PRG Holdings Berhad Annual Report 2020

PRG HOLDINGS BERHAD 112 10. INTANGIBLE ASSETS (continued) (a) For the purpose of impairment testing, the recoverable amount of the CGU is determined based on a “value-in-use” calculation. The value-in-use of the CGU is determined by discounting the future cash flows to be generated from continuing use of the CGU. The value-in-use is derived based on management’s cash flow projections for three (3) to six (6) financial years from 2021. The key assumptions used in the value-in-use calculations are as follows: 2020 2019 % % Average annual revenue growth rates Malaysia 7.5 11.8 China 12.5 9.0 Hong Kong 5.5 - Pre-tax discount rates 12.5 - 15.7 11.8 - 12.9 (b) Sensitivity to changes in assumptions Malaysia and Hong Kong CGU The management believes that a reasonably possible change in the key assumptions on which management has based its determination of the CGU’s recoverable amount would not cause the CGU’s carrying amount to further exceed its recoverable amount. China CGU The sensitivity of the impairment assessment to a reasonably possible change in each of the key inputs with all other variables held constant is as follows: Additional Change in changes in assumption impairment RM’000 Revenue growth rate 1.0% 1,779 Pre-tax discount rate 1.0% 1,072 (c) During the financial year, the impairment losses on goodwill of RM16,310,000 (2019: RM34,564,000) have been recognised due to the recoverable amounts determined based on the projected cash flows were lower than the carrying amount of the goodwill. Notes to the Financial Statements 31 December 2020 cont’d