MSM Malaysia Holdings Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019 40 SEGMENT INFORMATION (CONTINUED) Analysis of revenue The analysis of revenue by geographical locations is as follows: Group 2019 2018 RM’000 RM’000 Malaysia 1,834,917 2,032,053 Asia 145,954 119,676 Australia 12,201 30,100 Europe 13,929 29,219 Others 794 4,417 2,007,795 2,215,465 All non-current assets other than financial instruments are located in Malaysia. 41 EFFECTS OF CHANGES IN ACCOUNTING POLICY The Group has applied MFRS 16 with the date of initial application of 1 January 2019 by applying the full retrospective transition method. The Group and Company as a lessee Under the full retrospective transition method, the 2018 comparative information have been restated to reflect the new requirements of MFRS 16 where the Group is a lessee. On adoption of MFRS 16, the Group recognised lease liabilities in relation to leases which has previously been classified as ‘operating leases’ under the principles of MFRS 117 Leases.These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the respective lease commencement dates. The Group and Company have applied the practical expedient in applying MFRS 16 which at the date of initial application, no reassessments were made on whether existing contracts are, or contain, lease in accordance with MFRS 16. Accordingly, the Group and Company had applied this Standard to contracts that were previously identified as leases applying MFRS 117 Leases and IC Interpretation 4 Determining whether an Arrangement contains a Lease, while did not apply MFRS 16 to existing contracts that did not meet the definition of a lease under MFRS 117 and IC 4, although these contracts may meet the definition of lease under MFRS 16. The Company as a lessor Under MFRS 16, the Company (acting as a sub-lessor) is required to assess the lease classification of a sublease with reference to the ROU asset, not the underlying asset. On transition, the Company reassessed the lease classification of a sublease contract. The Company concluded that the sublease is a finance lease under MFRS 16 and the sublease contract was accounted for as a new finance lease entered into at the lease commencement date. Accordingly, the Company derecognises the ROU asset related to the head lease, and recognises a receivable at an amount equal to the net investment in the sublease. The net impact is adjusted retrospectively. MSM Malaysia Holdings Berhad | Annual Report 2019 218