FGV Annual Report 2017

FELDA GLOBAL VENTURES HOLDINGS BERHAD FINANCIAL STATEMENTS 308 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 56 CONTINGENT LIABILITIES (i) On 21 September 2017, Delima Oil Products Sdn. Bhd. (“DOP”), an indirect subsidiary of the Company, was sued by a company in China known as Chengdu Azonda International Trading Co., Ltd. (“Azonda”). The Plaintiff claims that they have incurred damages due to the alleged shipment issues in 2016 and 2017 amounting to RM7.0 million as well as loss of future profits approximately RM46.0 million. On 3 November 2017, DOP filed its Statement of Defence and Counterclaim and Azonda filed its Reply to Defence and Defence to Counterclaim on 15 November 2017. The matter has been fixed for trial from 30 to 31 October 2018. (ii) On 4 April 2018, Felda Global Ventures Research & Development Sdn. Bhd. (“First Defendant”) and Felda Agricultural Services Sdn. Bhd. (“Second Defendant”), the indirect subsidiaries of the Company have been served with Kuala Lumpur High Court Writ of Summons together with a Statement of Claim by Fulle Technik Sdn. Bhd. (“Plaintiff”) (“Fulle Technik Suit”). The First Defendant appointed the Plaintiff via a Service Agreement dated 30 September 2014 to develop a prototype machine known as Subsoil Fertiliser Machine (“Machines”). The Plaintiff alleges that the First Defendant have, in breach of their contractual obligations, appointed a third party via an open tender to build and supply the Machines. In this regard, the Plaintiff is claiming against the First and Second Defendants a total amount of RM23,390,000, special damages, interest at the rate of 5% per annum on general damages, interest at the rate of 2.5% per annum on special damages, exemplary damages, interest at the rate of 5% per annum on the judgment debt from the date of judgment to the full settlement, costs incurred by the Plaintiff in respect of the Fulle Technik Suit and other reliefs as deemed fit by the Court. This matter has been fixed for case management on 3 May 2018. Based on available information and on legal advice received, the Directors are of the view that there is a good chance of defending all the above claims and therefore, no provision has been made in the financial statements. The remaining claims are not material to be disclosed in the financial statements and deemed remote by the Directors. 57 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (a) On 12 May 2017, the Board of Directors of the Company announced that FGV Myanmar (L) Pte. Ltd. (“FGV Myanmar”), a wholly-owned subsidiary of FGV Investment (L) Pte. Ltd. a wholly-owned subsidiary the Company, had mutually terminated of the JVA in respect of the management and operations of the joint venture entity known as FGV Pho La Min Company Limited (“JV Co”). Pursuant to the terms of the Termination Agreement entered into between FGV Myanmar and Pho La Min Trading Company Limited dated 12 May 2017, the parties have agreed to mutually terminate the JVA and for the same to be of no further force or effect between the parties (the “Termination”). This Termination is subject to the full and satisfactory receipt of the shares and assets of the JV Co, returned proportionally between the parties in accordance with the Termination Agreement. Having considered all aspects of this Termination, the Board of Directors of the Company are of the opinion the mutual termination disclosed herein are in the best interest of the Company. The termination of this JVA would not have any financial impact on the Company and its subsidiaries.