More insights on Silver Bird's Financial Irregularities

Last night, Silver Bird made the following announcement: OTHERS

• The Special Committee of SBGB wishes to announce that consistent with the disclaimers raised by the auditors pertaining to the financial statements of the Company for the financial year ended 31 October 2011 as announced on 29 February 2012, and in the light of the findings of the forensic accountants taken as of to-date on the lack of reliability of the financial statements of the Group, it has undertaken upon itself to establish the financial position of the SBGB Group as at 29 February 2012, which was reconstructed based on information available to the Special Committee up to the date of this announcement. The financial position of the SBGB Group as at 29 February 2012 was approved by the Special Committee on the 22 April 2012. Details of the financial position as at 29 February 2012, is attached as Appendix 1. Based on the information available as at to-date, the Special Committee does not foresee any further material adjustments to the accounts of the SBGB Group. A reconciliation between the financial position as at 29 February 2012 and as at 31 October 2011, together with the underlying explanations as to how the differences occur, is also attached as Appendix 2.
  
  
  As previously announced, the forensic investigation report is expected to be finalized by 29 May 2012.
  
  Based on the financial position of the SBGB Group as at 29 February 2012, the Special Committee of SBGB also wishes to announce that subject to the approval of the relevant authorities, creditors and shareholders, the Group intends to seek the support of its bank lenders, major creditors and major shareholders to undertake a PCDRS. In this connection, the Special Committee of SBGB wishes to announce that Appendix 1 and the PCDRS will be or have been forwarded to the creditors and shareholders of the SBGB Group for discussion purposes. The PCDRS essentially envisages a proposed capital reduction, a proposed rights issue, a proposed debt settlement which incorporates a cash repayment, the terming out of part of the liabilities, debt to equity conversion and waiver of debts that are no longer supported by assets, and the proposed liquidation of subsidiary companies that are no longer essential to the future operations of the SBGB Group.
  
  
  The full particulars of the regularisation plan as required under Practice Note 17 will be announced by a Principal Adviser to be appointed, in due course, after taking into consideration the feedback of the bank lenders, major creditors and major shareholders of the Group on the PCDRS.
  
  This announcement is dated 27 April 2012.

Attached is the balance sheet: SilverBird BS.pdf 

Now, I wanted to see more in detail on what has changed in the balance sheet, ie I wanted to see how unreliable the previous financial statement released by the company.

From the quarterly earnings released on Dec 2011: SBGB_Q4 2011.pdf

Here is the screen shot of the balance sheet.

Here is the screen shot of the balance sheet posted last night by Silver Bird.

The changes were mentioned in detailed in the other pdf file: Silver Brid Financial Position reconciliation.pdf

The value of the property and plant were adjusted down by 98 million!!!! (The notes below mentioned 'assets that cannot be physically identified!!! WTH!!!!!! Did the assets even existed in the first place??!!! )

Cash was adjusted. Where did the Moola go?

Inventory was less. (The notes below state "obsolete inventories and inventories that cannot be physically identified." !!!! Again did these inventories even existed in the first place? )

 Accounts payable increased. And the total borrowings increased!!!!

Holy cow!!!

And the following were the notes stated in that pdf file attached.

Notes:

1. Impairment to fair value, after taking into consideration additional depreciation since 31 October 2011, write down of assets that should have been expensed to profit & loss as opposed to being capitalized, movements in acquisitions and disposals, write-offs of assets that cannot be physically identified, write backs of assets that were not previously taken up, and possibly adjustments to assets that may have been suspected to be capitalized above fair market value arising partly from the preliminary forensic investigation.

2. In view of the net liabilities position of the Group, goodwill is impaired in totality.

3. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, provisions for doubtful debts and suspected financial irregularities arising from the preliminary findings of the forensic investigation

4. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and after reconciling for transactions relating to suspected financial irregularities arising from the preliminary findings of the forensic investigation

5. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and for obsolete inventories and inventories that cannot be physically identified.

6. Adjustments have been made for movements in the ordinary course of business between 31 October 2011 and 29 February 2012, and which may relate to the losses incurred during the said period, and for provisions relating to suspected financial irregularities arising from the preliminary findings of the forensic investigation

7. Increased borrowings can be related to additional net borrowings of the Group between 31 October 2011 and 29 February 2012. Certain facilities, such as bonds, were paid off, whilst  additional borrowings were drawn down, in particular bankers acceptances, during the period

8. Others, relate to the write-off of investment in KPF Quality Foods Sdn Bhd, and increased deferred taxation provisions

The Star Biz had this article: Silver Bird to forward preliminary debt revamp scheme soon

• The bread and confectionary maker’s independent directors formed a special committee to run the daily affairs of the bread and confectionary maker after suspending group managing director-cum-founder Datuk Jackson Tan Han Kook, executive director Ching Siew Cheong and general manager for accounts and finance Lai Poh Mei on Feb 24.

So the MD-cum-founder and ED is suspended. Is that all?

ps: Do read comments posted in Corporate Governance in Malaysia blog by M.A. Wind : Silver Bird hammered by 300 million write-offs