PRG Holdings Berhad Annual Report 2019

ANNUAL REPORT 2019 153 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 cont’d 22. RESERVES Group Company 2019 2018 2019 2018 Note RM’000 RM’000 RM’000 RM’000 Non-distributable: Warrants reserve (a) - 3,713 - 3,713 Exchange translation reserve (b) (4,080) (2,881) - - Fair value reserve (c) (21,875) - (21,875) - (25,955) 832 (21,875) 3,713 Distributable: Retained earnings 49,862 47,924 60,552 60,962 23,907 48,756 38,677 64,675 (a) Warrants reserve Warrants reserve arose from a renounceable rights issue of 54,320,100 new ordinary shares of RM0.50 each together with 54,320,100 free new detachable warrants in the previous financial years. The fair value of RM0.08 per Warrant is determined using the Black Scholes pricing model based on the following key assumptions: Share price RM0.73 per Share Exercise price RM0.75 per Warrant Tenure 5 years Interest rate 4.25% Expected volatility of the Company’s share price 16.23% In the previous financial years, the Company undertook a share split exercise involving the subdivision of every one (1) existing Warrant with an exercise price of RM0.75 each into two (2) Warrants with an exercise price of RM0.375 each. Consequently, the fair value had been adjusted to RM0.04 per Warrant. The Warrants has expired on 6 July 2019 and any Warrants not exercised was thereafter lapsed and ceased to be valid for any purpose. Upon expiry of the Warrants, the balance within the warrants reserve account has been transferred to the retained earnings account during the financial year. (b) Exchange translation reserve The exchange translation reserve is used to record foreign currency exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items, which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. (c) Fair value reserve The fair value reserve arose from gain or loss of equity instrument measured at fair value through other comprehensive income.