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17 June 2015

Completion of Special Audit Report by UHY FLVS Sdn Bhd (“UHY”)

 

Further to the Company’s announcement made on 15 June 2015, the Board of Directors of the Company wishes to announce the following additional information to Bursa Malaysia Securities Berhad for public release:-                                      

1. The Company’s external auditors, Messrs Nexia SSY (“Nexia”), had raised concerns in respect of the following:

(a) Classification: The treatment/ classification of an amount due to a multinational commodity trader as at 31 December 2014 wherein the Company has treated/ classified the amount due as trade deposits. Nexia had concerns that this was a financing arrangement as the said multinational commodity trader continues to make advance whilst not accepting deliveries of their orders, causing the trade to be cancelled and triggering repayment of the earlier deposit.

(b) Validity and Recoverability: In the course of its audit verification of trade receivables, and based on information extracted from the records of the Companies Commission of Malaysia (“CCM”) by way of a company search conducted with the CCM on selected trade debtors for the purposes of ascertaining the financial position of these trade debtors, Nexia had doubts on the area of payables and purchases as the relevant accounts receivable records contained a number of credit entries and other adjustments which were explained to Nexia’s engagement team as cross-purchases of steel products by the Company from the said trade debtors. Nexia was also of the view that there appeared the possibility of specific misstatements in the financial statements and that the recoverability of the balances from the said trade debtors was put into question.

2. UHY’s findings on the areas of concern aforesaid are as follows:

(a) Classification: UHY was satisfied that the advance payments received from the aforesaid multinational commodity trader had been correctly accounted for by the Company as trade deposits in accordance with the Malaysian Financial Reporting Standards.

(b) Validity and Recoverability: UHY was satisfied that the transactions with the trade debtors under review are properly supported evidentially. UHY has also ascertained with reference to events post 31 December 2014 that the amounts due from the trade debtors under review have been fully repaid and/or settled in accordance with the agreed trade credit terms.

3. Having reviewed the Special Audit Report by UHY, the Audit Committee and the Board of Directors are in agreement with UHY’s findings therein.

4.Arising from the findings, the Company is presently liaising with Nexia on the release of its Audited Financial Statements for the year ended 31 December 2014 and the announcement thereof in due course.

This announcement is dated 17 June 2015.

 

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