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SUSTAINABILITY EFFECTIVE CORPORATE FINANCIAL ADDITIONAL DETAILS OF THE ANNUAL
REPORT LEADERSHIP GOVERNANCE STATEMENTS INFORMATION GENERAL MEETING

NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Financial liabilities
Financial liabilities are recognised on the statement of financial position when, and only when, the Group becomes a
party to the contractual provisions of the financial instrument.

Financial liabilities are recognised initially at fair value, plus, in the case of financial liabilities other than derivatives,
directly attributable transactions costs.

Subsequent to initial recognition, all financial liabilities are measured at amortised cost using the effective interest
method except for derivatives in a loss position, if any, which are measured through profit or loss.
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For financial liabilities other than derivatives, gains and losses are recognised in profit or loss when the liabilities are
derecognised, and through the amortisation process.
Gains or losses arising from changes in fair value of derivatives are recognised in profit or loss within other gain/losses,
net. Net gains or losses on derivatives include exchange differences.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the statement of financial position date.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale. MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
Foreign exchange differences are capitalised to the extent of the capitalisation of the related borrowing costs.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.
To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial
liability is replaced by another from the same lender on substantially difference terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(h) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there
is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events
and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.
(i) Property, plant and equipment
Property, plant and equipment are initially stated at cost. All property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. The cost of an item of property, plant and equipment initially recognised
includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs
that are directly attributable to the acquisition, construction or production of a qualifying asset.