MISC Annual Report 2018

NOTES TO THE FINANCIAL STATEMENTS 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 263 MISC BERHAD ANNUAL REPORT 2018 262 8. GAIN ON ACQUISITION OF BUSINESSES (a) The Corporation had on 29 June 2018 signed a sale and purchase agreement of FSO Mekar Bergading with Hess Exploration and Production Malaysia B.V. with a purchase price of RM1,070,475,000. This transaction constitutes a business acquisition and the Group recognised gain on acquisition of business of RM79,427,000. (b) The Corporation had on 26 November 2018 signed a sale and purchase agreement of LNG Lerici with LNG Shipping S.p.A. with a purchase price of RM126,877,000. This transaction constitutes a business acquisition and the Group recognised gain on acquisition of business of RM20,574,000. 9. (a) FINANCE INCOME Group Corporation 2018 RM'000 2017 RM'000 2018 RM'000 2017 RM'000 Interest income: Subsidiaries - - 160,446 148,127 Joint ventures - 1,595 - 1,595 Third party 13,781 8,477 13,781 8,477 Deposits 104,721 86,417 35,752 28,029 Unwinding of discount on trade and other receivables 14,405 - 14,405 - Total finance income 132,907 96,489 224,384 186,228 (b) FINANCE COSTS Group Corporation 2018 RM'000 2017 RM'000 2018 RM'000 2017 RM'000 Interest expense on loans and borrowings from: Subsidiaries - - 195,643 158,914 Banks and financial institutions 394,559 245,333 11,657 1,658 Unwinding of discount on provisions - 19,680 - 19,680 Total finance costs 394,559 265,013 207,300 180,252 10. TAXATION Group Corporation 2018 RM'000 2017 RM'000 2018 RM'000 2017 RM'000 Current income tax: Malaysian income tax 52,007 38,062 - - Foreign tax 11,150 7 - - Under/(over) provision in prior year: Malaysian income tax 701 (7,114) - - 63,858 30,955 - - Deferred tax: Relating to origination and reversal of temporary differences (18,475) (14,504) - - Under/(over) provision in prior year 14,389 (3,562) - - (4,086) (18,066) - - Taxation for the year 59,772 12,889 - - Domestic income tax is calculated at the statutory tax rate of 24% of the estimated assessable profit for the financial year. A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Corporation is as follows: Group Corporation 2018 RM'000 2017 RM'000 2018 RM'000 2017 RM'000 Profit before taxation 1,344,113 2,003,580 1,252,261 1,663,552 Taxation at Malaysian statutory tax rate of 24% 322,587 480,859 300,543 399,252 Effect of different tax rates in other countries/jurisdictions (98,281) (320,081) - - Income not subject to tax: Tax exempt shipping income (624,890) (718,730) (155,150) (186,489) Others (80,648) (73,147) (347,702) (426,497) Expenses not deductible for tax purposes 622,281 770,703 240,588 265,293 Effect of share of results of associates and joint ventures (67,988) (46,748) - - Utilisation of previously unrecognised tax losses (28,379) (51,559) (38,279) (51,559) Deferred tax assets recognised on unutilised investment tax allowances - (17,732) - - Deferred tax under/(over) provided in prior year 14,389 (3,562) - - Income tax under/(over) provided in prior year 701 (7,114) - - Taxation for the year 59,772 12,889 - -