MSM Malaysia Holdings Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 19 INTANGIBLE ASSETS (CONTINUED) Goodwill (continued) (i) 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. (ii) 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. (iii) Sales volume The sales volume is projected based on expected production volume and current market demand. (iv) 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. (v) Discount rate The pre-tax discount rate used, reflects specific industry risks relating to the sugar business. (vi) Exchange rate The exchange rate is projected based on forward rates as at 31 December 2019. 2019 Key assumptions Sensitivity VIU lower by RM’000 Domestic selling price Reduce RM50/MT 262,359 Raw sugar price Increase by 0.5 cents/lbs 340,519 Terminal value growth rate Reduce by 1% 222,855 Domestic sales volume Reduce by 5% 197,322 Discount rate Increase by 1% 308,443 Exchange rate Increase by RM0.20/USD 532,854 A reduction in domestic selling price by RM36/MT, increase in raw sugar price by 0.2 cents/lbs, reduction in terminal value growth rate by 0.6%, increase in discount rate by 0.4%, decrease in domestic sales volume by 3.8% and increase in exchange rate by RM0.06/USD would, all changes taken in isolation, result in the recoverable amount being equal to the carrying amount. 181 FINANCIAL STATEMENTS 08