Deloitte issues qualified opinion on Lion Industries' financial statements in relation to associated companies

TheEdge Tue, Apr 26, 2022 11:59pm - 1 year View Original


KUALA LUMPUR (April 26): Lion Industries Corp Bhd's auditor Deloitte PLT has issued a qualified opinion on the group's financial statements for the 18-month period ended Dec 31, 2021 (FP21). This is related to the deconsolidation of a subsidiary of its associate, Parkson Holdings Bhd.

In a filing with the bourse, Lion Industries' board of directors announced that its external auditor Deloitte had expressed a "Basis for Qualified Opinion" on its audited financial statements for FP21 in respect of the opinion expressed by Messrs Grant Thornton Malaysia PLT, the external auditor of Parkson Holdings, an associated company of Lion Industries, of the financial impact arising from a subsidiary of Parkson in Indonesia that was deconsolidated during the financial period.

Deloitte pointed out that the group's investment in Parkson was carried at RM438.52 million on its statement of financial position as at Dec 31, 2021, and the group's share of losses from Parkson of RM52.39 million was included in its profit and loss statement.

The group's latest audited balance sheet showed that its total non-current assets were RM1.718 billion, including investment in associated companies amounted to RM485.82 million, the second largest component after property, plant and equipment totalling RM848.43 million.

Due to a limitation of scope, Deloitte noted that it was unable to obtain sufficient appropriate audit evidence regarding the financial impact arising from the deconsolidation of Parkson's subsidiary during the period.

"Consequently, we were unable to determine whether any adjustments that might have been found necessary in respect of the carrying value of Parkson as at Dec 31, 2021 and the group's share of losses from Parkson recognised for the current financial period then ended," said Deloitte.

Deloitte also highlighted key audit matters, such as the inclusion of property, plant and equipment of RM848.43 million, of which RM721.49 million represented assets at manufacturing plants in Banting and Johor; the recognition of RM23.17 million in impairment losses in relation to manufacturing plants in Banting and Johor.

"The impairment of these plants is considered a key audit matter as significant judgement and estimates are required to be exercised by the management when determining the recoverable amount of the plants for impairment assessment," said the auditor.

Other key audit matters were the carrying amount of key investment properties which included freehold land, leasehold land and economic land concessions in Cambodia amounting to US$25.9 million (RM107.96 million), as well as the accounting of debt settlement for an amount owing by Graimpi Sdn Bhd and Lion DRI Sdn Bhd in exchange for equity stake in Well Morning Ltd.

Lion Industries' share price closed unchanged at 59 sen, giving a market capitalisation of RM423.57 million.

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