7 131 130 Notes to the Financial Statements Notes to the Financial Statements 1. BASIS OF PREPARATION (CONTINUED) (a) Statement of compliance (continued) The Group and the Company plan to apply the abovementioned accounting standards, interpretations and amendments: • from the annual period beginning on 1 April 2023 for the accounting standard and amendments that are effective for annual periods beginning on or after 1 January 2023, except for MFRS 17 and amendments to MFRS 17 which are not applicable to the Group and the Company; and • from the annual period beginning on 1 April 2024 for the amendments that are effective for annual periods beginning on or after 1 January 2024. The initial application of the abovementioned accounting standards, amendments and interpretations are not expected to have any material financial impact to the current period and prior period financial statements of the Group and of the Company. (b) Basis of measurement These financial statements have been prepared on the historical cost basis other than as disclosed in Note 2. (c) Functional and presentation currencies These financial statements are presented in Ringgit Malaysia (“RM”), which is the Group’s and the Company’s functional currency. All financial information is presented in RM and has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of the financial statements in conformity with MFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There are no significant areas of estimation uncertainty and critical judgements in applying accounting policies that have significant effect on the amounts recognised in the financial statements other than those disclosed in the following notes: (i) Note 4 – extension options and incremental borrowing rate in relation to leases The Group assesses at lease commencement by applying significant judgement whether it is reasonably certain to exercise the extension options. Group entities consider all facts and circumstances including their past practice and any cost that will be incurred to change the asset if an option to extend is not taken, to help them determine the lease term. The Group also applied judgement and assumptions in determining the incremental borrowing rate of the respective leases. Group entities first determine the closest available borrowing rates before using significant judgement to determine the adjustments required to reflect the term, security, value or economic environment of the respective leases. (ii) Note 6 – impairment of intangible assets The Group performs annual impairment assessment on goodwill. The impairment is measured by comparing the carrying amount of an asset with its recoverable amount. The recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value in use. Determining the value-in-use of an assets requires an estimation of the future cash flows expected to arise from the cash generating units to which goodwill has been allocated and a suitable discount rate. Details of the impairment assessment are provided in Note 6. 1. BASIS OF PREPARATION (CONTINUED) (d) Use of estimates and judgements (continued) (iii) Note 10 – allowances for doubtful debts Allowance for doubtful debts is made by an allowance matrix to measure expected credit losses (“ECLs”) of trade receivables. A considerable amount of judgement is required in assessing the loss rates, which are based on actual credit loss experience. The Group also considers differences between (a) economic conditions during the period over which the historic data has been collected, (b) current conditions and (c) the Group’s view of economic conditions over the expected lives of the receivables. If the financial conditions of the customers with which the Group deals were to deteriorate, resulting in an impairment of their ability to make payments, additional allowance may be required. Details are disclosed in Note 30.4. (iv) Note 11 – valuation of biological assets The fair value of livestock biological assets is determined using a discounted cash flow model. In measuring the fair value of livestock biological assets, management estimates and judgements are required which includes the following: • expected number of agriculture produce • expected selling price of agriculture produce • expected salvage value of agriculture produce • mortality rate of livestock • feed consumption rate and estimated feed costs • other estimated costs to be incurred for the remaining life of the biological assets, and at the point of sales • discount rates Changes to any of the above assumptions would affect the fair value of the biological assets. The key assumptions used in the discounted cash flow model and the sensitivity analysis are disclosed in Note 11 to the financial statements. (v) Note 12 – allowance for slow-moving inventories and write down of inventories to net realisable value Reviews are made periodically by management on damaged, obsolete and slow-moving inventories. These reviews require judgement and estimates. Possible changes in these estimates could result in revisions to the valuation of inventories. Details are disclosed in Note 12. (vi) Note 20 – presentation of amounts related to supplier factoring facilities Supplier factoring facility is an arrangement where the participating suppliers may elect to receive early payment of their invoices from a financial institution. Under this arrangement, the financial institution agrees to pay amounts to a participating supplier in respect of invoices owed by the Group and receives settlement from the Group at a later date. Details are disclosed in Note 20. (vii) Note 21 – employee benefits The defined benefit obligation is determined based on an actuarial valuation. The actuarial valuation involves making assumptions regarding the discount rate, future salary increases and attrition rates. Due to the longterm nature of the defined benefit plan, such estimates are subject to significant uncertainty. Details of the assumptions used are disclosed in Note 21.
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