Annual Report 2020

36. Acquisition/Disposal of subsidiaries and non-controlling interests (continued) 36.2 Disposal of a subsidiary in 2019 In October 2018, the Group, via its subsidiary, Kembang Subur Sdn. Bhd. (“KSSB”) entered into a share Sale and Purchase Agreement with Hisenor International Limited (“Hisenor”) to dispose its 51 ordinary shares of USD1.00 each, representing 51% of the total issued and paid up shares in Kembang Subur International Ltd. (“KSI”) for a total consideration of RM236,500 (equivalent to USD63,750) only. Upon completion of the disposal, KSI and its wholly-owned subsidiary, Nam Duong Vietnam Aquatic Hatchery Co., Ltd. ceased to be subsidiaries of the Group. The net cash inflow arising from the disposal is RM234,600 with a gain on disposal of RM186,000. 36.3 Acquisition of non-controlling interests in 2019 36.3.1 In June 2018, the Group, via its wholly-owned subsidiary, QL Green Resources Sdn. Bhd. (“QLGR”) subscribed additional 200,000 ordinary shares in Leisure Pyramid Sdn. Bhd. (“LP”) for RM200,000 by capitalising of debts. Following the subscription, shareholding of QLGR in LP increased from 73.33% to 76.47%. 36.3.2 In July 2018, the Group, via its subsidiary, Kembang Subur Sdn. Bhd. (“KSSB”) acquired 225,000 ordinary shares in Kembang Subur (Perak) Sdn. Bhd. (“KSP”) for a total consideration of RM3. Following the acquisition, shareholding of KSSB in KSP increased from 55% to 100%. 36.3.3 In July 2018, the Group, via its wholly-owned subsidiary, QL Feedingstuffs Sdn. Bhd. (“QLF”) entered into a share Sale and Purchase Agreement with Ng Siew Thiam and Chew Ching Kwang to acquire 780,000 ordinary shares, representing 5% of the issued and paid up capital in QL AgroResources Sdn. Bhd. (“QLAR”) for a total net cash consideration of RM16,549,000. Upon completion of the acquisition, shareholding of QLF in QLAR increased from 95% to 100%. 37. Significant changes in accounting policies During the year, the Group adopted MFRS 16. Definition of a lease On transition to MFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. It applied MFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under MFRS 117 and IC Interpretation 4, Determining whether an Arrangement contains a Lease were not reassessed. Therefore, the definition of a lease under MFRS 16 has been applied only to contracts entered into or changed on or after 1 April 2019. As a lessee Where the Group is a lessee, the Group applied the requirements of MFRS 16 retrospectively with the cumulative effect of initial application as an adjustment to the opening balance of retained earnings at 1 April 2019. At 1 April 2019, for leases that were classified as operating lease under MFRS 117, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at 1 April 2019. The weighted-average rate applied is 4.91%. Right-of-use assets are measured at their carrying amount as if MFRS 16 had been applied since the commencement date, discounted using the lessee’s incremental borrowing rate at 1 April 2019. For leases that were classified as finance lease under MFRS 117, the carrying amounts of the right-of-use asset and the lease liability at 1 April 2019 are determined to be the same as the carrying amount of the leased asset and lease liability under MFRS 117 immediately before that date. Annual Report | 2020 QL Resources Berhad 214 Notes To The Financial Statements