178 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023 45 LAND LEASE AGREEMENT (“LLA”) LIABILITY (CONTINUED) The leased land consists of planted oil palm and rubber areas. Based on the agreed leased area, the annual fixed lease amount payable is estimated to be RM243,507,000 (2022: RM243,624,000) per annum together with 15% (2022: 15%) of yearly plantation operating profit attributable to the land. Group 2023 RM’000 2022 RM’000 Non-current 3,257,842 3,264,463 Current 255,971 415,891 3,513,813 3,680,354 Movement in LLA liability is as follows: Group 2023 RM’000 2022 RM’000 At 1 January 3,680,354 3,804,790 Fair value changes charged to profit or loss (Note 10) 133,706 352,870 Repayment during the financial year (300,247) (477,306) At 31 December 3,513,813 3,680,354 The fair value of the LLA liability is measured using a discounted cash flow calculation using cash flow projections covering a 88 year period. The cash flow projection is approved by the LLA Steering Committee based on the 2024 approved financial budgets by the Directors plus the projection for the remaining period reflective of the forecasted operational results. The key assumptions used to compute the fair value of the LLA liability are as follows: LLA Key assumptions 2023 2022 Short Term Mid Term Long Term Short Term Mid Term Long Term CPO Price (per MT) 3,600 3,000 - 3,340 2,900 4,000 2,800 - 3,000 2,600 - 2,800 PK Price (per MT) 1,800 1,500 - 1,670 1,800 2,400 1,800 - 1,850 1,800 - 1,850 Average FFB yield (MT/ha) 15.9 16.8 - 17.7 18.1 - 21.1 17.8 18.1 - 18.3 16.6 - 22.0 Mature estate cost (per hectare) 6,906 6,742 – 6,807 6,428 6,486 6,370 - 6,424 5,229 - 5,588 Immature estate cost (per hectare) 5,985 5,817 – 5,951 5,469 5,963 5,842 - 5,847 5,105 Discount rate (%) 9.5% 9.5%
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