NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2023 CONT’D 16. INVESTMENTS IN SUBSIDIARIES (Cont’d) (e) Additional investment during the financial year ended 31 December 2022 In the previous financial year, GHL Asia Pacific Limited (“GHLAP”) had subscribed for additional 30,000 ordinary shares of PHP100 per share in GHL Philippines Financing Services for a consideration of RM239,250. There was no change to the equity interest of the GHLAP in GHL Systems Philippines, Inc. pursuant to the new issuance. (f) De-registration of a subsidiary during the financial year ended 31 December 2022 A wholly-owned subsidiary of the Company, EPY Capital Holdings Limited, had been de-registered from the British Virgin Islands Companies Registry. Effects of the de-registration of EPY Capital Holdings Limited. were as follows: 2022 RM Carrying amount of shares at the date of disposal - Less: Realisation of post-acquisition reserves - Accumulated losses 248,826 - Exchange translation reserve reclassified to profit or loss (248,826) Loss on de-registration of a subsidiary - (g) Movement in equity loan is as follows: Company 2023 2022 RM RM Balance as at 1 January 134,399,737 135,919,430 Additions during the financial year 6,236,000 - Reclassification of balance from amount owing by subsidiaries to equity loan - 1,077,580 Repayment during the financial year (400,000) (2,597,273) 140,235,737 134,399,737 Accumulated impairment losses (9,706,692) (9,706,692) Balance as at 31 December 130,529,045 124,693,045 In the previous financial year, the Company increased its equity loan via capitalisation of non-trade amount owing by subsidiaries as disclosed in Note 20(f). (h) The Group reviews the investments in subsidiaries for impairment when there is an indication of impairment. The recoverable amounts of the investments in subsidiaries are assessed by reference to the fair value less cost to sell of the underlying assets or the value in use of the respective subsidiaries. The value in use is the net present value of the projected future cash flows derived from the business operations of the respective subsidiaries discounted at an appropriate pre-tax discount rate. For such discounted cash flow method, it involves the use of estimated future results and a set of assumptions to support their income and cash flows. Significant judgements and estimates had also been used to determine the key assumptions applied to the cash flow projections, which includes the projected earnings before interest and tax margins, growth rates, and the appropriate pre-tax discount rates used for each of the subsidiary. Impairment losses are made when the carrying amount of the investment in subsidiaries exceed its recoverable amount. 125 ANNUAL REPORT 2023
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