2019 UEM Edgenta Annual Report

234 235 UEM EDGENTA AT A GLANCE MESSAGE FROM OUR LEADERSHIP STRATEGIC FOCUS OPERATIONAL REVIEW SUSTAINABILITY EFFORTS CORPORATE GOVERNANCE INTRODUCTION FINANCIAL REVIEW ADDITIONAL INFORMATION Notes to the Financial Statements For the year ended 31 December 2019 Notes to the Financial Statements For the year ended 31 December 2019 UEM Edgenta Berhad Annual Report 2019 32. DEFERRED TAX (CONT’D.) Deferred tax assets have not been recognised in respect of the following items: Malaysian Companies Group 2019 RM’000 2018 RM’000 Unused tax losses 54,413 43,343 Unabsorbed capital allowances 479 189 Others 4,917 3,379 59,809 46,911 Deferred tax of 24% 14,354 11,259 Unused tax losses At the reporting date, the Group has tax losses of approximately RM54.4 million (2018: RM43.3 million) that are available for offset against future taxable profits of the companies in which the losses arose, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The availability of unused tax losses for offsetting against future taxable profits of the respective subsidiaries in Malaysia is subject to no substantial changes in shareholdings of those subsidiaries under the Income Tax Act, 1967 and guidelines issued by the tax authority. Effective from year of assessment 2019 as announced in the Annual Budget 2019, the unused tax losses of the Company as at 31 December 2018 and thereafter will only be available for carry forward for a period of 7 consecutive years. Upon expiry of the 7 years, the unabsorbed losses will be disregarded. The use of tax losses of subsidiaries in other countries is subject to the agreement of the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the subsidiaries operate. Unrecognised temporary differences relating to investments in subsidiaries and associates At the reporting date, no deferred tax liabilities have been recognised that would be payable on the undistributed profits of subsidiaries and associates of the Group. The Group has determined that these undistributed profits will not be distributed in the foreseeable future. 33. SHARE CAPITAL AND SHARE PREMIUM Number of ordinary shares Amount 2019 ‘000 2018 ‘000 2019 ‘000 2018 ‘000 Group and Company Issued and fully paid up At 1 January/31 December 831,624 831,624 268,074 268,074 The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets. 34. CAPITAL AND OTHER MERGER RESERVE The acquisitions of Opus Group Berhad (“Opus”) and Edgenta PROPEL Berhad in prior years, which was accounted for using the pooling of interest method, gave rise to the following: (a) Capital reserve This reserve represents the excess of issue price of the Company’s shares over the par value in accordance with Section 60(4)(a) of the Companies Act, 1965. This reserve had been partially set off against the merger deficit reserve in prior years for the purpose of presentation in the financial statements of the Group. (b) Other merger reserve This reserve represents the excess of fair value of the Company’s shares at the acquisition date over the issue price. This reserve had been fully set off against the merger deficit reserve for the purpose of presentation in the financial statements of the Group. 35. OTHER RESERVES Put option reserve RM’000 (Note a) Statutory reserve RM’000 (Note b) Foreign currency translation reserve RM’000 (Note c) Other reserve RM’000 (Note d) Total RM’000 Group At 1 January 2018 (14,635) 279 (7,610) 9,163 (12,803) Foreign currency translation - - (457) - (457) Put option granted to non-controlling interests of a subsidiary 12,242 - - - 12,242 At 31 December 2018 (2,393) 279 (8,067) 9,163 (1,018) Foreign currency translation - - 1,457 - 1,457 Put option granted to non-controlling interests of a subsidiary 2,976 - - - 2,976 At 31 December 2019 583 279 (6,610) 9,163 3,415 (a) Put option reserve This relates to the put option issued to the non-controlling interests over the shares of a subsidiary of the Group. For the purpose of presentation in the financial statements, the put option reserve is shown net of the related non-controlling interests at each reporting date as if it was acquired at that date. On 14 November 2019, the non-controlling interest of EGT has issued a notice to exercise the put option granted on its 20% shareholding in the entity. Further information is disclosed in Note 17(f).