ESR AR 2019 EN

Notes to the Consolidated Financial Statements 31 December 2019 189 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ESR Annual Report 2019 20. GOODWILL (continued) Impairment testing of goodwill (continued) Redwood asset management business cash-generating unit The recoverable amount of the Redwood assets 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 16.3%. The growth rate used to extrapolate the cash flow of the Redwood asset management beyond the five-year period is 3%. This growth rate is based on the average growth rate of the management fee in which the business operates. Senior management believes that this growth rate is justified. These calculations use pre-tax cash flow projections based on financial budgets approved by management. Infinitysub asset management business cash-generating unit The recoverable amount of Infinitysub 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 10%. The growth rate used to extrapolate the cash flow of the Infinitysub 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. Senior management believes that this growth rate is justified. These calculations use pre-tax cash flow projections based on financial budgets approved by management. 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 five-year period approved by senior management. The discount rate applied to the cash flow projections is 10.0%. The growth rate used to extrapolate the cash flow 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. Senior management believes that this growth rate is justified. These calculations use pre-tax cash flow projections based on financial budgets approved by management. SIP asset management business cash-generating unit The recoverable amount of SIP 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 10%. The growth rate used to extrapolate the cash flow of the SIP business cash-generating unit beyond the five-year period is 2%. This growth rate is based on the average growth rate of the management fee in which the business operates. Senior management believes that this growth rate is justified. These calculations use pre-tax cash flow projections based on financial budgets approved by management.