Ni Hsin Berhad Annual Report 2018

Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Ni Hsin Resources 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 42 to 99. 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 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 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. The key audit matter of the Group Goodwill of investment in subsidiaries Refer to Note 2 (a)(i) and Note 2 (f) - Significant accounting policy: Subsidiaries and Goodwill and Note 5 Goodwill The key audit matter How the matter was addressed in our audit The Group has RM5.1million of goodwill and is solely attributable to the subsidiary which is involved in clad metals and stainless steel convex mirrors business cash-generating unit (“CGU”) as at 31 December 2018. This CGU is tested for impairment annually. Management applies the value-in-use (discounted cash flow) method to determine the recoverable amount of CGU. Any shortfall of the recoverable amounts against the carrying amounts would be recognised as impairment losses. The recoverable amounts are determined based on management estimates and assumptions on inputs as disclosed in Note 5 to the financial statements. This is a key audit matter because of the significant judgement required from us to evaluate the assumptions and estimates used in determining the recoverable amount of CGU. We performed the following audit procedures, among others, around the impairment of goodwill: � We reviewed the basis and assumptions used by the management in the preparation of 5 years cash flow projections. � We challenged the assumptions used in deriving the value- in-use models based on our knowledge of the CGU’s operations, and compared them against historical forecast and performance. � We used sensitivity analysis to determine those factors that were most sensitive within the valuation model. � We considered the adequacy of the Group’s disclosure about the sensitivity of the outcome of the impairment assessment to changes in key assumptions. Independent auditors’ report to the members of Ni Hsin Resources Berhad Annual Report 2018 101