175 INTEGRATED ANNUAL REPORT 2024 Overview of Wasco Berhad Key Messages Value Creation Commitment to Governance Sustainability Journey Financial Statements Other Information INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WASCO BERHAD (Incorporated in Malaysia) Registration No. 199901020946 (495846-A) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. 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 How our audit addressed the key audit matter 1.0 Impairment assessment for goodwill of CGU A and CGU B Refer to Note 6 - Goodwill and other Intangible Assets to the financial statements. As at 31 December 2024, the Group’s goodwill totalled RM154.3 million which is allocated to the following cash generating units (“CGU”): • Specialised Pipe Coating and Corrosion Protection Services (CGU A); and • EPC, Fabrication and Rental of Gas Compressors and Process Equipment (CGU B). We focused on this area due to the size of goodwill and because the recoverable amounts of CGUs are determined based on value in use (“VIU”) calculations which involve significant judgements in determining key assumptions on future cash flows generated from these CGUs. Audit procedures performed over this key audit matter were as follows: • Involved our valuation specialist to assess the appropriateness of the valuation methodology used by management; • Involved our valuation specialist to evaluate the appropriateness of the discount rates used for CGU A and CGU B. In addition to this, our valuation specialist benchmarked discount rates used by management to comparable peers in similar industries, adjusted for business risk and marketability to ascertain reasonableness of discount rates used; • Tested mathematical accuracy of VIU calculations prepared by management; • Compared forecasted revenues to past performance results, market outlook and management’s expectation of market developments; • Compared terminal growth rates to external macroeconomic sources of data and industry specific trends; • Assessed reasonableness of probabilities of occurrence assigned to best, base and worst case scenarios for CGU A; and • Assessed reasonableness of probabilities of occurrence assigned to base and worst case scenarios for CGU B; • We also considered the adequacy of disclosures in the financial statements of key assumptions and sensitivity analysis for the CGU. Based on procedures performed, no material exception was noted.
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