87 www.excelforce.com.my Notes to the Financial Statements (cont’d) 10. Goodwill on Consolidation Group 2024 2023 RM RM Cost At 1 January/1 July 29,454 - Additions through business combination 3,988,491 29,454 At 30 June 4,017,945 29,454 Goodwill on consolidation is stated at cost and arose from acquisition of the subsidiary companies. Allocation of goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s operating divisions which represent lowest level of cash-generating units (“CGU”) within the Group at which the goodwill is monitored for internal management purposes. The carrying amounts of goodwill allocated to application solutions division amounting to RM4,017,945 (2023: RM29,454). The Group has assessed the recoverable amount of goodwill allocated and determined that no additional impairment is required. The recoverable amounts of cash-generating units are determined using the value in use approach, and this is derived from the present value of the future cash flows from the operating segments computed based on the projections of financial budgets approved by management covering a period of five years. Value in use was determined by discounting the future cash flows expected to be generated from the application solutions division based on the following key assumptions: • Cash flows were projected based on anticipated average annual revenue growth rates used in the cash flows budgets and plans of the CGU at 32% (2023: Nil) per annum from years 2024 to 2028. • Profit margin were projected based on the pre-determined profit margin for the unit. • A pre-tax discount rate of 8.24% (2023: Nil) was applied in determining the recoverable amount of the CGU. The values assigned to the key assumptions represent management’s assessment of future trends in the cash-generating units and are based on both external sources and internal historical data. The Directors believe that there is no reasonable change in the above key assumptions applied that is likely to materially cause the cash generating unit carrying amount of the goodwill to exceed its recoverable amounts. Material accounting policy information Goodwill is measured at cost less accumulated impairment losses. Goodwill is not amortised but instead, it is reviewed for impairment annually or more frequent when there is objective evidence that the carrying amount may be impaired.
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