Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 77 Notes to the Financial Statements 31 December 2016 (cont’d) 9. GOODWILL ON CONSOLIDATION (CONT’D) Group 2015 Balance as at 1.1.2015 Impairment loss for the financial year Balance as at 31.12.2015 RM RM RM Carrying amount Goodwill 32,528 - 32,528 32,528 - 32,528 [--------------------As at 31.12.2015-----------------] Accumulated Carrying Cost impairment amount RM RM RM Goodwill 32,528 - 32,528 32,528 - 32,528 (a) For the purpose of impairment testing of goodwill on consolidation, the recoverable amount in the Cash Generating Unit (‘CGU’) was determined based on its value in use. The value in use was determined by discounting the future cash flows to be generated from the continuing use of the CGU based on financial budgets prepared by management covering a five (5) year period. In the previous financial year, the key assumptions used in the value in use calculations were as follows: (i) The anticipated average annual revenue growth rates used in the cash flow budgets and plans of the CGU ranged from 5% to 47% per annum for years 2016 to 2020. (ii) Profit margins were projected based on the historical profit margin achieved or predetermined profit margin for the products. (iii) A pre-tax discount rate of 8.40% per annum had been applied in determining the recoverable amount of the CGU. Based on these assumptions, the Directors were of the view that no impairment loss was required as the recoverable amount determined was higher than the carrying amount of the CGU. (b) Sensitivity to changes in assumptions In the previous financial year, the management believed that a reasonable possible change in the key assumptions on which management had based its determination of the CGU’s recoverable amount would not cause the CGU’s carrying amount to exceed its recoverable amount.