MKH Annual Report 2017

11. INTANGIBLE ASSETS (continued) Impairment test of goodwill (continued) Key assumptions used in the value-in-use calculations based on a 13 years (2016: 14 years) cash flows projection in respect of impairment test for goodwill on the plantation segment are: (i) discount rate of 11.5% (2016: 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 (2016: 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 RM2,323 (2016: RM2,269) per metric tonne based on the management’s estimate; (iv) Average CPO extraction rate of 22% (2016: 23%) based on the industry trend and past performance; and (v) Average annual oil palm yield per hectare of 28 to 33 (2016: 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. 11.2Other Intangible asset The Group 2017 2016 RM RM Capitalised development At beginning of year 9,000,539 - Additions 7,466,108 4,847,540 Reclassification from prepayments - 4,152,999 At end of year 16,466,647 9,000,539 Other intangible asset represents expenditure incurred to construct a commuter station for Railway Asset Corporation (“RAC”) in consideration for the right to lease a plot of land from RAC for a period of 60 years. The total estimated construction costs of the commuter station is approximately RM40,139,000. Notes to the Financial Statements For the Financial Year ended 30 September 2017 134 MKH Berhad • Annual Report 2017