MISC Annual Report 2019

8. GAIN ON ACQUISITION OF BUSINESSES (a) The Corporation had on 26 November 2018 signed a sale and purchase agreement of LNG Portovenere with LNG Shipping S.p.A. with a purchase price of RM130,283,000. This transaction constitutes a business acquisition and the Group recognised gain on acquisition of business of RM23,731,000. (b) In the previous financial year, 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. (c) In the previous financial year, 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. 9. (a) FINANCE INCOME Group Corporation 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Interest income: Subsidiaries – – 106,839 160,446 Third party 17,779 13,781 17,779 13,781 Deposits 134,993 104,721 54,045 35,752 Unwinding of discount on trade and other receivables 16,477 14,405 16,477 14,405 Total finance income 169,249 132,907 195,140 224,384 (b) FINANCE COSTS Group Corporation 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Interest expense on loans and borrowings from: Subsidiaries – – 103,898 195,643 Banks and financial institutions 442,191 394,559 23,755 11,657 Interest on lease liabilities (Note 19(c)) 42,112 – 1,763 – Total finance costs 484,303 394,559 129,416 207,300 10. TAXATION Group Corporation 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Current income tax: Malaysian income tax 47,549 52,007 1,496 – Foreign tax 34,621 11,150 – – (Over)/Under provision in prior year: Malaysian income tax (7,705) 701 – – Foreign tax 1,742 – – – 76,207 63,858 1,496 – Deferred tax (Note 28): Relating to origination and reversal of temporary differences (8,770) (18,475) – – Under provision in prior year 8,619 14,389 – – (151) (4,086) – – Taxation for the year 76,056 59,772 1,496 – 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 2019 2018 2019 2018 RM’000 RM’000 RM’000 RM’000 Profit before taxation 1,512,323 1,344,113 1,865,910 1,252,261 Taxation at Malaysian statutory tax rate of 24% 362,958 322,587 447,818 300,543 Effect of different tax rates in other countries/jurisdictions (32,144) (98,281) – – Income not subject to tax: Tax exempt shipping income (570,322) (624,890) (148,113) (155,150) Others (21,187) (80,648) (397,423) (347,702) Expenses not deductible for tax purposes 445,497 622,281 152,495 240,588 Effect of share of results of joint ventures (60,151) (67,988) – – Utilisation of previously unrecognised tax losses (53,281) (28,379) (53,281) (38,279) Deferred tax assets recognised on unutilised investment tax allowances (1,624) – – – Deferred tax assets not recognised during the year 3,654 – – – Deferred tax under provided in prior year 8,619 14,389 – – Income tax (over)/under provided in prior year (5,963) 701 – – Taxation for the year 76,056 59,772 1,496 – NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 NOTES TO THE FINANCIAL STATEMENTS 31 December 2019 FINANCIAL STATEMENTS MISC BERHAD PEOPLE. PASSION. POSSIBILITIES ANNUAL REPORT 2019 286 287