Page 57 - Hardide-Annual-Report-2021
P. 57

Notes to the Group Financial Statements 57
£ ‘000
 Cost at 1 October 2020 and 30 September 2021 69 Net book value at 1 October 2020 and 30 September 2021 69
Goodwill relates to the acquisition of the net liabilities of Isle Hardide Limited by Hardide Coatings Limited which occurred in October 2000 and which were valued at £99,095, for which no consideration was paid. The goodwill had previously been amortised over 20 years under UK GAAP until conversion to IFRS on 1 October 2006. Total amortisation up to that date amounted to £30,000 giving a net book value of £69,000.
The Group tests whether goodwill has suffered any impairment on an annual basis. The Directors consider there
to be one-cash generating unit for the purposes of assessing for impairment of goodwill. For the 2021 and 2020 reporting periods, the recoverable amount of the cash-generating unit (CGU) was determined based on value-in-
use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering the following financial year, together with a 3 year strategic plan. The Directors consider the recoverable amount of the cash-generating unit exceeds the carrying value of goodwill under this period of financial budgets and strategic plans and, therefore, have not extrapolated the cash flow projections over a longer period.
The Directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU. The Directors have a applied a discount rate of 4%.
The key assumptions used by management in setting the financial budget and strategic plan include forecast sales growth rates, expected changes to selling prices, material costs and operating profits. Forecast sales growth rates are based on past experience and expected outcomes of current development work.
The Group has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount of goodwill. The Directors believe that any reasonably possible change in the key assumptions on which the recoverable amount of the CGU is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the CGU.
Cost at 1 October 76 Additions 4 Disposals (2) Cost at 30 September     78
Amortisation b/fwd   26 Disposals (2)
2021 £ ‘000
2020 £ ‘000
44 33 (1) 76
14 (1) 13 26
30 50
      Amortisation in the year Amortisation c/fwd
Net book value at 1 October
Net book value at 30 September
18 42
50 36

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