ENRA Group Berhad Annual Report 2018

54 E N R A G R O U P B E R H A D ( 2 3 6 8 0 0 - T ) KEY AUDIT MATTERS (Cont’d) Company level Impairment assessment of the carrying amounts of costs of investments in subsidiaries and amounts due from subsidiaries As at 31 March 2018, costs of investments in subsidiaries and amounts due from subsidiaries of the Company amounted to RM13.2 million and RM72.3 million respectively as disclosed in Notes 6 and 12 to the financial statements. Management used a value in use model to compute the present value of forecasted future cash flows for the subsidiaries to determine if there is any impairment loss required on the costs of investments in subsidiaries and amounts due from subsidiaries. We have focused on the impairment assessment of the carrying amounts of the costs of investments in subsidiaries and the amounts due from subsidiaries as the determination of whether or not an impairment loss is necessary involved significant judgements and estimates by the Directors about the future results and key assumptions applied to cash flow projections of the subsidiaries in determining their recoverable amounts. These key assumptions include forecast growth in future revenue, as well as determining an appropriate pre-tax discount rate. Audit response Our audit procedures included the following: (a) compared cash flow projections against recent performance and assessed the reasonableness of the key assumptions used by management in the cashflow forecast and projections by comparing to actual growth rates; (b) compared prior period budgets and forecasts to current period’s actual results to assess the historical accuracy of the forecasts; (c) assessed the suitability of the pre-tax discount rate used by each subsidiary by comparing to the weighted average cost of capital of the Group and relevant risk factor; and (d) performed sensitivity analysis to stress test the key assumptions used by management 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. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. INDEPENDENT AUDITORS’ REPORT To the Members of ENRA GROUP BERHAD (Incorporated in Malaysia) cont’d