NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 (CURRENCY - SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C3 Intangible assets (continued) Recognition and measurement The recoverable amounts of the CGUs are determined based on value-in-use calculations, using cash flow projections derived from the financial budgets approved by management for the next five to ten years. The key assumptions used in the calculation of recoverable amounts are as follows: • The discount rates used are pre-tax and reflect specific risks relating to the relevant segments. • The long-term terminal growth rate has been determined based on either the nominal GDP rates for the country in which the CGU is based or the long-term growth rate estimated by management by reference to forecasts included in industry reports and expected market development. • The revenue growth rate and gross profit margins are determined based on the past performance and its expectations of market developments. Sensitivity to changes in assumptions: (a) Management has identified the following key assumption for which a change as set out below could cause the carrying amount to exceed the recoverable amount. Business Segment Assumption Change required for carrying amount to equal the recoverable amount 2022 % 2021 % Defence & Public Security Revenue growth rate (average of next 5 years) 2.4 2.7 (b) No sensitivity analysis was disclosed for the remaining CGUs as the Group believes that any reasonable possible change in the key assumptions is unlikely to result in any material impairment to the CGUs. Key estimates and judgement: Impairment of goodwill Determination of potential impairment requires an estimation of the recoverable amount of the CGUs to which goodwill are allocated. Key assumptions made to the projected cash flows requiring judgement include growth rate estimates and discount rates. CORPORATE OVERVIEW PERFORMANCE REVIEW SUSTAINABILITY FINANCIAL REPORT 179
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