ESR Group Limited Annual Report 2023 191 Notes to the Consolidated Financial Statements 31 December 2023 19. GOODWILL (continued) Impairment testing of goodwill (continued) ESR Australia asset management business cash-generating unit The recoverable amount of ESR Australia asset management business cash-generating unit has been determined based on a value-in-use calculation using cash flow projections based on financial budgets covering a fiveyear period approved by senior management. The discount rate applied to the cash flow projections is 9.6%. The growth rate used to extrapolate the cash flows of the ESR Australia asset management business cash-generating unit beyond the five-year period is 2.5%. This growth rate is based on the average growth rate of the management fee in which the business operates. Management believes that this growth rate is reasonable. SIP asset management business cash-generating unit Pursuant to the results of an Extraordinary General Meeting (“EGM”), resolution was passed to internalise the REIT management function of Sabana REIT that is managed by an indirect subsidiary of the Group (‘the REIT Manager”). Management has assessed that the outcome of the internalisation of the REIT Manager which is administered by the Trustee of Sabana REIT is not within the control of the Group. Consequently, goodwill impairment loss of US$13,571,000 has been provided in financial year ended 31 December 2023. The impairment loss is included in Administrative Expenses. ARA asset management business cash-generating unit The recoverable amount of ARA asset management business cash-generating unit has been determined based on a value-in-use calculation using cash flow projections based on financial budgets covering a five-year period approved by senior management. The discount rate applied to the cash flow projections is 8.5%. The growth rate used to extrapolate the cash flows of the ARA business cash-generating unit beyond the five-year period is 2.5%. This growth rate is based on the average growth rate of the management fee in which the business operates. Management believes that this growth rate is reasonable. The Company has engaged independent professionally qualified valuers for the impairment assessment. With regard to the assessment of the values in use of the cash-generating units, management believes that no reasonable possible change in any of the above key assumptions would cause the carrying values including goodwill of the cash-generating units to materially exceed the recoverable amounts. CORPORATE GOVERNANCE FINANCIAL STATEMENTS STRATEGIC REPORTS
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