90 FGV HOLDINGS BERHAD 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 2022 (continued) b) FGV Dairy Farm Sdn. Bhd. (“FGVDF”) Based on the impairment assessment under the assumptions that only existing cattles would be used in the operation, the cash flows projected a reduction in productivity of the existing cattles as it ages. As the cost of operating the existing farm infrastructure, barn and equipment exceeds the future cash flows management expects to derive from the cattles, the impairment loss of RM7,033,000 has been recognised as the Group’s impairment of non-financial assets and has been included as impairment loss within the Others Sector in the Group’s segment reporting (Note 18). c) FGV Agri Services Sdn. Bhd. (“FGVAS”) The proposed closure of a mini mill in FGVAS has been identified as indicator for impairment for the assets. Based on the impairment assessment, the recoverable amount is Nil based on the expected planned closure. The impairment loss of RM4,668,000 has 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). d) MSM Sugar Refinery (Johor) Sdn. Bhd. (“MSM Johor”) MSM Johor has recorded continuous losses due to its low utilisation capacity since previous financial years, and this had been identified as an indicator for impairment for the assets. The recoverable amount was determined using value in use calculation based on cash flow projections which is approved by the Board of Directors. The assumption of the projection is based on the 2023 to 2025 approved financial budgets by the Directors and it covers a finite projection period of 27 years, based on the weighted average remaining useful life of property, plant and equipment. The recoverable amount of MSM Johor’s assets calculated based on value in use calculation was RM1,421 million exceeds the carrying value by RM282 million (2021: recoverable amount was RM1,428 million exceeds the carrying value by RM195 million). The key assumptions used for the value in use calculation are: Key assumptions 2022 2021 Selling price, RM/MT* 2,303 - 3,635 2,010 - 3,012 Raw sugar price, RM/lb 0.65 - 0.79 0.64 - 0.86 Utilisation factor 19.5% - 57.0% 38% - 66.0% Sales volume, MT’000 195 - 570 381 - 655 Freight charges, RM/MT 152.3 - 162.4 127.5 - 148.8 Landed cost, RM/MT 15.0 - 18.3 3.0 - 15.3 Natural gas price, RM/MMBtu 33.0 - 54.8 30.0 - 33.1 Discount rate % 12% 12% * Excluding products subject to price control
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