160 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 46 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 RM243,623,925 (2021: RM243,552,000) per annum together with 15% (2021: 15%) of yearly plantation operating profit attributable to the land. Group 2022 RM’000 2021 RM’000 Non-current 3,264,463 3,314,874 Current 415,891 489,916 3,680,354 3,804,790 Movement in LLA liability is as follows: Group 2022 RM’000 2021 RM’000 At 1 January 3,804,790 4,213,824 Fair value changes charged to profit or loss (Note 10) 352,870 3,984 Repayment during the financial year (477,306) (413,018) At 31 December 3,680,354 3,804,790 The fair value of the LLA liability is measured using a discounted cash flow calculation using cash flow projections covering a 89 year period. The cash flow projection is approved by the LLA Steering Committee based on the 2023 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 2022 2021 Short Term Mid Term Long Term Short Term Mid Term Long Term CPO Price (per MT) 4,000 3,000 2,600 4,300 2,500 -2,900 2,450 PK Price (per MT) 2,400 1,800 1,800 2,645 1,500 - 1,740 1,800 Average FFB yield (MT/ha) 17.8 18.1 - 18.3 16.6 - 22.0 16.9 17.6 - 18.5 16.6 - 21.8 Mature estate cost (per hectare) 6,486 6,370 - 6,424 5,229 - 5,588 5,709 4,703 - 4,845 4,921 - 5,114 Immature estate cost (per hectare) 5,963 5,842 - 5,847 5,104 5,402 4,575 - 4,629 4,786 Discount rate (%) 9.5% 9.5%
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