NOTES TO THE FINANCIAL STATEMENTS For the Financial Year Ended 31 December 2023 (cont’d) 6. DEVELOPMENT COSTS (CONT’D) Development costs were mainly expenditures incurred for the development of Zetrix platform and applications, JPJ Test taking and license module, payment gateway and portal development. The amortisation charges are recognised in statements of profit or loss and other comprehensive income under the “Cost of sales” and “Other expenses” line items. Additional development costs with finite useful lives are amortised over a period of 2 to 5 years. Certain development costs are not amortised as these assets are not available for use and are still under development as at the financial year end. (a) Impairment testing for cash-generating units (“CGU”) Management has carried out a review of the recoverable amounts of the project development costs based on value in use calculations. The key assumptions for the value in use calculations are regarding the discount rates and using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGU to which the asset belongs. The growth rates are based on past results and budgets done by management. The Group and the Company prepare cash flows forecasts derived from the most recent financial forecasts approved by management for the next 2 to 5 years. The rate used to discount the forecast cash flows is 11%. As at 31 December 2023, any reasonably possible change to the key assumptions applied not likely to cause the recoverable amounts to be below the carrying amounts of the respective intangible assets. Having considered the above, management is of the view that there is no impairment of development costs as at 31 December 2023. (b) Material accounting policy information Internally generated intangible assets – research and development costs Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group and the Company can demonstrate: r UIF UFDIOJDBM GFBTJCJMJUZ PG DPNQMFUJOH UIF JOUBOHJCMF BTTFU TP UIBU UIF BTTFU XJMM CF BWBJMBCMF GPS VTF PS sale; r JUT JOUFOUJPO UP DPNQMFUF BOE JUT BCJMJUZ BOE JOUFOUJPO UP VTF PS TFMM UIF BTTFU r IPX UIF BTTFU XJMM HFOFSBUF GVUVSF FDPOPNJD CFOFàUT r UIF BWBJMBCJMJUZ PG SFTPVSDFT UP DPNQMFUF BOE r UIF BCJMJUZ UP NFBTVSF SFMJBCMZ UIF FYQFOEJUVSF EVSJOH EFWFMPQNFOU The amount initially recognised for internally generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. When no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred. Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Capitalised development expenditures are amortised over the periods the Group expected to benefit from selling the products developed. The amortisation expenses recognised in profit or loss on a straight-line basis and included within the cost of sales and other expenses. Intangible asset acquired separately Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation and accumulated impairment losses. Capitalised costs are amortised on a straight-line basis over their estimated useful lives. Amortisation expenses are recognised in profit or loss and included within the cost of sales and other expenses. ANNUAL REPORT 2023 201 (a) Impairment testing for cash-generating units (“ (b) Material accounting policy information y g g p UIF UFDIOJDBM GFBTJCJMJUZ PG DPNQMFUJOH UIF JOUBOHJCMF BTTFU TP UIBU UIF BTTFU XJMM CF BWBJMBCMF GPS VTF PS JUT JOUFOUJPO UP DPNQMFUF BOE JUT BCJMJUZ BOE JOUFOUJPO UP VTF PS TFMM UIF BTTFU IPX UIF BTTFU XJMM HFOFSBUF GVUVSF FDPOPNJD CFOFàUT UIF BWBJMBCJMJUZ PG SFTPVSDFT UP DPNQMFUF BOE UIF BCJMJUZ UP NFBTVSF SFMJBCMZ UIF FYQFOEJUVSF EVSJOH EFWFMPQNFOU FINANCIAL STATEMENTS
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