116 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 22 INTANGIBLE ASSETS (CONTINUED) (a) Impairment test for goodwill (continued) (ii) Palm upstream operations in Malaysia (continued) The Group’s review includes an impact assessment of changes in key assumptions. Based on the sensitivity analysis performed, the Directors concluded that no reasonable change in any of the base case assumptions would cause the carrying amount of the CGU to exceed the recoverable amount. a) CPO and PK price CPO and PK is determined based on the forecast provided by the Group’s trading arm subsidiary, based on industry trend and historical prices. b) Average FFB yield and estate costs The average FFB yield and estate costs are based on forecast provided by the Group’s upstream operations management, the Group’s agronomists, based on the 2024 approved budget plus the projection for the remaining period reflective of the forecasted operations results, taking into considerations historical results, industry trend, and other available information, including recent developments in respect of commodity prices, yield and costs due to labour consideration and risk associated with ESG factors. c) Discount rate The post-tax discount rate used reflects specific industry risks relating to the palm plantation operations including consideration of comparison with comparable peer companies in Malaysia. (iii) Others Included in others in the previous financial year was goodwill of RM6,037,000, which arose from the acquisition of cattle and dairy operations and were allocated to FGV Dairy Farm Sdn. Bhd (“FGVDF”) and its subsidiary, FGV Dairy Industries Sdn. Bhd. (“FGVDI”). During the financial year, an impairment assessment was performed due to continuous loss making in FGVDF and FGVDI. Based on the impairment assessment, the recoverable amount of cattle and dairy operations continued to project a negative cash flow, which resulted in the full impairment loss of RM6,037,000 for goodwill. The impairment loss has been recognised in other operating expenses and has been included as impairment loss within the Corporate HQ, Others and Elimination in the Group’s segment reporting (Note 18).
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