FGV Annual Report 2012

74 Felda Global Ventures Holdings Berhad 21 INVESTMENT IN SUBSIDIARIES (continued) (d) Incorporation, accretion and dilution of interest in subsidiaries in the previous financial year (continued) ^ In February 2011, the Board of Directors of the Company approved a proposed corporate reorganisation scheme to restructure and to list the Sugar business of the Group on the Main Market of Bursa Malaysia Securities Berhad. The corporate reorganisation includes the following: (continued) (iii) On 20 May 2011, pre-listing restructuring had taken place as follows: (a) Transfer of Felda Global Ventures Perlis Sdn Bhd’s (‘FGVP’) sugar cane cultivation operations in Chuping including certain assets and liabilities to Kilang Gula Felda Perlis Sdn Bhd (“KGFP”) for a purchase consideration of RM106,209,770, which was satisfied through the issuance of 25.4 million new KGFP shares at issue price of RM4.19 per share. FGVP had nominated FGVH to receive KGFP’s shares. The transfer of the sugar cane cultivation operations in Chuping to KGFP resulted in a dilution of equity interest in the sugar cane cultivation operations from 100% to 82% in the Group and is regarded as a transaction with non-controlling interest. The loss of RM19,084,000 arising from the dilution of equity interest has been recognised in retained earnings of the Group. (b) Acquisition of the entire equity interest in MSM and KGFP by MSMH for a purchase consideration of RM1,230,992,000 and RM791,937,300 respectively satisfied by issuance of a total of 578.0 million new MSMH shares at issue price of RM3.50 per share. The acquisition of the entire equity interest in MSM by MSMH resulted in an accretion of equity interest in MSM from 80% to 82% in the Group and is regarded as a transaction with non-controlling interest. The gain of RM14,956,000 arising from the accretion of equity interest has been recognised in retained earnings of the Group. The acquisition of the entire equity interest in KGFP by MSMH resulted in an accretion of equity interest in KGFP from 74.5% to 82% in the Group and is regarded as a transaction with non-controlling interest.The gain of RM27,054,000 arising from the accretion of equity interest has been recognised in retained earnings of the Group. (c) Dividend-in-specie was declared by Felda Holdings Bhd (“FHB”), an associate of the Group, to its shareholders for its 36.2 million MSMH shares amounting to RM126,709,968, of which 17.7 million of MSMH shares amounted to RM62,088,000 was received by the Group. The declaration of dividend-in-specie by FHB resulted in an accretion of equity interest in MSMH from 82% to 85% in the Group and is regarded as a transaction with non-controlling interest. The loss of RM27,759,000 arising from the accretion of equity interest has been recognised in retained earnings of the Group. (iv) On 28 June 2011, MSMH was listed after undertaking a public offering through: (a) the issuance of 125 million shares by MSMH; and (b) the selling of 131 million of MSMH shares by the Company; at the price of RM3.50 per share, for public issue and of which 51.8 million of MSMH shares was subscribed/acquired by KPF, resulting in a total cash inflows RM891,415,000. The issuance of shares by MSMH and selling of MSMH shares by the Company resulted in a dilution of equity interest in MSMH from 85% to 51% in the Group and is regarded as a transaction with non-controlling interest. The gain of RM280,550,000 arising from the dilution of equity interest has been recognised in retained earnings of the Group. Notes to the Financial Statements for the financial year ended 31 December 2012