Financial Statements Notes to the Financial Statements 6. GOODWILL ON CONSOLIDATION AND INTANGIBLE ASSETS (continued) Impairment testing for cash-generating units containing goodwill, brand names and hospital licences (continued) (a) Healthcare services and Labs services CGUs (continued) Key assumptions used in determining recoverable amount (continued) The values assigned to the key assumptions represent the Group’s assessment of future trends in the healthcare market and are based on both external sources and internal sources (historical data). In 2022, the China clinics healthcare services CGU continued to incur operating losses arising from challenges faced in its business operations, especially in the midst of the COVID-19 pandemic. The Group performed an assessment of recoverable amount using the value in use approach and determined the recoverable amount of the CGU was lower than its carrying amount. Accordingly, an impairment loss of RM150,066,000 on goodwill over China healthcare services CGU was recognised in ‘other operating expenses’ in the statement of profit or loss. Except as mentioned above, the Group believes there are no reasonably foreseeable changes in the above key assumptions that would cause the carrying values of the remaining CGUs to materially exceed their recoverable amounts, other than changes in prevailing operating environments, of which the impact is not ascertainable. (b) PLife REIT The recoverable amount of PLife REIT is based on fair value less cost to sell, using the open market price of PLife REIT as at the end of the financial year. 7. INVESTMENTS IN SUBSIDIARIES Company 2023 2022 RM’000 RM’000 Cost of investment Unquoted shares in Malaysia 22,727,119 23,035,788 Unquoted shares outside Malaysia 3,206 3,206 22,730,325 23,038,994 Allowance for impairment loss (2,295,921) (2,295,921) 20,434,404 20,743,073 Details of the subsidiaries are as disclosed in note 41. Although the Group owns less than half of the ownership interest in the following entities, the Group consolidated them as subsidiaries in accordance with MFRS 10, Consolidated Financial Statements, on the following basis: (a) Fortis The Group controls majority of Fortis’ board by virtue of the share subscription agreement with Fortis. (b) PLife REIT The Group has de facto control over PLife REIT, on the basis that the remaining voting rights in PLife REIT are widely dispersed and there is no indication all other shareholders exercise their votes collectively. The Group, via PLife REIT, does not hold any ownership interest in the special purpose entities (“SPEs”) listed in note 41. Notwithstanding that the Group does not have any direct or indirect shareholdings in these SPEs, the Group has accounted for the SPEs as subsidiaries in accordance with MFRS 10, Consolidated Financial Statements, as PLife REIT receives substantially all of the returns related to the SPEs’ operations and net assets and has the current ability to direct these SPEs’ activities that most significantly affect their returns based on the terms of agreements under which these SPEs were established. IHH Healthcare Berhad 168
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