Wednesday, March 06, 2013

Octagon’s auditors issues disclaimer of opinion

I was reading this article on the Edge.

  • Octagon’s auditors issues disclaimer of opinion
    Business & Markets 2013
    Written by Lee Wen Ai of
    Wednesday, 06 March 2013 09:06

    KUALA LUMPUR: OCTAGON CONSOLIDATED BHD []’s (OCB) auditors have expressed a disclaimer of opinion in the company’s latest audited accounts for the year ended Oct 31, 2012 (FY12).

    Its external auditors Messrs Baker Tilly AC expressed “significant doubt” on OCB’s ability to continue as a going concern pending the implementation of a proposed rationalisation scheme (PRS) as a result of OCB’s default on term loan payments during the year.

    OCB had earlier submitted the PRS for its lenders’ consideration. OCB was informed on Jan 9 that the PRS was approved. OCB is said to be in the process of finalising and executing its debt settlement agreement with its lenders.

    The auditors said there was “material uncertainty” over the recoverability of the group’s RM79.4 million work-in-progress for a waste tyre project, a RM71.8 million development expenditure for a waste-to-energy project in Sri Lanka and the company’s RM33.6 million investment in relevant subsidiaries as at Oct 31, 2012 — which were dependent upon the successful implementation of the projects and the PRS.

    The auditors also highlighted that the group had a contingent liability of RM11.9 million from transactions entered into with YEM Holding Company WLL, a shareholder of a subsidiary, for advances made to fund the waste-to-energy project in Sri Lanka.

    “Because of the significance of the matters described in the basis for disclaimer of opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements,” said Baker Tilly AC.

    OCB is a financially distressed company under Practice Note 17 (PN17) status because of its inability to fulfil its payment obligations to Amanah Raya Capital Sdn Bhd last June.

    For FY12, the group incurred net losses of RM68.6 million. The group had net current liabilities of RM190.6 million as at end-October.

    OCB engages in the coating of consumer electrical and electronics products and providing clean energy from renewable sources.

    This article first appeared in The Edge Financial Daily, on March 6, 2013.
I had posted on this company before back in 2010.

Here are the links to those postings.