INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF SASBADI HOLDINGS BERHAD (continued) (Incorporated in Malaysia) Key Audit Matters (continued) Key Audit Matters of the Group 1. Annual impairment assessment of the carrying amount of goodwill As at 31 August 2025, the carrying amount of goodwill of Sanjung Unggul Sdn. Bhd. and its subsidiaries amounted to RM10,253,000 as disclosed in Note 7(e) to the financial statements. We determined the annual assessment of impairment of goodwill to be a key audit matter because of the significance of goodwill to the Group’s consolidated financial position and it requires significant management judgement and assumptions in determining the valuein-use of the cash generating units to determine the expected cash flows. These judgements and assumptions include projected growth in sales and gross margins and terminal value, as well as determining appropriate pre-tax discount rate. Audit response Our audit procedures included the following: a. Compared prior period projection to actual outcome to assess reliability of management’s projections; b. Verified projected gross margins, sales growth rates and terminal values to support the key assumptions in projections by corroborating information from other areas of our audit; c. Verified pre-tax discount rate used by management for the CGU by comparing to market rate, weighted average cost of capital of the Group and relevant risk factors; and d. Performed sensitivity analysis of our own to stress test the key assumptions in the impairment model. 2. Carrying amount of inventories at the lower of cost and net realisable value As at 31 August 2025, the carrying amount of inventories of the Group was RM63,868,000 and the associated allowance for inventories write down amounted to RM4,580,000, as disclosed in Note 12 to the financial statements. ANNUAL REPORT 2025 Financial Statements (conঞ nued) 83
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