FGV Annual Report 2015

257 WHO WE ARE & WHAT WE DO OUR STRATEGIC INTENT & PERFORMANCE HOWWE ARE GOVERNED CREATING SUSTAINABLE VALUE OUR NUMBERS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING Notes to the Financial Statements For The Financial Year Ended 31 December 2015 ADDRESSING OUR RISKS & OPPORTUNITIES Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 21 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (iii) Others Included in others is goodwill of RM12,770,000 arising from the acquisition of the production and selling of high grade carbon nanotubes and graphene business and is allocated to FGV Cambridge Nanosystems Limited (“FGV CNL”) (previously known as Cambridge Nanosystems Limited). The Group performed its annual goodwill impairment assessment by estimating the recoverable amount of CGU (the goodwill and the intangible asset (other than goodwill)) using a fair value less cost to sell calculation (Level 3 fair value computation).The impairment assessment of the CGU was determined using a discounted cash flow calculation using cash flow projections based on financial budgets approved by the Directors covering a nine year period. The key assumptions are as follows: 2015 Gross margin 53%-73% Terminal value growth rate 2% Discount rate 30% As a result of impairment assessment, the goodwill of the RM12,770,000 has been fully impaired. In addition, the Group has also recognised a further impairment of RM27,473,000 on intangible assets (other than goodwill) in respect of intellectual property rights. The total impairment loss of RM40,243,000 was recorded in cost of sales of the Group for the financial year ended 31 December 2015. The Group's review includes an impact assessment of changes in key assumptions. Based on the sensitivity analysis performed, a 1.0% decrease in margin, with all other variables being held constant, would result in a further impairment of RM2.2 million to the intangible assets (other than goodwill). A 1.0% increase in the discount rate, with all other variables being held constant, would result in a further impairment of RM3.6 million to the intangible asstes (other than goodwill). No reasonable change in the terminal growth rate assumption would result in further material impairment the intangible assets (other than goodwill).