Financial Statements Financial Statements Press Metal Aluminium Holdings Berhad 234 235 Integrated Annual Report 2023 Notes to the Financial Statements Notes to the Financial Statements 6. INTANGIBLE ASSETS Group Goodwill RM’000 Others RM’000 Total RM’000 Cost At 1 January 2022 67,285 659 67,944 Acquisition through business combination (Note 32.1) 3,687 - 3,687 Effect of movements in exchange rates (176) (9) (185) At 31 December 2022/1 January 2023 70,796 650 71,446 Effect of movements in exchange rates 314 32 346 At 31 December 2023 71,110 682 71,792 Amortisation and impairment loss At 1 January 2022 Accumulated amortisation - 307 307 Accumulated impairment loss 4,131 - 4,131 4,131 307 4,438 Amortisation for the year - 101 101 At 31 December 2022/1 January 2023 Accumulated amortisation - 408 408 Accumulated impairment loss 4,131 - 4,131 4,131 408 4,539 Amortisation for the year - 116 116 Effect of movements in exchange rates - 26 26 At 31 December 2023 Accumulated amortisation - 550 550 Accumulated impairment loss 4,131 - 4,131 4,131 550 4,681 Carrying amounts At 1 January 2022 63,154 352 63,506 At 31 December 2022/1 January 2023 66,665 242 66,907 At 31 December 2023 66,979 132 67,111 6. INTANGIBLE ASSETS (CONT’D) 6.1 Impairment testing for cash-generating units containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to each unit are as follows: Group 2023 RM’000 2022 RM’000 Press Metal International Limited 9,219 9,219 Press Metal Aluminium Rods Sdn. Bhd. 28,628 28,628 Japan Alumina Associates (Australia) Pty. Ltd. 7,991 7,677 PMB Central Sdn. Bhd. 6,763 6,763 52,601 52,287 Multiple units without significant goodwill 14,378 14,378 66,979 66,665 The recoverable amount of each unit was based on its value in use. Value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the units and was based on the following key assumptions: • Cash flows were projected based on past experience, actual operating results and a 5-year business plan. A terminal growth rate of 2% (2022: 2%) was then applied. Management believes that this terminal growth rate was justified due to the long-term nature of the aluminium business. • The anticipated annual revenue growth included in the cash flow projections was between 1% to 3% (2022: 1% to 3%), which is lower than the average growth rate experienced in the past 3 years. • The aluminium price was assumed to be similar to the average prices for the current financial year. • Cost growth, based on past experience, was estimated to be between 1% to 3% (2022: 1% to 3%), which is in line with revenue growth. • Pre-tax discount rates of 8% - 10% (2022: 8% - 10%) were applied in determining the recoverable amount of the units. The discount rates were estimated based on an industry weighted average cost of capital. The values assigned to the key assumptions represent management’s assessment of future trends in the aluminium industry and are based on both external sources and internal sources (historical data). The above estimates are not particularly sensitive in any areas. 6.2 Material accounting policy information (a) Recognition and measurement Intangible assets, other than goodwill, that are acquired by the Group, which have finite useful lives, are measured at cost less any accumulated amortisation and any accumulated impairment losses. (b) Amortisation Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets. The estimated useful life for the current and comparative periods for other intangible assets is 7 years.
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