DESTINI Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS 10. 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 5% to 15% per annum; (iii) Expenses were projected at annual increase of approximately 1.5% to 5% per annum; and (iv) A pre-tax discount rate of 8% to 10% 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. 11. Land Use Rights Group 2019 2018 RM RM At cost At 1 January - 1,973,125 Exchange differences - (12,562) At 31 December - 1,960,563 Accumulated amortisation At 1 January - 288,907 Charge for the financial year - 38,683 Exchange differences - (1,310) At 31 December - 326,280 Carrying amount At 31 December - 1,634,283 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 39 (2018: 40 years). The carrying amount of the Group’s land use right had been pledged as securities for bank borrowings as disclosed in Note 27. The land use rights of the Group has been reclassified to ROU assets on 1 January 2019. 06 FINANCIAL STATEMENTS DESTINI BERHAD 154