FORGING AHEAD - Tradewinds Plantation Berhad

13. GOODWILL ON CONSOLIDATION
At cost
Group
2010 2009
RM’000 RM’000
Balance as at 1 January/31 December 26,848 26,848
Accumulated impairment loss
Balance as at 1 January/31 December (1,294) (1,294)
Carrying amount 25,554 25,554
Goodwill on consolidation arises mainly from the plantation segment of the Group.
For the purpose of impairment testing, the recoverable amount of a Cash Generating Unit (‘CGU’) is based on its value in
use determined by discounting the pre-tax cash flows based on financial projections approved by management covering up
to 25 years which represents the full life cycle period of the oil palms.
(a) Key assumptions used in value in use calculations
The key assumptions on which management has based its cash flow projections to undertake impairment testing of
goodwill are:
(i) Discount rate of 5.00% representing the pre-tax cost of debt of the Group as at 31 December 2010.
(ii) Fresh fruit bunches yield ranging from 8 to 28 MT/hectare obtained from the Malaysian Palm Oil Board published
average yield applicable to the age of the respective estates and also based on management’s best estimates on
the estate’s performance after taking into account existing achievements.
(iii) Crude palm oil prices ranging from RM2,500 to RM2,700 per metric tonne and palm kernel prices ranging from
RM1,500 to RM1,625 per metric tonne.
(iv) Oil extraction rate ranging from 21.00% to 21.65% and kernel extraction rate ranging from 5.00% to 5.60%
based on management’s best estimates after taking into account the age of the respective estates and existing
achievements.
(v) Average increase in plantation maintenance expenses of 1% to 3% per hectare.
FINANCIAL STATEMENTS
TRADEWINDS PLANTATION BERHAD
Annual Report 2010
167