Wah Seong Corporation Berhad Annual Report 2020

172 WAH SEONG CORPORATION BERHAD NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020 37 DISPOSAL OF SUBSIDIARIES Disposal of subsidiaries during the financial year (a) On 30 July 2020, Jutasama Sdn. Bhd. (“JSB”), a wholly-owned subsidiary of the Company, had disposed 1,000 ordinary shares, representing 100% of the equity interest in VI Energy Ltd (“VI Energy”) for a total cash consideration of USD1,000. As a result of the disposal, VI Energy and its subsidiaries namely P.M.T.I Energy (Cambodia) Co., Ltd. and PMT Energy Sdn. Bhd. ceased to be subsidiaries of JSB and the Company accordingly. Details of the disposal and the net cash flow on disposal are as follows: At the date of disposal RM’000 Goodwill 79 Cash and bank balances 13 Trade and other payables (9) Non-controlling interests (3) Group share of net assets disposed 80 Net disposal proceeds 4 Net loss on disposal before reclassification of foreign currency translation reserve (76) Reclassification of foreign currency translation reserve to profit or loss (140) Net loss on disposal (216) Net disposal proceeds received 4 Less: Cash and bank balances of subsidiary disposed (13) Net cash outflow on disposal (9) Net loss on disposal was recognised in the profit or loss within ‘administrative and general expenses’. (b) On 13 August 2020, Syn Tai Hung Trading Sdn. Bhd. (“STHT”), an indirect wholly-owned subsidiary of the Company, had diluted its 100% equity interest held to 30% by disposing 3,622,990 ordinary shares, representing 70% of equity interest in Spirolite (M) Sendirian Berhad (“Spirolite Malaysia”) for a total cash consideration of RM30,369,000. As a result, Spirolite Malaysia and its subsidiaries namely Spirolite Marketing Sdn. Bhd. and Spirolite (Myanmar) Company Limited ceased to be subsidiaries and became associates of STHT. Following the loss of control, Spirolite Malaysia has been accounted for as investment in associate. On the same date as the sales and purchase agreement on 13 August 2020, STHT also entered into a put option agreement with Lesso Malaysia Holdings Sdn Bhd (“Lesso”). Lesso granted STHT the put option to dispose its remaining 30% shares in Spirolite Malaysia within 24 months after the completion date of the sales and purchase agreement. The option price is determined as the higher of: - RM8.38 per share plus an interest of 8.0% per annum calculated from the completion date until date of option notice; or - Latest audited net assets of Spirolite Malaysia and taking into account of revaluation reserve and goodwill at the time of exercising the put option. The impact of the put option agreement is not material to the Group.