FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 195 01 02 05 03 07 06 04 08 09 ANNUAL INTEGRATED REPORT 2018 EXAMINED OUR NUMBERS 5 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED) (iv) Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. This involves judgment regarding the future financial performance of the particular entity in which the deferred tax asset has been recognised. As at 31 December 2018, the Group has deferred tax assets of RM127,727,000 (2017: RM199,277,000) in respect of unused tax losses of certain loss making subsidiaries of the Group. The key assumptions for taxable profit projections for the loss making subsidiaries include CPO price between RM2,250/MT to RM2,586/MT, FFB yield of up to 27.1MT/ha, and estate and production costs of between RM2,480/ha to RM3,649/ha for its plantation subsidiaries, and CPO price between RM2,260/MT to RM2,510/MT, gross margin of 7% and yearly sales volume between 2.5 million MT to 2.7 million MT for its trading subsidiary. The taxable profit projections for the loss making subsidiaries include the effects of cost management plans and increase in productions to improve the performance of the businesses. In evaluating whether it is probable that future taxable profits will be available in future periods, all available evidence was considered, including approved budgets, business plans, and analysis of historical operating results. These forecasts are consistent with those prepared and used internally for business planning and impairment testing purposes.