Dagang NeXchange Berhad Annual Report 2018

Key Audit Matters (continued) 184 Dagang NeXchange Berhad Annual Report 2018 Independent Auditors’ Report TO THE MEMBERS OF DAGANG NEXCHANGE BERHAD (CONTINUED) (INCORPORATED IN MALAYSIA) COMPANY NO. 10039-P As at 31 December 2018, the Group has goodwill of RM60.22 million. This is an area of focus given the materiality of the Group’s goodwill balances and the inherent subjectivity in impairment testing. The judgements in relation to goodwill impairment relate primarily to the assumptions underlying the calculation of the value in use of the business, being the achievability of the long-term business plans. Our procedures included, amongst others:-  Enquiring of and challenging the management on the key assumptions made, including:  the consistent application of management’s methodology;  assumptions in relation to terminal growth in the business at the end of the plan period; and  revenue growth, operating margin and discount rate.  Evaluating the reasonableness of management’s estimate of expected future cash flows by taking into consideration the past performances of their CGUs;  Performing sensitivity analysis to assess the impact on the recoverable amount of the CGUs; and  Reviewing the adequacy of disclosure of goodwill in the financial statements. KEY AUDIT MATTER HOWOUR AUDIT ADDRESSED THE KEY AUDIT MATTER Goodwill impairment Refer to Note 4 to the financial statements