Kenanga Investment Bank Berhad Annual Report 2021 234 Our Sustainability Approach About This Report We Are Kenanga Message From Chairman and GMD 17. INTANGIBLE ASSETS (CONT’D.) (g) Impairment test on intangible assets (cont’d.) All of the above intangible assets have indefinite useful lives and an annual impairment review has been carried out in accordance with MFRS 136 Impairment of Assets and MFRS 138 Intangible Assets. Client relationships which have definite useful lives and amortised over the estimated remaining useful lives. Key assumptions used in value-in-use calculations For annual impairment testing purposes, the recoverable amounts of the CGUs, which are reportable business segments, are determined based on their value-in-use. The value-in-use is computed by discounting the future cash flows of the unit, which is based on financial budget and projections approved by the Board. The following describes key assumptions on which management has based its cash flow projections to undertake impairment testing of intangible assets: (i) Cash flow projections and growth rates Cash flow projections for the first to third year are based on the most recent three years financial budget and business plan approved by the Board, taking into account projected regulatory capital requirements. Cash flows for the fourth to fifth year are extrapolated using growth rates in revenue and expenses of the business. Cash flows beyond the fifth year are projected to remain constant and estimated as a terminal value by discounting future cash flows to present value. (ii) Discount rate The discount rate used is based on the business units’ pre-tax weighted average cost of capital plus an appropriate risk premium at the date of assessment at 9.30% (2020: 9.00%) per annum. (h) Sensitivity to changes in assumptions Management believes that a reasonably possible change in any of the above key assumptions would not cause, in overall basis, the recoverable amounts of the intangible assets to be lower than the carrying values of the CGUs. Notes to the Financial Statements 31 December 2021
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