INDEPENDENT AUDITORS9 REPORT TO THE MEMBERS OF SASBADI HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Group 1. Annual impairment assessment of the carrying amount of goodwill As at 31 August 2024, the carrying amount of goodwill of Sanjung Unggul Sdn. Bhd. and its subsidiaries amounted to RM10,253,000 as disclosed in Note 7(d) to the financial statements. We determined the annual assessment of impairment of goodwill to be a key audit matter because of the significance of goodwill to the Group9s consolidated financial position and it requires significant management judgement and assumptions in determining the valuein-use of the cash generating units to determine the expected cash flows. These judgements and assumptions include projected growth in sales and gross margins and terminal value, as well as determining appropriate pre-tax discount rate. Audit response Our audit procedures included the following: a. Compared prior period projection to actual outcome to assess reliability of management9s projections; b. Compared cash flow projections against the CGU9s recent performance, then assessed and evaluated the key assumptions made in the forecast and projections; c. Verified projected gross margins, sales growth rates and terminal values to support the key assumptions in projections by corroborating information from other areas of our audit; d. Verified pre-tax discount rate used by management for the CGU by comparing to market rate, weighted average cost of capital of the Group and relevant risk factors; and e. Performed sensitivity analysis of our own to stress test the key assumptions in the impairment model. 2. Valuation of inventories As at 31 August 2024, the carrying amount of inventories of the Group was RM59,993,000 and the associated allowance for inventories write-down was RM9,950,000, as disclosed in Note 12 to the financial statements. Responsible Corpor-|; bঞ;mv_br Integrity & Honesty Accountable P-u|m;uv_br Excellence & Inno-ঞom Financial Statements (continued) 83
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