My EG Services Berhad Annual Report 2020

ANNUAL REPORT 2020 181 FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS For The Financial Year Ended 31 December 2020 (CONT’D) 11. OTHER INVESTMENTS (CONT’D) The details of significant unobservable inputs of material investments under level 3 fair value measurement relating to Entity A, B and C are as follows:- Investment in an entity engaged in computer and mobile software application and provision of information technology related services activities (Entity A) Unobservable Inputs Relationship of Unobservable Inputs to Fair Value Sensitivity Analysis (Assume All Other Variables Held Constant) (aa) Revenue growth rates of 22% Based on management’s experience and knowledge of market conditions of the specific industries. The higher the revenue growth rate, the higher the fair value. A 1% change in revenue growth rate would result in an increase/decrease in the fair value by RM1,330,000. (bb) Pre-tax operating profit margins of 40% Taking into account management’s experience and knowledge of market conditions of the specific industries. The higher the pre-tax operating margins, the higher the fair value. A 1% change in pre-tax operating profit margin would result in an increase/ decrease in the fair value by RM384,000. (cc) Discount rate of 15% Determined using a Capital Asset Pricing Model. The higher the discount rate, the lower the fair value. A 1% change in discount rate would result in a decrease/ increase in the fair value by RM712,000. Investment in an entity engaged in online fashion boutique business (Entity B) Unobservable Inputs Relationship of Unobservable Inputs to Fair Value Sensitivity Analysis (Assume All Other Variables Held Constant) (aa) Revenue growth rates of 30% (2019 - 28%) Based on management’s experience and knowledge of market conditions of the specific industries. The higher the revenue growth rate, the higher the fair value. A 1% change in revenue growth rate would result in an increase/decrease in the fair value by RM2,637,000. (bb) Pre-tax operating profit margins of 50% (2019 - 50%) Taking into account management’s experience and knowledge of market conditions of the specific industries. The higher the pre-tax operating margins, the higher the fair value. A 1% change in pre-tax operating profit margin would result in an increase/ decrease in the fair value by RM1,847,000. (cc) Discount rate of 14% (2019 - 9%) Determined using a Capital Asset Pricing Model. The higher the discount rate, the lower the fair value. A 1% change in discount rate would result in a decrease/ increase in the fair value by RM611,000.