FGV Audited Financial Statements 2019

82 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED) (ii) Goodwill relating to sugar business operations in Malaysia The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash generating units (“CGU”) to which the goodwill is allocated. Estimating the recoverable amount requires management to make an estimate of the expected future cash flows from the CGUs and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The recoverable amounts of CGUs were determined based on the higher of fair value less cost to sell or value in use (“VIU”) calculations. The fair value less cost to sell or VIU is the net present value of the projected future cash flows derived from the CGU discounted at an appropriate discount rate. Projected cash flows are estimates made based on historical and industry trends, general market and economic conditions and other available information. As a result of the impairment assessment, the Group did not recognise any impairment loss (2018: Nil) for goodwill relating to sugar business operations in Malaysia during the financial year. The key assumptions and the sensitivity analysis are as disclosed in Note 23(a)(i) to the financial statements. (iii) Impairment of non-financial assets Group The Group tests its non-financial assets for impairment if there is any objective evidence of impairment. Management have assessed that certain non-financial assets may be potentially impaired or the existing impairment may be reversed. The recoverable amounts of these assets were determined based on the higher of fair value less cost to sell or VIU calculations. The fair value less cost to sell or VIU is the net present value of the projected future cash flows derived from the CGU discounted at an appropriate discount rate. Projected cash flows are estimates made based on historical and industry trends, general market and economic conditions and other available information. As a result of the assessment, the Group has recognised a net impairment of RM168,262,000 (2018: RM282,727,000) on certain property, plant and equipment, right-of-use assets, investment properties and intangible assets (other than goodwill) and assets held for sale. The key assumptions and the sensitivity analysis are as disclosed in Note 20 to the financial statements. Company The Company assessed it investments in FGV Sugar Sdn Bhd, a wholly owned subsidiary, and MSMH for impairment, arising from the rationalisation exercise of the sugar business and the impairment of property, plant of equipment of one of the sugar business entity (Note 20). The recoverable amount was determined based on value in use of the investments, which is the net present value of the projected future cash flows derived from the CGU discounted at 11.4%. The key assumptions and results of the impairment assessment are disclosed in Notes 24(d) to the financial statements.