PRG Holdings Berhad Annual Report 2019

PRG HOLDINGS BERHAD 148 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 cont’d 18. PROPERTY DEVELOPMENT COSTS (continued) (c) Included in the leasehold land under development is a piece of land purchased from Baycity Park Sdn. Bhd. (“BPSB”) pursuant to the Development Joint Venture Agreement (“DJVA”) entered between BPSB and Premier Baycity Sdn. Bhd. for the proposed development of the development land in Subang U5, Selangor. The Group has accrued the remaining amount of RM9,308,000 (2018: RM10,569,000) payable to BPSB for the balance of the purchase consideration of the leasehold land as disclosed in Note 24(c)(ii) to the financial statements. (d) Included in property development costs is interest expense of RM330,000 (2018: RM329,000) capitalised during the financial year at interest rate of 6.27% (2018: 6.36%) per annum. (e) The leasehold land together with development costs with a total carrying amount of RM29,929,000 (2018: RM26,504,000) have been pledged to licensed banks for banking facilities granted to the Group as disclosed in Note 23(a) to the financial statements. 19. BIOLOGICAL ASSETS Group 2019 RM’000 Balance as at 1 January - Addition during the financial year 83,140 Transfer to inventories (40) Balance as at 31 December 83,100 (a) The fair value of the biological assets is stated at Level 3 of the fair value hierarchy. (b) The biological assets of the Group comprise of teak plantation. During the financial year, PRG Agro Sdn. Bhd., an indirectly wholly-owned subsidiary of the Company, had acquired two parcels of agriculture land planted with teak trees in Kelantan. (c) The current age of teak trees ranges from 16 to 19 years, which are ready to be harvested as agricultural produce. The estimated number of trees planted on the purchased land was approximately 296,800 trees. (d) During the financial year, the Group harvested approximately 74.86m³ of teak trees. The estimated quantity of unharvested teak trees as at 31 December 2019 included in the fair valuation of teak trees of the Group was 153,211.00m³. (e) The valuation of biological assets is based on income approach which considers the net present value of all directly attributable net cash flows. Significant unobservable inputs are used by the independent valuers in determining the fair value of the asset, which include the discount rate used in the discounted cash flow model and adjustment factors to account for the discounted cash flow methods. The resulting fair value based on the independent valuers’ professional opinion is therefore sensitive to these unobservable inputs, and changes to these inputs may result in a significantly higher or lower fair value measurement.