17. INTANGIBLE ASSETS (CONTD.) (a) Goodwill (contd.) Key assumptions used in value-in-use calculation (contd.) The calculation of the value-in-use for the CGUs are most sensitive to the following assumptions: (i) Budgeted gross margin The basis used to determine the value assigned to the budgeted gross margins is the average gross margins and average growth rate achieved in the years before the budgeted year, adjusted for market and economic conditions and internal resource efficiency. (ii) Discount rate The discount rates reflect the current market assessment of the risks specific to each CGU. This reflected the management’s best estimate of return on capital employed required in the Group. (iii) Terminal growth rate Terminal growth rates used to extrapolate cash flows beyond the budget period is based on published industry research for each business. Sensitivity to change in assumption Management believes that no reasonable possible change in any of the above key assumptions would cause the recoverable amount of each of the CGUs to be materially lower than their respective carrying amounts. (b) Customer contracts and relationships Customer contracts and relationships arose from the acquisition of EGT Group and Edgenta UEMS Group in 2016 and are amortised over the range of 5 to 15 years. (c) Software and other development cost Computer software represents licenses and other software assets that are not an integral part of property, plant and equipment assets. Software assets are recorded at cost and have finite useful life based on the term of the license or other contractual basis. The cost is amortised over the estimated asset’s useful life of 3 to 10 years (2021: between 3 to 10 years). Other development cost relates to the development of a framework for the application of improved processes, systems and services for servicing expressways. 18. INVESTMENT IN SUBSIDIARIES Company 2022 RM’000 2021 RM’000 Unquoted shares, at cost (Note (a)): – Malaysian subsidiaries 1,871,259 1,870,546 – Foreign subsidiaries 217,302 86,377 2,088,561 1,956,923 Less: Accumulated impairment (Note (b)) (415,300) (410,784) 1,673,261 1,546,139 (a) Cost of investment in subsidiary companies Company Note 2022 RM’000 2021 RM’000 At 1 January 1,956,923 2,249,216 Capitalisation of amounts due from Edgenta (Singapore) Pte. Ltd. (“ESG”) (i) 130,925 – Incorporation of Edgenta Arabia Limited (“EAL”) (ii) 613 – Acquisition of additional share capital in subsidiaries (iii) 100 500 Capital reduction of Opus Group Berhad (“OGB”) (iv) – (101,816) Liquidation of Faber L.L.C (“FLLC”) (v) – (418) Dissolution of Faber Hotel Holdings Sdn. Bhd. (“FHH”) (vi) – (190,559) At 31 December 2,088,561 1,956,923 (i) Capitalisation of amounts due from ESG On 16 December 2022, a wholly-owned subsidiary of the Company, ESG increased its share capital from SGD1 to SGD40.8 million (approximately RM131.0 million). The Company subscribed to the new shares which was settled via capitalisation of debts due to the Company amounting to RM131.0 million. This capitalisation of amounts due from ESG has no cash flows impact to the Company. (ii) Incorporation of EAL On 31 July 2022, EAL was incorporated in the Kingdom of Saudi Arabia as a wholly-owned subsidiary of the Company. (iii) Acquisition of additional share capital in subsidiaries On 30 March 2022, Edgenta FIRST Sdn. Bhd., increased its ordinary shares to 100,000 by issuing new ordinary shares. The Company subscribed to the new shares which was settled by cash. In previous financial year, the acquisition of additional share capital in subsidiaries relates to subscription of new shares issued by Edgenta NXT Sdn. Bhd.. The subscription was settled by cash. p.322 p.323 UEM EDGENTA BERHAD INTEGRATED ANNUAL REPORT 2022 1 2 3 4 5 6 7 8 9 FINANCIAL STATEMENTS Notes to the financial statements For the year ended 31 December 2022 Notes to the financial statements For the year ended 31 December 2022
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