FGV Annual Report 2018

115 01 02 05 03 07 06 04 08 09 EXAMINED OUR NUMBERS ANNUAL INTEGRATED REPORT 2018 REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (contined) Key audit matters How our audit addressed the key audit matters Goodwill impairment assessment As at 31 December 2018, the Group’s carrying value of goodwill of RM803.0 million comprised goodwill in relation to sugar business in Malaysia of RM576.2 million and palm upstream operations in Malaysia of RM226.8 million. Goodwill is subject to annual impairment testing. We focused on this area as the determination of recoverable amounts of the assets in the Cash Generating Units ( “ CGUs ” ) based on discounted cash flows projections prepared by management, involved a significant degree of judgment in determining the following key assumptions: Business Key assumptions Sugar business Selling price and sales volume, raw sugar price and terminal value growth rate. Palm upstream operations CPO price, PK price, FFB yield and mature and immature estate costs. Refer to Note 3(d) in the significant accounting policies, Note 5(ii) in the critical accounting estimates and judgments and Note 21 to the financial statements. We have performed the following audit procedures: • We assessed the reliability of management’s projections through the comparison of actual past financial performances against previous forecasted results; • We assessed the reasonableness of the key assumptions, which were used by management in developing the discounted cash flows projections, by comparing against historical data and industry trends; • We examined the sensitivity analysis performed by management on the key assumptions listed in the above table for the respective businesses and also the discount rates used to evaluate the impact on the impairment assessment; and • We assessed the adequacy and reasonableness of the disclosures in the financial statements. Based on our procedures, we noted no significant exceptions. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF FGV HOLDINGS BERHAD (Formerly known as Felda Global Ventures Holdings Berhad) (Incorporated in Malaysia) (Company No. 800165-P)