88 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 20 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment and write off of property, plant and equipment (continued) Financial year ended 31 December 2021 (continued) (d) FGV Plantations (Malaysia) Sdn Bhd (“FGVPM”) In the previous financial year, the change in replanting plan and the deterioration in the rubber operations’ result in FGVPM had resulted in the impairment loss of RM40,755,000. Refer Note 20(i). During the financial year, an impairment assessment was performed due to delay in maturity of the rubber trees as well as deterioration of results being compounded by workers shortages at the estates level. Based on the impairment assessment, the recoverable amount of the rubber plantation in FGVPM was RM124,200,000, which resulted in the impairment loss of RM11,385,000 for property, plant and equipment. The impairment loss has been recognised as the Group’s impairment of non-financial assets and has been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 19). The recoverable amount was determined using value-in-use calculation based on cash flow projections. The key assumptions used in the valuation were as follows: (i) Rubber price RM5.80 per kg (ii) Rubber yield 1,000 kg/ha to 1,550 kg/ha per annum (iii) Mature cost per kg RM5.00 per kg to RM6.20 per kg (iv) Final replanting year 2027 (e) FGV Palm Industries Sdn Bhd (“FGVPI”) As at 31 December 2021, certain FGVPI mills had been in continuing loss position for three consecutive years which had been identified as indicator for impairment of the assets. Based on the impairment assessment, one of the mill’s recoverable amount of RM28,200,000 resulted in a shortfall of RM9,100,000 and this has been recognised as part of the Group’s impairment of non-financial assets and included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 19). The recoverable amount was determined using value-in-use calculation based on cash flow projections. (f) MSM Malaysia Holdings Berhad (“MSMH”) During the financial year, MSMH, a subsidiary of the Group had received an offer to purchase certain plant and machinery from a scrap metal purchaser. These plant and machinery were part of assets impaired in financial year ended 31 December 2019 following cessation of refinery operations in its previous subsidiary, MSM Perlis Sdn Bhd. Following this offer, the Group has reversed the impairment made of RM11,300,000 based on the recoverable amount of the assets which is equivalent to the offer price. Subsequently, the assets have been reclassified to assets held for sale from plant, property and equipment.
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