FGV Audited Financial Statements 2020

24 INVESTMENT IN SUBSIDIARIES (CONTINUED) (c) Liquidation, restructuring and disposal of subsidiaries in previous financial year (continued) On the disposal of FGVCO, the Group recognised a gain of RM3.66 million arising from realisation of accumulated foreign exchange difference in foreign exchange reserve to profit or loss. The Company recognised a loss on disposal of RM56.4 million being the difference between the net proceeds from disposal of RM44.8 million and the derecognition of cost of investment of RM101.2 million. The remaining proceeds from disposal of RM52.4 million was used to pay the loan to FGV Capital Sdn. Bhd., a wholly- owned subsidiary of the Company. (vi) On 23 September 2019, the Board of Directors of the Company announced that Plantation Resorts Sdn. Bhd. and F.S. Oils Sdn. Bhd., both indirect subsidiaries of the Company have been placed under Members’ voluntary winding up pursuant to Section 439(1)(b) of the Companies Act 2016. The liquidators had been appointed for both companies on the same day. The voluntary winding up of both companies did not have any material impact on the earnings and net assets of the Group for the financial year ended 31 December 2019. (vii) On 14 November 2019, the Board of Directors of the Company announced that Felda Global Ventures Indonesia Sdn. Bhd., a wholly-owned subsidiary of the Company had been placed under Members’ voluntary winding up pursuant to Section 439(1)(b) of the Companies Act 2016. The liquidator has been appointed for the company on the same day. The voluntary winding up of the subsidiary did not have any material impact on the earnings and net assets of the Group for the financial year ended 31 December 2019. (d) Reversal of impairment/(impairment) on investment in subsidiaries (i) FGV Sugar Sdn. Bhd. (“FGV Sugar”) and MSM Malaysia Holdings Berhad (“MSMH”) The recoverable amounts of the Company’s investment in subsidiaries in FGV Sugar and MSMH were reassessed during the financial year. The recoverable amounts of the investments were determined based on value in use of the investments, being the holding companies of the sugar business, computed based on the net present value of the projected future cash flows derived from the sugar business, adjusted for financing and tax and discounted at 10.0%. The other key assumptions used are as disclosed in Note 23(a)(i) of the financial statements. Based on the value in use assessments of FGV Sugar andMSMH, the recoverable amounts were computed at RM885,300,000 and RM208,500,000 respectively, resulting in reversal of impairment of RM47,300,000 and RM12,400,000 in the Company’s investment in FGV Sugar and MSMH respectively. (ii) FGV Research Sdn. Bhd. (“FGV Research”) During the financial year, the Company assessed the investment in FGV Research for impairment, arising from the shortfall of the net tangible asset of FGV Research. The recoverable amount of the investment was determined based on the value in use of the investment, computed based on the net present value of the projected future cash flows derived from the business, adjusted for financing and tax and discounted at 12%. Based on the value in use assessment, the recoverable amount was computed at RM22,500,000, resulting in impairment of RM5,500,000 in the carrying value of the Company’s investment in FGV Research. Based on sensitivity analysis performed by the Company, the impact of 1% increase in the discount rate used, which was a key assumption, would have resulted in additional impairment loss of approximately RM7,500,000. 127 Notes to the Financial Statements For The Financial Year Ended 31 December 2020 Audited Financial Statements 2020