FGV Annual Report 2016

ANNUAL INTEGRATED REPORT 2016 339 FINANCIAL REPORT NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016 59 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED) On 8 April 2016, the Board of Directors of the Company announced that as the conditions precedent set out in SPA could not be fulfilled within the CP Completion Date nor has the same been waived, the Purchaser has issued termination notices, both dated 8 April 2016 to the Vendors and Zhong Hai to terminate SPA in accordance with the relevant provision of SPA. The Purchaser will not be pursuing or taking any legal action pursuant to the above mentioned termination and would also not have any financial impact on FGV. (c) On 30 March 2016, the Board of Directors of the Company announced that two (2) dormant indirect subsidiaries of FGV, namely Felda Plantations Sdn. Bhd. and Felda Iffcoallana Malaysia Sdn. Bhd. have been placed under members' voluntary winding-up pursuant to Section 254(1)(b) of the Companies Act, 1965. A liquidator has been appointed for the subsidiaries and the members' voluntary winding-up of the subsidiaries will not have any material impact on the net assets and earnings per share of FGV for the financial year ending 31 December 2016. (d) On 3 May 2016, the Board of Directors of the Company announced that FGV and FELDA ("FELDA Group") have withdrawn the Roundtable Sustainable Palm Oil ("RSPO") – Principles and Criteria ("P&C") certificates of 58 complexes located throughout Malaysia. FELDA Group remains a member of RSPO and continues its commitment to RSPO-P&C. This exercise does not affect FELDA Group's RSPO Supply Chain Certification System ("SCCS") certificate of its kernel crushing plants and downstream refineries. FELDA Group is currently addressing all sustainability issues along the supply chain. This exercise allows a more inclusive certification between commercially managed plantations by FGV and FELDA smallholders. (e) On 23 November 2016, Group President/Chief Executive Officer of the Company confirmed there were indeed some unusual stock lossess which had been detected in Felda Iffco Gida Sanayi, Turkey, a subsidiary of Felda Iffco Sdn Bhd ("FISB Group"), a joint venture of the Company. Subsequently, FISB Group had appointed KPMG Turkey ("KPMG") to commence a forensic investigation to investigate the fraud losses. The report on factual finding performed by KPMG to identify and quantify the losses had been finalised in December 2016 and forensic report completed in January 2017. As a result, stock losses of TL71.96 million (RM91.32 million) and overstatements of receivables of TL11.48 million (RM14.56 million) had been identified by the Group due to the manipulation of financial statements perpetrated by previous management of Felda Iffco Gida Sanayi from the beginning financial year 2011 to 2016, which were considered as deliberate misrepresentation of facts and fraud. Accordingly, the impact of errors relating to the fraud perpetrated in prior financial years of RM36.8 million had been adjusted retrospectively in prior year's financial statements (Note 58). (f) On 8 December 2016, the Board approved the proposed divestment of the 70% equity interest in FGV Cambridge Nanosystems Limited ("FGV CNS"), an indirect wholly-owned subsidiary of the Company. As at 31 December 2016, FGV CNS has been classified as asset held for sale in the statements of financial position as the criteria under FRS 5 "Non-current assets held for sale" has been met. 60 APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 17 April 2017.