Ni Hsin Berhad Annual Report 2018

5. Goodwill Group 2018 2017 RM’000 RM’000 Cost 5,105 5,105 Carrying amounts 5,105 5,105 5.1 Impairment testing for cash-generating unit containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s operating segments which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The recoverable amount of the cash-generating unit was based on its value-in-use. The carrying amount of the unit was determined to be approximately its recoverable amount and no impairment loss was recognised. Value-in-use was determined by discounting the future cash flows generated from the continuing use of the unit and was based on the following key assumptions: • Cash flows were projected based on past experience, actual operating results and the 5-year business plan. Cash flows for period after the 5 th year were extrapolated using a constant growth rate of 5% (2017:5%), which represent management’s assessment on the growth rate for clad metals and convex mirror industry using both external sources and internal sources (historical data). Management believes that this cash flows forecast period was justified as there is no future event or condition that may cause the unit to cease to continue as a going concern. • Revenue growth rate in the 5-year business plans is ranging from 9% to 12% per annum (2017: 6% to 8% per annum) • Gross profit margin in the 5-year business plans is ranging from 19% to 23% (2017: 21%) • A pre-tax discount rate of 8.0% (2017: 8.5%) The values assigned to the key assumptions represent management’s assessment of future trends in the clad metals and convex mirrors industry and are based on both external sources and internal sources (historical data). The above estimates are particularly sensitive in future planned revenue. A decrease of 3% in the future planned revenue would result in an impairment loss of RM611,000. 6. Investments in subsidiaries Company 2018 2017 Note RM’000 RM’000 Unquoted shares, at cost 56,654 56,654 Less: Impairment loss 6.2 (115) (70) 56,539 56,584 Amount due from a subsidiary 6.1 2,871 2,871 Less: Impairment loss 6.2 (2,871) - - 2,871 56,539 59,455 Notes to the financial statements (continued) Annual Report 2018 69