Fraser & Neave Holdings Bhd Annual Report 2020

221 06 financial statements ANNUAL REPORT 2020 Notes to The Financial Statements (Cont’d.) 34. SIGNIFICANT CHANGES IN ACCOUNTING POLICIES (CONTINUED) 34.1 IMPACTS ON FINANCIAL STATEMENTS Since the Group applied the requirements of MFRS 16 using modified retrospective approach with the initial application that right-of-use assets are equivalent to lease liabilities as at 1 October 2019, there are no adjustments made to the prior period presented. The following table explains the difference between operating lease commitments disclosed applying MFRS 117 at 30 September 2019, and lease liabilities recognised in the statement of financial position at 1 October 2019. RM’000 Operating lease commitments at 30 September 2019 as disclosed in the Group’s consolidated financial statements 43,481 Discounted using the incremental borrowing rate at 1 October 2019 42,077 Recognition exemption for short-term leases (5,558) Recognition exemption for leases of low-value assets (2,274) Variable lease payments based on an index or a rate (2,592) Others (2,588) Lease liabilities recognised at 1 October 2019 29,065 35. SIGNIFICANT EVENTS Significant events during the financial year are as follows: (A) Conditional sale and purchase agreement (the “SPA”) in relation to the proposed acquisition of approximately 4,453.92 hectares of leasehold land located in Mukim Chuping, Daerah Perlis, Negeri Perlis (“Ladang Chuping”) for a cash consideration of RM156,000,000 The Company's direct wholly-owned subsidiary, F&N AgriValley Sdn Bhd had on 8 October 2019 entered into a SPA with MSM Perlis Sdn Bhd (“MSM Perlis”), a direct wholly-owned subsidiary of MSM Malaysia Holdings Berhad. On 9 April 2020, the Board of the Company announced that MSM Perlis had informed F&N AgriValley Sdn Bhd that MSM Perlis had not granted any extension of time for the satisfaction of conditions precedent under the SPA and MSM Perlis had then rescinded the SPA. F&N AgriValley Sdn Bhd had received the refund of the deposit paid under the SPA. The Company and F&N AgriValley Sdn Bhd have decided that the Group will pursue and evaluate other opportunities for its proposed integrated crop and dairy farming project when such opportunities arise. (B) SPA relating to the disposal of the “TEAPOT” trademark for a cash consideration of RM83,175,000 The Board of Directors of the Company had on 29 July 2020 announced that its direct wholly-owned subsidiary, Lion Share Management Limited entered into a SPA with F&N Global Marketing Pte Limited, a direct wholly-owned subsidiary of F&NL, in relation to the disposal of the “TEAPOT” trademark as disclosed in Note 7 for a total cash consideration of RM83,175,000. Completion of the Sale and Purchase Agreement occurred on 30 September 2020. At completion, F&N Global Marketing Pte Limited entered into Trade Mark Licence Agreements (“TMLAs”) with F&N Beverages Marketing Sdn Bhd, F&N Dairies (Thailand) Limited and F&N Dairies Distribution (Singapore) Pte Ltd. respectively, all of whom are wholly-owned subsidiaries of the Company (“F&NHB Subsidiaries”), granting the F&NHB Subsidiaries a non-exclusive, non-transferable licence to use the “TEAPOT” trademark for the sole purpose of preparing, packaging, manufacturing, marketing, distributing, and selling products under the “TEAPOT” trademark in the respective territories to which each of the F&NHB Subsidiaries have been licensed.