FGV Annual Report 2016

ANNUAL INTEGRATED REPORT 2016 313 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 48 PROVISION FOR ASSET RETIREMENT Group 2016 RM'000 2015 RM'000 At 1 January 32,916 30,697 Unwinding of discount 623 457 Payment made during the financial year (62) (72) (Reversal of provision)/provision during the financial year (1,000) 500 Currency translation differences 370 1,334 At 31 December 32,847 32,916 Less: payable within 12 months (718) (687) Non-current 32,129 32,229 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. 49 PROVISION FOR DEFINED BENEFIT PLAN The Group operates defined benefit retirement plans in Malaysia, Thailand and Indonesia for all eligible employees. All of the plans are lump sum payments depend on members' length of service and their salary in the final years leading up to retirement. As the retirement benefit plans are unfunded, the Group meets the defined benefit payment obligations as it falls due. Group Company 2016 RM'000 2015 RM'000 2016 RM'000 2015 RM'000 Non-current - Retirement benefit scheme 50,325 25,776 1,516 560 - Housing assistance scheme 17,569 16,899 - - - Long service award 4,013 3,359 67 61 71,907 46,034 1,583 621 The retirement benefit scheme is a final salary defined benefit plan with a guaranteed lump sum payment at retirement, which remains open to new entrants. The housing assistance scheme is a final salary defined benefit plan with a guaranteed lump sum payment at retirement or at an earlier exit through ill-health retirement or death-in-service in Malaysia, which remains open to new entrants. The long service award is for eligible employees that have served the Group for 20 years in Malaysia.