7. INTANGIBLE ASSETS (continued) (d) Impairment testing for cash-generating units containing goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s cashgenerating units (“CGU”), 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 2023 2022 RM’000 RM’000 Sanjung Unggul Group 10,253 10,253 Distinct Motion Group - - Pinko Creative 178 178 10,431 10,431 An impairment loss on goodwill amounting to RM533,000 had been previously recognised in respect of Distinct Motion Group CGU within other operating expenses in the statements of profit or loss and other comprehensive income in the previous financial year due to its deteriorating financial performance. This impairment loss had been fully written off during the current financial year. In assessing whether goodwill is impaired, the carrying amount of the CGU (including goodwill) is compared with the recoverable amount of the CGU. (i) Sanjung Unggul Group The recoverable amount of the business unit is higher than its carrying amount and was based on its value in use. Value in use was determined by discounting future cash flows to be generated from the continuing operation of the business as a book publisher and education and supplement material provider and was based on the following key assumptions: • Cash flows were projected based on actual operating results and financial budget approved by management covering a 5-year business plan. • The anticipated sales is approximately RM14,066,000 in 2024. The anticipated sales growth rate is 2.58% (2022: 2.00% - 21.00%) from 2024 to 2028. • The operating expenditure growth was assumed to be 2.58% (2022: 2.42%) per annum. The estimated growth rate was based on the forecasted inflation rate. • The projected gross margins which reflects the average historical gross margin, adjusted for projected market and economic conditions and internal resource efficiency. • Terminal value was based on the fifth year cash flow without incorporating any growth rate. • The unit will continue its operations indefinitely. • A pre-tax discount rate of 10.33% (2022: 11.02%) was applied in determining the recoverable amount of the CGU. The discount rate applied was estimated based on the Group’s weighted average cost of capital and reflect the current market assessment of the risks specific to the CGU. ANNUAL REPORT 2023 SASBADI HOLDINGS BERHAD 101 Financial Statements (continued)
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