FGV Annual Report 2016

ANNUAL INTEGRATED REPORT 2016 311 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 47 LAND LEASE AGREEMENT ("LLA") LIABILITY (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 26) 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 RM264,227,000 (2015: RM248,370,000) per annum together with 15% (2015: 15%) of yearly plantation operating profit attributable to the land. 2016 RM'000 2015 RM'000 Non-current 4,125,032 4,312,277 Current 282,532 314,918 4,407,564 4,627,195 Movement in LLA liability is as follows: At 1 January 4,627,195 4,680,829 Fair value changes charged to profit or loss (Note 9) 68,275 224,861 Repayment during the financial year (287,906) (278,495) At 31 December 4,407,564 4,627,195 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 95 years.