Chemical Company of Malaysia Berhad Annual Report 2018

Independent Auditors’ Report TO THE MEMBERS OF CHEMICAL COMPANY OF MALAYSIA BERHAD REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinion We have audited the financial statements of Chemical Company of Malaysia Berhad, which comprise the statements of financial position as at 31 December 2018 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 100 to 194. 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 31 December 2018, and of their financial performance and their cash flows for the year then ended in accordance withMalaysian 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 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 of goodwill Refer to Note 2(f) and Note 2(k) for significant accounting policies and Note 5 “Intangible Assets”. The key audit matter How the matter was addressed in our audit At 31 December 2018, the Group’s consolidated statements of financial position includes goodwill amounting to RM94.1 million, contained within a cash generating unit (“CGU”). Impairment of goodwill is considered to be a key audit matter due to the significance of the assets to the Group’s consolidated statements of financial position and due to the judgement involved in the assessment of the ‘value in use’ of the CGU performed by the Directors. The judgement relates to the future results of the CGU and the discount rates applied to future forecasted cash flows. Our procedures included, amongst others: • We challenged the Group’s assumptions and estimates used to determine the recoverable value of the CGUs, including those relating to forecast revenue, cost, capital expenditure and discount rates by corroborating the key market related assumptions to external data; • We assessed the historical accuracy of cash flow forecast of the Group; • We performed sensitivity analysis in two main areas. These included the discount rates and gross profit margins on the CGUs; and • We assessed the adequacy of the disclosure of the assumptions and estimates made by the Directors. 196 ANNUAL REPORT 2018