Key audit matters (cont’d.) Revenue and cost of sales from property development activities (cont'd.) We idenঞfied revenue and cost of sales from property development acঞviঞes as maers requiring audit focus as significant management’s judgements and esঞmates are involved in determining the total esঞmated property development costs (which is used to determine revenue of property development acঞviঞes). To address these areas of audit focus, we have performed, amongst others, the following procedures: (i) Obtaining an understanding of the processes and internal controls over the revenue recogniঞon process, including management process in esঞmaঞng total property development cost and profit margin; (ii) Reading sales and purchase agreements entered into with customers on a sampling basis to obtain an understanding of the terms and condiঞons of the agreements and to assess the impact of those terms and condiঞons on revenue recogniঞon; (iii) E valuaঞng the assumpঞons applied in esঞmaঞng the total property development costs on sampling basis for each property development projects/phases by examining documentary evidence such as leers of award issued to contractor and bill of quanঞঞes for materials in order to support the total esঞmated property development costs. We also considered the historical accuracy of management’s budgets for similar property development projects to evaluate esঞmated property development costs; and (iv) Evaluaঞng the progress towards complete saঞsfacঞon of a performance obligaঞon by examining supporঞng evidence on a sampling bases such as contractors’ progress claims and suppliers’ invoices. Impairment assessment of property, plant and equipment As at 31 March 2025, a cash generaঞng unit (“CGU”) of the Group relaঞng to the educaঞon segment reported recurring losses, which indicated that the carrying amount of the property, plant and equipment (“PPE”) of this CGU of RM118,098,000 may be impaired, as disclosed in Note 3(b) and Note 12 to the financial statements. The carrying amount of the PPE represents 63% of total Group’s property, plant and equipment. Accordingly, the Group performed an impairment assessment on these PPE by esঞmaঞng the recoverable amount using the value-in-use (“VIU”) method. The VIU assessment involved significant management judgement and esঞmates, in parঞcular, esঞmated student growth rate, esঞmated course fee and discount rate applied to the cash flow projecঞon in deriving at the VIU. Due to the significance of the carrying amount of the PPE as well as the significant judgement and esঞmates involved in deriving at the VIU, we consider the impairment assessment on these PPE as an area of audit focus. To address this area of audit focus, we have performed, amongst others, the following procedures: (i) Evaluaঞng the key assumpঞons used by management in the VIU calculaঞon , including the student growth rate and esঞmated course fees, by assessing the effecঞveness of management’s previous esঞmaঞon process to evaluate the reliability of management’s VIU calculaঞon; (ii) Engaging our internal valuaঞon specialists to evaluate the VIU methodology applied by management, including the evaluaঞon of the discount rate; and (iii) Assessing the adequacy of the related disclosures in Note 3(b) and Note 12 to the financial statements, in parঞcular the disclosures on significant assumpঞons to which the outcome of the impairment assessment is most sensiঞve, being those that have the most significant effect on the determinaঞon of the recoverable amount of the PPE. independent auditors’ report to the members of matrix concepts holdings berhad (incorporated in malaysia) registration no. 199601042262 (414615-u) 149 MATRIX CONCEPTS HOLDINGS BERHAD INTEGRATED ANNUAL REPORT 2025 07 FINANCIAL STATEMENTS
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