Frontken Berhad Annual Report 2019

101 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2019 14. INVESTMENT IN AN ASSOCIATE (CONT’D) In the previous financial year, on 6 September 2018, FSPL, a wholly-owned subsidiary of the Company, entered into a Sale and Purchase agreement to dispose of 1,172,004 ordinary shares, representing its entire 49% equity interest in Frontken (Thailand) Co., Ltd. for a cash consideration of SGD830,000 (equivalent to RM2,496,557). 15. GOODWILL ON CONSOLIDATION The Group 2019 2018 RM RM At 1 January/31 December 33,760,856 33,760,856 Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating unit (“CGU”) that is expected to benefit from that business combination. The carrying amounts of the goodwill allocated to each CGU are as follows:- The Group 2019 2018 RM RM FEM 805,812 805,812 AGTC 24,588,453 24,588,453 TTES 8,366,591 8,366,591 33,760,856 33,760,856 The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amounts of the CGUs are determined using the value in use approach, and this is derived from the present value of the future cash flows from each CGU computed based on the projections of financial forecast covering a period of 5 years. The key assumptions used in the determination of the recoverable amounts are as follows:- 2019 2018 % % Budgeted gross margin 15 to 51 18 to 48 Growth rates - Year 1 -40 to 12 1 to 23 - Year 2 to 5 3 to 12 1 to 17 Pre-tax discount rates 17 to 18 15 to 19 Notes To The Financial Statements (cont’d)