Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 527

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 527
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 once a year, or whenever there is an indication of impairment, by comparing the recoverable amount

of a CGU with its carrying amount.

Goodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a

CGU. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the

portion of the CGU retained.

Critical estimates and judgements

| The review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management’s best estimate of the future cash flows of the CGUs and therates used to discount these cash flows, both of which are subject to uncertain factors as follows:                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Judgements                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| –The accuracy of forecast cash flows is subject to ahigh degree of uncertainty in volatile marketconditions. Where such circumstances aredetermined to exist, management re-tests goodwillfor impairment more frequently than once a yearwhen indicators of impairment exist. This ensuresthat the assumptions on which the cash flowforecasts are based continue to reflect currentmarket conditions and management’s best estimateof future business prospects. | –The future cash flows of the CGUs are sensitive to the cash flows projected for the periods for whichdetailed forecasts are available and to assumptions regarding the long-term pattern of sustainable cashflows thereafter. Forecasts are compared with actual performance and verifiable economic data, butthey reflect management’s view of future business prospects at the time of the assessment.–The rates used to discount future expected cash flows can have a significant effect on their valuation,and are based on the costs of equity assigned to individual CGUs. The cost of equity percentage isgenerally derived from a capital asset pricing model and market implied cost of equity, whichincorporates inputs reflecting a number of financial and economic variables, including the risk-freeinterest rate in the country concerned and a premium for the risk of the business being evaluated.These variables are subject to fluctuations in external market rates and economic conditions beyondmanagement’s control.–Key assumptions used in estimating goodwill and non-financial asset impairment are described in Note21. |

The Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but does consider this to be an area that is inherently judgemental. The Group’s consideration of