FGV Audited Financial Statements 2020

48 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) Discount rate Increase by 0.5% Decrease by RM226.9 million Decrease by 0.5% Increase by RM253.7 million (ii) CPO price Increase by RM200 Increase by RM317.9 million per metric tonne Decrease by RM200 Decrease by RM342.9 million per metric tonne (iii) PK price Increase/decrease by Increase/decrease by RM100 per metric tonne RM40.6 million (iv) Improvement/ Increase/decrease by Increase/decrease by reduction in FFB yield 1% RM36.8 million (v) Mature estate cost Increase/decrease by Decrease/increase by 5% RM107.0 million (vi) Immature estate cost Increase/decrease by Decrease/increase by 5% RM24.3 million 49 PROVISION FOR ASSET RETIREMENT 2020 RM’000 2019 RM’000 At 1 January 32,779 32,472 Unwinding of discount 437 459 Payment made during the financial year (52) (63) Currency translation differences (163) (89) At 31 December 33,001 32,779 Provision for asset retirement relates to the Group’s fatty acids manufacturing facility in USA and mills in Malaysia. The asset retirement obligation is computed based on detailed estimates, adjusted for inflation, escalated to the estimated spending dates, and then discounted using an average 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. 170 Notes to the Financial Statements For The Financial Year Ended 31 December 2020 FGV HOLDINGS BERHAD Audited Financial Statement 2020