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DonBronco, well spotted, my thoughts are that the finsncials are conservative (good) and there is potential upside on the good-will write off even to MULTIPLES of materiality. The "matefiality" in question is for group financials the way I read it - set at £270K.
Page 68 - "Materiality for the Group financial statements as a whole was set at £270,000 (2018: £254,000), determined with reference to a benchmark of Group revenue (2018: group profit before tax, normalised to exclude last year’s costs directly attributable to the Group’s acquisitions and subsequent integration (including legal and professional fees, severance payments, office closure costs and the gain on settlement of the forward contract, totalling £1.5m)), of which it represents 0.5% (2018: 5%). Group revenue was determined to be the most suitable benchmark as it provides a more stable measure year on year than Group profit before tax."
Page 67 - "As part of our audit work, we determined that the impairment charge has a high degree of estimation uncertainty, with a potential range of REASONABLE OUTCOMES GREATER THAN our materiality for the financial statements as a whole, and POSSIBLY MANY TIMES THAT AMOUNT."
I read it a potential upside, not downside, and that the decks were cleared and garbage accounted for in a conservative fashion that might lead to a pleasant surprise. DYOR though.
What are the implications of this, particularly the last paragraph?
Over the past year, certain areas of the Group have underperformed, with customer churn greater than previously expected, particularly in the ‘US’ and ‘Rest of Mainland Europe’ cash generating units.
As a result, the directors have recorded an impairment charge against goodwill in the Group accounts of £27.0m, in relation to the US cash generating unit. The investment in Proactis Overseas Limited (relating to the 2017 Perfect Commerce LLC acquisition) on the parent company balance sheet has also been impaired by £47.6 million.
The estimated recoverable amount and the resulting impairment charge are subjective due to the inherent uncertainty involved in forecasting and discounting future cash flows. As part of our audit work, we determined that the impairment charge has a high degree of estimation uncertainty, with a potential range of reasonable outcomes greater than our materiality for the financial statements as a whole, and possibly many times that amount.