AUDITED FINANCIAL STATEMENTS 2022 93 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 19 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Significant impairment and write off of property, plant and equipment (continued) Financial year ended 31 December 2021 (continued) b) Asian Plantation Limited (“APL”) In the previous financial year, impairment indicator exists for APL’s bearer plant arising from shortages of labour from the movement restriction of foreign labour as a result of the Covid-19 pandemic resulting in the forecasted yield of FFB for the certain estates expected to be affected until 2024. The recoverable amount of the assets was determined using value-in-use calculation based on updated cash flow projections in regards to bearer plans for affected estates with the following key assumptions: Item Key assumptions Crude palm oil prices FY2022: RM3,430/MT FY2023 to FY2024: RM2,830/MT FY2025: RM2,430/MT FY2026 onwards: RM2,380/MT Crude palm kernel process FY2022: RM2,066/MT FY2023 to FY2024: RM1,586/MT FY2025 onwards: RM1,346/MT FFB price FY2022: RM688/MT FY2023 to FY2024: RM596/MT FY2025 onwards: RM504/MT Yield 6.1 MT/ha to 18.08 MT/ha - projected yield varies depending on the age profile and field conditions. Discount rate 9.47% Based on the assumptions above, the recoverable amount of APL’s bearer plants for the affected estates was RM4,224,000, which resulted in the recognition of impairment losses of RM15,526,000 for property, plant and equipment. The impairment loss had been recognised as the Group’s impairment of non-financial assets and had been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 18). c) Pontian United Plantation Berhad (“PUP”) In the previous financial year, prolonged delay to rebuild a collapsed bridge during the Covid-19 pandemic and higher cost in relation to rehabilitation work had led to a drop in value of the bearer plant in PUP. The recoverable amount of the affected estate was determined using fair value less cost to sell (Level 3 fair value calculation), based on the valuation report obtained from an external valuer. Based on the valuation, the recoverable amount of the affected estate was RM39,640,000, which resulted in the recognition of impairment losses of RM13,118,000 for property, plant and equipment. The impairment loss had been recognised as the Group’s impairment of non-financial assets and has been included as impairment loss within the Plantation Sector in the Group’s segment reporting (Note 18).
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