PRG Holdings Berhad Annual Report 2020

20. BIOLOGICAL ASSETS Group 2020 2019 RM’000 RM’000 Balance as at 1 January 83,100 - Addition during the financial year - 83,140 Transfer to inventories (1,040) (40) Balance as at 31 December 82,060 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. In the previous 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 17 to 20 years (2019: 16 to 19 years), which are ready to be harvested as agricultural produce. (d) During the financial year, the Group harvested approximately 1,645.81m³ (2019: 74.86m³) of teak trees. (e) The valuation of biological assets is determined by income approach which considers the net present value of all directly attributable net cash flows based on Directors’ estimation by reference to inputs used in valuation report performed by independent valuers. 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 income approach is therefore sensitive to these unobservable inputs, and changes to these inputs may result in a significantly higher or lower fair value measurement. Fair value measurements using significant unobservable inputs The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value measurement: 2020 2019 Selling price per m 3 RM1,200 RM1,120 Discount rate 16% 16% Sensitivity analysis With all other variables held constant, the Group’s loss after taxation for the year would have been impacted as follows: 2020 2019 RM’000 RM’000 Selling price - increase by 1% (1,151) (850) - decrease by 1% 934 850 Discount rate - increase by 1% 2,067 1,462 - decrease by 1% (2,379) (1,520) Annual Report 2020 147 Notes to the Financial Statements 31 December 2020 cont’d