GHL System Berhad Annual Report 2019

A N N U A L R E P O R T 2 0 1 9 127 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 CONT’D 16. INVESTMENTS IN SUBSIDIARIES (cont’d) (h) Acquisition of subsidiary during the financial year ended 31 December 2018 (cont’d) (i) Paysys (M) Sdn. Bhd. (cont’d) The fair values of the identifiable assets and liabilities acquired and the effects on cash flows arising from the acquisitions were as follows: 2018 At date of acquisition Note RM Property, plant and equipment 12 11,658,877 Inventories 12,107,045 Trade and other receivables 9,859,561 Cash and bank balances 5,604,596 39,230,079 Trade and other payables (8,448,098) Borrowings 25 (2,882,522) Deferred tax liabilities 18 (4,448) Total identifiable net assets 27,895,011 Goodwill arising from acquisition 15 63,009,198 90,904,209 The consideration transferred for the acquisition of PMSB are as follows: RM Cash consideration 40,000,000 Equity instruments issued (13,414,941 ordinary shares of the Company) (i) 20,793,159 Payment on acquisition date 60,793,159 Contingent consideration arrangement (ii) 30,111,050 90,904,209 The fair value of the 13,414,941 ordinary shares issued as part of the consideration paid for PMSB was determined on the basis of the closing price, RM1.55 of the Company’s ordinary shares on the acquisition date. The contingent consideration arrangement requires the Company to pay the Sellers of: - 10,061,206 if PMSB achieves a profit target of RM6,500,000 for the financial year ended 31 December 2018 – Tranche 2. - 10,061,206 if PMSB achieves a profit target of RM8,500,000 for the financial year ended 31 December 2019 – Tranche 3.