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 on investment in joint venture Refer to Note 2.6 – Joint arrangement for accounting policies, Note 3(c) – Impairment of investments in associates and joint ventures and Note 11 – Investment in joint ventures to the financial statements. As at 31 December 2023, the carrying amounts of investments in joint venture, Alam-PE Holdings (L) Inc ("Alam-PE") was RM11.4 million. Impairment indicators exist due to: l ALAM-PE’s low vessel utilisation (the identified impairment indicator) in the current financial year resulted in ALAM-PE continuing to incur losses; and l The significant shortfall of its actual loss and the budgeted profits for the current financial year indicated that the investment may be impaired. Subsequently, management of Alam-PE performed an impairment assessment which resulted in an impairment charge of RM20 million on its vessels for the current financial year. Alam-PE reported a net loss of RM24.3 million for the financial year ended 31 December 2023 for which the Group recognised its share of loss in the joint venture totalling RM11.9 million, resulting in the carrying amount of RM11.4 million as at 31 December 2023. We focused on this area because the recoverable amounts of the investment are determined based on higher of fair value less cost to sell and VIU calculations which involved significant judgements in determining key assumptions on future cash flows generated. Audit procedures over this key audit matter were as follows: l Ascertain the independence and competencies of the component auditor’s team members, ensuring that they have the necessary experience and expertise to undertake the audit on ALAM-PE; l Reviewed the component auditor’s planning procedures, discussed the key audit risks and the audit approach adopted by the component auditor on ALAM-PE; l Set out and communicated the relevant group reporting protocol, setting out the deliverables and timelines required to be reported by the component auditor to us; l Reviewed the deliverables provided by the component auditor and discussed the results of their audit work as well as reviewed their audit working papers; l Involved our valuation specialist to assess the appropriateness of the valuation methodology used by management; l Involved our valuation specialist to evaluate the appropriateness of discount rates used. This involved consideration of inputs from comparable industries; l Tested mathematical accuracy of VIU calculations prepared by management; l Compared forecasted revenues to past performance records, market outlook and management’s expectation of market developments; l Compared current year EBITDA margin to historical EBITDA margins; Independent Auditors’ Report TO THE MEMBERS OF WASCO BERHAD (formerly known as Wah Seong Corporation Berhad) 155 Wasco Berhad
RkJQdWJsaXNoZXIy NDgzMzc=