NOTES TO THE FINANCIAL STATEMENTS Cont’d 6. Intangible assets cont’d 6.1 Impairment testing for cash-generating units containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill allocated to each unit are as follows: Group 2022 2021 RM’000 RM’000 Press Metal International Limited 9,219 9,219 Press Metal Aluminium Rods Sdn. Bhd. 28,628 28,628 Japan Alumina Associates (Australia) Pty. Ltd. 7,677 7,852 PMB Central Sdn. Bhd. 6,763 6,763 52,287 52,462 Multiple units without significant goodwill 14,378 10,692 66,665 63,154 The recoverable amount of each unit was based on its value in use. Value in use was determined by discounting the future cash flows expected to be generated from the continuing use of the units and was based on the following key assumptions: • Cash flows were projected based on past experience, actual operating results and a 5-year business plan. A terminal growth rate of 2% (2021: 2%) was then applied. Management believes that this terminal growth rate was justified due to the long-term nature of the aluminium business. • The anticipated annual revenue growth included in the cash flow projections was between 1% to 3% (2021: 1% to 3%), which is lower than the average growth rate experienced in the past 3 years. • The aluminium price was assumed to be similar to the average prices for the current financial year. • Cost growth, based on past experience, was estimated to be between 1% to 3% (2021: 1% to 3%), which is in line with revenue growth. • Pre-tax discount rates of 8% - 10% (2021: 8% - 10%) were applied in determining the recoverable amount of the units. The discount rates were estimated based on an industry weighted average cost of capital. The values assigned to the key assumptions represent management’s assessment of future trends in the aluminium industry and are based on both external sources and internal sources (historical data). The above estimates are not particularly sensitive in any areas. ANNUAL REPORT 2022 242
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