19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment of property, plant and equipment (continued) Financial year ended 31 December 2024 (continued) b) FGV Plantations (Malaysia) Sdn. Bhd. (“FGVPM”) Rubber plantation assets In view of the adverse results in the rubber operation arising from lower rubber yield and the Board’s approval of the rubber strategy, an impairment assessment was performed on the rubber operations in FGVPM. Based on the impairment assessment, the recoverable amount of the rubber plantation in FGVPM was RM8,530,000, which resulted in the impairment loss of RM26,788,000 for property, plant and equipment. The impairment loss was recognised as the Group’s impairment of non-financial assets and included as an impairment loss within the Plantation Division in the Group’s segment reporting (Note 18). The recoverable amount was determined based on the fair value through cost to sell calculation (Level 3 fair value calculation) using cash flow projection. The cash flow projection was based on approved financial budgets by the Board of Directors, covering a period of 6 years in line with the approved strategy plan. The key assumptions used in the valuation were as follows: 2024 2023 (i) Planted rubber hectarage 5,920 7,079 – Own tapping (ha) 406 – 2,555 846 – 7,079 – Outsource (ha) 354 – 2,381 nil (ii) Rubber price (RM/kg) 6.83 – 8.45 5.90 – 6.20 (iii) Rubber yield (kg/ha per annum) 650 1,141 – 1,250 (iv) Mature cost (RM/kg) 7.55 – 10.98 5.88 – 5.99 (v) Discount rate 9.5% 9.5% (vi) Cashflow projection period 6 years 14 years 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 (756) Rubber yield Reduce by 100 kg/ha per annum (2,259) Mature cost per hectare Increase by 5% (1,311) FGV Holdings Berhad | Audited Financial Statements 2024 Notes to the Financial Statements For the financial year ended 31 December 2024 92
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