89 AUDITED FINANCIAL STATEMENTS 2021 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) (g) MSM Sugar Refinery (Johor) Sdn. Bhd. (“MSM Johor”) MSM Johor has recorded continuous losses due to its low utilisation capacity since previous financial years, and this has been identified as indicator for impairment for the assets. The recoverable amount was determined using value in use calculation based on cash flow projections for a finite projection period of 20 years, based on the weighted average remaining useful life of property, plant and equipment. The recoverable amount of MSM Johor’s assets calculated based on value in use calculation was RM1,428 million exceed the carrying value by RM195 million. The key assumptions used for the value in use calculation are: Key assumptions 2021 Selling price, RM/MT 2,690 – 2,800 Raw sugar price, US cents/lbs 15.0 – 20.3 Sales volume, MT’000 381 – 655 Freight charges, USD/MT 30.0 – 35.0 Natural gas price, RM/MMBtu 30.0 – 33.1 Discount rate % 10% Exchange rate (RM – USD) RM4.25/USD The sensitivity on the MSM Johor’s assets recoverable amount to key assumptions are as follows: Key assumptions Sensitivity VIU Higher/(Lower) by RM’000 Sales volume 30% reduction in FY22 and FY23 (43,000) Capital expenditure Increase by RM50 million (42,100) Freight charges Increase to USD60/MT in FY22 (USD 30/MT FY23 onwards) (32,400) Natural gas price Increase to RM40/MMBtu in FY22 (21,100) Fine syrup sales volume Reduce by 12KMT – 16KMT (8,800) The above sensitivity analysis is based on the movement of individual key assumptions while holding all other assumptions constant.
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