My EG Services Berhad Annual Report 2019

MY E.G. SERVICES BERHAD [Registration No. 200001003034 (505639-K)] 154 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 31 DECEMBER 2019 (CONT’D) 14. GOODWILL ON CONSOLIDATION The Group 31.12.2019 30.9.2018 RM’000 RM’000 At cost 18,549 18,549 Accumulated impairment losses:- At 1 October 2018/1 July 2017 (95) - Impairment during the financial period - (95) At 31 December 2019/30 September 2018 (95) (95) Carrying amount 18,454 18,454 Goodwill on consolidation is stated at cost and arose from the acquisition of the subsidiaries. The carrying amounts of goodwill allocated to each cash-generating unit are as follows:- The Group 31.12.2019 30.9.2018 RM’000 RM’000 E-business activities 9,422 9,422 Provision of credit card terminal, hardware, solutions and other related services 5,689 5,689 Other cash-generating units without significant goodwill 3,343 3,343 18,454 18,454 The Group has assessed the recoverable amount of goodwill allocated and determined that no additional impairment is required. The recoverable amounts of cash-generating units are determined using the value in use approach, and this is derived from the present value of the future cash flows from the operating segments computed based on the projections of financial budgets approved by management covering a period of 5 years. The key assumptions used in the determination of the recoverable amounts value-in-use are as follows:- Gross Margin Growth Rate Discount Rate 2019 2018 2019 2018 2019 2018 E-business activities 85% - 86% 85% - 86% 5% 5% 13% 16% Provision of credit card terminal, hardware, solutions and other related services 35% - 38% 25% - 45% 27% - 29% 35% - 40% 13% 16% (a) Budgeted gross margin Average gross margins achieved in the year immediately before the budgeted year. (b) Growth rate The growth rates used are based on the expected projection of e-business and provision of credit card terminal, hardware, solutions and other related services. There is no growth rate in perpetuity to arrive at terminal value. (c) Discount rate (pre-tax) Reflect specific risk relating to the relevant cash generating unit.