2019 UEM Edgenta Annual Report

183 UEM EDGENTA AT A GLANCE MESSAGE FROM OUR LEADERSHIP STRATEGIC FOCUS OPERATIONAL REVIEW SUSTAINABILITY EFFORTS CORPORATE GOVERNANCE INTRODUCTION FINANCIAL REVIEW ADDITIONAL INFORMATION Notes to the Financial Statements For the year ended 31 December 2019 UEM Edgenta Berhad Annual Report 2019 2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.) 2.5 Significant accounting judgements and estimates (cont’d.) (b) Key sources of estimation uncertainty (cont’d.) (v) Income taxes Significant estimation is involved in determining the provision for income taxes. There are certain transactions and computations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for expected tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recognised, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. (vi) Deferred tax assets Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The deferred tax assets amounting to RM13.3 million (2018: RM13.0 million) are mainly related to subsidiaries of which management is confident that it would be probable for the related subsidiaries to generate future taxable profits. If the Group was able to recognise all unrecognised deferred tax assets, profit and equity would have increased by RM14.4 million (2018: RM9.8 million). Further details are disclosed in Note 32. (vii) Deferred consideration payable Deferred consideration payable arose from the acquisition of Edgenta GreenTech Sdn. Bhd. (”EGT”) (formerly known as KFM Holdings Sdn. Bhd.) in prior year. At each reporting period, the Group assesses the fair value of the deferred consideration payable based on the projected profitability of EGT, and considers the current and projected market conditions. During the year, management assessed the fair value of the remaining deferred consideration payable for EGT to be RM2.9 million (2018: RM8.7 million) due to lower probability of EGT meeting the performance targets. Accordingly, an amount of RM5.3 million (2018: RM9.3 million) was recognised in profit or loss representing the fair value changes relating to the deferred consideration payable during the current financial year. Further details of the deferred consideration payable are disclosed in Note 31(d).