MISC Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS HIGHLIGHTS OF THE YEAR OUR BUSINESS OUR LEADERSHIP OUR PERFORMANCE OUR COMMITMENT TO SUSTAINABILITY OUR GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 50 TH ANNUAL GENERAL MEETING 225 MISC BERHAD ANNUAL REPORT 2018 224 1. CORPORATE INFORMATION The Corporation is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad ("Bursa Malaysia"). The registered office of the Corporation is located at Level 25, Menara Dayabumi, Jalan Sultan Hishamuddin, 50050 Kuala Lumpur. The immediate and ultimate holding company of the Corporation is Petroliam Nasional Berhad ("PETRONAS"), a company incorporated and domiciled in Malaysia. The principal activities of the Corporation consist of shipowning, ship operating and other activities related to shipping services and operating offshore floating terminals. The principal activities of the subsidiaries, associates and joint arrangements are described in Notes 40, 41 and 42 respectively. There have been no significant changes in the nature of the principal activities during the financial year. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 27 February 2019. 2. SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of preparation The financial statements of the Group and of the Corporation comply with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act, 2016 in Malaysia. These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of the Bursa Malaysia Securities Berhad. The financial statements of the Group and of the Corporation have been prepared on a historical cost basis unless otherwise indicated in the accounting policies below. The functional currency of the Corporation is United States Dollar ("USD"). The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The Group and the Corporation's financial statements are presented in Ringgit Malaysia ("RM"). 2.2 Changes in accounting policies and effects arising from the adoption of new and revised MFRSs The Group and the Corporation had on 1 January 2018 adopted new MFRSs, amendments to MFRS and IC Interpretation (collectively referred to as "pronouncements") that have been issued by the Malaysian Accounting Standards Board ("MASB") as follows: • MFRS 9: Financial Instruments • MFRS 15: Revenue from Contracts with Customers • Amendments to MFRS 15: Revenue from Contracts with Customers: Clarifications to MFRS 15 • Amendments to MFRS 140: Investment Property: Transfers of Investment Property • IC Interpretation 22: Foreign Currency Transactions and Advance Consideration The adoption of the above pronouncements did not have any significant financial impact to the Group and the Corporation other than as set out below: 2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D.) 2.2 Changes in accounting policies and effects arising from the adoption of new and revised MFRSs (cont'd.) (i) Classification and measurement of financial assets on the date of initial application of MFRS 9 MFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. MFRS 9 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (“FVOCI”) and fair value through profit or loss (“FVTPL”). The standard eliminates the existing MFRS 139 categories: • held to maturity investments; • loans and receivables; and • available for sale ("AFS") financial assets. The Group and the Corporation have elected to classify their equity investments as FVTPL and subsequent changes in the investments' fair value are recognised in profit or loss. The adoption of MFRS 9 has fundamentally changed the Group and the Corporation's accounting for impairment losses for financial assets by replacing MFRS 139's incurred loss approach with a forward-looking expected credit loss ("ECL") approach. MFRS 9 requires the entity to recognise allowances for ECLs for all debt instruments not held at FVTPL and contract assets (amount due from customers on contracts). As allowed by the transitional provision of MFRS 9, the Group and the Corporation elected not to restate the comparatives. Effects arising from the initial application of MFRS 9 to the statements of financial position are as follows: 31 December 2017 RM '000 Remeasurement 1 January 2018 RM '000 Group Other non-current financial assets 237,747 26,268 264,015 Finance lease receivables 13,862,350 (71,040) 13,791,310 Trade and other receivables 4,161,775 (98,528) 4,063,247 Other reserves  (5,959,545) 53,036 (5,906,509) Retained profits (19,961,391) 89,601 (19,871,790) Non-controlling interests (1,060,566) 663 (1,059,903) Corporation Other non-current financial assets 2,031,343 26,268 2,057,611 Trade and other receivables 3,528,387 (95,689) 3,432,698 Other reserves (1,981,759) 53,036 (1,928,723) Retained profits (10,744,934) 16,385 (10,728,549) NOTES TO THE FINANCIAL STATEMENTS 31 December 2018