189 ANNUAL REPORT 2025 MST GOLF GROUP BERHAD 2. BASIS OF PREPARATION (CONT’D) 2.7 Significant accounting estimates and judgements (cont’d) 2.7.1 Estimation uncertainties (cont’d) Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below (cont’d). Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs of disposing of the asset. The value in use calculation is based on a discounted cash flow (“DCF”) model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the performance of the assets of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimations are most relevant to goodwill with indefinite useful lives recognised by the Group. Impairment of property, plant and equipment and right-of-use assets The Group recognises impairment loss in respect of property, plant and equipment and right-of-use assets when the carrying value of the individual stores, defined as smallest CGU exceeds its recoverable amount, which is the higher of its fair value less cost of disposal and its value in use. This requires an estimation of the value in use of the individual stores to which the property, plant and equipment and right-of-use assets are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the individual stores and to choose a suitable pre-tax discount rate to calculate the present value of the cash flow projections. Loss making stores in current financial year indicates there is an impairment of property, plant and equipment and right-of-use assets. During the year, the Group recognised an impairment loss of RM2,236,000 (2024: RMNil) on property, plant and equipment and RM6,473,000 (2024: RMNil) on right-of-use assets arising from the underperforming outlets in Malaysia and Singapore. The information about the impairment loss on property, plant and equipment and rightof-use assets are disclosed in Notes 3 and 4 respectively to the financial statements. The pre-tax discount rates applied to the cash flow projection for Malaysia and Singapore are 10.54% (2024: Nil) and 9.42% (2024: Nil) respectively. The Group’s impairment loss recognised is segregated by segment below:- Property, plant and equipment Right-of-use assets 2025 2024 2025 2024 RM ’000 RM ’000 RM ’000 RM ’000 Malaysia 1,406 - 2,555 - Singapore 830 - 3,918 - 2,236 - 6,473 -
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