263 SECTION 6 FINANCIAL STATEMENTS INTEGRATED ANNUAL REPORT 2025 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2025 9 INVESTMENT IN ASSOCIATES (CONTINUED) (a) Quoted shares – Petra Energy Berhad (continued) As the fair value less costs of disposal is lower than the value-in-use of the investment, the Group has determined the recoverable amount of the investment using discounted cash flows expected to be generated from the investment. The calculations use pre-tax cash flow projections based on financial budgets approved by the Group covering a period of 5 years (2024: 5 years) based on past performance and management’s expectations of market development. Terminal value is estimated at the end of the 5-year period. Due to the uncertainty of the future economic condition, management developed multiple (2024: best case, base case and worst case) scenarios of cash flow projections. Probabilities of occurrence were assigned to each scenario to arrive at a single set of cash flow projection. The assumptions used in the multiple (2024: all three) scenarios and the probabilities of occurrence assigned required management’s judgement. The key assumptions used in the cash flow projections to determine the recoverable amount for the investment under the multiple scenarios are as follows: (i) The revenue forecast is supported by management’s expected projects, which is in line with past performance records, future market outlook and management’s expectation of market developments; (ii) Pre-tax discount rate ranges from 14.1% to 18.4% (2024: 14.5%) was applied for the multiple (2024: all three) scenarios, benchmarked against comparable companies at the date of assessment; and (iii) No terminal growth rate was applied across all scenarios. The value-in-use is above the carrying value of the Group’s investment in quoted shares. As such, no impairment loss is deemed necessary to be recognised in the financial year ended 31 December 2025 (2024: RM Nil). Sensitivity As at 31 December 2025, an increase of 1% in pre-tax discount rate, with all other inputs remaining constant, will not result in a material effect on the Group’s impairment charge. (b) Impairment of investment in associates The movements for allowance for impairment losses on investment in associates during the financial year are as follows: Group 2025 RM’000 2024 RM’000 At 1 January 55,836 57,405 Effect of exchange rate changes (5,135) (1,569) At 31 December 50,701 55,836
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