7 FINANCIAL STATEMENTS 301 2. ACCOUNTING POLICIES (CONTD.) 2.4 Summary of material accounting policies (contd.) (w) Climate-related matters (contd.) (ii) Impairment of non-financial assets. The value-in-use may be impacted in several different ways by transition risk in particular, such as climate-related legislation and regulations and changes in demand for the Group’s products. Even though the Group has concluded that no single climate-related assumption is a key assumption for the 2025 test of goodwill, the Group remains vigilant and will consider incorporating climate-related assumptions into its financial reporting as and when such risks become more prevalent or significant to the Group’s operations. 2.5 Significant accounting judgements and estimates The preparation of the Group’s and of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. (a) Judgements There are no critical judgements made by management in the process of applying the Group’s and the Company’s accounting policies that may have significant effects on the amounts recognised in the financial statements. (b) Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: (i) Revenue recognition - Asset consultancy The Group recognises its revenue and profit on consultancy contract services based on the percentage of completion, calculated by reference to the proportion of costs incurred to date against the total expected costs for the contracts. Full provision is made for losses on all contracts when they are first foreseen. Significant estimates are applied especially in determining the total expected costs for the contracts in order to reliably estimate the percentage of completion. (ii) Impairment of goodwill and other non-current assets The Group determines whether goodwill is impaired at least on an annual basis and other non-current assets are impaired when there are indications of impairment. This requires an estimation of the value-in-use of the CGU to which the goodwill and other non-current assets are allocated. Estimating a value-in-use amount requires management to make an estimate of the expected future cash flows from the CGU and also to determine suitable discount and growth rates in order to calculate the present value of those cash flows. The carrying amounts of property, plant and equipment, right-of-use assets and intangible assets, including goodwill are disclosed in Notes 13, 15 and 17 respectively.
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