7. INTANGIBLE ASSETS (continued) (e) Impairment testing for cash-generating units containing goodwill (continued) (i) Sanjung Unggul Group The recoverable amount of the business unit is higher than its carrying amount and was based on its value in use. Value in use was determined by discounting future cash flows to be generated from the continuing operation of the business as a book publisher and education and supplement material provider and was based on the following key assumptions: • Cash flows were projected based on actual operating results and financial budget approved by management covering a 5-year business plan. • The anticipated sales growth rate ranges from -11.86% to 25.27% (2024: 1.22% to 37.85%) from financial year 2026 to 2030 due to expected changes in market demand, including new opportunities from government tenders. • The operating expenditure growth was assumed to be 2.06% (2024: 2.17%) per annum. The estimated growth rate was based on the forecasted inflation rate. • The projected gross margins which reflects the average historical gross margin, adjusted for projected market and economic conditions and internal resource efficiency. • Terminal value was based on the fifth-year cash flow without incorporating any growth rate. • The unit will continue its operations indefinitely. • A pre-tax discount rate of 11.28% (2024: 8.60%) was applied in determining the recoverable amount of the CGU. The discount rate applied was estimated based on the Group’s weighted average cost of capital and reflect the current market assessment of the risks specific to the CGU. The values assigned to the key assumptions represent management’s assessment of future trends in the industries and are based on both external sources and internal sources. Sensitivity analysis The recoverable amount is sensitive to changes in a key assumption. The recoverable amount of the CGU is based on the assumption that certain government tender will be successfully secured between financial year 2027 and 2030. Management considers this assumption to be reasonable, taking into account the CGU’s market position in the publication of textbooks and its historical success rate in securing similar tenders. This assumption is subject to uncertainty. The sensitivity analysis of this key assumption with all other variables being held constant is as follows: Best case Base case Worst case Weighting 10% (i) 60% (ii) 30% (iii) (i) Assumes successful tender awards with outcomes surpassing forecasted performance. (ii) Assumes a reasonable prospect of success based on past tender submissions and awards secured. (iii) Assumes securing approximately half of the tender value projected in the base case. Based on the sensitivity analysis, it would not result in impairment on the carrying amount of the CGU. ANNUAL REPORT 2025 Financial Statements (conঞ nued) 107
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