EXCEL FORCE MSC BERHAD 47 Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Excel Force MSC Berhad, which comprise the statements of financial position as at 30 June 2023 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial period then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 50 to 122. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 June 2023, and of their financial performance and their cash flows for the financial period then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. Basis for Opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and Other Ethical Responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial period. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matters How we addressed the key audit matters Impairment assessment on product development costs As at 30 June 2023, the Group and the Company recognised product development costs of RM15.4 million and RM13.4 million respectively and disclosed their assessment for impairment of product development costs in Note 6 to the financial statements. Significant judgement is involved in estimating the recoverable amount, i.e. the present value of future cash flows generated by product development costs. It involves uncertainties and is significantly affected by assumptions used and judgement made regarding estimates of future cash flows including forecasted revenue growth, profit margin of the products and discount rates. We evaluated management’s assessment of whether there was any indication of impairment on product development costs. We assessed the reasonableness of the assumptions used by management in estimating the recoverable amount, included: i) Reasonableness of cash flows forecasts and projections by comparison to historical performance and future outlook, as well as discussion with management. ii) The appropriateness of the discount rate by comparison to the Group’s cost of capital and relevant risk factors. iii) Sensitivity analysis taking into account the future trends based on both external and internal sources. We also considered the appropriate disclosure of the consolidated financial statements. Independent Auditors’ Report To the Members of Excel Force MSC Berhad [Registration No.: 200201003114 (570777-X)] (Incorporated in Malaysia)
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