124 FGV HOLDINGS BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 23 INVESTMENT IN SUBSIDIARIES (CONTINUED) (c) Liquidation and restructuring of subsidiaries in the previous financial year (continued) (v) On 1 November 2021, FGV Integrated Farming Holdings Sdn. Bhd. (“FGVIF”), a wholly-owned subsidiary of the Company, acquired 37,354,500 ordinary shares constituting 100% of the entire issued and paid up share capital in MSM Perlis Sdn. Bhd. (“MSM Perlis”), a subsidiary of MSM Malaysia Holdings Berhad (“MSM”) for a cash consideration of RM181.11 million. The above transaction resulted in MSM Perlis becoming a direct subsidiary of FGVIF. This exercise did not have any effect on the issued and paid-up capital of the Company or any material effect on the earnings, net assets or gearing of the Company on a consolidated basis. (vi) On 10 November 2021, the loan between Asian Plantations Limited (“APL”) with FGV Plantations (M) Sdn. Bhd. (“FGVPM”) was restructured and new shares were subscribed by FGVPM. Both are indirect subsidiaries of the Group. Upon completion of the loan restructuring exercise and issuance of the new shares, the subsidiaries of APL, Asian Plantation (Sarawak) Sdn. Bhd. and Asian Plantation (Sarawak) II Sdn. Bhd. become direct subsidiaries of FGVPM with equity shareholdings of 91.22% and 96.93% respectively while Asian Plantation (Sarawak) III Sdn. Bhd. remains as wholly-owned subsidiary of APL. The above transaction was an internal re-organisation exercise and did not have any material effect on the earnings or net assets of the Group for the financial year ended 31 December 2021. (d) Impairment on investment in subsidiaries in the financial year (i) FGV Research Sdn. Bhd. (“FGV Research”) On 30 August 2022, due to reduction of demand on research projects for estates and mills, Board of Directors of the Company had approved for the research and development activities under FGV Research to be consolidated or merged through: • Acquisition of property, plant and equipment of FGV Applied Technology Sdn. Bhd. (“FGVAT”) by FGV R&D Sdn. Bhd. (“FGV R&D”) at the relevant market value; • Novation of all agreements entered by FGVAT to FGV R&D; and • Re-organisation of FGVAT’s workforce into FGV R&D and/or any other entities within the Group. Upon completion of the consolidation, FGVAT and FGV Research shall be liquidated in accordance with the provisions of the Companies Act 2016. Since FGVAT is a wholly owned subsidiary of FGV Research, the Company had re-assessed the investment in FGV Research for impairment. The recoverable amount of the investment was determined based on value in use of the investments, and it was assessed to approximate the value of the net tangible asset of FGVAT as at 31 December 2022. Based on the impairment assessment performed, the recoverable amount was computed at RM9,112,000, resulting in impairment of RM14,388,000 in the carrying value of the Company’s investment in FGV Research. (e) Summarised financial information on subsidiaries with material non-controlling interests Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group (other subsidiaries that have non-controlling interests are individually not significant). MSM Malaysia Holdings Berhad Group FGV Palm Industries Sdn. Bhd. 2022 2021 2022 2021 Interest held by non-controlling interest 49% 49% 28% 28%
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