Key Audit Matters (continued) Accounting effect of bargain purchase gain from the acquisition of Silterra Malaysia Sdn. Bhd. (“Silterra”) Refer to Note 31 to the financial statements Key Audit Matter How our audit addressed the key audit matter Acquisition accounting for Silterra under MFRS 3 - Business Combinations On 26 July 2021, the Group completed the acquisition of a 60% equity interest in Silterra for a total cash consideration of RM163.80 million. We focused on this area due to the acquisition is material and requires the use of significant management judgement regarding the identification of intangible assets, valuation of assets acquired and liabilities assumed. A purchase price allocation exercise was performed by management, assisted by an external expert. The allocation considered the fair values of non-current and current assets and non-current and current liabilities. Our procedures included, amongst others: • Evaluating the competence and capabilities of the external expert and reviewing the terms of engagement of the expert appointed by the Group to determine whether there were any matters that might have affected their objectivity or limited their scope of their work; • Assessing the methodology adopted by management and its appointed expert for calculating the fair values and validating the key assumptions used; and • Reviewing the adequacy of disclosure of acquisition in the financial statements. Impairment of property, plant and equipment, right-of-use assets and intangible assets Refer to Notes 3, 4 and 6 to the financial statements Key Audit Matter How our audit addressed the key audit matter As of 30 June 2022, the Group’s property, plant and equipment, right-of-use assets and intangible assets were approximately RM1,748.81 million, RM56.47 million and RM1,028.60 million net of impairment losses respectively. These assets mainly relate to the building and facility system and equipment of semiconductor wafers, a floating production, storage and offloading vessel (“FPSO”), leasehold land and production fields of the Anasuria Cluster. This is an area of focus given the inherent subjectivity in impairment testing. Our procedures in relation to the impairment indication test included, amongst others: Technology segment • Reviewing the reinstatement cost model prepared by management and assisted by an external expert for indications of impairment; • Evaluating the competence and capabilities of the external expert and reviewing the terms of engagement of the expert appointed by the Group to determine whether there were any matters that might have affected their objectivity or limited their scope of their work; and • Assessing the methodology adopted by management and its appointed expert for calculating the fair values and validating the key assumptions used. Energy segment • Reviewing the reserve model prepared by the management for indications of impairment; • Assessing the reasonableness of management’s key assumptions made, including oil prices, production volumes and discount rate; and • Performing sensitivity analysis by changing the key assumptions used and assessing the impact on the recoverable amount of the cash-generating unit (“CGU”). DAGANG NeXCHANGE BERHAD 310 INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DAGANG NEXCHANGE BERHAD (CONTINUED) (Incorporated in Malaysia) Registration No. 197001000738 (10039-P)
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