322 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 INDEPENDENT AUDITORS’ REPORT to the menbers of Yinson Holdings Berhad (Incorporated in Malaysia) Registration No. 199301004410 (259147-A) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Key audit matters How our audit addressed the key audit matters 2) Estimates and judgements in the impairment assessment of Project Nokh Refer to Note 5(h) and Note 16 to the financial statements. The assessment of impairment under MFRS 136 “Impairment of Assets” (“MFRS 136”) requires a detailed analysis and is dependent on multiple critical judgements and significant estimates made by management that are applied in determining the asset’s value-in-use. The Group is currently constructing a 190 Megawatt solar plant at the Nokh Solar Park, Rajasthan, India (“Project Nokh”). Continuous inflationary pressures due to the continuous disruptions in the market as a result of the COVID-19 pandemic and other macroeconomic factors have caused a significant increase to the cost of solar panels. This was identified as an impairment indicator by management. Consequently, management conducted an impairment assessment on the project. Based on the impairment assessment, management ascertained that the value-in-use of Project Nokh was lower than its carrying value. As a result, an impairment of RM117 million was recognised in the consolidated income statement for the financial year ended 31 January 2023. Based on our risk assessment, the most critical judgements and significant estimates to determine the value-in-use of Project Nokh include: • The forecasted revenue of the project, as this would depend on future volume of power generation, subject to change in tariff and carbon credits pricing; • The estimated commissioning date of the project affecting the timing of the cash flows; and • The discount rates applied to the forecasted cash flows. We consider this to be a key audit matter given the magnitude of the amounts involved, the complex nature of the impairment assessment and the critical judgements and significant estimates applied by the management. Audit procedures performed over this key audit matter were as follows: • Obtained management’s approved cash-flows projections and agreed to its value-in-use assessment; • Tested the mathematical accuracy of the underlying value-in-use calculations; • Discussed and evaluated management’s assumptions related to the power generation and carbon credit revenues, expenses and commissioning date; • With the involvement of our internal valuation specialists, assessed the reasonableness of the discount rate. This included an assessment of the specific inputs, inter alia, the risk-free rate, the equity risk premium and beta, along with gearing and cost of debt. Such inputs were benchmarked either against risk rates that are available in the public domain or equivalent data for peer companies; and • Assessed the related disclosures provided, in particular disclosures about key assumptions and sensitivities. Based on our procedures performed, no material exceptions were noted. We have determined that there are no key audit matters to report for the Company.
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