19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment of property, plant and equipment (continued) Financial year ended 31 December 2024 (continued) d) FGV Rubber Industries Sdn. Bhd. (“FGVRI”) As at 31 December 2024, certain factories within FGVRI incurred losses due to insufficient production volume to cover fixed costs, which had been identified as an indicator of impairment. Based on the impairment assessment, the recoverable amount of two factories were nil, which resulted in a full impairment of RM8,463,000 for property, plant, and equipment and RM1,187,000 for right-of-use assets. The impairment loss totalling RM9,650,000 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 using value in use calculation using cash flow projections. The key assumptions used in the valuation were as follows: 2024 2023 (i) Revenue growth rate 3% 3% (ii) Sales volume (MT) 25,486 – 36,161 25,486 (iii) Selling price (sen/kg) 742 – 762 676 (iv) Gross profit margin 5% 4% (v) Discount rate 9% 10% e) FGV Integrated Farming Holdings Sdn. Bhd. (“FGVIF”) Continued losses in FGVIF due to lower sales volume have been identified as an impairment indicator impairment for the assets. Based on the impairment assessment, the recoverable amount of the assets in FGVIF was RM3,400,000, which resulted in the impairment loss of RM6,928,000 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 Corporate HQ and Others in the Group’s segment reporting (Note 18). The recoverable amount was determined using the fair value through cost to sell calculation (Level 3 fair value calculation), based on the valuation report obtained from the external valuer. f) 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 projection which was approved by the Board of Directors. The key assumptions of the projection were based on the 2025 to 2027 approved financial budget by the Directors and it covers a finite projection period of 23 years (2023: 25 years), based on the useful life of the property, plant and equipment. FGV Holdings Berhad | Audited Financial Statements 2024 Notes to the Financial Statements For the financial year ended 31 December 2024 94
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