ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 160 Focused 3. SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES (continued) Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at 31 December 2019, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Impairment of goodwill The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 December 2019 was USD340,243,000(2018: USD285,382,000). Further details are given in note 20. Impairment of trade receivables Before 1 January 2018, the provision policy for impairment of receivables of the Group was based on ongoing assessment of the recoverability and the aging analysis of the outstanding receivables and on management’s judgement. A considerable amount of judgement was required in assessing the ultimate realisation of those receivables, including the creditworthiness and the past collection history of each customer. If the financial conditions of the customers of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required. From 1 January 2018, the impairment loss in respect of trade and other receivables of the Group is based on the evaluation of collectability and aging analysis of trade and other receivables and on management’s judgement. A considerable amount of judgement is required in assessing the ultimate realisation of those receivables, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of the debtors of the Group were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances might be required. The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future. The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in note 23 and note 24.