91 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) j) MSM Perlis Sdn Bhd (“MSMP”) The rationalisation plan, which was embarked in financial year 2019 to address losses incurred in Sugar business did not materialise following the recission of sale and purchase agreement. The recoverable amount of plantation assets in MSMP was determined based on the valuation report obtained from the external valuer. Based on the valuation, the recoverable amount for the land was RM173,000,000 and nil for plantation assets after considering that the rubber trees were not viable due to low price and high production costs while the recoverable amount for the industrial leasehold land and building was RM22,300,000. Hence, impairment loss of RM43,705,000 was recognised for property, plant and equipment and reversal of impairment loss of RM7,968,000 was recognised in right-of-use assets and included as the impairment loss within the Sugar Sector in the Group’s segment reporting (Note 19). In addition, there were a series of fire incidents in the Chuping plantation in MSMP occured during the financial year. Based on the fire incident report prepared by the plantation operations team in Chuping, an assessment had been performed and an amount of RM27,243,000 of bearer plants had been written off in the previous financial year. k) FGV-CVC (Cambodia) Co. Ltd. (“FGV-CVC”) FGV-CVC incurred losses in the previous financial year, which had been identified as indicator for impairment for the entity’s non current assets. The Board of Directors of the Company has decided to dissolve FGV-CVC as there has been no firm offer due to the unfavourable local duty structure in Cambodia. Based on the impairment assessment, due to the lack of disposal alternatives, the Group had recognised the full impairment of RM16,007,000 for carrying value of the property, plant and equipment and RM3,650,000 for carrying value of the right-of-use assets, which had been recorded as impairment of non-financial assets of the Group and had been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 19). Leasing arrangements – Group as a lessor The Group leases out certain of its buildings and structures, mainly relating to tanks, pipelines and installations and warehouses, to tenants under operating leases. The Group is not exposed to any material impact of lease payments subject to variable lease considerations. Operating lease receipts represent rentals receivable by the Group for natural oil tanks and oil pipeline system rented out. The future aggregate minimum lease receivables under non-cancellable operating lease are as follows: Group 2021 2020 RM’000 RM’000 Within 1 year 2,149 2,073 Between 1 and 2 years 2,149 2,073 Between 2 and 3 years 2,149 2,073 Between 3 and 4 years 2,149 2,073 Between 4 and 5 years 2,149 2,073 10,745 10,365 Rental income recognised in profit or loss during the financial year amounted to RM1,811,000 (2020: RM1,932,000).
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