MSM Malaysia Holdings Berhad Annual Report 2020

34 BORROWINGS (CONTINUED) Bankers’ acceptances The average interest rates of the borrowings range approximately 3.27% to 3.57% (2019: 3.96% to 4.14%) per annum. Islamic term loans The average interest rates of the borrowings range approximately 4.36% to 5.67% (2019: 4.99% to 5.69%) per annum. The Islamic term loans which have a tenure of 12 years (2019: 12 years) are secured against a leasehold land, debenture and certain bank balances of the Group. The Group and the Company are required to comply with certain financial covenants i.e. consolidated net debt and financing to equity ratio, consolidated net debt and financing to earnings before interest, tax, depreciation and amortisation (“EBITDA”) ratio and consolidated finance payment cover ratio (collectively known as “financial covenants”). The financial covenants are to be complied with annually (2019: annually). On 10 December 2020, the Group and the Company has obtained a consent letter from its lender to defer the imposition of all the financial covenants for financial year ending 31 December 2020. The imposition is conditional upon the Group and the Company obtaining an official valuation report addressed to its lender on a land leased by the Company and a prepayment of RM40,000,000. These conditions have been confirmed as fulfilled by the lender on 28 December 2020. As a result of the prepayment, the Company has recorded a loan modification credit of RM11,695,000. Term loan - secured The average interest rates of the borrowings range approximately 5.90% to 6.45% per annum (2019: 6.30% to 6.40% per annum). This loan has been repaid in full during the financial year ended 31 December 2020. 35 SIGNIFICANT RELATED PARTY TRANSACTIONS In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions and balances. Federal Land Development Authority (“FELDA”), the Group and Company’s ultimate holding body effective from 24 December 2020, is a statutory body corporate set up under the Land Development Act 1956, and controlled by the Malaysian Government. The Group considers that, for the purpose of MFRS 124 – “Related Party Disclosures”, FELDA and the Malaysian Government is in the position to exercise significant influence over it. As a result, the Malaysian Government and Malaysian Government controlled bodies (collectively referred to as “government-related entities”) are related parties of the Group and the Company. Apart from the individually significant transactions as disclosed in the financial statements, the Group and the Company have collectively, but not individually, significant transactions with other government-related entities which include but not limited to the following: • Deposit placing with and deposit taking from government-related entities • Utilities services provided by the government-related entities These transactions are conducted in the ordinary course of the Group’s business on terms consistently applied in accordance with the Group’s internal policies and processes. These terms do not depend on whether the counterparties are government-related entities or not. MSM MALAYSIA HOLDINGS BERHAD Annual Repor t 2020 216 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 CHAIRMAN’S STATEMENT DELIVERING VALUE MSM OVERVIEW MANAGEMENT DISCUSSION & ANALYSIS GROUP FINANCIAL REPORT