82 EXCEL FORCE MSC BERHAD Notes to the Financial Statements (Cont’d) 6. Product Development Costs (Cont’d) (a) Product development costs comprise salaries of personnel involved in the development and design of products prior to the commencement of commercial production. (b) The Group and the Company review the carrying amount of product development costs at the end of each reporting period to determine whether there is any indication of impairment. If any such indications exist, the recoverable amount of the cash-generating unit (“CGU”) is determined based on its value in use. The value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the CGU based on the financial budgets prepared by the management covering a period of five (5) years. The key assumptions used in the value in use calculations are as follows: (i) The anticipated average annual revenue growth rates used in the cash flow budgets and plans of the CGU at 5% (31.12.2021: 5% and 1.1.2021: 4%) per annum from years 2024 to 2028 (31.12.2021: 2022 to 2026 and 1.1.2021: 2021 to 2025). (ii) Profit margins were projected based on the historical profit margin achieved or pre-determined profit margin for the products. (iii) A pre-tax discount rate of 9.1% (31.12.2021: 4.80% and 1.1.2021: 4.80%) per annum has been applied in determining the recoverable amount of the CGU. The discount rate was estimated based on the Group’s weighted average cost of capital plus a reasonable risk premium. Based on the assessment, the Directors are of the view that no impairment loss is required as the recoverable amount of the CGU is higher than its carrying amount. (c) Sensitivity to changes in assumptions The management believes that there is no reasonable possible change in any key assumption that would cause the CGU carrying amount to exceed its recoverable amount. 7. Intangible Assets Group and Company 30.6.2023 31.12.2021 RM RM Cost At 1 January/30 June/31 December 1,010,000 1,010,000 Accumulated amortisation At 1 January/30 June/31 December (1,010,000) (1,010,000) Carrying amount At 30 June/31 December - - Intangible assets consist of trademarks and copyrights which had been fully amortised in the financial year ended 31 December 2013.
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