19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment of property, plant and equipment (continued) Financial year ended 31 December 2023 (continued) e) Pontian United Plantation Berhad (“PUP Group”) The recoverable amount of the estates in PUP Group was determined based on the valuation report obtained from an external valuer using income approach (level 3 fair value computation) with cash flow projections covering a 25 year period. Based on the valuation, the recoverable amount of this estate was RM18,725,000, which resulted in the impairment loss of RM18,931,000 for property, plant and equipment. The impairment loss which was primarily driven by the reducing trend of CPO prices had been recognised as the Group’s impairment of non-financial assets and had been included as impairment loss within the Plantation Division in the Group’s segment reporting (Note 18). The key assumptions used in the valuation were as follows: (i) CPO price (RM/MT) 2,915 – 3,600 (ii) PK price (RM/MT) 1,500 – 1,895 (iii) Cost of production (RM/Ha) 2,500 – 4,500 (iv) FFB yield (MT/Ha) 7 – 24.50 (v) Discount rate 9.5% 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 2024 2023 RM’000 RM’000 Within 1 year 1,155 2,368 Between 1 and 2 years 1,155 2,368 Between 2 and 3 years 1,155 2,368 Between 3 and 4 years 1,155 2,368 Between 4 and 5 years 1,155 2,368 5,775 11,840 Rental income recognised in profit or loss during the financial year amounted to RM1,854,000 (2023: RM1,892,000). FGV Holdings Berhad | Audited Financial Statements 2024 Notes to the Financial Statements For the financial year ended 31 December 2024 98
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