156 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 47 LAND LEASE AGREEMENT (“LLA”) LIABILITY (CONTINUED) The sensitivity of the LLA liability to changes in key assumptions is as follows: Assumptions Change in assumption Impact on LLA liability (i) Discount rate Increase by 0.5% Decrease by RM184.5 million Decrease by 0.5% Increase by RM114.5 million (ii) CPO price Increase by RM200 per metric tonne Increase by RM269.1 million Decrease by RM200 per metric tonne Decrease by RM285.9 million (iii) PK price Increase/decrease by Increase/decrease by RM34.6 million RM100 per metric tonne (iv) Improvement/ reduction in FFB yield Increase/decrease by 1% Increase/decrease by RM40.6 million (v) Mature estate cost Increase/decrease by 5% Decrease/increase by RM110.2 million (vi) Immature estate cost Increase/decrease by 5% Decrease/increase by RM23.8 million 48 PROVISION FOR ASSET RETIREMENT 2021 2020 RM’000 RM’000 At 1 January 33,001 32,779 Provision for the year 8,245 – Unwinding of discount 447 437 Payment made during the financial year (10) (52) Currency translation differences 332 (163) At 31 December 42,015 33,001 Provision for asset retirement mainly relates to the Group’s fatty acids manufacturing facility in USA and mills in Malaysia. The asset retirement obligation is computed based on detailed estimates, adjusted for inflation, escalated to the estimated spending dates, and then discounted using an average risk-free interest rate of which represents management’s best estimate of the liability. Actual costs to be incurred in future periods may vary from estimates, given the inherent uncertainties in evaluating certain exposures subject to the imprecision in estimating the asset retirement obligation. 2021 2020 RM’000 RM’000 Analysed as: Non-current 41,349 32,358 Current 666 643 42,015 33,001
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