FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 309 01 02 05 03 07 06 04 08 09 ANNUAL INTEGRATED REPORT 2018 EXAMINED OUR NUMBERS 48 LAND LEASE AGREEMENT ( “ LLA ” ) LIABILITY (CONTINUED) The key assumptions used to compute the fair value of the LLA liability are as follows: (i) Discount rate 9.47% (31.12.2017: 9.47%; 1.1.2017: 9.47%) based on discount rates applied by relevant comparable companies (ii) CPO price RM2,250/MT to RM2,586/MT (31.12.2017: RM2,500/MT to RM2,600/MT; 1.1.2017: RM2,450/ MT to RM2,700/MT) (iii) PK price RM1,600/MT to RM1,875/MT (31.12.2017: RM1,752/MT to RM2,300/MT; 1.1.2017 : RM1,752/ MT to RM2,900/MT) (iv) Average FFB Yield 17.8 MT/ha to 27.1 MT/ha (31.12.2017: 17.3 MT/ha to 27.1 MT/ha; 1.1.2017: 16.9 MT/ha to 27.1 MT/ha) (v) Mature estate cost RM3,079 per hectare to RM3,649 per hectate (31.12.2017: RM3,127 per hectare to RM3,565 per hectare; 1.1.2017: RM3,028 per hectare to RM3,565 per hectare) (vi) Immature estate cost RM3,993 per hectare to RM4,331 per hectate (31.12.2017: RM3,782 per hectare to RM4,268 per hectare; 1.1.2017: RM3,782 per hectare to RM4,175 per hectare) (vii) Lease term Extension of lease term to 99 years (31.12.2017: 99 years; 1.1.2017: 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) Discount rate Increase by 0.5% Decrease by RM240.2 million Decrease by 0.5% Increase by RM270.8 million (ii) CPO price Increase by RM200 per metric tonne Increase by RM312.9 million Decrease by RM200 per metric tonne Decrease by RM331.5 million (iii) PK price Increase/decrease by RM100 per metric tonne Increase/decrease by RM40.5 million (iv) Improvement/ reduction in FFB yield Increase/decrease by 1% Increase/decrease by RM31.6 million (v) Mature estate cost Increase/decrease by 5% Decrease/increase by RM108.5 million (vi) Immature estate cost Increase/decrease by 5% Decrease/increase by RM24.0 million