KUALA LUMPUR: An independent assessment by auditor reveals that there was a discrepancy in the values of London Biscuits Bhd’s (Lonbisco) property, plant and equipment.

However, the confectionery group did not disclose the details of the discrepancy in its property, plant and equipment in the announcement to Bursa Malaysia yesterday.

“PKF has completed their review, mainly covered the period from Oct 1, 2017, to Sept 30, 2018, and has submitted their report to the company” said Lonbisco.

In terms of trade receivables, PKF reported that the qualification of Nexia SSY on the inability to ascertain the correctness of the ageing data of trade receivables and related information utilised to calculate and measure expected credit loss, was valid, the group added.

On its inventories for the financial year ended Sept 30, 2018 (FY18), PKF reported that it was common for Nexia SSY to qualify the group’s FY18 inventories, as they were only appointed two months after FY18.

PKF viewed that transactions with Secret Ingredients Sdn Bhd (SISB) are not related party transactions, as there was no legal connection between LBB and SISB or any evidence signifying otherwise.

That said, PKF noted that the transaction between Lonbisco and SISB was not in Lonbisco’s commercial interest.

“The board will be in discussion and review in relation to the report. The company will make further announcement on any development arising from the above matter as and when necessary,” the group said.

Lonbisco appointed PKF to conduct an independent assessment after its existing auditor Nexia SSY raised certain issues, such as inventories and impairment of trade receivables on the group’s financial statements for FY18.

Lonbisco defaulted on RM9.83 million in debt repayment to Bank of Nova Scotia Bhd in July due to “cash flow constraint”.

While it cited cash flow constraints for the default, however its balance sheet as at March 31, showed that it had total assets of RM845.8 million.