FGV Audited Financial Statements 2019

217 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 60 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED) (xiii) On 14 November 2019, the Board of Directors announced that Felda Global Ventures Indonesia Sdn. Bhd., a wholly-owned subsidiary of the Company has been placed under Members’ voluntary winding up pursuant to Section 439(1)(b) of the Companies Act 2016. The liquidator has been appointed for the company on the same day. The voluntary winding up of the subsidiary did not have any material impact on the earnings and net assets of the Group for the financial year ended 31 December 2019. (xiv) On 21 November 2019, the Board of Directors announced that the members’ voluntary winding-up process (In Members’ Voluntarily Liquidation) for ProXcel Sdn Bhd ( “ ProXcel ” ), an indirect joint venture company of FGV has been completed and ProXcel is deemed fully dissolved on 21 November 2019 pursuant to Section 459 (5) of the Companies Act 2016. 61 SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD (i) On 13 February 2020, the Board of Directors’ announced that MEO Trading Sdn. Bhd., an indirect joint venture of the Company has been placed under Members’ voluntary winding up pursuant to Section 439(1)(b) of the Companies Act 2016. The liquidator has been appointed for the company on the same day. The voluntary winding up of the company is not expected to have any material impact on the earnings and net assets of the Group for the financial year ended 31 December 2019. (ii) In 2020, the global economic impact from the COVID-19 pandemic will be felt by industries and billions of people across the world. Even though a large portion of the Group’s activities are considered as essential operations, it is foreseen that the COVID-19 pandemic may have financial implications to the Group, including the results of the Group and measurement of its assets and liabilities of the Group for the next financial year. The Board of Directors of the Company are closely monitoring the situation and will make the appropriate decisions and undertake the necessary measures to preserve value. (iii) On 9 April 2020, the MSMH issued a letter to F&N to exercise its rights to rescind the sale and purchase agreement in respect of the disposal of its leasehold agriculture land located at Chuping, Perlis, entered on 8 October 2019 as disclosed in Note 60(xii) to the financial statements. As of the date of this report, MSMH continues with its plan to sell the leasehold agriculture land with F&N and it is of the view that the sales consideration in the sale and purchase agreement with F&N of RM156,000,000 remains the most reflective market value to be used as fair value less costs to sell for the purposes of measurement of the assets held for sale. 62 EFFECTS OF CHANGE IN ACCOUNTING POLICY The Group has applied MFRS 16 with the date of initial application of 1 January 2019 by applying the full retrospective transition method. Under the full retrospective transition method, the 2018 comparative information had been restated to reflect the new requirements of MFRS 16 where the Group is a lessee. On adoption of MFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of MFRS 117 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the respective lease commencement dates. The Group and Company have applied the practical expedient in applying MFRS 16 which at the date of initial application, no reassessments were made on whether existing contracts are, or contain, lease in accordance with MFRS 16. Accordingly, the Group and Company had applied this Standard to contracts that were previously identified as leases applying MFRS 117 Leases and IC Interpretation 4 Determining whether an Arrangement contains a Lease, while did not apply MFRS 16 to existing contracts that did not meet the definition of a lease under MFRS 117 and IC 4, although these contracts may meet the definition of lease under MFRS 16.