Update on Mems Accounting Issue

Blogged the other day: OSK comments on Mems

In which OSK wrote the following...

• We understand that there has been speculation since last week indicating that MemsTech’s audited FY07 net profit could be much lower than reported in September 2007 after adopting a new accounting standard. We have contacted the management and we think it is still premature at this juncture to actually conclude anything. First of all, this is not a special investigation on the company’s FY07 financial results. It is a standard procedure that the full-year financial results of PLCs will eventually be audited. According to management, the audited FY07 results will only be released at least two weeks from now. Meanwhile, our concerns that investors may further dump the shares until this uncertainty is alleviated, we have revised our recommendation on MemsTech to a Neutral. Nevertheless, our fair value of RM0.95 is maintained until the audited report is obtained..... (do read OSK comments on Mems )

Mems made the following announcement tonight:

MEMS TECHNOLOGY BERHAD (“MEMS” or the “Company”) - AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 JULY 2007

• Pursuant to Paragraph 9.24(b) of the Listing Requirements of Bursa Securities Malaysia Berhad for the MESDAQ Market (“Bursa Securities”), MEMS is required to furnish Bursa Securities its Audited Financial Statements for the financial year ended 31 July 2007 for public release, within a period of 4 months from the close of the financial year, which falls on 30 November 2007.
  
  The Board of Directors of MEMS (“Board”) wishes to announce that the Company is not able to issue its Audited Financial Statements by 30 November 2007, as the Company’s external auditors have expressed concerns over certain transactions relating to revenue and property plant and equipment.
  
  In light of the above, and after due deliberation, the Board has resolved not to recognize revenue of RM19.72 million. As a result of this, the unaudited consolidated revenue for the financial year ended 31 July 2007 will be revised to RM53.7 million. This will consequently result in the unaudited profit after tax for the financial year ended 31 July 2007 to be reduced from RM21.47 million as announced on 27 September 2007, to RM13.45 million.

Bottom line is net earnings will be reduced from 21.47 million to just 13.45 million!

WOW!

That's pretty drastic!

For a stock that was touted for its stellar growth, doesn't this reflects so rather poorly on the company!