FGV Annual Report 2014

45 Land Lease Agreement (“LLA”) Liability (continued) The land lease agreement liability is calculated based on the terms set out in the various agreements as follows: (continued) (v) Management Agreement On 21 May 2012, the Tenancy Agreement dated 6 January 2012 was supplemented by an addendum, whereby both FELDA and FGVPM acknowledged that as at 1 January 2012, FGVPM has yet to be deemed or recognised as native in respect of the lands in Sarawak to the Land Code of Sarawak. Both FELDA and FGVPM agree to exclude all the Sarawak Land from the Tenancy Agreement and the LLA. Both FELDA and FGVPM agree that no lease consideration shall be deemed payable in respect of these Sarawak Land for the tenancy for the period commencing from 1 January 2012 until FGVPM has duly obtained the status of native, all Approvals have been obtained and upon registration of the lease in accordance with the Land Code of Sarawak. Upon fulfilment of the aforementioned conditions, the Sarawak Lands will be included as part of the Remaining Existing Lands and the terms of the Land Lease Agreement shall be applicable in respect thereof and the accounting application shall remain the same as per LLA. In the event the land or any part thereof at any time become affected by any notice by acquisition under Land Acquisition Act, 1960, the lessor may not be compensated for the termination costs. (vi) Clarification Letter On 17 July 2013, 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 RM248,463,661 (2013: RM248,481,322) per annum together with 15% (2013: 15%) of yearly plantation operating profit attributable to the land. 2014 RM’000 2013 RM’000 Non-current 4,309,308 4,458,623 Current 371,521 385,767 4,680,829 4,844,390 Movement in LLA liability is as follows: At 1 January 4,844,390 5,664,769 Fair value changes charged/(credited) to profit or loss (Note 9) 115,240 (494,485) Repayment during the financial year (336,401) (325,894) Additional land acquired during the year 57,600 – At 31 December 4,680,829 4,844,390 Introduction Performance Highlights About FGV Reports Financial Statements Others Strategy and Value Creation Performance Review & Progress Foreword to Shareholders Annual General Meeting Annual Report 2014 pg 301