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SUSTAINABILITY JOURNEY HOW WE ARE GOVERNED FINANCIAL STATEMENTS ADDITIONAL INFORMATION 69

profit retained in the Group. Net Debt to EBITDA ratio also
Taxation declined from 6.54 as at 31 December 2020 to 2.14 as at
31 December 2021. This marked improvement is as a result
of additional term loan repayments as well as improved
The Group recorded a higher tax expense of RM43.49 million EBITDA from the prior year, as mentioned above.
in FY2021. This is largely consistent with the higher profits
recorded. Notably however, the effective tax was higher at
26% against the applicable tax rate of 24% mainly due to the Cash Flow
tax effects of non-deductible expenses. This was partly offset
by non-taxable gains on disposal of wholly-owned subsidiary
MSM Perlis Sdn Bhd. The Group generated a positive operating cash flow
of RM95.15 million in FY2021 albeit a decrease from
RM277 million in FY2020. The higher revenue and net
Statement of Financial Position profit did not translate into an overall increase in working
capital due to the tighter working capital management.
Despite operating in a challenging environment,
Total debt decreased from RM907.10 million as at the Group ended the year with a healthy cash balance of
31 December 2020 to RM793.06 million as at RM194.78 million which is relatively in line with prior year’s
31 December 2021 mainly due to repayment of term loan. balance of RM195.92 million. Additional information can be
Total debt consists of unsecured Bankers’ Acceptance loans found in the Cash Flow Statement on pages 282 to 285.
and Islamic term loans. Banker’s Acceptance is used for the
Group’s raw sugar financing and short term in nature, whilst
term loan was drawn mainly for the construction of MSM Dividend
Johor refinery and is therefore longer term. Gearing ratio
decreased from 33% as at 31 December 2020 to 26% as at For FY2021, the Group declared a total dividend of 3.0 sen
31 December 2021 due to lower net debt as at year end per share amounting to RM21.09 million which is equivalent
coupled with the higher total capital driven by higher
to 17% of the FY2021 net profit of RM125.35 million.

OUTLOOK

The Group performed well in the financial year ended 31 December 2021, buoyed by good
raw sugar hedging. We expect the level of sugar consumption to improve in FY2022 as travel
restrictions ease domestically. While raw sugar supply shortages will result in raw sugar price
increase, the Group has managed to hedge a significant portion of its Wholesale requirement in
FY2022 at below market price.

Overall, the Group expects the new financial year to continue to be challenging. There is still
significant uncertainty on the full impact of the ongoing COVID-19 pandemic and trade tensions
at this juncture. Nevertheless, the Group will remain focused towards higher yield and capacity
utilisation which will result in lower refining and production costs and stronger financial position
which will put the Group in a good position for growth, should prospects and business sentiment
improve.