FINANCIAL STATEMENTS (continued) 68 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SASBADI HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Company Impairment assessment of investments in subsidiaries As at 31 August 2022, the carrying amount of the investments in subsidiaries for unquoted equity shares were RM90,414,000 as disclosed in Note 8 to the financial statements. We determined this to be a key audit matter because it requires management to exercise significant judgements in determining the recoverable amount, estimating the future results and key assumptions applied to cash flow projections of these subsidiaries. These key assumptions include forecast growth in future revenues and operating profit margin, as well as determining an 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 management’s projections; b. Compared cash flow projections against the subsidiaries’ recent performance, then assessed and evaluated the key assumptions made in the forecast and projections; c. Verified projected profit margins, revenue 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 each subsidiaries 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. Information Other than the Financial Statements and Auditors’ Report Thereon The Directors of the Company are responsible for the other information. The other information comprises the information included in the annual report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon. Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon. 68 SASBADI HOLDINGS BERHAD
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