MISC Integrated Annual Report 2020

8. GAIN ON ACQUISITION OF A BUSINESS In the previous financial year, 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 a business of RM23,731,000. 9. WRITE OFF OF TRADE RECEIVABLES AND LOSS ON RE-MEASUREMENT OF FINANCE LEASE RECEIVABLES AND PROVISION FOR LITIGATION CLAIMS Following the decision by the Arbitral Tribunal as disclosed in Note 43(a)(i), the Group has written off its trade receivables and accounted for the loss on re-measurement of finance lease receivables amounting to RM846,229,000. Based on legal opinion obtained from the Group’s legal counsel, the Group has also recognised a provision for litigation claims amounting to RM1,049,248,000, representing an estimate of the outcome arising from the Awards issued by the Arbitral Tribunal and the Group’s intention to pursue an application to set aside a substantial portion of the Award. The Group is of the view that the provision will not prejudice the Group’s legal ground to challenge the decision by the Arbitral Tribunal. 10. (a) FINANCE INCOME Group Corporation 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 Interest income: Subsidiaries – – 64,128 106,839 Third party 9,505 17,779 9,505 17,779 Deposits 84,286 134,993 29,005 54,045 Unwinding of discount on trade receivables 18,821 16,477 18,821 16,477 Total finance income 112,612 169,249 121,459 195,140 (b) FINANCE COSTS Group Corporation 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 Interest expense on loans and borrowings from: Subsidiaries – – 15,263 103,898 Banks and financial institutions 344,708 442,191 14,249 23,755 Interest on lease liabilities (Note 20(c)) 23,376 42,112 1,312 1,763 Total finance costs 368,084 484,303 30,824 129,416 11. TAXATION Group Corporation 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 Current income tax: Malaysian income tax 41,199 47,549 6,214 1,496 Foreign tax 17,999 34,621 – – Under/(over) provision in prior year: Malaysian income tax 11,075 (7,705) – – Foreign tax 163 1,742 – – 70,436 76,207 6,214 1,496 Deferred tax (Note 29): Relating to origination and reversal of temporary differences (38,005) (8,770) – – Under provision in prior year 13,816 8,619 – – (24,189) (151) – – Taxation for the year 46,247 76,056 6,214 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 (loss)/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 2020 2019 2020 2019 RM’000 RM’000 RM’000 RM’000 (Loss)/profit before taxation (123,584) 1,512,323 1,918,550 1,865,910 Taxation at Malaysian statutory tax rate of 24% (29,660) 362,958 460,452 447,818 Effect of different tax rates in other countries/jurisdictions 363,681 (32,144) – – Income not subject to tax: Tax exempt shipping income (528,894) (570,322) (135,908) (148,113) Others (10,717) (21,187) (406,620) (397,423) Expenses not deductible for tax purposes 293,261 445,497 116,982 152,495 Effect of share of results of associates and joint ventures (102,966) (60,151) – – Utilisation of previously unrecognised tax losses (28,004) (53,281) (28,692) (53,281) Deferred tax assets recognised on unutilised investment tax allowances (102,743) (1,624) – – Deferred tax assets not recognised during the year 167,235 3,654 – – Deferred tax under provided in prior year 13,816 8,619 – – Income tax under/(over) provided in prior year 11,238 (5,963) – – Taxation for the year 46,247 76,056 6,214 1,496 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS 31 December 2020 NOTES TO THE FINANCIAL STATEMENTS 10 370 10 371 /// Leadership / Governance / Financial Statements / Additional Information / Annual General Meeting ////// /// Leadership / Governance / Financial Statements / Additional Information / Annual General Meeting ////// Section Section MISC Berhad / Integrated Annual Report 2020 MISC Berhad / Integrated Annual Report 2020