Tuesday 16 Jul 2024
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KUALA LUMPUR (Feb 22): The external auditor of London Biscuits Bhd has expressed a qualified opinion on the group’s financial statements for the financial year ended Sept 30, 2018 (FY18) 

Messrs Nexia SSY, which was appointed as auditors of the group on Dec 20, 2018, said it was unable to satisfy itself by alternative means concerning  the group's physical inventories held at Sept 30, 2018, which are stated in the statements of financial position of the group and the company at RM26.89 million and RM20.79 million respectively.

"Since inventories enter into the determination of the financial performance and cash flows, we were unable to determine whether adjustments might have been necessary in respect of the profit for the year reported in the statement of comprehensive income and the net cash flows from operating activities reported in the statement of cash flows," Nexia SSY said in its report attached in London Biscuits' filing with Bursa Malaysia today.

Also reviewed was certain opening balances containing misstatements that materially affect the current period’s financial statements.

"Consequently, the items in opening balances as described in detail in Note 39 to the financial statements, were adjusted and restated in the financial statements.

"We noted that there were significant and material transactions between the group and a customer and as explained in Note 29 to the financial statements, the operations were indicative of a related party relationship despite the absence of a legal nexus. Consequently, the inter-company transactions were adjusted and treated as related party transactions (RPT) to reflect the operational arrangements described in Note 29 to the financial statements," said Nexia SSY.

The auditor said London Biscuits' management is of the opinion that RPT disclosure would not apply due to the legal status of the said company.

Another concern identified by the external auditor include the group recognising an impairment of trade receivables of RM1.994 million for FY18, and RM60.39 million were adjusted retrospectively to comply with the impact of the group’s early adoption of MFRS 9.

"In the computation of the expected credit loss (ECL), we were unable to ascertain the correctness of the ageing data of trade receivables as well as the related information utilised to calculate and to measure the ECL.

"Consequently, we are unable to determine whether adjustments are necessary in respect of the ECL and the ageing disclosure in Note 12 to the financial statements," said Nexia SSY.

"During the current financial year ending Sept 30, 2019 (FY19), acquisition of plant and machinery totalling RM52.467 million was made. We were unable to obtain sufficient appropriate audit evidence in respect of these acquisitions," it added.

London Biscuits said its board of directors has resolved to do an interim limited re-audit or assessment on the key audit matters raised in the auditors' report before the end of FY19.

London Biscuits shares closed down 3 sen or 5.26% at 54 sen today, with 8.13 million shares done, bringing a market capitalisation of RM138.5 million.

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