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21-243MR Jayex Technology writes down goodwill
ASIC notes the decision by Jayex Technology Limited (Jayex) to write down the goodwill for its UK cash generating unit by $1.93 million in its financial report for the half-year ended 30 June 2021.
ASIC had expressed concerns about Jayex’s financial report for the year ended 31 December 2020 in relation to:
- the value of goodwill for Jayex’s UK business, due to optimistic forecast revenue growth rates (50.1% for 2021) despite the significant impact of COVID-19; and
- a materially incorrect revenue growth rate disclosure (5.5%).
Jayex corrected the revenue growth disclosure in a market announcement on 16 August 2021. The $1.93 million write down relates to an adjustment to the revenue growth rates affecting Jayex’s continuing UK business due to the impact of COVID-19.
As outlined in ASIC media release 21-129MR, ASIC highlights focus areas for 30 June 2021 financial reports under COVID-19 conditions, the impact of COVID-19 on asset values remains a focus area for financial reporting at 30 June 2021.
Directors are primarily responsible for the quality of an entity’s financial report. This includes ensuring that management produces quality information on a timely basis. Companies should apply appropriate experience and expertise to financial reporting and must have appropriate processes, records, and analysis to support information in the financial report.