Lendlease Annual Report 2022

160 Lendlease Annual Report 2022 Notes to Consolidated Financial Statements continued Section F. Other Notes 32. Intangible Assets Accounting Policies Goodwill represents the excess of the purchase price over the fair value of the Group’s share of the net identifiable assets and contingent liabilities of the acquired business at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets as goodwill. Goodwill on acquisition of associates is included in the carrying value of investments in associates. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is not amortised. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. For the purposes of impairment testing, goodwill is allocated to cash generating units (CGUs) (or groups of CGUs) that are expected to benefit from the business combination in which the goodwill arose. CGUs are an identifiable group of assets that generate cash associated with the goodwill. Management considers this is an area of estimation uncertainty as these calculations involve an estimation of the recoverable amount of the CGU to which the goodwill is allocated. The Construction CGUs use the value in use basis, which requires the Group to estimate the future cash flows expected to arise from the CGUs and a suitable discount rate in order to calculate the recoverable amounts. Management agreements and other intangible assets acquired by the Group are stated at cost less accumulated amortisation and impairment losses (see Note 7 ‘Other Expenses’ ). Amortisation is charged to the Income Statement on a straight line basis over the estimated useful lives of the intangible assets, ranging from three to 20 years. June 2022 June 2021 Note $m $m Goodwill 32.a 1,056 1,200 Management agreements 24 33 Other intangibles 1 145 223 Total intangible assets 1,225 1,456 1. During the second half of the financial year, the Group performed a review of its Digital assets of $115 million that resulted in a change in product offering. As the Group changed its product offering, it had to determine the recoverable amount of the remaining Digital assets. This was calculated using a value in use with a discount rate of 20 per cent, resulting in an impairment expense of $77 million. The impairment expense was charged to the Corporate Activities. At 30 June 2022, the remaining Digital assets was $38 million (30 June 2021: $66 million). 32.a. Goodwill June 2022 June 2021 Note $m $m Development 33 30 Construction 1,023 1,170 Total goodwill 1,056 1,200 Reconciliations of the carrying amounts for each category of goodwill are as follows: Development Carrying amount at beginning of financial year 30 32 Effect of foreign exchange rate movements 3 (2) Carrying amount at end of financial year 33 30 Construction Carrying amount at beginning of financial year 1,170 1,181 Disposals (151) - Effect of foreign exchange rate/other movements 4 (11) Carrying amount at end of financial year 32.b 1,023 1,170