DESTINI Annual Report 2018

9. Intangible Assets (Cont’d) (b) Impairment testing for cash generating units (“CGU”) containing goodwill (Cont’d) The recoverable amount for the above was based on its value-in-use and was determined by discounting the future cash flows generated from the continuing use of those units and was based on the following key assumptions: (i) Cash flows were projected based on actual operating results and a five-year business plan; (ii) Revenue was projected at anticipated annual revenue growth of approximately 13% to 40% per annum; (iii) Expenses were projected at annual increase of approximately 5% to 10% per annum; and (iv) A pre-tax discount rate of 7% to 8% was applied in determining the recoverable amount of the respective CGU. The discount rate was estimated based on the weighted average cost of capital of individual CGU. With regards to the assessments of value-in-use of these CGUs, management believes that no reasonably possible changes in any of the key assumptions would cause the carrying values of these units to differ materially from their recoverable amounts except for the changes in prevailing operating environment which is not ascertainable. 10. Land Use Rights NOTES TO THE FINANCIAL STATEMENTS Group 2018 2017 RM RM At cost At 1 January 1,973,125 2,050,107 Exchange differences (12,562) (12,562) At 31 December 1,960,563 1,973,125 Accumulated amortisation At 1 January 288,907 259,179 Charge for the financial year 38,683 40,359 Exchange differences (1,310) (10,631) At 31 December 326,280 288,907 Carrying amount At 31 December 1,634,283 1,684,218 The Group has land use right over a plot of state-owned land in the People’s Republic of China (“PRC”) where the Group’s PRC manufacturing and storage reside. The land use right is not transferrable and has a remaining tenure of 40 (2017: 41 years). The carrying amount of the Group’s land use right had been pledged as securities for bank borrowings as disclosed in Note 25. DESTINI BERHAD ANNUAL REPORT 2018 158