FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD FINANCIAL STATEMENTS 214 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 20 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (i) Sugar business operations in Malaysia (continued) The key assumptions used for the CGU’s VIU calculation are: 2017 2016 Selling price, RM per metric tonne (“MT”) 1,971 – 2,790 2,206 - 2,991 Terminal value growth rate 2% 2% Raw sugar price, US cents per pounds 16.0 17.3 – 20.3 Sales volume, MT’000 1,403.3 – 1,463.4 1,082.0 – 1,629.5 Discount rate 10% - 11% 10% - 11% (i) Selling price Selling price is assumed based on ceiling price set by Government for domestic. Industry and export selling prices is estimated based on raw sugar futures price and expected margins from refining of raw sugar. The selling prices are held constant in financial year 2019 and 2020, except for industries sales. (ii) Terminal value growth rate The terminal value growth rate used is based on long-term sustainable growth rates of 2% in the sugar industry in Malaysia. (iii) Raw sugar price Raw sugar price is projected in line with New York #11 raw sugar future contracts. The long term price beyond financial year 2020 is held constant consistent with selling prices. (iv) Sales volume The sales volume is projected based on expected production volume and current market demand. (v) Discount rate The pre-tax discount rate used, reflects specific industry risks relating to the sugar business. A higher discount rate of 11% was applied on MSM Johor due to uncertainties in the projected sales volume and timing of operations commencement.