FGV Audited Financial Statements 2019

148 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 24 INVESTMENT IN SUBSIDIARIES (CONTINUED) (c) Liquidation and dissolvement of subsidiaries in previous financial year (continued) (ii) On 30 October 2018, the member’s voluntary winding up process for Sutrajaya Shipping Sdn. Bhd. (“SSSB”), a dormant indirect subsidiary of the Company had been completed and was deemed fully dissolved pursuant to Section 459(5) of the Companies Act 2016. The capital return was received in 2016 and the impact of the dissolvement had been recorded in the same year. (iii) On 23 November 2018, the process to strike-off the name of FGV Green Rubber Sdn. Bhd. (“FGVGR”), a dormant indirect subsidiary of the Company, from the Register of the Companies Commission of Malaysia under Section 550 of the Act was completed and FGVGR had been deemed duly dissolved under the Act. As a result, the Group derecognised its interest in FGVGR and the effect of the dissolvement was not material to the Group. (iv) On 29 November 2018, the member’s voluntary winding up process for Felda Construction Sdn. Bhd. (“FCSB”) and Felda Farm Products Sdn. Bhd. (“FFPSB”), both dormant and indirect subsidiaries of the Company had been completed. Both FCSB and FFPSB had deemed fully dissolved pursuant to Section 459(5) of the Companies Act 2016. As a result, the Group derecognised its interest in FCSB and FFPSB and recorded a gain on liquidation of RM324,000 and RM600,000 respectively in previous financial year. (d) Impairment loss on investment in subsidiaries The Company assessed the investments in FGV Sugar Sdn. Bhd. (“FGV Sugar”) and MSMH for impairment, arising from the rationalisation exercise of the sugar business and the impairment of property, plant of equipment of one of the sugar business entity (Note 20). The recoverable amounts of the investments were determined based on value in use of the investments, being the holding companies of the sugar business, computed based on the net present value of the projected future cash flows derived from the sugar business, adjusted for financing and tax and discounted at 11.4%. The other key assumptions used are as disclosed in Note 23(a)(i) of the financial statements. Based on the value in use assessments of FGV Sugar and MSMH, the recoverable amounts were computed at RM838,079,000 and RM196,190,000 respectively, resulting in impairment of RM263,086,000 in the Company’s investment in FGV Sugar and impairment of RM73,836,000 in the investment in MSM Holdings. Based on sensitivity analysis performed by the Company, the impact of 1% increase in the discount rate used, which is a key assumption, will result in additional impairment loss of approximately RM143,381,000.