Registration No. 200301030845 (633265-K) - 95 - 10. Intangible Assets (Cont’d) (b) Impairment testing for cash generating units (“CGU”) containing goodwill (Cont’d) The aggregate carrying amount of goodwill allocated to each subsidiary is as follows: 2022 2021 RM RM Destini Oil Services Sdn. Bhd. ("DOSSB") 67,158,888 67,158,888 Group The recoverable amount of the goodwill allocated to each CGU is determined based on a value-in-use, determined by discounted future cash flows. The impairment of goodwill is recognised when the recoverable amount is estimated at lower than the cost of investment. The recoverable amount for DOSSB was based on its value-in-use and was determined by discounting the future cash flows generated from the continuing use of those units and was based on the following key assumptions: (i) Cash flows were projected based on actual operating results and five years business plan for two major sources of income which are tubular running services (“TRS”) and Napesco TRS; (ii) Revenue was projected the management’s best estimate of the contract value, taking into consideration of the project timeline set out by Malaysia Petroluem Management, types of projects and scope of works to be conducted and contract sum of the letter of awards from customers and the expected pipeline from customers; (iii) Expenses were projected at annual increase of approximately 5% - 10% per annum; (iv) A pre-tax discount rate of 12.72% (2021: 14.11%) was applied in determining the recoverable amount of the respective CGU. The discount rate was estimated based on the weighted average cost of capital of individual CGU; and (v) A terminal growth rate of 1.00% (2021: 1.86%) was applied in determining the recoverable amount of the CGU, taking into consideration Malaysia’s expected Consumer Price Index, the average inflation in Malaysia and other economic or external factors that may directly and indirectly affect the business of CGU. With regards to the assessments of value-in-use of these CGUs, management believes that no reasonably possible changes in any of the key assumptions would cause the carrying values of these units to differ materially from their recoverable amounts except for the changes in prevailing operating environment which is not ascertainable. 173 ANNUAL REPORT 2022 DESTINI BERHAD
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