Wah Seong Corporation Berhad Annual Report 2021 182 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2021 37 DISPOSAL OF SUBSIDIARIES (CONTINUED) Disposal of subsidiaries in the previous financial year (continued) (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. Details of the disposal and the net cash flow on disposal are as follows: At the date of disposal RM’000 Property, plant and equipment 3,145 Right-of-use assets 11,691 Inventories 3,506 Trade and other receivables 7,429 Time deposits 4,000 Cash and bank balances 3,446 Deferred tax liabilities (3,507) Trade and other payables (4,276) Amount owing to holding company (65) Amount owing to related company (1) Current tax liabilities (465) Dividend payable (500) 24,403 Less: Fair value of remaining stake as an associate (13,011) Group share of net assets disposed 11,392 Net disposal proceeds 30,369 Net gain on disposal before reclassification of foreign currency translation reserve 18,977 Reclassification of foreign currency translation reserve to profit or loss 226 Net gain on disposal 19,203 Gain on disposal of net assets of subsidiary disposed 13,512 Fair value gain on remaining stake as an associate 5,691 Net gain on disposal 19,203
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