MKH Annual Report 2019

154 A N N U A L R E P O R T 2 0 1 9 11. INTANGIBLE ASSETS (CONT’D) 11.1 Goodwill (Cont’d) Impairment test of goodwill (Cont’d) Key assumptions used in the value-in-use calculations based on a 11 years (30.9.2018: 12 years; 1.10.2017: 13 years) cash flows projection in respect of impairment test for goodwill on the plantation segment are: (i) discount rate of 11.5% (30.9.2018 and 1.10.2017: 11.5%) which is pre-tax and reflected specific risks of the plantation segment in Indonesia; (ii) oil palm trees with an average life of 25 (30.9.2018 and 1.10.2017: 25) years with the first three years as immature and remaining years as mature which is the average life cycle of the trees; (iii) crude palm oil (“CPO”) average selling price of RM2,000 (30.9.2018: RM1,984; 1.10.2017: RM2,323) per metric tonne based on the management’s estimate; (iv) average CPO extraction rate of 22% (30.9.2018 and 1.10.2017: 22%) based on the industry trend and past performance; and (v) average annual oil palm yield per hectare of 30 to 33 (30.9.2018: 30 to 34; 1.10.2017: 28 to 33) metric tonnes based on management’s estimate and historical yield. In assessing the value-in-use, management does not foresee any possible changes in the above key assumptions that would cause the carrying amounts of the goodwill to materially exceed its recoverable amounts. . 11.2 Other intangible asset The Group 2019 2018 RM RM Capitalised development At beginning of year 21,438,080 16,466,647 Additions 3,796,311 4,971,433 At end of year 25,234,391 21,438,080 Other intangible asset represents expenditure incurred to construct a commuter station for Perbadanan Aset Keretapi (“PAK”) in consideration for the right to lease a plot of land from PAK for a period of 60 years. The total estimated construction costs of the commuter station is approximately RM53,154,136 (30.9.2018 and 1.10.2017: RM40,139,000). The status of the construction as disclosed in Note 33. NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2019