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Notes to the financial statements
31 December 2014
Bursa Malaysia
•
Annual Report 2014
130
14. Goodwill
Group
Company
2014
2013
2014
2013
RM’000
RM’000
RM’000
RM’000
At 1 January/31 December
42,957
42,957
29,494
29,494
Goodwill is in respect of acquisitions of subsidiaries by the Group and has been allocated to the CGUs in the following market segments:
Group
Company
2014
2013
2014
2013
RM’000
RM’000
RM’000
RM’000
Securities market
33,273
33,273
29,494
29,494
Derivatives market
9,684
9,684
-
-
42,957
42,957
29,494
29,494
Key assumptions used in value-in-use calculations
The following describes the key assumptions on which management has based its cash flow projections to undertake impairment assessment of goodwill:
(i) Securities market
The recoverable amount of this CGU has been determined based on value-in-use calculations using five year financial projections. Revenue growth has
been capped at 5% per annum, while expenses have been assumed to grow between 4% to 5% per annum, which is in line with the expected inflation
rate. No revenue and expense growth was projected from the 6
th
year to perpetuity.
(ii) Derivatives market
The recoverable amount of this CGU has been determined based on value-in-use calculations using five year financial projections. The anticipated average
revenue and expenses growth in the five year financial projections was at 15% and 10% respectively, based on the expected developments. No revenue
and expense growth was projected from the 6
th
year to perpetuity.
(iii) Discount rate
A discount rate of 11% was applied in determining the recoverable amount of the respective CGU. The discount rate was based on the Group’s weighted
average cost of capital.
Sensitivity to changes in assumptions
Management believes that no reasonable possible changes in any of the key assumptions above would cause the carrying values of the CGUs to materially
exceed their recoverable amounts.