ANNUAL REPORT 2021 147 FINANCIAL STATEMENTS REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D) Key Audit Matters (cont’d) Fair Value Assessment of Other Investments Refer to Notes 4.1(g) and 11 to the financial statements Key Audit Matter How our audit addressed the key audit matter As disclosed in Note 11 to the financial statements, other investments as at the reporting date amounted to approximately RM246.49 million representing 13% of total asset of the Group. Other investments are carried at fair value through other comprehensive income. The management’s determination of other investments’ fair value involves significant assumptions on future results of the businesses. In particular, key assumptions are made on, among others, growth rates and discount rates in the cash flow forecasts. This assessment involves significant judgement and there is inherent uncertainty in the assumptions applied by the management to determine the fair values of other investments. We considered this as a key audit matter due to the significance of other investments of the Group and the uncertainty inherent in determining the fair value of these other investments. Our procedures included, amongst others:- z Obtained management’s fair value assessment and gained an understanding of their approach in determining the fair value of other investments; z Reviewed the reasonableness of key assumptions used and judgement made in determining the fair values of other investments; and z Reviewed the sensitivity analysis on revenue growth, profit margin and discount rate. Impairment of Development Costs Refer to Note 4.1(h) and 12 to the financial statements Key Audit Matter How our audit addressed the key audit matter As disclosed in Note 12 to the financial statements, development costs as at the reporting date amounted to approximately RM322.52 million representing approximately 17% of total assets of the Group. Development costs are subject to impairment assessment by comparing the carrying amounts to their corresponding recoverable amounts. The recoverable amounts were determined by the management using the value in use method, based on future financial information. We considered this as a key audit matter due to the significance of the carrying amount and the uncertainty inherent in determining the recoverable amounts. Our procedures included, amongst others:- z Obtained management’s impairment analysis and gained an understanding of their impairment assessment process; z Reviewed the reasonableness of the key assumptions used and judgement made in determining the recoverable amount; z Reviewed the sensitivity analysis on revenue growth, profit margin and discount rate; and z Evaluated the capitalisation process and determined that costs capitalised met the requirements of MFRS 138. INDEPENDENT AUDITORS’ REPORT To the Members of MY E.G. Services Berhad (Incorporated in Malaysia) Registration No: 200001003034 (505639 - K) (CONT’D)
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