Annual Report (Complete) - MYCRON Steel Berhad

Notes to the Financial Statements 30 June 2010
(continued)
15. ASSOCIATE (continued)
The Group’s share of revenue, profit, assets (including goodwill) and liabilities of the associate are as follows:
2010
RM
2009
RM
Revenue
Loss after tax
- 1,172,780
(97,625) (121,500)
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
17,270,591
2,461,506
(740,900)
(1,948,087)
17,043,110
17,308,697
2,530,610
(672,868)
(2,025,704)
17,140,735
The details of the associate, which is incorporated in Malaysia is as follows:
Proportion of ownership interest
Name
Principal activities
2010
%
2009
%
PMP Galvanizers Sdn Bhd* (“PMP”)
Manufacturing and trading of galvanised
metal
20
20
* Shareholding held directly by the Company.
In previous financial year, the Group has commenced legal action to recoup their cost of investment in PMP as a result of non
compliance of certain conditions by the vendor pursuant to a shareholder’s agreement entered in 2005. During the financial
year, the vendor has filed for a change in the jurisdiction for the case to be heard against the Group on the investment in PMP
and the key assumption used in the value-in-use computation has changed since prior financial year as follows:
(a)
(b)
The investment expected to be recovered in 7 years (2009: 5 years) from commencement of legal proceedings in view of
legal action taken by vendor; and
The industry discount rate of 10.97% (2009: 6.85%) per annum.
The amount receivables representing the cost of investment in PMP is in accordance with the terms of the shareholders’
agreement and it is supported by a legal opinion. The discount rate was derived based on weighted average cost of capital of
companies in the cold rolled coil industry.
As at 30 June 2010, the Group has recognised an impairment loss of RM3,940,993 (2009: RM3,955,000) in PMP as the recoverable
amount of PMP was lower than its carrying amount.
16. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Group/Company
2010
RM
2009
RM
Equity securities:
- Unquoted
At 1 July
Less: Impairment loss
At 30 June
934,528
(616,926)
317,602
934,528
-
934,528
The available-for-sale financial asset represents the Group’s investment in Maybach Logistics Sdn Bhd (“Maybach”), a company
providing logistics services.
During the financial year, the Group and Company have recognised an impairment loss of RM616,927 respectively on the
investment, as the recoverable amount of the investment was lower than its carrying value. The recoverable amount of the
investment was determined by adjusting the net assets of Maybach with, impairment loss on a trade receivable and an aircraft,
and accruals for maintenance cost of an aircraft.
pg 72 | Mycron Steel Berhad