GHL System Berhad Annual Report 2017

GHL SYSTEMS BERHAD 92 NOTES TO THE FINANCIAL STATEMENTS 31 December 2017 CONT’D 13. GOODWILL (cont’d) (c) Key assumptions used in value-in-use calculations The recoverable amount of an asset or CGU is the higher of its fair value less cost to sell and its value in use. The calculations of value in use for the CGUs are most sensitive to the following assumptions: (i) Growth rate The anticipated annual revenue growth rates used in the cash flows are 3.0% (2016: 3.0%) for the financial budget period. (ii) Pre-tax discount rate Discount rates reflect the current market assessment of the risks specific to the Group. Discount rate of 11.8% (2016: 10.5%) used for cash flows discounting purpose is the Group’s weighted average cost of capital. This is the benchmark used by management to assess the operating performance of the Group and to evaluate future investment proposals. (iii) Terminal value Terminal growth rate of 3.0% (2016: 3.0%). Based on the annual impairment testing undertaken by the Group, no impairment loss is required for the carrying amount of the remaining goodwill assessed as at 31 December 2017 as its recoverable amount is in excess of its carrying amount. Sensitivity to changes in assumptions Management is not aware of any reasonably possible changes in the assumptions above that could cause any impairment loss on goodwill. 14. INVESTMENTS IN SUBSIDIARIES Company 2017 2016 RM RM Unquoted shares, at cost 35,316,124 156,018,627 Equity contributions in subsidiaries in respect of ESS 1,818,965 1,818,965 37,135,089 157,837,592 Less: Accumulated impairment losses (14,663,571) (135,366,080) 22,471,518 22,471,512 (a) Investments in subsidiaries, which are eliminated on consolidation, are stated in the separate financial statements of the Company at cost less impairment losses, if any. (b) All components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by MFRSs. The choice of measurement basis is made on a combination-by-combination basis. Subsequent to initial recognition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. The Group does not have any subsidiary that has non-controlling interests, which is individually material to the Group for both financial years ended 31 December 2016 and 31 December 2017.