FGV Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018 160 FGV HOLDINGS BERHAD EXAMINED OUR NUMBERS 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The principal accounting policies applied in the preparation of financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (continued) (l) Intangible asset (continued) The nature of the intangible assets are as follows: (i) Brand relates to sugar brand ‘ Prai ’ and consumer brands ‘ Saji ’ , ‘ Seri Pelangi ’ , ‘ SunFlower ’ , ‘ SunBear ’ , and ‘ Yangambi ’ acquired as part of the acquisition of the related business. (ii) Licenses is related to a license for subsidiaries to use certain technologies. (iii) Lease agreement is related to a lease agreement for a subsidiary to lease several assets to a customer, acquired as part of a business combination. Twin Rivers Technologies Holdings, Inc. ( “ TRTH ” ), is the lessor of a portion of its facility to a tenant under a non-cancellable operating lease. This property includes natural oil tanks and an oil pipeline system. (iv) Software relates to information technology ( “ IT ” ) used within the Group. (v) Intellectual property rights relates to patents for the commercialisation of high quality graphene. (vi) Land use rights relates to oil palm plantations in Indonesia. (vii) Intangible assets under development relates to IT system under development. (m) Biological assets Oil Palm The Group attribute a fair value on the fresh fruit bunches ( “ FFB ” ) at each statement of financial position date as required under MFRS 141 “ Agriculture ” . FFB are produce of oil palm trees and are harvested continuously throughout the financial year to be used in the production of crude palm oil ( “ CPO ” ). Each FFB takes approximately 22 weeks from pollination to reach maximum oil content to be ready for harvesting. The value of each FFB at each point of the FFB production cycle will vary based on the cumulative oil content in each fruit. In determining the fair values of FFB, management has considered the oil content of all unripe FFB from the week after pollination to the week prior to harvest. As the oil content accrues exponentially in the 15 days prior to harvest, the FFB prior to 15 days before harvesting are excluded in the valuation as the fair values are considered negligible. The valuation model adopted by the Group is a discounted cash flows model which includes all cash inflows, cash outflows and imputed contributory asset charges where no actual cash flows associated with the use of assets essential to the agricultural activity are accounted for. The net present value of cash flows is then determined with reference to the market value of crude palm oil at the date of harvest, adjusted for freight, extraction rates, production, transportation, contributory asset charges and other cost to sell at the point of harvest.