Page 204 - 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

23 RECEIVABLES (CONTINUED)

The receivables are denominated as follows:
Group Company
2020 2019 2020 2019
RM’000 RM’000 RM’000 RM’000

Ringgit Malaysia 193,110 265,336 176 887
US Dollar 33,751 25,102 - -
Others 316 135 - -
202 227,177 290,573 176 887

Credit term of trade receivables range between 30 to 60 days (2019: 30 to 60 days).
MSM MALAYSIA HOLDINGS BERHAD Annual Report 2020
(a) On 28 February 2014, the Company signed the Gas Supply Agreement (‘GSA’) with a natural gas supplier for the supply
and delivery of natural gas to the Company. The GSA is effective from March 2014 and will expire on 31 December 2022.
An advance payment of RM8,198,000 was made to the natural gas supplier for the construction of the gas distribution
pipeline and metering facilities to enable the supply of the natural gas to the Company. The ownership of the gas
distribution pipeline and metering facilities constructed shall remain vested with the natural gas supplier. The advance
payment is amortised over 106 months on a straight line basis starting from March 2014 based on the tenure of the
GSA. On 20 November 2019, the Board has resolved to cease the operation of its raw sugar refining division of a
subsidiary from July 2020 and determined that the advance payment will be amortised over a period of 8 months
from November 2019 onwards to June 2020 instead of 38 months from November 2019 to December 2022.
As at 31 December 2020, the remaining balance of advance payment is nil (2019: RM2,204,154).
(b) Included in non-current advance payment is an amount of RM Nil (2019: RM301,124) which is related to down payment
paid for purchase of property, plant and equipment.
(c) Included in deposits are deposits for sugar futures trading facilities of RM Nil (2019: RM7,181,000).
(d) Reconciliation of loss allowance
(i) Trade receivables using simplified approach

The Group and the Company applies MFRS 9 simplified approach to measuring expected credit losses which uses
a lifetime expected loss allowance for trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk
characteristics and the days past due.
The expected loss rates are based on the payment profiles of revenue earned over a period of 24 months before
31 December 2020 or 31 December 2019 respectively and the corresponding historical credit losses experienced
within this period. The historical loss rates were not adjusted to reflect forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivables, as the Group has not
identified any forward looking assumptions which correlate to the historical loss rates.