KUB Malaysia Berhad Annual Report 2021

Report on the Audit of the Financial Statements Opinion We have audited the financial statements of KUB MALAYSIA BERHAD, which comprise the statements of financial position as at 30 June 2021 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the period from 1 January 2020 to 30 June 2021, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 62 to 144. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2021, and of their financial performance and their cash flows for the period from 1 January 2020 to 30 June 2021 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (‘By-Laws’) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independance Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and IESBA Code. Key Audit Matter Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the Group and of the Company for the current period. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Our audit performed and responses thereon Assessing the impact of expected credit losses (‘ECLs’) on trade receivables, contract assets and finance lease receivables of the Group MFRS 9 requires the use of an expected credit loss (‘ECL’) model to measure impairment of financial assets. The model requires consideration of both historical and current information, as well as reasonable and supportable forecasts of future conditions (including macroeconomic information). The Group uses a provision matrix to calculate ECLs for trade receivables, contract assets and finance lease receivables. The provision rates are based on days past due for groupings of various customer segments that have similar loss patterns (i.e., nature of project undertaking, product type, customer type and rating, and coverage by bank guarantee or other forms of credit insurance). In assessing the recoverability of trade receivables, contract assets and finance lease receivables of the Group, we performed the following audit procedures: • Obtained an understanding of the process relating to the ECL of trade receivables, contract assets and finance lease receivables; • Evaluated the methodology and model used by management to ascertain that these have been consistently applied by management; • Evaluated the completeness, accuracy and relevance of data used in the ECL model and checked the mathematical accuracy of the calculations; • Tested the accuracy of the ageing against supporting documents on a sample basis; INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF KUB MALAYSIA BERHAD (Incorporated in Malaysia) 48 KUB MALAYSIA BERHAD