Tropicana Corporation Berhad Annual Report 2019

22. INTANGIBLE ASSETS (CONT’D.) (a) Key assumptions used in value-in-use calculations The recoverable amounts of the CGUs have been determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management. The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill. (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margin is the average rate achieved in the financial year immediately before the budgeted year increased for expected efficiency improvements. (ii) Pre-tax discount rate The discount rates used are pre-tax ranging from 7% to 8% (2018: 7% to 8%) and reflect specific risks relating to the relevant segments. (b) Sensitivity to changes in assumptions With regard to the assessment of value-in-use of the CGUs, management believes that no reasonable possible change in any of the above key assumptions would cause the carrying amounts of the unit to materially differ from its recoverable amount. For the financial year ended 31 December 2019 Notes to the Financial Statements Tropicana Corporation Berhad Annual Report 2019 pg 202 About Tropicana Our Strategic Performance Our Leadership