19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment of property, plant and equipment (continued) Financial year ended 31 December 2023 (continued) c) FGV Palm Industries Sdn. Bhd. (“FGVPI”) A biomass power plant continued to be in a loss making position as a result of low utilisation factors in the previous financial year, which had been identified as indicator for impairment of the asset. Based on the impairment assessment, the recoverable amount of the biomass power plant was RM41,100,000, which resulted in the impairment loss of RM9,100,000 for property, plant and equipment. The recoverable amount was determined using value-in-use calculation based on cash flow projections covering a 15 year period. The key assumptions on the assessment were as follows: (i) Export utilisation factor 17% – 37% (ii) Electricity rate (RM/KwH) 0.8 (iii) Other income per annum (RM’000) 13,672 (iv) Total cost per annum (RM’000) 27,427 – 29,142 All impairment losses in FGVPI was recognised as the Group’s impairment of non-financial assets and included as impairment loss within the Plantation Division in the Group’s segment reporting (Note 18). d) FGV Kernel Products Sdn. Bhd. (“FGVKP”) As at 31 December 2023, certain mills in FGVKP were in loss making position due to the downward trend of selling price for palm kernel expeller (“PKE”), crude palm kernel oil (“CPKO”) as well as low utilisation factor, and this had been identified as an indicator impairment for the assets. Based on the impairment assessment, one of the mill’s recoverable amount of RM719,000, resulted in the impairment loss of RM7,181,000 for property, plant and equipment. The impairment loss was recognised as the Group’s impairment of non-financial assets and included as impairment loss within the Plantation Division in the Group’s segment reporting (Note 18). The recoverable amount was determined using value-in-use calculation based on cash flow projections. The key assumption used for the value-in-use calculation were as follows: (i) Estimated selling price CPKO (per MT) RM3,079 – RM3,900 (ii) Estimated selling price PKE RM519 – RM618 (iii) Utilisation capacity (%) 35% (iv) Utilisation capacity (MT) 66,000 (v) Discount rate 10% Notes to the Financial Statements For the financial year ended 31 December 2024 97
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