116 GHL SYSTEMS BERHAD 199401007361 (293040-D) ANNUAL REPORT 2022 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 CONT’D 16. INVESTMENTS IN SUBSIDIARIES (Cont’d) (g) Movement in equity loan is as follows: Company 2022 2021 RM RM Balance as at 1 January 135,919,430 103,050,344 Reclassification of balance from amount owing by subsidiaries to equity loan 1,077,580 32,869,086 Repayment during the year (2,597,273) - 134,399,737 135,919,430 Accumulated impairment losses (9,706,692) (10,631,660) Balance as at 31 December 124,693,045 125,287,770 During the financial year, the Company increased its equity loan via capitalisation of non-trade amount owing by subsidiaries as disclosed in Note 20(f) to the financial statements. (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. (i) The reconciliation of movement in the impairment loss are as follows: Company 2022 2021 RM RM Balance as at 1 January 27,567,178 17,103,563 Charge for the financial year - 1,130,536 Reversal of impairment during the financial year (1,627,185) - De-recognition of a subsidiary (1,080,012) - Reclassification from amount owing by subsidiary 285,633 9,333,079 Balance as at 31 December 25,145,614 27,567,178 (j) 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 2022 and 31 December 2021.
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