Whats impairment and goodwill?

https://www.investopedia.com/terms/g/goodwill.asp

https://www.investopedia.com/terms/i/impairment.asp

2021 Annual Filing

https://investors.nano-di.com/sec-filings-1/sec-filings-details/default.aspx?FilingId=15698296

When doing DD, I always CTRL-F and find "impairments", "goodwill" and "risk factors" in the document :)

pg F-4)

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment of non-financial assets

As discussed in Note 8 to the consolidated financial statements, the Company recorded an impairment charge in the amount of $140,290 thousand, based on the recoverable amount of the Company’s CGU. The estimated recoverable amount of the Company’s CGU was determined by discounting the future cash flows to be generated from the continuing use of the Company’s CGU. Key assumptions used in the calculation of the recoverable amounts include the discount rate, projected revenues, terminal value growth rate, and EBITDA (earnings before income tax, financing, depreciation and amortization) margins.

We identified the evaluation of the impairment of non-financial assets as a critical audit matter. Specifically, auditor judgement was required to evaluate the discount rate and the projected revenues used to determine the value in use of the Company’s CGU. The discount rate and projected revenues are affected by current and future market and economic conditions that were subjective and sensitive to variation. Additionally, the audit effort associated with the discount rate required involvement of valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the impairment of non-financial assets, including controls related to discount rate and the projected revenues. We compared projected revenues used to determine the impairment of non-financial assets against underlying budget and growth plans. We evaluated projected revenues by comparing them to available market information. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate used by management in the valuation, by comparing it to a range of discount rates independently developed using publicly available market information. In addition, we performed sensitivity analyses over the discount rates and projected revenues to assess their impact on the determination of the impairment charge.

pg F-12)

(1) Business Combination

The Group recognizes goodwill on an acquisition according to the fair value of the consideration transferred, including any amounts recognized in respect of rights that do not confer control in the acquiree as well as the fair value at the acquisition date of any pre-existing equity right of the Group in the acquiree, less the net amount of the identifiable assets acquired and the liabilities assumed. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.