22 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (i) Sugar business operations in Malaysia (continued) The sensitivity on the goodwill arising from the sugar business operations in Malaysia recoverable amount to key assumptions are as follows: (continued) Key assumptions Sensitivity VIU lower by RM‘000 2023 Selling price of products subject to price control Selling price remain at RM2,690/MT* (2,311,900) * Represents existing ceiling price for products subject to price control. All changes taken in isolation, a reduction in selling price of products subject to price control by RM291/MT, increase in raw sugar price by USD0.24 cents/lb, decrease in terminal value growth rate by 3.6%, increase in discount rate by 2.6%, decrease in domestic sales volume by 30,000MT, increase in freight charges by USD15.68/MT, or increase in natural gas prices by RM17.45/MMBtu would result in the recoverable amount being equal to the carrying amount. The above sensitivity analysis is based on the movement of individual key assumptions while holding all other assumptions constant. (ii) Palm upstream operations in Malaysia Goodwill of RM226,795,000 (2023: RM226,795,000) for palm upstream operations in Malaysia comprise of RM127,238,000 (2023: RM127,238,000) for Pontian United Plantations Berhad (“PUP”) and RM99,557,000 (2023: RM99,557,000) for Yapidmas, a group of subsidiaries of PUP. The Group’s palm upstream operations 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 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: a) FGV Plantations (Malaysia) Sdn. Bhd. 2024 2023 Short Term Mid Term Long Term Short Term Mid Term Long Term Key assumptions CPO Price (per MT) 4,000 3,800 3,345 3,600 3,000 – 3,340 2,900 PK Price (per MT) 2,200 2,090 1,970 1,800 1,500 – 1,670 1,800 Average FFB yield (MT/ha) 17.1 18.2 18.4 – 21.0 15.9 16.8 – 17.7 18.1 – 21.1 Mature estate cost (per hectare) 7,612 7,758 7,869 – 14,878 6,906 6,742 – 6,807 6,428 Immature estate cost (per hectare) 7,411 7,735 6,890 – 14,830 5,985 5,817 – 5,951 5,469 Discount rate 9.5% 9.5% Projection period 86 years 87 years b) PUP Group 2024 2023 Key assumptions Long Term CPO price (per MT) 3,249 2,915 Long Term Average FFB price (per MT) 630 540 FFB projected yield (MT/ha planted area) 1.9 – 28 1.8 – 26.6 Rate of return on capital 9.0 – 9.5% 9.0 – 9.5% Deferred basic land value rate 3.0% 3.0% Notes to the Financial Statements For the financial year ended 31 December 2024 107
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