Notes tothe financial statements For the financial year ended 31 December 2023 16. Goodwill (cont’d) The following assumptions were used to estimate the recoverable amounts: Cash generating units Carrying amount of goodwill Pre-tax discount rate Growth rate after forecast year 31 October 2023 31 October 2022 31 October 2023 31 October 2022 Recoverable amount assessment based on value-in-use Integrated plantation estates of Lonsum 2,909,757 12.90% 13.00% 5.15% 5.30% Plantation estates of PT GS* 8,055 12.60% 13.23% 5.15% 5.30% Plantation estates of PT MPI* 2,395 12.59% 13.02% 5.15% 5.30% Integrated plantation estates of PT MISP* 34,087 12.24% 12.79% 5.15% 5.30% Sub-total 2,954,294 Recoverable amount assessment based on FVLCD Plantation estates of PT LPI 37,230 10.56% 10.76% 5.15% 5.30% Plantation estates of PT SAL 86,996 12.38% 12.74% 5.15% 5.30% Plantation estates of PT MLI – 14.34% 10.70% 5.15% 5.30% Sub-total 124,226 Grand total 3,078,520 * The determination of recoverable amount changed from FVLCD in the prior year, to value-in-use calculations as most of these plantations start to mature. The primary selling prices used in the discounted cash flow model are projected prices of CPO, rubber, sugar and logs. • CPO The projected prices are based on the on the extrapolation of average market price from reputable independent forecasting service firm for the projection period. • Rubber The projected prices (RSS1 and other rubber products of the Group) over the projection period are based on the extrapolation of actual selling prices and the forecasted price trend from the World Bank. • Sugar The sugar prices used in the projection are based on the extrapolation of actual selling prices and the forecasted price trend from the World Bank, but not exceeding the highest retail price imposed by the Ministry of Trade of Indonesia. • Logs The projected prices of logs are based on the average selling prices of the produce which are extrapolated based on changes of market prices of plywood log. The cash flows beyond the projected periods are extrapolated using the estimated terminal growth rate indicated above. The terminal growth rate used does not exceed the long-term average growth rate in Indonesia. The discount rate applied to the cash flow projections is derived from the weighted average cost of capital of the respective CGUs. Changes to the assumptions used by the management to determine the recoverable amounts, in particular the discount rate, prices, and terminal growth rates, can have significant impact on the results of the assessment. Management is of the opinion that no reasonably possible change in any of the key assumptions stated above would cause the carrying amount of the goodwill for each of the CGU to materially exceed their respective recoverable amounts. 111 GROUP OVERVIEW OPERATION AND FINANCIAL REVIEW SUSTAINABILITY & GOVERNANCE FINANCIALS OTHER INFORMATION Annual Report 2023
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