Friday 29 Mar 2024
By
main news image

KUALA LUMPUR (Oct 22): Bursa Malaysia has publicly reprimanded Kinsteel Bhd and its 30.54%-owned subsidiary, Perwaja Holdings Bhd, with regards to their respective quarterly financial reports for the 18-month financial period ended June 30, 2014(QR June 2014), which was announced on Aug 29, 2014.

Two separate filings from Kinsteel and Perwaja on the exchange today, revealed the quarterly report of both companies were in contravention of paragraph 9.16(1)(a) of the Bursa Malaysia Securities Main Market Listing Requirements(MMLR).

The requirement states a listed issuer must ensure that each announcement made is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.

To put things into perspective, Kinsteel had reported an unaudited net loss of RM421.49 million in its QR June 2014 (announced on Aug 29), as compared to an audited net loss of RM546.81 million in the audited financial statements (announced on Nov 7, 2014). The difference of RM125.32 million between the unaudited and audited results, represented a variance of 29.7%.

The adjustments were mainly attributed by Perwaja at the material time, and in respect to impairment of its plant and machinery.

In Perwaja’s books, the group had reported an unaudited net loss of RM921.6 million in its QR June 2014, announced on Aug 29, 2014; as compared to an audited net loss of RM1.22 billion in the audited financial statements announced on Nov 7, 2014. The difference of RM295.85 million between the unaudited and audited results, represented a variance of 32%.

The main adjustment was in respect to impairment of plant and machinery of RM233.57 million, whereby despite requests by the external auditors since May 28, 2014, Perwaja had failed to undertake an impairment assessment, including taking reasonable steps to appoint and expedite completion of the independent valuation report for impairment assessment, prior to the submission of the QR June 2014.

“The explanation that the adjustment was made upon receipt of the valuation letter dated Nov 6, 2014 was not acceptable,” said Bursa Malaysia.

The regulator added that Kinsteel has the responsibility to ensure its consolidated financial statements were prepared to give a true and fair view of the state of affairs of the group, and there was no justification for its failure to do so, particularly where the entire board of directors of Perwaja, except for Lim Chew Yin, were directors of Kinsteel.

“They were or should be aware of the audit issues highlighted by the external auditors, including the request for an independent valuation report,” said Bursa Malaysia.

The regulator added while it has not found any of Kinsteel or Perwaja’s directors to have caused or permitted the breach by the company, it is the duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance to the main listing requirements.

Perwaja is also required to review and ensure adequacy and effectiveness of its financial reporting function, and carry out a limited review on its quarterly report submissions.

The limited review must be performed by the company’s external auditors for four quarterly reports, commencing no later than the quarterly report for the financial period ending Dec 31, 2015.

In addition, Perwaja must ensure all of its directors and relevant personnel attend a training programme in relation to compliance with the MMLR pertaining to financial statements.

Bursa Malaysia views the contravention seriously, since timely and accurate submission of financial statements to enable investors to make informed investment decisions, is one of the fundamental obligations of companies listed on the official list of Bursa Malaysia Securities, it said.

Kinsteel's shares closed unchanged at 12.5 sen today, with a market capitalisation of RM130.2 million; while Perwaja's shares were down 0.5 sen or 3.85% to 12.5 sen, with a market capitalisation of RM70 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

      Print
      Text Size
      Share