Figures in Rand thousand  2020     Restated 
Cost  3 657 801     4 358 312    
Accumulated impairments  (1 484 715)    (103 031)   
Opening balance  2 173 086     4 255 281    
Acquired in business combinations  –     70 877    
Foreign currency translation  8 975     27 874    
Disposals  (248 149)    (325 605)   
Impairments: discontinued operations  (147 870)    (506 762)   
Impairments: continuing operations  (265 224)    (1 348 579)   
Closing balance before assets held for sale  1 520 818     2 173 086    
Cost  3 225 516     3 657 801    
Accumulated impairments  (1 704 698)    (1 484 715)   
Assets held for sale (note 14)  (604 075)    (322 232)   
Closing balance  916 743     1 850 854    

A number of economic and operational events during the year ended 31 July 2020 had a negative impact on EOH's market capitalisation and certain underlying businesses. This has resulted in a material impact on the carrying value of goodwill. The Group's annual review of goodwill highlighted impairments of R413 million (R110 million in the iOCO segment, R243 million in the NEXTEC segment and R60 million in the IP segment).


Impairments in iOCO were largely driven by lost or unrenewed contracts, delayed projects with customers as a result of ongoing challenging market conditions, or businesses that have been rendered non-operational during the year.


The largest contributor to the impairment of goodwill in NEXTEC is the TCD cash generating unit (CGU), which incurred an impairment of R93 million due to the effects of changes in clinical trials legislation which led to a loss of customers and consequent restructuring of the business. The PIA Solar CGU incurred a R49 million impairment to goodwill relating to renewable energy loss-making contracts. The PCI CGU incurred a R39 million impairment, primarily due to continued material delays in the commencement or award of projects in the water sector. Other impairments in the segment related primarily to assets held for sale, the values for which were negatively impacted by challenging market conditions, particularly in the water and rail sector, which impacted infrastructure-focused businesses that have been disposed of or are in the process of being sold.


The impairment of goodwill amounting to R60 million in the IP segment relates to key long-term contract renewal challenges. Some of the CGUs within IP were particularly hard hit by the effects of the COVID-19 lockdown due to their B2B2C business lines.

Prior year impairments

Prior year goodwill impairments amounted to R1 855 million (R613 million in the iOCO segment and R1 242 million in the NEXTEC segment). Goodwill amounting to R565 million across a number of cash-generating units was impaired due to project complexities, supplier issues, slow debtor recoveries, and underperformance to budgets. Impairments of R375 million were driven by lost or delayed contracts and projects due to the reputational damage sustained by EOH in that year. Court rulings and legislation changes issued in the prior year negatively impacted cash-generating units providing employee services and clinical trials, contributing to impairments of R212 million. Cash-generating units in the Middle East and Europe sustained impairments of R114 million owing to weaker cash conversion and project delivery difficulties. Impairments of R122 million relate to non-core CGUs that were held for sale and were written down to fair value less costs of disposal. The balance of impairments sustained in the prior year related mainly to the prevailing challenging market conditions.

Impairment testing

For the purpose of impairment testing, goodwill is allocated to the Group's cash-generating units. The recoverable amount of these cash-generating units was determined based on value-in-use calculations, discounting the future cash flows expected to be generated from the continuing operations of each cash-generating unit. Impairment tests on assets held for sale were based on fair value less costs of disposal.

A pre-tax discount rate was used in discounting the projected cash flows depending on the nature of business and operating markets (including country specific risk factors). These calculations use cash flow projections based on financial budgets and forecasts for three years and in some instances up to five years, as approved by the Board of Directors, which are based on assumptions of the business, industry and economic growth. A perpetuity growth rate is calculated using long term growth rates, this is further applied based on conservative historical market trends and operating markets (including country specific risk factors).

With the Group undergoing significant re-organisation and corporate structure simplification, a number of businesses were integrated during the year, which resulted in movements in goodwill attributed to certain CGU's. The Glacier CGU was combined with the Compute CGU, the Synergy and Softworks CGU's were combined and the XDS, MIE and HTCSA CGUs were integrated to operate as one CGU under the Infosys name. Faculty Training Institute, Proserv, Siyanqoba, and Siyaya were previously recognised as individual CGUs. During the current year these have been merged to form a single unit, Learning and Development. The performance of these assets are now being collectively managed, measured and reported on by a single executive team, sharing the same markets and offering its services collectively to prospective customers.

Impacts of COVID-19 on the goodwill financial impairment testing

In determining the budgets and forecasts, the management team has taken into consideration the impact of COVID-19 on the underlying cash-generating units' performance and adjusted the revenue growth forecasts and adjusted EBITDA margins where applicable.

Key assumptions used in discounted cash flow projection calculations

The values assigned to the key assumptions represent management's assessment of future trends in the industry and are based on past experience and both external and internal data.

Changes in key assumptions, as well as the actual cash flows achieved against forecasts, may result in further impairments to the cash-generating units impaired during the year. The forecast cash flows of these cash-generating units are reliant on a certain level of anticipated improvement within the forecast period.

The assumptions below have been applied to calculate the recoverable amount of cash-generating units based on value-in-use calculations. The discount rates used in the discounted cash flow models are calculated using the principles of the Capital Asset Pricing Model, taking into account current market conditions.

The following key assumptions were used for the value in use calculations:

  • Growth rates: the Group used growth rates to extrapolate revenues for the two years beyond the budget period. These growth rates were based on the different industries the cash generating units operate in, as well as management's views on the growth prospects of the businesses. The higher growth rates applied to certain CGU's relate to businesses that had shown growth despite the COVID-19 impacted economic conditions (the Impressions digital signatures business), or CGU's with low budgeted 2021 revenue bases due to the expected negative impacts of COVID-19, which are anticipated to grow over the forecast periods to historically achieved or improved levels (for example the Learning and Development CGU, which is also undergoing an active business optimization process). In the prior year, the higher growth rates were driven by proven historic trends in revenue growth (for example the Allos CGU).
  • Discount rates: discount rates used reflect both time value of money and other specific risks relating to the relevant cash generating unit;
  • Adjusted EBITDA margins in the following ranges: iOCO (3.4%-45.3%), Nextec (6.4%-19.8%) (prior year: iOCO (1.6%-52.8%), Nextec (5.5%-25.2%), (IP: 3.2%-39.4%)); and
  • Perpetuity growth rates: a perpetuity growth rate of 4% (prior year: 3.9%) has been used for the Group.
    Figures in Rand thousandGoodwill


    Compute 211 899   23.4%   7.8%  
    Managed Services 80 793   23.9%   5.8%  
    Symplexity 50 123   23.6%   0.8%  
    Softworks 39 345   22.1%   7.4%  
    Employee Benefits 38 162   23.4%   3.2%  
    Microsoft 35 707   22.5%   11.4%  
    ESA 31 773   25.6%   (2.3%)  
    Network Solutions 31 163   22.1%   4.6%  
    Legal Services 29 177   23.5%   2.9%  
    Coastal 22 342   22.9%   13.5%  
    IOT 14 814   25.6%   6.0%  
    Freethinking 14 081   22.5%   14.4%  
    XTND 13 333   23.9%   6.9%  
    Impressions 12 240   24.6%   37.2%  
    Connection 42 12 016   23.7%   9.4%  
    Other 55 305   n/a   n/a  


    Learning and Development 93 488   25.1%   17.7%  
    JOAT 59 463   27.3%   10.6%  
    SCAN RF 28 155   25.6%   (2.2%)  
    Energy Insight 12 261   24.9%   17.6%  
    Other 31 103   n/a   n/a  
    Figures in Rand thousandGoodwill


    Compute176 569 20.1% 3.9%
    LSD103 684 24.1% 2.4%
    Managed Services80 798 21.6% 3.9%
    Symplexity60 123 19.0% 8.5%
    Employee Benefits58 162 19.7% 3.9%
    Microsoft35 707 21.6% 3.9%
    Glacier35 330 20.2% 3.9%
    Synergy33 778 19.6% 5.0%
    Allos33 604 21.4% 19.7%
    ESA31 773 21.6% 3.9%
    Network Solutions31 163 20.0% 6.1%
    Legal Services29 177 19.9% 3.9%
    Coastal22 342 20.8% 3.9%
    CA20 771 19.9% 3.9%
    IOT 14 814 19.9% 3.9%
    Freethinking14 081 20.0% 4.9%
    XTND13 333 22.0% 3.9%
    MPC Recruitment13 126 21.2% 3.9%
    Impressions12 240 20.3% 3.9%
    Connection 4212 016 20.2% 3.2%
    Oracle11 671 20.2% 3.9%
    Other60 733 n/a n/a


    TCD92 953 19.6% 3.9%
    JOAT 59 463 23.1% 3.9%
    PIA Solar48 530 26.4% 3.9%
    PCI Africa38 699 22.7% 5.0%
    SCAN RF28 155 21.7% 10.0%
    Change Logic24 967 20.3% 3.9%
    Impact HR15 808 20.3% 3.9%
    Gibela14 124 16.3% 3.9%
    Energy Insight12 261 21.6% 3.9%
    Other26 388 n/a n/a


    Sybrin237 467 19.8% 11.2%
    MIE139 926 20.5% 12.1%
    Syntell98 601 22.3% 23.0%
    XDS97 317 20.8% 10.0%
    HTCSA 11 200 20.4% 3.9%

    Sensitivity analysis on value in use

    In performing the impairment test for goodwill, EOH considered the sensitivity of the cash-generating units to changes in assumptions around key value drivers. The key value drivers for the cash-generating units are adjusted EBITDA margins, discount rates and revenue growth assumptions. The cash-generating units not included in the table below have sufficient headroom and are not sensitive to the changes applied to the assumptions. However, a decrease in the adjusted EBITDA margin of 2.5 percentage points (prior year: 1 percentage point) resulted in the following cash-generating units being impaired by the values listed:

    Figures in Rand thousand2020   Restated
    Impressions 8 405   n/a  
    Compute 3 110   n/a  
    Impact Human Resources 16 258   n/a  
    Legal Services 6 412   n/a  
    GLS Consulting 3 280   n/a  
    Hospitality Professionals SA n/a   681  

    n/a - These cash-generating units have sufficient headroom and were not materially impacted by the sensitivity analysis performed.

    Assets held for sale

    The Group tested its held for sale assets, for impairment in line with IFRS 5. The recoverable amount was determined as the fair value less costs of disposal which was then compared to the carrying value of the CGU (including its allocated goodwill balance). The fair value was determined primarily with reference to advanced offers from potential acquirers less estimated disposal costs. In assessing sensitivity, the advanced offers were adjusted down by 5% and in all cases sufficient headroom remained.

    In 2019, the fair values of the Proserv and Siyaya CGUs were determined using a discounted cashflow approach applying the following pre-tax discount rates and average growth rates respectively: Proserv (21.0% and 3.9%) and Siyaya (20.7% and 3.9%). Sufficient headroom existed after applying the same sensitivities applied to the prior year value-in-use calculations and it was found that these CGUs were not sensitive to changes in key assumptions.

    Figures in Rand thousand Goodwill


    Infosys248 443  
    Sybrin242 630  
    Syntell38 601  


    DENIS74 401  
    Figures in Rand thousand Goodwill


    Vilt 59 251  
    Dataworld 28 027  


    DENIS 94 402  
    Siyaya 47 377  
    Enablemed 23 617  
    Proserv 23 138  
    MSO 22 871  
    Siyanqoba 15 345  
    Other 8 204