FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 230 FGV HOLDINGS BERHAD EXAMINED OUR NUMBERS 21 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (i) Sugar business operations in Malaysia (continued) The recoverable amount calculated based on VIU exceeded the carrying value by RM306 million (31.12.2017: RM473 million; 1.1.2017: RM524 million). The key assumptions used for the CGU’s VIU calculation are: 31.12.2018 31.12.2017 1.1.2017 Selling price, RM per metric tonne ( “ MT ” ) 1,746 – 2,630 1,971 – 2,790 2,206 – 2,991 Terminal value growth rate 2% 2% 2% Raw sugar price, US cents per pounds 14.0 16.0 17.3 – 20.3 Sales volume, MT’000 1,238 – 1,561 1,403 – 1,463 1,082 – 1,630 Discount rate 10.5% – 12.5% 10% – 11% 10% – 11% (a) Selling price Selling price is assumed based on ceiling price set by Government for domestic on 1 September 2018. 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 FY 2019 and FY 2020 except for export sales. (b) 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. (c) Raw sugar price Raw sugar price is projected in line with New York #11 raw sugar future contracts. The long term price beyond FY 2020 is held constant consistent with selling prices. (d) Sales volume The sales volume is projected based on expected production volume and current market demand. (e) Discount rate The pre-tax discount rate used, reflects specific industry risks relating to the sugar business.