Fraser & Neave Holdings Bhd Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 06 Financial Statements 171 NOTES TO THE FINANCIAL STATEMENTS 6. INTANGIBLE ASSETS (CONTINUED) (B) KEY ASSUMPTIONS USED IN VALUE IN USE CALCULATIONS (CONTINUED) (i) Goodwill (continued) Cash flows beyond these periods (i.e. three-year) are extrapolated using the estimated growth rate stated in the table below: Terminal growth rate Average annual growth rate Pre-tax discount rate At 30 September 2019 Dairy products 1.0% 7.9% 8.8% Soft drinks 0.0% 8.4% 9.8% At 30 September 2018 Dairy products 1.0% 4.0% 8.3% Soft drinks 0.0% 7.0% 9.5% (ii) Brand No impairment loss is required for the brand assessed in the current financial year as its recoverable value is in excess of its carrying value. The value in use calculations apply a discounted cash flows model using cash flow projections based on business plan covering three-year period. The discount rates applied to the cash flow projections are derived from the cost of capital plus a reasonable risk premium. Terminal growth rate Annual growth rate Pre-tax discount rate At 30 September 2019 1.0% 1.0% 9.8% At 30 September 2018 1.0% 1.0% 9.5% The key assumptions represent management’s assessment of future trends in Condensed Milk industry and are based on both external sources and internal sources (historical data). (C) SENSITIVITY TO CHANGES IN ASSUMPTIONS With regard to the assessment of value in use of these CGUs, management believes that no reasonably possible changes in any of the key assumptions would cause the carrying values of these CGUs to differ materially from their recoverable amounts except for the changes in the prevailing operating environment, the impact of which is not expected to be significant.