FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 FINANCIAL STATEMENTS 281 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 42 BORROWINGS (CONTINUED) During the financial year, MSM Malaysia Holdings Berhad (“MSMH”), an indirect subsidiary of the Company, was not in compliance to certain financial covenants for its Islamic term loans amounting to RM404,742,000. However, letter of indulgence dated 3 November 2017 was received from facility agent allowing the compliance to financial covenants to be deferred until 31 December 2018 and that the financial covenants will be required to be met for the 12 month period ending 31 December 2019 and all times thereafter but subject to the following conditions: a) No dividend declaration and/or payment by MSMH without prior written consent from the financier until the financial covenants are complied with; b) Letter of undertaking (“LOU”) from the Company to complete the construction of the new sugar refinery in Johor by Quarter 2 2018; and c) MSMH’s ability to perform all obligations under and comply with all terms and conditions governing the facilities. As at 31 December 2017, MSMH met all the conditions stipulated in the letter of indulgence and therefore, the deferral of financial covenants continue to be effective. The carrying amounts and fair value of the total borrowings are as follows: Group Carrying amount Fair value 2017 RM’000 2016 RM’000 2017 RM’000 2016 RM’000 Islamic short term trade financing 2,572,665 3,290,323 2,572,665 3,290,323 Short term trade financing 722,059 397,994 722,059 397,994 Islamic term loans 814,404 199,366 814,404 199,366 Term loans 1,028 1,026 1,028 1,026 Finance lease liabilities - 2,423 - 2,423 Total 4,110,156 3,891,132 4,110,156 3,891,132 Company Carrying amount Fair value 2017 RM’000 2016 RM’000 2017 RM’000 2016 RM’000 Islamic short term trade financing - 540,900 - 540,900