ASIC Cracks The Whip On Writedowns

By Glenn Dyer | More Articles by Glenn Dyer

ASIC, the corporate regulator, has forced three small companies to write down asset values in their 2018-19 balance sheets according to quietly released announcements this week.

Total write-downs or impairments revealed by the companies top the $70 million mark.

The first announcement came on Monday when the regulator revealed that ’ASIC notes the decision by PS&C Limited [ASX code: PSZ] to impair goodwill by $50 million in its financial report for year ended 30 June 2019.

“ASIC had raised concerns on PS&C’s impairment assessment of the goodwill as at 30 June 2018. ASIC questioned the reasonableness and supportability of free cash flow forecasts used in goodwill impairment testing, having regard to historical performance and market conditions.

“As outlined in ASIC media release 19-143MR Major financial reporting changes and other focuses, impairment testing and asset values remain a focus area for financial reporting at 30 June 2019,’ the regulator said in the release on Monday.

Then on Thursday, the regulator released two statements revealing smaller write-downs by two other companies.

In the first statement, ASIC said it “notes the decision by Range International Limited (Range) to impair its non-current assets by US$5.4 million in its financial report for the half year ended 30 June 2019.”

“ASIC had raised concerns on Range’s impairment assessment of the non-current assets as at 31 December 2018. ASIC questioned the reasonableness and supportability of free cash flow projections, revenue, gross margins and EBITDA used in its impairment testing, having regard for historical performance and market conditions.”

And in a second statement, ASIC said it “ otes the decision by Tempo Australia Limited (Tempo) to write down goodwill by $9.23 million, deferred tax assets (DTA) by $5.32 million and intangible assets by $0.47 million in its financial report for the half-year ended 30 June 2019.

“ASIC had raised concerns on the impairment assessment of goodwill, intangible assets and DTA at 31 December 2018. ASIC questioned the supportability of earnings growth and gross margins used in testing goodwill and other intangible assets for impairment and the recoverability of DTA having regard to losses in the financial years ended 31 December 2017 and 31 December 2018 and market conditions,” ASIC said in the statement.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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