FGV Annual Report 2015

324 Notes to the Financial Statements For The Financial Year Ended 31 December 2015 Felda Global Ventures Holdings Berhad Annual Integrated Report 2015 46 LAND LEASE AGREEMENT (“LLA”) LIABILITY (CONTINUED) 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 RM276.9 million Decrease by 0.5% Increase by RM314.7 million (ii) CPO price Increase by RM100 per metric tonne Increase by RM165.9 million Decrease by RM100 per metric tonne Decrease by RM173.8 million (iii) Improvement/reduction in FFB yield Increase/decrease by 1% Increase/decrease by RM41.6 million (iv) Change of total planted hectarage under LLA Increase/decrease by 1,000 ha Increase/decrease by RM7 million (v) Estate planting costs Increase/decrease by RM100 per ha Increase/decrease by RM2 million (v) PK price Increase by RM100 per metric tonne Increase/decrease by RM49.0 million In previous financial year, 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. 47 PROVISION FOR ASSET RETIREMENT Group 2015 2014 RM’000 RM’000 At 1 January 30,697 32,373 Unwinding of discount 457 38 Payment made during the financial year (72) (74) Provision/(reversal) during the financial year 500 (2,000) Currency translation differences 1,334 360 At 31 December 32,916 30,697 Less: payable within 12 months (687) (87) Non-current 32,229 30,610 Provision for asset retirement relates to the Group’s fatty acids manufacturing facility in USA and mills in Malaysia. The asset retirement obligation was based on detailed estimates, adjusted for inflation, escalated to the estimated spending dates, and then discounted using an average credit adjusted risk-free interest rate of which represents management’s best estimate of the liability. Actual costs to be incurred in future periods may vary from estimates, given the inherent uncertainties in evaluating certain exposures subject to the imprecision in estimating the asset retirement obligation.