MKH Annual Report 2020

156 FINANCIAL STATEMENTS ANNUAL REPORT 2020 12. INTANGIBLE ASSETS (CONT’D) 12.1 Goodwill (Cont’d) Impairment test of goodwill Goodwill on acquisition is allocated to the Group’s cash-generating units (“CGUs”), business segments as follows: The Group 2020 RM 2019 RM Plantation 4,900,865 5,181,919 Property development 32,369 32,369 4,933,234 5,214,288 The goodwill allocated to property development segment is not significant in comparison with the Group’s total carrying amount of goodwill. Key assumptions used in the value-in-use calculations based on a 10 years (2019: 11 years) cash flows projection in respect of impairment test for goodwill on the plantation segment are: (i) discount rate of 6.4% (2019: 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 (2019: 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 (2019: RM2,000) per metric tonne based on the management’s estimate; (iv) average CPO extraction rate of 22% (2019: 22%) based on the industry trend and past performance; and (v) average annual oil palm yield per hectare of 30 to 33 (2019: 30 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.