FGV Annual Report 2014

45 Land Lease Agreement (“LLA”) Liability (continued) Fair value of the LLA liability has been measured using a discounted cash flow calculation using cash flow projections based on financial budgets approved by the Directors covering 96 years. The key assumptions used to compute the fair value of the LLA liability are as follows: (i) Implied discount rate 9.47% (2013: 9.47%) based on discount rates applied by relevant comparable companies (ii) CPO price RM2,450/MT to RM2,630/MT (2013: RM2,450/MT to RM2,600/MT) (iii) FFB price RM509/MT to RM550/MT (2013: RM488/MT to RM524/MT) (iv) Average FFB Yield (MT/ha) 19.1/MT to 27.3/MT (2013: 19.4/MT to 27.0/MT) (v) Estate replanting fixed cost • Matured – RM2,580 (2013: RM3,270) per hectare based on a 25 year cycle for oil palm • Immature – RM6,346 (2013: RM9,414) per hectare based on a 25 year cycle for oil palm (vi) Lease term Extension of lease term to 99 years (2013: 99 years) will be obtained for all land in the plantation estates The sensitivity of the LLA liability to changes in key assumptions is as follows: Key assumptions Change in assumption Impact on LLA liability (i) Implied discount rate Increase by 0.5% Decrease by RM273.8 million Decrease by 0.5% Increase by RM308.8 million (ii) CPO price Increase by RM100 per metric tonne Increase by RM162.6 million Decrease by RM100 per metric tonne Decrease by RM171.8 million (iii) Improvement/reduction in FFB yield Increase/decrease by 1% Increase/decrease by RM13.7 million (iv) Change of total planted Increase/decrease by 1,000 ha Increase/decrease by RM7 million hectarage under LLA (v) Estate planting costs Increase/decrease by RM100 per ha Increase/decrease by RM41.1 million The Group had waived a portion of the compensation receivable from FELDA amounting to RM75,504,000 based on the original land identified for mining activities and the actual hectarage given up for mining activities. FELDA had agreed to lease the unaffected land back to the Group together with biological assets on terms similar to the LLA, which were accepted by the Group. As a result, the Group recognised RM57,565,000 representing the fair value of biological assets acquired. Felda Global Ventures Holdings Berhad pg 302 NOTES TO THE FINANCIAL STATEMENTS For The Financial Year Ended 31 December 2014