INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF GKN PLC continued
Area of focus Assessment of the carrying value of goodwill and other relevant assets
Refer to page 34 (Other financial information), pages 40 to 47 (Risk management/Principal risks and uncertainties), pages 70 to 75 (Audit & Risk Committee report), note 1 (Accounting policies and presentation) and note 11 (Goodwill and other intangible assets). We focused on this area because the Directors’ assessment of whether or not certain elements of goodwill and other relevant assets were impaired, and the level of impairment to be booked if applicable, involved complex and subjective judgements and assumptions about the progress and future results of the Group’s Cash-Generating Units (CGUs). In particular, we focused on the carrying values of material CGUs for Aerospace St. Louis in North America (£8 million of goodwill and £110 million of other relevant assets) and Aerospace Astech in North America (£13 million of goodwill and £13 million of other relevant assets). The Directors have recorded total impairment charges of £71 million relating to the Aerospace St. Louis CGU (£49 million), the Aerospace Astech CGU (£14 million) and other impairment charges totalling £8 million. No impairment triggers had been identified by the Directors in respect of the remaining CGUs and/or their impairment models determined that adequate headroom existed not to result in the need for an impairment charge in reasonably possible scenarios.
How our audit addressed the area of focus