FGV Annual Report 2012

115 F i n a n c i a l S t a t e m e n t s 2 0 1 2 P e n y a t a K e w a n g a n 52 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) On 2 January 2012, the Company entered into an addendum to the LLA (“LLA Addendum”) to acquire certain assets and liabilities other than biological assets of the plantation estates owned by FELDA for a purchase consideration equivalent to the carrying values of the assets and liabilities acquired as at 31 December 2011 amounting to RM54,690,000, removing the requirement for consents from State Authority prior to commencement of LLA and amending the definition. As a result, the Land Lease Agreement (‘LLA’) commenced on 1 January 2012. On 6 January 2012, as part of its restructuring process, FELDA, the Company and Felda Global Ventures Plantations (Malaysia) Sdn. Bhd. (“FGVPM”), a subsidiary of the Company had entered into a novation agreement whereby all benefits, rights, title, interest, obligations, undertakings, covenants and liabilities of the Company under the LLA and LLA Addendum shall be transferred by the Company to FGVPM from 1 January 2012 and FELDA has consented to the transfer of all of the Company’s benefits, rights, title, interest, obligations, undertakings, covenants and liabilities to FGVPM subject to the terms and conditions of the novation agreement. The acquisition of plantation estates met the criteria for predecessor accounting. The difference between the fair value of the purchase consideration and carrying the value of the net assets acquired amounting to RM2,088.97 million, which was recognised as a reorganisation reserve. (b) On 9 January 2012, the Board of Directors of FELDA had approved for the conversion of all RCPS and RCCPS issued by FGVH to FELDA into ordinary shares. The number of RCPS and RCCPS to be converted is 329,949,500 and 570,590,000 respectively, at a nominal value of RM0.01 and a premium of RM0.99 per share. The RCPS and RCCPS conversion was completed as at 17 May 2012, resulting in an increase in the issued and paid share capital of FGVH from RM1,767,612,000 to RM2,668,151,500. Consequently, the difference between the carrying value and the redemption value amounting to RM9.75 million was debited to profit or loss, and an amount of RM9.0 million which is equal to the par value of the RCPS and RCCPS redeemed was transferred from retained earnings to capital reserves in accordance with the requirement of the Companies Act 1965. (c) On 18 January 2012, the Company was converted to a public company for purpose of listing on the Main Market of Bursa Malaysia Securities Berhad (“Listing”). Subsequently, the Company has changed its name to Felda Global Ventures Holdings Berhad. (d) On 20 January 2012, the Board of Directors of the Group approved a proposed corporate reorganisation scheme to restructure and to list FGVH on the Main Market of Bursa Malaysia Securities Berhad, which was subsequently updated by the Board of Directors on 26 March 2012. (e) A Supply and Delivery Agreement (‘SDA’) dated 22 February 2012 was signed between FGVPM, a wholly-owned subsidiary of the Company and Felda Palm Industries Sdn. Bhd. (‘FPISB’), a subsidiary of Felda Holdings Bhd, an associate of the Company. The agreement stipulates that FPISB shall sell all of its CPO, produced from FFB supplied by FGVPM as well as other sources of supply, to FGVPM. The basis of the price of the delivered CPO shall apply the same principle used to derive FFB price. FFB supplied to FPISB by FGVPM shall be recognized as FFB sales revenue by the latter. Prior to entering into SDA, no revenue from CPO sales and no cost of sales relating to CPO purchases were recognised by FGVH. In addition to the revenue FGVPM recognises from the sale of CPO that FPISB produces using the FFB that FGVPM supplies to it, FGVPM also recognises revenue from resale of CPO that FPISB produces from FFB it sources from other suppliers. As for the CPO produced from FFB sourced from other suppliers, the cost of sales is recognised from the purchase cost charged by FPI. (f) On 16 May 2012, FGVH’s authorised ordinary share capital was increased from RM2,000,000,000 comprising 2,000,000,000 ordinary shares of RM1 each to RM4,000,000,000 comprising 4,000,000,000 ordinary shares of RM1 each and 1 special share of RM1 each. (g) On 26 June 2012, in conjunction with the listing, the Company increase its issued and paid up capital to RM3,648,151,501 by way of public issue of 980,000,000 new shares.