UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 241 240 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 16. INVESTMENT IN SUBSIDIARIES Company 2021 RM’000 2020 RM’000 Unquoted shares, at cost (a): - Malaysian subsidiaries 1,870,546 2,162,421 - Foreign subsidiaries 86,377 86,795 1,956,923 2,249,216 Less: Accumulated impairment (b) (410,784) (560,993) 1,546,139 1,688,223 (a) Cost of investment in subsidiary companies The movement of cost of investment in subsidiary companies is as follows: Company 2021 RM’000 2020 RM’000 At 1 January 2,249,216 2,221,006 Capital reduction of Opus Group Berhad (Note f) (101,816) - Acquisition of additional share capital in a subsidiary 500 - Liquidation of Faber L.L.C. (“FLLC”) (Note g) (418) - Dissolution of Faber Hotel Holdings Sdn. Bhd. (Note h) (190,559) - Acquisition of non-controlling interest (Note d) - 28,210 As at 31 December 1,956,923 2,249,216 (b) Impairment of investment in subsidiaries The movement in accumulated impairment is as follows: Company 2021 RM’000 2020 RM’000 At 1 January 560,993 513,393 Impairment loss of investment in a subsidiary company 40,350 47,600 Dissolution of Faber Hotel Holdings Sdn. Bhd. (Note h) (190,559) - As at 31 December 410,784 560,993 16. INVESTMENT IN SUBSIDIARIES (CONTD.) (b) Impairment of investment in subsidiaries (contd.) During the current financial year, an impairment loss of RM40.3 million (2020: RM47.6 million) was recognised against the carrying amount of its investment in OGB of RM534.2 million (2020: RM683.6 million) to its recoverable amount. Based on management’s assessment, the recoverable amount of its investment in OGB was RM476.2 million (2020: RM621.2 million) which was estimated based on the VIU of OGB. (c) Acquisition of non-controlling interest in UEMS Pte. Ltd. (“UEMS”) On 30 July 2021, Edgenta (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Company, acquired the remaining 2.54% equity interest in UEMS from the non-controlling shareholders which resulted with UEMS being an indirect wholly-owned subsidiary of the Company. (d) Acquisition of non-controlling interest in Edgenta GreenTech Sdn. Bhd. (“EGT”) On 16 December 2015, the Company had entered into a put option agreement with the non-controlling interest of EGT, to purchase its 20% equity interest in EGT. The Company at that time had 80% direct equity interest in EGT. 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 EGT at a total purchase price of RM28.2 million. The transaction was completed on 25 June 2020 upon approval from Unit Kerjasama Awam Swasta (“UKAS”) under the Ministry of Finance. As a result, EGT became a wholly-owned subsidiary of the Company. (e) Consolidation of Edgenta PROPEL (Sarawak) Sdn. Bhd. (“EPS”) Notwithstanding Edgenta Propel Berhad’s (“EPB”) effective shareholding of less than 50% in EPS, the Group does have the substantive rights and power to direct the relevant activities of EPS and the ability to use the power to significantly affects its returns as stipulated in the shareholders’ agreement. Therefore, EPS is consolidated in the Group’s consolidated financial statements. (f) Capital reduction of OGB On 15 February 2021, OGB had undertaken capital reduction exercise of RM101.8 million by way of offsetting against the loan amount due from the Company. Consequently, the cost of investment of OGB reduced from RM1,002.4 million to RM900.6 million. This capital reduction exercise has no cash flows impact to the Company. (g) Liquidation of Faber L.L.C. (“FLLC”) On 29 May 2021, FLLC, a 75% subsidiary of the Company, which was under Members’ Voluntary Winding-Up, has ceased to be a subsidiary of the Company upon cancellation and termination of its Trade License from the Commercial Register in accordance with Federal Law No. (5) of 1975 and Federal Law No. (8) of 1984 of United Arab Emirates.
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