FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 FINANCIAL STATEMENTS 215 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) Other than as disclosed below, there is no reasonably possible change in any of the above key assumptions, which would cause the carrying value of the CGU to exceed its recoverable amount. Financial year ended 31 December 2017 Key assumptions Sensitivity VIU lower by RM’000 Selling price Reduce by RM50 per metric tonne 668,000 Raw sugar price Increase in raw sugar prices by 1 cent per pounds 636,000 Sales volume Reduce by 5% 628,000 Discount rate Increase by 1% 320,000 The recoverable amount calculated based on VIU exceeded the carrying value by RM473 million. A reduction in selling price of RM35 per metric tonne, increase in raw sugar price by 0.8 cents per pounds, reduction in sales volume by 3.75% and increase in discount rate by 1.0% would, all changes taken in isolation, result in the recoverable amount being equal to the carrying amount. Financial year ended 31 December 2016 Key assumptions Sensitivity VIU lower by RM’000 Selling price Reduce by RM100 per metric tonne 1,400,000 Raw sugar price Increase in raw sugar prices by 1 cent per pounds 923,000 Sales volume Reduce by 10% 1,002,000 Discount rate Increase by 1% 553,000 The recoverable amount calculated based on VIU exceeded the carrying value by RM524 million. A reduction in selling price of RM37 per metric tonne, increase in raw sugar price by 0.6 cents per pounds, reduction in sales volume by 5% and increase in discount rate by 0.95% would, all changes taken in isolation, result in the recoverable amount being equal to the carrying amount. The above sensitivity analysis is based on the assumptions while holding all other assumptions constant. (ii) Palm upstream operations in Malaysia Goodwill of RM739,741,000 for palm upstream operations in Malaysia comprise of RM512,946,000 for APL, RM127,238,000 for PUP and RM99,557,000 (Note 21(c)(i)) 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.