Page 225 - Sigmaroc Annual-Report 2023

Key assumptions
The key assumptions used in performing the impairment review are set out below:
Cash flow projections
The key assumptions and methodology used in respect of the operating segments are consistent with those described above. The values applied to each of the key estimates and assumptions are specific to the individual operating segment and are based on past experience and forecast future trading conditions. The cash flows and terminal value were projected in line with the methodology disclosed above.
Long-term growth rates
Cash flow projections are prudently based on 2 per cent (2022: 2 per cent) and therefore provides plenty of headroom.
Discount rate
Forecast cash flows for each operating segment have been discounted at rates of 9.30 per cent to 12.24 per cent (2022: 10 per cent); which was calculated based on market participants’ cost of capital and adjusted to reflect factors specific to each operating segment.
18. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Shares in subsidiary undertakings At beginning of the year
Additions
Disposals
At period end
Loan to/(from) Group undertakings
Total
Investments in Group undertakings are stated at cost less impairment.
Sensitivity
The Group has applied sensitivities to assess whether any reasonable possible changes in assumptions could cause an impairment that would be material to these consolidated Financial Statements. The table below identifies the amounts by which each of the following assumptions would decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets in the two operating segments selected for sensitivity analysis disclosures:
6.0% - 7.0% 2.0% - 3.7% 2.0%
This demonstrated that a 1.0% (2022: 1.0%) increase in the discount rate would not cause an impairment and the annual growth rate is assumed to be 2.0% (2022: 2.0%).
The Directors have therefore concluded that no impairment to goodwill is necessary.
Company
225
Reduction in cash flows
Increase in discount rate
Reduction in growth rate
31 December 2023 £’000
31 December 2022 £’000
482,622
6,190
-
488,812
78,493
567,305
435,085
47,537 - 482,622 100,799 583,421