Buriram Sugar Public : Yearly 2021

Key audit matter

Loss allowance - Farmer receivables and Borrowings to farmer receivables

Refer to Note no. 6.5 'Accounting policies - Trade and farmer receivables', Note no. 6.7 'Accounting policies - Financial asset', Note no. 13 'Farmer receivables, net', and Note no. 19 'Long-term borrowings to farmer receivables, net' to the consolidated and separate financial statements.

As of 31 December 2021, the Group has account farmer receivables, net, non-current farmer receivables, net, current portion of long-term borrowings to farmer receivables, net, and long-term borrowings to farmer receivables, net in the consolidated financial statements in the amount of Baht 442.26 million, Baht 104.77 million, Baht 41.56 million, and Baht 106.97 million, respectively, which represented 7.68% of total assets. The loss allowance - farmer receivables and borrowings to farmer receivables was set up totalling Baht 94.54 million. The management has a policy to assess the collectability of outstanding accounts receivables and sets up the appropriate loss allowance - farmer receivables and borrowings to farmer receivables based on period of overdue balance, collectability histories, collaterals and forward-looking information and factors that may affect the ability of repayments.

The loss allowance is assessed based on probability- weighted present value of estimated uncollectible amounts which deriving from the exposure at default after deducting appraisal value of collateral. The management assess the value of collateral by comparing between the market value and carrying value and regularly reassess its value. In addition, they will also consider expected credit loss based on historical collectability, the possibility of recoverable amount, forward-looking information, and regularly assess for credit risk characteristics of farmer receivables and adjust the loss allowance as appropriate each year.

I focused on this area due to the amount of loss allowance are material and related with the management's judgement on the reasonableness of the assumptions used in the valuation of the collateral and the collectability in the future.

How my audit addressed the key audit matter

I evaluated the appropriateness of the loss allowance - Farmer receivables and Borrowings to farmer receivablesby:

• Inquiring management the appropriateness of identificationand judgement of loss allowance required.
• Testing the reliability of accounting receivables agingreport used in assessing the loss allowance
• Assessing the reasonableness of the historical datafor farmer receivables collection included the possibility of recoverable amount and considering the management's reasons used to assess the adequacy of the loss allowance based on the assessment of credit risk characteristics of accounts receivables, and
• Examining each collateral value with reliable externalsources of information and comparing value with similar and comparative objects market value

Based on my procedures above, I found that the loss allowance - farmer receivables and borrowings to farmer receivables was reasonable and consistent with historicaldata and align with the available evidence.

Key audit matter

Impairment assessment of investments in subsidiaries

Refer to Note 9 b) 'Impairment of investments in subsidiaries' and Note 18 'Investments in subsidiaries' to the consolidated and separate financial statements.

As of 31 December 2021, the Company has investments in subsidiaries in the separate financial statements at amounting to Baht 3,150.61 million, which some of the Group's subsidiaries have indicators of the possible impairment due to inability to achieve the expected profits, which might affect to the recoverable amounts of the investments in subsidiaries. In addition, some subsidiaries have net loss continuously. Management considered these as impairment indicators of investments in subsidiaries.

Management performed impairment testing on investments in subsidiaries in the separate financial statements and calculated the recoverable amount by comparing between the higher of the fair value less costs to sell and value-in-use. The assessment for the recoverable amount requires the management's significant judgement on the future operating results of business, projected cash flows and the discount rate applied to the projected cash flows.

From this impairment testing on the investments, the management found that the recoverable amount of the investments was higher than the carrying amount, therefore, no allowance for impairment of investments in subsidiaries was required in this year.

I focused on the recoverable amount of investments in subsidiaries due to its significant value and because of the subjectivity of management's judgement on the reasonableness of the key assumptions used in deriving the recoverable amount.

How my audit addressed the key audit matter

I carried out the following audit procedures to assess the impairment test of investments in subsidiaries in the separate financial statements prepared by management.

• Assessed the appropriateness of management'sidentification of the indicators for impairment of investments in subsidiaries.
• Held discussions with the management to understandthe basis for the assumptions applied to the cash flow projections.
• Challenged management's significant assumptionsused in impairment testing, especially in respect to the forecasted revenue, expected changes to working capital, overhead costs and long-termgrowth rate to the business. My procedures included comparing those assumptions to the external sources and management's approved business plan.
• Assessed the reasonableness of the business planby comparing the plans of 2021 with actual results.
• Assessed the discount rate by considering andcomparing with the independence data obtained from available public information of companies in the same industry sector to see whether the discount rate used by the management was within the acceptable range.
• Tested the sensitivity analysis of the key assumptionsused in the discounted cash flows projection, such as forecasted revenue and discount rate, to assess the sensitivity impact and the impact from changes in these key assumptions.
• Assessed the appropriateness of the impairmenttesting and recording for the impairment of investments in subsidiaries in the separate financial statements.

As a result of the procedures performed, I did not find any irregularity of the management's assessment of the impairment and noted that the key assumptions used by management and the independent appraiser were reasonable based on the available evidence andthe calculated fair value was acceptable.