GHL System Berhad Annual Report 2018

a n n u a l r e p o r t 2 0 1 8 107 NOT ES TO THE F I NANC I A L STAT EMENTS 3 1 D e c e m b e r 2 0 1 8 C O N T ’ D 15. INVESTMENTS IN SUBSIDIARIES (cont’d) (g) Acquisition of Paysys (M) Sdn. Bhd. during the financial year ended 31 December 2018 (cont’d) (ii) The contingent consideration arrangement requires the Company to pay the Sellers of (cont’d): The potential undiscounted amount of all future payments that the Company could be required to make under the contingent consideration arrangement is between RM nil to RM33,363,043. The fair value of the contingent consideration arrangement of RM30,111,050 was estimated by applying the income approach. The fair value estimates are based on assumed discount rate of 10.8% and assumed that PMSB will achieved its profit target for both financial years. (iii) If the acquisition occurred on 1 January 2018, the revenue and profit after tax of the Group for the financial year ended 31 December 2018 would have been RM324,273,963 and RM27,500,339 respectively. The effects of the acquisition on cash flows: RM Total consideration for equity interest acquired 90,904,209 Less: Equity instruments issued - Tranche 1 (20,793,159) Less: Contingent consideration - Tranche 2 and Tranche 3 (30,111,050) Cash consideration 40,000,000 Less: Cash and cash equivalents of subsidiary acquired (5,604,596) Net cash inflow of the Group on acquisition 34,395,404 (h) During the financial year, the Group recognised share options granted under shares options scheme of RM1,018,945 (2017: RM18,962) in profit or loss, out of which an amount of RM643,848 (2017: Nil) in the financial year are in respect of employees of subsidiaries. At Company level, the amount of RM643,848 (2017: Nil) in the financial year are recorded as an increase in investments in subsidiaries with a corresponding credit to equity as disclosed in Note 23 to the financial statements. (i) During the financial year, the Company had granted and subsequently capitalised the amount owing by a subsidiary, S Capital Sdn. Bhd. amounting RM61,042,181 into equity loan. (j) During the financial year, the Company subscribed for additional 100,000 (2017: 2,400,000) ordinary shares in GHL Payments Sdn. Bhd. (“GHLP”) for a consideration of RM100,000 (2017: RM2,400,000). (k) During the financial year, the Company subscribed for additional 5,000,000 ordinary shares in GHL ePayments Sdn. Bhd. (“GHLE”) for a consideration of RM5,000,000. (l) During the financial year, impairment loss on investments in subsidiaries amounting to RM111,971 (2017: RM2,400,000) relating to a subsidiary, GHLP, was recognised due to its poor financial performance and financial position. (m) During the financial year, impairment loss on investments in subsidiaries amounting to RM864,643 relating to a subsidiary, GHL Cardpay Sdn. Bhd. (“GHLC”), was recognised due to its poor financial performance and financial position. (n) During the financial year, impairment loss on investments in subsidiaries amounting to RM98,063 relating to a subsidiary, GHL Systems Australia Pty. Ltd. (“GHLSA”), was recognised due to its poor financial performance and financial position.