Page 198 - MSM_AR2020

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

20 INVESTMENTS IN SUBSIDIARIES
Company
2020 2019
RM’000 RM’000
Unquoted investments, at cost
At 1 January 2,157,406 2,057,406
Additional investment in a subsidiary (Note 20(a)) - 100,000
At 31 December 2,157,406 2,157,406
196 Accumulated impairment

At 1 January 828,806 391,134
MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
Charged during the year (Note 20(b)) 27,362 437,672
At 31 December 856,168 828,806
Net investment in subsidiaries 1,301,238 1,328,600

(a) Non-cash transaction
The cost of investment includes the conversion of a loan due from a subsidiary, MSM Sugar Refinery (Johor) Sdn Bhd
(“MSM Johor”), to cost of investment in subsidiaries during the previous financial year. The Company’s intercompany
loan to MSM Johor of RM100,000,000 was capitalised into an enlarged paid up capital of MSM Johor of
RM130,000,000 by creation of 100,000,000 ordinary shares of RM1 each.
(b) Impairment in subsidiaries

Investments in subsidiaries have been impaired at the year-end as there is indication that the carrying amount will not
be fully recovered. The impairment charge has been recognised based on a combination of the value-in-use and fair
value less costs to sell methods using the following key assumptions:
Value in use
Key assumptions 2020 2019
Selling price, RM/MT 1,866 - 2,690 2,175 - 2,500
Raw sugar price, US cents/lbs 13.2 - 15.0 13.5
Sales volume, MT’000 498 - 671 41
Terminal value growth rate % 2% N/A*
Pre-tax discount rate % 12% - 13% 9%

* The value-in-use method is based on the assumption of cessation of one of the Company’s subsidiaries from July
2020 onwards.

Fair value less costs to sell
Included in the cash generating unit is the fair value less costs to sell for a piece of land of RM175,000,000
(2019: RM156,000,000).