102 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 22 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. (continued) 2021 Key assumptions Sensitivity VIU Higher/(Lower) by RM’000 Landed cost Increase by RM15/mt (105,500) Domestic sales volume Reduce by 30% (42,900) Fine syrup sales volume Reduce by 24kmt – 29kmt (50,200) Natural gas price Increase by 10% (38,500) All changes taken in isolation, a reduction in domestic selling price by RM297/MT, increase in raw sugar price by USD1.2 cents/lb, reduction in terminal value growth rate by 4.6%, increase in discount rate by 1.8%, decrease in domestic sales volume by 18.9% and increase in exchange rate by RM0.33/USD would result in the recoverable amount being equal to the carrying amount. The above sensitivity analysis is based on the movement of individual key assumptions while holding all other assumptions constant. (ii) Palm upstream operations in Malaysia Goodwill of RM226,795,000 (2021: RM226,795,000) for palm upstream operations in Malaysia comprise of RM127,238,000 (2021: RM127,238,000) for PUP and RM99,557,000 (2021: RM99,557,000) for Yapidmas. The Group’s palm upstream operations 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. The recoverable amount of the palm upstream operations CGU is determined using a fair value less cost to sell calculation (Level 3 fair value computation) using cash flow projections covering a 25 year period. The key assumptions are as follows: Key assumptions 2022 2021 Short Term Mid Term Long Term Short Term Mid Term Long Term CPO Price (per MT) 4,000 2,800 - 3,000 2,600 - 2,800 4,300 2,500 - 2,900 2,450 - 2,600 PK Price (per MT) 2,400 1,800 - 1,850 1,800 - 1,850 2,645 1,500 - 1,740 1,750 – 1,800 Average FFB yield (MT/ha) 17.8 18.1 - 18.3 16.6 - 26.6 16.9 17.6 - 18.5 16.6 - 26.6 Mature estate cost (per hectare) 6,486 6,370 - 6,424 5,229 - 5,588 5,709 4,703 - 4,845 4,921 - 5,114 Immature estate cost (per hectare) 5,963 5,842 - 5,847 5,104 5,402 4,575 - 4,629 4,786 Discount rate 9.5% 9.5%
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