Wednesday, November 10, 2010

Changhuat's Audited Accounts Showed That Profits Should Be Losses

Posted the other day: What's Happening In Changhuat?

On today's Edge: Changhuat’s audited results turn from profit to loss

  • Changhuat’s audited results turn from profit to loss
    Written by The Edge Financial Daily
    Wednesday, 10 November 2010 14:23

    KUALA LUMPUR: Changhuat Corp Bhd, which produces rubber products, incurred an audited net loss of RM3.5 million for FY2010 ended June 30, compared with the unaudited net profit of RM1.78 million announced earlier in August, following some audit adjustments.

    Interestingly, Changhuat’s shares rose 11 sen or 10.1% to RM1.20 on volume of 1.76 million shares yesterday.

    The company announced yesterday the deviation of more than 10%, or -RM5.3 million, in its profit or loss after tax and minority interest between the announced unaudited numbers and the audited financial statements.

    It explained that the deviation was principally due to five items, namely:

    1) a net increase in revenue and other income due to late recognition of an insurance claim,
    2) an increase in cost of sales,
    3) a net decrease in administration and finance costs,
    4) an increase in tax expenses arising from deferred tax adjustments, and
    5) a loss reversal from a discontinued operation.

    These items led to a deviation of –RM5.3 million, reducing Changhuat’s bottom line to a net loss of RM3.5 million.

    The increase in the cost of sales was due to an adjustment to the depreciation of a subsidiary asset at fair value at the group level amounting to RM1.99 million, accrual for a rebate payable of RM1.3 million not taken up in the unaudited accounts, and recognition of additional operating expenses of RM578,000 including bunker fuel costs and insurance expenses not taken up previously.

    Changhuat had failed to submit its audited financial statements for FY10 to Bursa Malaysia within the stipulated timeframe under Bursa’s listing requirements.

    In Changhuat’s case, it was to submit its audited accounts by end-October. It then asked for an extension of time until Monday and explained that the delay was due to a change in auditors and unresolved audit issues.

    Changhuat submitted it audited financial statements on Monday. Trading of its shares would have been suspended had it not submitted the outstanding financial statements before yesterday.

Another nice one for my scrapbook.