cash flow model. This model used cash flow projections for the CGU for 5 years, with a terminal growth rate applied to the 5th year. The cash flow projections werethen discounted to net present value using the Company’s weighted average cost of capital (“WACC”); and• comparing the resulting value in use of the CGU to the CGU’s carrying amount.As a result of this exercise, an impairment of goodwill of $54.2 million was recognised during the year. Management also performed a sensitivity analysis over the value in use calculations, by varying the assumptions used (growth rates, terminal growth rate and WACC) to assess the impact on the valuations. We determined the impairment of goodwill to be a Key Audit Matter due to the materiality of the goodwill balance, and because the directors’ assessment of the ‘value in use’ of the CGU involves judgements about the future underlying cash flows of the business, estimated growth rates for the CGU for the next 5 years as well as in perpetuity, and the discount rates applied to the estimated cash flows. We note that the impact of the COVID-19 pandemic on the current market conditions has increased the level of judgement by the directors in estimating future cash flows.