The Full audit Statement on Transmile!

My Dearest Moo Moo Cow,

Here it is.

• On 4 May 2007, the Directors of the Company received a letter from the Company's auditors, Messrs. Deloitte & Touche ("D&T") stating that D&T was unable to obtain the supporting documents from the management to satisfy D&T as to the fairness of the trade receivables and related sales to 18 companies identified by D&T. D&T also informed the Directors that they were unable to obtain satisfactory supporting documents for purchases of property, plant and equipment which amount was correspondingly credited to the unpaid balance owing by the 18 companies identified by D&T.
  
  As a result, the Board of Directors of the Company ("Board") expressed its concerns through the announcement dated 7 May 2007 as to the reliability of the unaudited consolidated results for the financial year ended 31 December 2006 announced on 15 February 2007, in particular, the items highlighted by D&T.
  
  On 7 May 2007, the Board appointed Moores Rowland Risk Management Sdn Bhd ("MRRM") to carry out a special audit on the issues mentioned above.
  
  This announcement is made in view of the Board's intention to maintain transparency of the findings by MRRM.
  
  1. FINDINGS OF SPECIAL AUDIT
  
  On 25 May 2007, MRRM issued a first interim report on its findings, a copy of which was submitted to the Securities Commission following a request by the Securities Commission.
  
  In the interim report, MRRM reported that:
  
  · In the financial year ended 31 December 2006, invoices were issued and recorded for purported services to 20 companies (comprising the 18 companies identified by D&T and 2 additional companies identified by MRRM) totalling RM333 million and representing 30% of the consolidated revenue stated in the unaudited consolidated results announced on 15 February 2007. This may result in an overstatement in the consolidated revenue by RM333 million;
  
  · Based on the unaudited consolidated financial statements as at 31 December 2006, the trade receiveables from the above 20 companies totalled RM236 million; and
  
  · In the course of the special audit, MRRM also noted that in the financial year ended 31 December 2005, invoices were issued and recorded for purported services to 19 companies (including 17 of the 20 referred to above) totalling RM197 million and representing 36% of the audited consolidated revenue of the Company for the financial year ended 31 December 2005. This may result in an overstatement in the consolidated revenue by RM197 million.
  
  For the purposes of illustration based on the above findings, on the assumption that TGB makes full provisions relating to the revenue recorded in respect of the companies mentioned above, the unaudited consolidated profit before taxation of the Company will be reduced by RM333 million for the financial year ended 31 December 2006, from RM207 million profit before taxation to a loss before taxation of RM126 million and the audited consolidated profit before taxation of the Company will be reduced by RM197 million for the financial year ended 31 December 2005 from a profit before taxation of RM120 million to a loss before taxation of RM77 million.
  
  The above illustration of the impact to profit before tax is subject to changes that may arise from the on-going special audit and the statutory audit for the financial year ended 31 December 2006 and does not take into account tax implications.
  
  The special audit by MRRM is still on-going in respect of the financial statements arising from the above.
  
  2. ON-GOING AUDIT
  
  The Company wishes to highlight that the special audit of MRRM is presently still on-going. Updates of any further material findings will be made in due course.
  
  In conjunction with the special audit, the Company will work towards finalising the annual statutory audit of the financial statements of the Company for the financial year ended 31 December 2006. With the findings of MRRM, the audited financial statements of the Company for the financial year ended 31 December 2006 are likely to include prior year adjustments.
  
  3. OPERATIONAL FRAMEWORK
  
  The Board has instituted the following:
  
  (a) A formation of an Executive Committee ("Exco") which assumes the authority of the Chief Executive Officer, arising from governance issues relating to the release of the announcement on the unaudited consolidated results for the financial year ended 31 December 2006, dated 15 February 2007 by the Board. The Executive Committee will be chaired by Mr Kuok Khoon Ho, and will comprise two other members of the Board, namely, Tan Sri A. Razak bin Ramli and Datuk Abu Huraira bin Abu Yazid. All of the Directors on the Exco are non-executive Directors of TGB;
  
  (b) The appointment of Mr Ong Teng Ping as the acting Chief Financial Officer. Mr Ong has been seconded from Chem Quest Sdn Bhd (a subsidiary of PPB Group Berhad), where he is a Director and the Group General Manager; and
  
  (c) On-going review of the systems to strengthen operations and internal controls of TGB and its subsidiaries ("TGB Group").
  
  4. CONTINUITY OF BUSINESS
  
  The TGB Group is keen to ensure the continuity of its business in providing express air cargo transportation services comprising international express freight services, chartering of aircraft, aircraft leasing and general freight services. The other services that are provided by the TGB Group include aircraft ground handling, aircraft maintenance, supply of aircraft parts, equipment and warehousing. In this respect, the TGB Group is presently actively engaging various stakeholders for its businesses including its principal customers, who are multinational cargo integrators, freight forwarders and courier companies, as well as its bankers, its shareholders and regulators, through appropriate channels.
  
  The TGB Group has in excess of 600 people with 49 managerial staff. It has its operational head office at Subang Airport and corporate head office in Damansara Heights.
  
  The Board is confident that the day-to-day business and service levels of the TGB Group will remain uninterrupted with the help of Group Chief Operating Officer, Robert Hyslop and the management team. With its landing rights and fleet of aircraft, the TGB Group is expected to continue to benefit from its niche within the express air cargo transportation market by providing its express air cargo transportation services.