2021
2020
Goodwill
Total
£’000
Total
£’000
Opening carrying value 5,928 4,628
Arising on acquisition - 1,338 Effect of foreign exchange (29) (38) Closing carrying value 5,899 5,928
Basis for calculation of recoverable amount
The Group has prepared, and formally approved, a five-year plan for its CGU (based on a formal 3-year plan extended for two more projected years). The detailed plan put together by the management team and the Board makes estimates for revenue and gross profit expectations. This is from both contracted and pipeline revenue streams. It also takes account of historical success of winning new work and has been prepared in accordance with IAS 36, ‘Impairment of Assets’.
The key assumptions used in the value in use calculations were the pre-tax discount rates applied (13%) and the growth assumptions. Growth in sales and corresponding costs for the five-year period has been forecast at 12% and 6% per annum respectively.
The rates used in the above assumptions are consistent with management’s knowledge of the industry and strategic plans going forward. The assumptions noted above have been given in terms of revenue and overhead percentage growth. For 2022 and subsequent years, the assumption has been provided in terms of growth on the prior year EBITDA. The terminal growth rate of 2% does not exceed the long-term growth rate for the business in which the CGUs operate. The discount rate used is pre-tax and reflect specific risks relating to the Group. The forecasts are most sensitive to changes in revenue and overhead assumptions (taken together as the EBITDA). However, there are no major changes to the key assumptions which would cause the goodwill to be impaired.
There would have to be a reduction in forecast EBITDA by 24% in the year ending 31 January 2022 for the headroom to be removed.
Current |
2021 £’000 |
2020 £’000 |
Trade receivables |
5,607 |
5,012 |
Less: provision for impairment of trade receivables |
(80) |
(68) |
5,527 |
4,944 |
|
Other receivables |
1,497 |
1,431 |
Prepayments and accrued income |
3,866 |
3,555 |
10,890 |
9,930 |
Trade and other receivables
Total £’000 |
|
At 1 February 2020 |
2,613 |
Accrued revenue invoiced in the year |
( 2,613) |
Revenue accrued in the year |
2,847 |
Foreign exchange difference |
103 |
At 31 January 2021 |
2,950 |
Below is a reconciliation of the movement in accrued income: