FGV Annual Report 2015

295 WHO WE ARE & WHAT WE DO OUR STRATEGIC INTENT & PERFORMANCE HOWWE ARE GOVERNED CREATING SUSTAINABLE VALUE OUR NUMBERS ADDITIONAL INFORMATION DETAILS OF THE ANNUAL GENERAL MEETING Notes to the Financial Statements For The Financial Year Ended 31 December 2015 ADDRESSING OUR RISKS & OPPORTUNITIES Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 24 INTERESTS IN JOINT VENTURES (CONTINUED) Impairment loss on investment in joint ventures (a) Felda Iffco Sdn. Bhd. (“FISB”) At 31 December 2015, the Group’s investment in a joint venture, FISB was tested for impairment due to continued difficult operating conditions. The recoverable amount of the investment in FISB was computed using fair value less cost to sell method based on cash flow projections of the various CGUs within FISB Group, expected to be attributable to the equity holder and adjustment to the discount rate to reflect equity risk and cash flows being assessed on a profit after interest and tax basis. The key assumptions used to determine the recoverable amount of investment in FISB are as follows: 2015 2014 - Gross margin 7% - 18% 7% - 18% - Terminal value growth rate 2.5% 2.5% - Discount rate 10% 10% As a result of the impairment assessment, no impairment was recognised as the recoverable amount of the investment exceeds the carrying amount. In previous year, a reversal of impairment in a joint venture of RM68,657,000 was recorded within other operating income. The reversal to the carrying amount at fair value less cost to sell is a Level 3 fair value computation. The Group’s review includes an impact assessment of changes in key assumptions. Based on the sensitivity analysis performed, the Directors concluded that no reasonable change in any of the base case assumptions would cause the carrying amount of the CGU to exceed the recoverable amount. (b) In previous financial year, an impairment of RM9.86 million was recorded in respect of a joint venture, FPG Oleochemicals Sdn. Bhd. relating to the decision to discontinue a component of the business.