Serba Dinamik Annual Report 2018

226 ANNUAL REPORT 2018 SERBA DINAMIK HOLDINGS BERHAD 7. Intangible assets - Group License Goodwill and rights Total Note RM’000 RM’000 RM’000 Cost At 1 January 2017 3,832 4 3,836 Additions - 3,151 3,151 _________ _________ _________ At 31 December 2017/ 1 January 2018 3,832 3,155 6,987 Acquisition through business combination 30(a) 1,426 - 1,426 Amortisation - ( 2,009) ( 2,009) _________ _________ _________ At 31 December 2018 5,258 1,146 6,404 ======== ======== ======== License and rights Included in the license and rights is the rights of the Group to acquire and use or execute a gas quantity (quota) in accordance with provisions stipulated by the government (Pertamina PEP) to a subsidiary, PD Muaro Jambi Energi as a KSO Partner. The term of the agreement is for six years. The amortisation of the license and rights is recognised in cost of sales as the gas is used or sold. Impairment testing for cash-generating units containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s operating activities which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The recoverable amount of this goodwill is allocated to a subsidiary, which hold a DNV Business Assurance Management System Certification ISO 9001:2008, which is valid for the design and manufacture of fire pumps and power generation systems to the offshore industry. Value in use is used to assess the recoverable amount of the CGU. The budgeted cash flows was based on the following key assumptions: • Cash flows were projected based on past experience, with anticipated profit growth by 10% for the years 2019 to 2039; and • A pre-tax discount of 9% was applied to discount the estimated cash flow. The key assumptions used for the value in use computations are that the markets will grow and the Group will maintain its market share and gross margins will be maintained at current level. N O T E S T O T H E F I N A N C I A L S TAT E M E N T