FGV Audited Financial Statements 2019

119 01 S E C T I O N NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 AUDITED FINANCIAL STATEMENTS 2019 23 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (ii) Palm upstream operations in Malaysia (excluding APL) Goodwill of RM226,795,000 (2018: RM226,795,000) for palm upstream operations in Malaysia comprise of RM127,238,000 (2018: RM127,238,000) for PUP and RM99,557,000 (2018: RM99,557,000) for Yapidmas. The Group’s estates in Malaysia are combined for the purposes of goodwill impairment testing as they represent the lowest level within the Group at which goodwill is monitored for internal management purpose. The recoverable amount of the palm upstream operations (excluding APL) CGU is determined using a fair value less cost to sell calculation (Level 3 fair value computation) using cash flow projections covering a 25 year period. The key assumptions are as follows: Financial year ended 31 December 2019 (i) CPO price RM2,450/MT to RM2,500/MT (ii) PK price RM1,450/MT to RM1,850/MT (iii) Average FFB yield 18.1 MT/ha to 26.8 MT/ha (iv) Estate cost Mature estate costs – RM2,795 per hectare to RM3,368 per hectare based on a 25 year cycle for oil palm Immature estate costs – RM4,175 per hectare to RM4,889 per hectare based on a 25 year cycle for oil palm (v) Discount rate 9.5% Financial year ended 31 December 2018 (i) CPO price RM2,250/MT to RM2,586/MT (ii) PK price RM1,600/MT to RM1,875/MT (iii) Average FFB yield 17.8 MT/ha to 27.1 MT/ha (iv) Estate cost Mature estate costs – RM3,079 per hectare to RM3,693 per hectare based on a 25 year cycle for oil palm Immature estate costs – RM3,993 per hectare to RM4,331 per hectare based on a 25 year cycle for oil palm (v) Discount rate 9.5%