TSH most affected by implementation of MFRS 116, 141

KOTA KINABALU: TSH Resources Bhd (TSH) most affected by the implementation of the amended MFRS 116 and 141, analysts say.

Of note, most Malaysian-listed planters will need to comply with MFRS 115 and 141 this year and there will not be any more extensions for companies who have yet to comply with the revised MFRS 115 and MFRS 141 on Agriculture: Bearer Plants.

The research arm of Maybank Investment Bank Bhd (Maybank IB Research) noted that in the upcoming quarterly results throughout 2018, planters will be reporting under this new accounting standard.

With that, it pointed out that TSH will be most impacted as its upstream assets is presently valued at RM30,800 per hectare (ha), double its peers.

“TSH has the highest bearer plant value as most of its estates are young and not depreciated as it adopted the capital maintenance method, and it has only done minimal replanting,” it added.

Under the revised accounting standard, Maybank IB Research said that the regular replanting expenditure is treated as the equivalent of amortisation and charged out as expense when incurred.

“In complying with the new MFRS, these companies will be required to retrospectively add back replanting expenditure charged as an expense item in the prior years, capitalise them and calculate the depreciation required in each prior period (as if the new method had always been applied).

“Hence, the extent of replanting activities in recent past will determine the financial impact of these companies,” the research team highlighted.

It noted that only a handful of planters have adopted the new MFRS early and their financial impacts were mixed.

To asses the impact of this revamped accounting standard, Maybank IB Research noted that it analysed the implied bearer plant value recorded in their books.

“This is derived by taking the value of bearer plant, biological assets or plantation development expenditure in the books divided by the group’s total planted area.