CAHYA MATA SARAWAK ANNUAL REPORT 2016

www.cmsb .com.my Cahya Mata Sarawak Berhad 142 Section 07 Financial StatementS NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2016 18. GOODWILL Group 2016 2015 RM’000 RM’000 At 1 January and 31 December 61,709 61,709 Goodwill arising from business combinations has been allocated to the cash-generating unit (“CGU”) for impairment testing. The carrying amount of goodwill allocated to the Group’s CGU is as follows: Group 2016 2015 RM’000 RM’000 Manufacturing of cement and clinker 61,709 61,709 Key assumptions used in value-in-use calculations: The recoverable amount of the CGU is determined based on value-in-use calculations using cash flow projections based on financial budgets approved by management covering a three-year period. The assumptions used for value-in-use calculations are: Gross Margin Discount Rates 2016 2015 2016 2015 CMS Clinker Sdn. Bhd. 24% 16% 12% 12% The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill: (a) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margins is the average gross margin achieved in the year immediately before the budgeted year and increased for expected efficiency improvements. (b) Discount rates The discount rates used are pre-tax and reflect specific risks relating to the segment. The Group believes that any reasonable possible change in the above key assumptions applied is unlikely to materially cause the recoverable amount to be lower than its carrying amount. 19. INVESTMENTS IN SUBSIDIARIES Company 2016 2015 RM’000 RM’000 Unquoted shares, at cost 1,040,622 958,722 Redeemable preference share, at cost 110,000 - Less: Accumulated impairment losses (55,877) (55,877) 1,094,745 902,845