Ferrier Hodgson to investigate Ire-Tex’s related party deals

Ire-Tex-Corp

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KUALA LUMPUR: Corrugated packaging services provider Ire-Tex Corp Bhd has appointed Ferrier Hodgson MH Sdn Bhd as investigative accountant (IA) to conduct a thorough review of its related party transactions, following the issuance of a qualified opinion by its auditor on the group’s financial statements for the year ended Dec 31, 2014 (FY14).

In a filing with Bursa Malaysia yesterday, the group said Ferrier Hodgson will do a thorough investigation of the transactions made between Ire-Tex, its wholly-owned subsidiary Zoomic Automation (M) Sdn Bhd (ZASB), and suppliers Future Rank Sdn Bhd (FRSB), Sanjung AMS Sdn Bhd (AMS) and Midstream Resources Sdn Bhd (MRSB).

To recap, Ire-Tex (fundamental: 0.85; valuation: 1.7) had on May 5 announced that its external auditor UHY Chartered Accountants had expressed a qualified opinion on the group's FY14 accounts.

The qualified opinion emphasised two transactions. The first entailed the purchase of machinery by ZASB from FRSB amounting to RM16.5 million, with the group subsequently entering into a separate agreement with AMS to upgrade the machinery for RM16 million.

The group had also entered into a tripartite agreement to assign the debt of RM10.7 million owing from the initial supplier FRSB to AMS.

The second transaction highlighted by its auditor was the agreement between Ire-Tex and MRSB for the implementation of a lean manufacturing programme amounting to RM2 million.

Ire-Tex shares closed 0.5 sen or 1.49% higher at 34 sen yesterday, bringing a market capitalisation of RM44.16 million.

 

This article first appeared in The Edge Financial Daily, on June 12, 2015.