NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2022 (cont’d) 12. Other investments (CONT’D) The details of significant unobservable inputs of material investments under level 3 fair value measurement relating to Entity A, B, C, H, I and K are as follows: (cont’d) Investment in an entity engaged in the provision of national security solutions which involves the provision of its own security technology intellectual property to its customers as well as the development and customisation of solutions and systems (Entity I) Unobservable inputs Relationship of unobservable inputs to fair value Sensitivity analysis assume all other variables held constant (aa) Revenue growth rates of 212% (2021 - 198%) Based on information on current and tendered projects by the entity. The higher the revenue growth rate, the higher the fair value. A 1% change in revenue growth rate would result in an increase/decrease in fair value by RM293,786 (2021: RM45,291,000). (bb) Pre-tax operating profit margins of 52% (2021 - 40%) Taking into account management’s experience and knowledge of market conditions of the specific industries. The higher the pre-tax operating margins, the higher the fair value. A 1% change in pre-tax operating profit margin result in an increase/ decrease in the fair value by RM2,839,636 (2021: RM4,660,000). (cc) Discount rate of 20% (2021 - 17%) Reflects current market assessments of the uncertainty in the amount and timing of cash flows. The higher the discount rate, the lower the fair value. A 1% change in discount rate would result in a decrease/increase in the fair value by RM8,333,844 (2021: RM13,059,000). Investment in an entity engaged in blockchain technology and software development (Entity K) Unobservable inputs Relationship of unobservable inputs to fair value Sensitivity analysis assume all other variables held constant (aa) Revenue growth rates of 85% (2021 - 88%) Based on management’s experience and knowledge of market conditions of the specific industries. The higher the revenue growth rate, the higher the fair value. A 1% change in revenue growth rate would result in an increase/decrease in fair value by RM94,083 (2021: RM500,000). (bb) Pre-tax operating profit margins of 85% (2021 - 73%) Taking into account management’s experience and knowledge of market conditions of the specific industries. The higher the pre-tax operating margins, the higher the fair value. A 1% change in pre-tax operating profit margin result in an increase/ decrease in the fair value by RM295,878 (2021: RM186,000). (cc) Discount rate of 38% (2021 - 20%) Reflects current market assessments of the uncertainty in the amount and timing of cash flows. The higher the discount rate, the lower the fair value. A 1% change in discount rate would result in a decrease/increase in the fair value by RM507,496 (2021: RM545,000). 208
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