NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2021 19. GOODWILL (continued) Impairment testing of goodwill (continued) 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 8%. 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. 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. The carrying amounts of goodwill allocated to each cash-generating unit of business are as follows: As at 31 December As at 31 December Asset management business 2021 2020 US$’000 US$’000 Redwood 210,480 210,480 Infinitysub 34,370 34,370 ESR Australia 284,216 81,823 SIP 13,570 13,570 Total 542,636 340,243 Assumptions were used in the value-in-use calculation of the Group’s cash-generating unit for 31 December 2021 and 2020. The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill. Budgeted gross fee income — The basis used to determine the value assigned to the budgeted gross fee income is the average fee income achieved in the year immediately before the budget year, increased for expected market development. Discount rates — The discount rates used reflect specific risks relating to the relevant units. R E A C H I N G N E W H E I G H T S 194
RkJQdWJsaXNoZXIy ODIwNTc=