MSM Malaysia Holdings Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 21 LOANS DUE FROM SUBSIDIARIES (CONTINUED) The interest rates charged during the financial year were as follows: 2019 2018 % % per annum per annum Term loan 5.80 5.80 Islamic term loan 4.45 - 5.64 4.48 - 4.99 Revolving credit loans 4.48 4.23 - 4.48 (a) Revolving credit loans to subsidiaries are unsecured, with interest charged at a rate which is at the prevailing rate based on a licensed bank’s revolving credit facility rate on the day of the drawing. Subject to the provisions of the agreements, the amount of the facility shall be repaid at the end of every six (6) months from the date of the first drawing. (b) Term loan is unsecured, with interest charged at a rate which is at the prevailing rate based on a licensed bank’s term loan facility rate on the day of the drawing. Subject to the provisions of the agreements, the amount of the facility shall be repaid commencing from the seventh (7) year from the date of the first drawing and shall be repaid fully at the tenth (10) year. (c) Islamic term loan is unsecured, with interest charged at a rate which is at the prevailing rate based on a licensed bank’s Islamic term loan facility rate on the day of the drawing. Subject to the provisions of the agreements, the amount of the facility shall be repaid commencing from 2019 for a period of 8 years. (d) Reconciliation of loss allowance Loan due from subsidiaries using general 3 stage approach The loss allowance for loan due from subsidiaries as at 31 December 2019 reconciles to the opening loss allowance for that provision as follows: Under- Non- Performing performing performing Total RM’000 RM’000 RM’000 RM’000 Opening loss allowance as at 1 January 2018 (calculated under MFRS 9) - - - - Individual financial assets transferred to non-performing (credit-impaired financial assets) (Notes 1a, 8) - (32,709) - (32,709) Closing loss allowance as at 31 December 2018 - (32,709) - (32,709) Individual financial assets transferred to non-performing (credit-impaired financial assets) (Notes 1a, 8) - (50) - (50) Reversal of loss allowance (Notes 1b, 8) - 32,340 - 32,340 Closing loss allowance as at 31 December 2019 - (419) - (419) Note 1a: The decrease in the loss allowance of RM419,000 (2018: RM32,709,000) is due to moving of assets with total gross carrying amount of RM37,030,000 (2018: RM1,090,517,000) being measured at 12 months ECL to lifetime ECL. Note 1b: The reversal of loss allowance of RM32,340,000 is recorded after considering the repayment plan agreed by the Company with the subsidiaries and recent repayments that have been received from the Company’s subsidiaries. 185 FINANCIAL STATEMENTS 08