90 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) (h) Asian Plantation Limited (“APL”) The loss of APL’s productive planted area in the previous financial year had been identified as indicator for impairment for the assets. The recoverable amount of the carrying value of APL’s assets was determined using fair value less cost to sell (Level 3 fair value calculation), based on the valuation report obtained from an external valuer. Based on the valuation, the recoverable amount of APL’s assets was RM306,000,000, which resulted in the recognition of impairment losses of RM112,339,000 for property, plant and equipment and RM25,090,000 for right-of-use assets. The impairment loss totalling RM137,429,000 had been recognised as the Group’s impairment of non-financial assets and had been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 19). (i) FGV Plantations (Malaysia) Sdn Bhd (“FGVPM”) In the previous financial year, FGVPM had revised its rubber replanting plans, where the final rubber replanting activities is planned in 2022. The change in the replanting plan and the deterioration in the rubber operations’ results have been identified as indicators for impairment for the rubber plantation’s assets. Based on the impairment assessment, the recoverable amount of the rubber plantation in FGVPM was RM132,500,000, which resulted the impairment loss of RM40,755,000 for property, plant and equipment. The impairment loss had been recognised as the Group’s impairment of non-financial assets and had been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 19). The recoverable amount was determined using fair value less cost to sell calculation (Level 3 fair value calculation) based on cash flow projections covering a 20 year period. The key assumptions used in the valuation were as follows: (i) Rubber price RM5.40 per kg to RM6.48 per kg (ii) Rubber yield 1,250 kg/ha to 1,275 kg/ha per annum (iii) Mature cost per kg RM3.9 per kg to RM4.0 per kg (iv) Final replanting year 2022 The sensitivity of the rubber plantation recoverable amount to changes in key assumptions is as follows: Key assumptions Sensitivity Recoverable amount lower by RM’000 Rubber price Reduce by RM0.25 cents per kg 15,092 Rubber yield Reduce by 100 kg/ha per annum 29,323 Mature cost per kg Increase by 5% 12,025
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