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CHAIRMAN’S DELIVERING MSM MANAGEMENT DISCUSSION GROUP FINANCIAL
STATEMENT VALUE OVERVIEW & ANALYSIS REPORT

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

3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(t) Equity instruments
Ordinary shares are classified as equity.
The transaction costs of an equity transaction are accounted for as a deduction from equity, net of tax. Equity transaction
costs comprise only those incremental external costs directly attributable to the equity transaction which would
otherwise have been avoided.

(u) Contingent liabilities
The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent
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liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence and
non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not
MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent
liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be
measured reliably. However contingent liabilities do not include financial guarantee contracts.
(v) Segment reporting
Segment information is presented in a manner that is consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Group Chief Executive Officer.

(w) Provisions
Provisions are recognised when:
• the Group has a present legal or constructive obligation as a result of past events;
• it is probable that an outflow of resources will be required to settle the obligation; and
• a reliable estimate of the amount can be made.
Where the Group expects a provision to be reimbursed (for example, under an insurance contract), the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for
future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.
The increase in the provision due to passage of time recognised as finance cost.
(x) Onerous contracts

The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are
less than the unavoidable costs of meeting the obligations under the contract.