125 FINANCIAL STATEMENTS & OTHERS ENRA GROUP BERHAD ANNUAL REPORT 2023 Notes To The Financial Statements 31 March 2023 (Cont’d) 8. GOODWILL ON CONSOLIDATION Group 2023 2022 Note RM’000 RM’000 At beginning of the financial year 400 4,404 Disposal of subsidiary - (4,004) Impairment during the year (400) - At end of the financial year 7 - 400 (a) Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised, but instead, it is reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may be impaired. This requires an estimation of the value-in-use of the subsidiaries to which goodwill is allocated. Estimating a valuein-use amount requires management to make an estimate of the expected future cash flows from the subsidiaries and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (b) Impairment of goodwill Goodwill has been allocated to the identified cash generating unit (“CGU”) according to reportable segment as follows: Group 2023 2022 RM’000 RM’000 Energy services - 400 For the purpose of impairment testing, the recoverable amount of a CGU is determined based on its value-in-use. The value-in-use is determined by discounting the pre-tax cash flows based on financial budgets prepared by the Group covering a five-year period with a terminal value based on the following key assumptions: 2023 2022 % % Growth rates 5 5 Pre-tax discount rate 10 10 Impairment of goodwill amounted to RM400,000 was recognised during the financial year due to adverse adjustments made to the forecast operating cash flows included in the value-in-use calculation of Malaysia’s subsidiaries.
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