REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters (continued) Key audit matters How our audit addressed the key audit matters 2.0 Impairment assessment for goodwill of CGU A and CGU B Refer to Note 2.10(a) for the accounting policy, Note 3(a) and Note 7 to the financial statements. As at 31 December 2022, the Group’s goodwill totalled RM152.8 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 the goodwill and because the recoverable amounts of the CGUs are determined based on value in use (“VIU”) calculations which involve significant judgements in determining key assumptions on the future cash flows generated. 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; • Tested mathematical accuracy of VIU calculations prepared by management; • Compared forecasted revenues to past performance records, market outlook and management’s expectation of market developments; • Compared terminal growth rates to external macroeconomic sources of data and industry specific trends; • Compared costs to approved budgets and historical performance; • Involved our valuation specialist to evaluate the appropriateness of the discount rates used for CGU A and CGU B. This involved consideration of inputs from comparable industries and peer companies, adjusted for business risk and marketability; and • Assessed reasonableness of probabilities of occurrence assigned to base and worst case scenarios. We also considered the adequacy of disclosures in the financial statements of key assumptions and sensitivity analysis for respective CGUs. Based on procedures performed, no material exception was noted. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF WAH SEONG CORPORATION BERHAD Wah Seong Corporation Berhad Annual Report 2022 96
RkJQdWJsaXNoZXIy NDgzMzc=