ESR Group Limited Annual Report 2022 Notes to the Consolidated Financial Statements 31 December 2022 185 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 9.0%. 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. Senior management believes that this growth rate is justified. 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 10.0%. The growth rate used to extrapolate the cash flows of the SIP 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. 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 7.8%. The growth rate used to extrapolate the cash flows of the ARA business cash-generating unit beyond the five-year period is 1.2%. 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. 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. STRATEGIC REPORT FINANCIAL STATEMENT CORPORATE GOVERNANCE
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