FGV Audited Financial Statements 2019

193 01 S E C T I O N NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 AUDITED FINANCIAL STATEMENTS 2019 48 LAND LEASE AGREEMENT (“LLA”) LIABILITY (CONTINUED) The land lease agreement is calculated based on the terms set out in the various agreements as follows: (continued) (vi) Clarification Letter On 17 July 2015, FELDA and FGVPM agreed upon the clarification of several terms within the LLA and its ancillary agreements, as follows: - Maintenance costs of utilities on the lands managed by FELDA in Sahabat shall be charged to FGVPM; - The refund of the security deposit paid by the company in respect of the LLA (Note 27) shall be by way of set-off towards any payment of the lease amount prior to expiry or sooner determination of the LLA; and - The agreed formula to compute the Implied Revenue with respect to calculating the average fresh fruit bunches (“FFB”) price used by FGVPM in the preparation of the statement of plantation operating profit is now clarified via a detailed formula and accompanying assumptions. 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 RM243,781,000 (2018: RM243,843,000;) per annum together with 15% (2018: 15%) of yearly plantation operating profit attributable to the land. 2019 RM’000 2018 RM’000 Non-current 4,063,332 4,079,836 Current 252,814 248,172 4,316,146 4,328,008 Movement in LLA liability is as follows: 2019 RM’000 2018 RM’000 At 1 January 4,328,008 4,393,280 Fair value changes charged to profit or loss (Note 11) 236,821 233,379 Repayment during the financial year (248,683) (298,651) At 31 December 4,316,146 4,328,008 Fair value of the LLA liability has been measured using a discounted cash flow calculation using cash flow projections based on financial budgets approved by the Directors covering 92 years.