FGV HOLDINGS BERHAD | AUDITED FINANCIAL STATEMENTS 2023 115 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 22 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (i) Sugar business operations in Malaysia (continued) The sensitivity on the goodwill arising from the sugar business operations in Malaysia recoverable amount to key assumptions are as follows: (continued) 2022 Key assumptions Sensitivity VIU lower by RM ‘000 Raw sugar price Increase NY11 in 2024 & 2025 by USD0.61 cents/lb and USD0.30 cents/lb (29,500) Selling price Decrease of selling price by RM116/mt in 2023 (681,863) Natural gas price Increase in natural gas price by 22% to RM67/ MMBtu in 2023 (39,637) All changes taken in isolation, a reduction in selling price by 17.2%, increase in raw sugar price by USD2.2 cents/lb, increase in terminal value growth rate by 6.9%, increase in discount rate by 3.6%, decrease in sales volume by 17.1%, increase in freight charges by RM23/MT, increase in landed cost by RM96/MT or increase in natural gas prices by 15.7% 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 (2022: RM226,795,000) for palm upstream operations in Malaysia comprise of RM127,238,000 (2022: RM127,238,000) for PUP and RM99,557,000 (2022: 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 2023 2022 Short Term Mid Term Long Term Short Term Mid Term Long Term CPO Price (per MT) 3,600 3,000 - 3,340 2,900 4,000 2,800 - 3,000 2,600 - 2,800 PK Price (per MT) 1,800 1,500 - 1,670 1,800 2,400 1,800 - 1,850 1,800 - 1,850 Average FFB yield (MT/ha) 15.9 16.8 - 17.7 18.1 - 21.1 17.8 18.1 - 18.3 16.6 - 22.0 Mature estate cost (per hectare) 5,906 6,742 - 6,807 6,428 6,486 6,370 - 6,424 5,229 - 5,588 Immature estate cost (per hectare) 5,985 5,817 - 5,951 5,469 5,963 5,842 - 5,847 5,105 Discount rate 9.5% 9.5%
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