Report on the audit of the financial statements Opinion (CONT’D) Key audit matters (cont’d) Fair value assessment of other investments Key audit matters How our audit addressed the key audit matters As disclosed in Note 12 to the financial statements, other investments as at the reporting date amounted to approximately RM235.7 million representing 9.3% of total assets of the Group. The management’s determination of other investments’ fair value involves significant assumptions on future results of the business. In particular, key assumptions are made on, among others, growth rates and discount rates in the projected cash flows. This assessment involves significant judgement and there is inherent uncertainty in the assumptions applied by the management to determine the fair value of other investments. We considered this as key audit matter due to the significance of the other investments of the Group and the uncertainty inherent in determining the fair value of these other investments. Our audit procedures included, amongst others:- l Obtained management’s fair value assessment and gained an understanding of their approach in determining the fair value of other investments; l Reviewed the reasonableness of key assumptions used and judgement made in determining the fair values of other investments; and l Reviewed the sensitivity analysis on revenue growth, profit margin and discount rate. Impairment of development costs Key audit matters How our audit addressed the key audit matters As disclosed in Note 7 to the financial statements, development costs as at the reporting date amounted to approximately RM762.7 million representing 30.0% 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 key audit matter due to the significance of the carrying amounts of development cost and the uncertainty inherent in determining the recoverable amounts. Our audit procedures included, amongst others:- l Obtained management’s impairment analysis and gained an understanding of their impairment assessment process; l Reviewed the reasonableness of key assumptions used and judgement made in determining the recoverable amount; l Reviewed the sensitivity analysis on revenue growth, profit margin and discount rate; and l Evaluated the capitalisation process and determined that costs capitalised met the requirements of MFRS 138. 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. INDEPENDENT AUDITORS’ REPORT To the members of MY E.G. Services Berhad (Incorporated in Malaysia) [Registration No.: 200001003034 (505639-K)] (cont’d) 146
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