Fraser & Neave Holdings Bhd Annual Report 2019

WWW . F N . C O M . M Y 212 F R A S E R & N E A V E H O L D I N G S B H D INDEPENDENT AUDITORS’ REPORT to the members of Fraser & Neave Holdings Bhd (Company No. 196101000155 (4205-V)) (Incorporated in Malaysia) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS OPINION We have audited the financial statements of Fraser & Neave Holdings Bhd, which comprise the statements of financial position as at 30 September 2019 of the Group and of the Company, and the statements of profit or loss, statements of other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 138 to 210. 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 September 2019, and of their financial performance and their cash flows for the financial year 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 auditors’ 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’ Code of Ethics for Professional Accountants (“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 year. 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. IMPAIRMENT ASSESSMENT ON INTANGIBLE ASSETS – GOODWILL AND BRAND Refer to Note 2(F)(i) and (ii) – Significant accounting policy on intangible assets – goodwill and brand and Note 6 – Intangible assets – goodwill and brand of the financial statements. THE KEY AUDIT MATTER As at 30 September 2019, the Group had goodwill of approximately RM41 million mainly relating to soft drinks business and dairy brand of approximately RM75 million owned by the Group. The Group is required to assess impairment of goodwill and brand at the end of each reporting period. The recoverability of the carrying amounts of goodwill and brand are dependent upon the recoverable values (determined using the discounted cash flow model) of the cash generating units which the goodwill and brand are allocated to. This was one of the areas that our audit focused on because there were inherent uncertainties and significant judgement involved in forecasting and discounting future cash flows to arrive at the recoverable values which may be affected by future market or economic conditions. The inherent uncertainties amongst others include appropriateness of significant assumptions used and discount rates.