V a l ua t i on of g ood wi l l R e fe r to N o t e 2g to t he Fi n a nc i a l R epor t T h e K ey au d i t m at t er H ow t he m a t t e r wa s a ddr e s s e d i n o ur a udi t The a s s e s s m ent of i m pa i r m ent o f t he G r oup s goodw i l l i s a k e y a udi t m a t t er due t o t he s i gni f i c a nc e of t he a m oun t t o t he G r oup s ba l a n c e s heet 47 of t ot a l a s s et s a nd t he j udgem ent a ppl i ed by us w hen e v a l u a t i ng t he f or w a r d l ook i ng a s s um p t i ons i n t he G r oup s v a l ue i n us e m odel s W e f oc u s ed on t he f ol l ow i ng a s s um p t i ons For ec a s t oper a t i ng c a s h f l ow s a nd g r ow t h r a t es t he G r oup oper a t e s i n c om pet i t i v e m a r k et s w hi c h c a n put p r es s ur e on gr ow t h a nd m a r gi ns Thi s i nc r e a s e s t he po s s i bi l i t y of goodw i l l bei ng i m pa i r ed w hi c h i s a f oc u s f o r u s For ec a s t g ro w th ra te s i n a ddi t i on t o t he unc er t a i nt y de s c r i bed a bo v e t he A L S Li f e S c i enc e s S out h A m e r i c a a nd A LS I ndus t r i a l C a s h G ener a t i ng U ni t s C G U s m odel s a r e se n si t i ve t o s m al l ch an g e s i n g r o w t h as su m p t i o n s Thi s dr i v es a d di t i ona l a udi t ef f or t sp e ci f i c t o t hei r f e a s i bi l i t y a nd c ons i s t enc y of a ppl i c a t i on t o t he G r oup s s t r a t eg y D i s c ount r a t e t hes e a r e c o m pl i c a t ed i n n a t ur e a nd v a r y a c c o r di ng t o t h e c ondi t i ons a nd env i r onm ent t he s pe c i f i c C G U i s s ubj ec t t o fro m ti m e to ti m e The G r oup s m odel s u s ed t o ca lc u la t e va lu e in u s e a r e l a r gel y m a nu a l l y dev e l oped us e a dj us t ed hi s t or i c a l per f o r m a n c e a nd a r a nge of i nt e r na l a nd ex t er n a l s our c es a s i nput s t o t he a s s u m pt i ons M odel l i ng us i ng f or w a r d l ook i ng a s s um p t i ons t ends t o be pr one t o gr e a t e r r i s k f or po t ent i a l b ias a nd er r or The s e c ondi t i ons nec es s i t a t e a ddi t i ona l sc r u t i n y b y u s W e i nv ol v ed s eni or a udi t t e a m m em be r s i nc l udi ng v a l ua t i on s pe c i a l i s t s t o c h a l l enge t he G r oup s as su m p t i o n s Ou r pr o c edur e s i nc l uded W e c ons i der ed t he a ppr o pr i a t ene s s of t he val u e i n us e m et hod a ppl i ed by t he G r oup t o per f or m t he a nnua l t e s t of goodw i l l f or i m pa i r m ent a g a i ns t t he r eq ui r em ent s of t he a c c ount i ng s t a nd a r d s W e as se s se d t h e h i st o r i cal a ccu r a cy o f f or ec a s t i ng of t he G r oup by c om pa r i ng a c t u a l pa s t per f or m a n c e a g a i ns t p r ev i o u s f o r e ca st s a nd a s s um p t i ons t o i nf or m our e v a l u a t i on of f or ec a s t s i n c or por a t ed i n t he m odel s W or k i ng w i t h our v a l ua t i o n s pec i a l i s t s w e c ha l l enged t he G r oup s f o r ec a s t oper a t i ng c a s h f l o w s an d gr ow t h r a t e s i n l i ght of t he m ar g i n pr es s ur e f r om t h e c om pet i t i v e env i r onm ent t he G r oup oper a t es w i t hi n W e c om pa r ed ba s e y ea r c a s h f l ow s t o B o a r d a ppr ov ed pl a n s a nd s t r a t eg y ou r unde r s t a ndi n g of t he c ur r ent bus i nes s a nd oper a t i ons a s obt a i ned f r o m our a udi t t e s t i ng f or c on s i s t en c y of r el a t i ons hi ps W e c om p a r ed fo re c a s t g ro w th ra t e s to publ i c l y av ai l ab l e m ar ke t d at a f o r co m p ar ab l e e n t i t i e s a nd c ons i der ed di f f e r enc e s f or t he G r oup s oper a t i on s W e u s ed our k now l edge of t he G r oup t hei r p a s t per f or m a nc e bus i ne s s a nd c us t om er s a nd our i ndus t r y ex per i enc e W o r ki n g w it h o u r va lu at io n s p e c ia lis t s w e a na l y s ed t he G r o up s di s c o unt r a t e s a g a i ns t p u b l i cl y a vai l ab l e m ar ke t d a t a f o r co m p ar ab l e ent i t i es W e c on s i der ed t he s ens i t i v i t y of t he v a l ue i n us e m odel s by v a r y i ng k ey a s s u m pt i ons i nc l udi ng t he di s c oun t r a t e a nd g r o w th ra te w i t hi n a r ea s ona bl y po s s i bl e r a nge W e di d t hi s t o i dent i f y t ho s e C G U s a t hi gher r i s k of i m pa i r m ent a n d t o f oc us our f ur t he r pr oc edur e s W e a s s es s ed t he di s c l os u r es i n t he f i na nc i a l r epor t u s i ng our under s t a nd i ng obt a i ned f r om our t e s t i ng a nd a ga i ns t t he r e qui r em ent s of t he a c c ount i ng s t a nd a r d s 85 ALS LIMITED AND IT S SUBSIDIARIES A NNU AL F INANCIAL R EPOR T F OR THE Y EAR E NDED 31 M AR CH 2019 F INANCIAL REPOR T I NDEPENDENT A UDIT OR S REPOR T T O THE MEMBERS OF ALS L IMITED