Special audit on Multico accounts!

What a start to the new year.

Published on the Star Business: Special audit on Multico accounts

• Wednesday January 2, 2008
  
  Special audit on Multico accounts
  
  By C. S. TAN
  
  PETALING JAYA: Multi-Code Electronics Industries Bhd (Multico), a second board company with RM37mil in unascertained deposits and investments, will appoint Azman, Wong, Salleh & Co to carry out a special audit on its accounts.
  
  The company told Bursa Malaysia on Monday the special audit would cover matters highlighted by the external auditors and “the failure to detect the error in FRS (financial reporting standards) recommendations by the external auditors.” The company’s external auditors are Ernst & Young.
  
  Multico has yet to announce its audited accounts for its financial year ended July 31 (FY07) even after three extensions. It announced in September an unaudited net profit of RM1.3mil for that year, and was required to disclose its audited results by Nov 30 under Bursa’s Listing Requirements.
  
  After three extensions, the latest of which was till Dec 19, the company had yet to present its audited results, according to Bursa’s website.
  
  On Monday, in announcing its results for its first quarter ended Oct 31, Multico said that in the course of audit for FY07, auditors were not able to obtain documentary evidence and satisfactory explanation from management so as to verify the existence or recoverability of sums totalling over RM37mil. These involve:
  
  1) Deposits with a foreign financial institution of RM28.6mil, and accrued interest income of RM960,000;
  
  2) Investment in a foreign investment fund amounting to RM3.5mil; and
  
  3) Deposit of RM4.2mil with a foreign company for registration of the company in the American Depository Receipt programme.
  
  Multico said these sums arose from transactions involving parties connected to a director of the company.
  
  Meanwhile, Multico, which makes electronics components like remote control auto alarm, central locks, power windows and reverse sensors, reported an unaudited net profit of RM1.1mil for the first quarter of FY08.
  
  The company saw a change of major shareholder and managing director early last year.
  
  Goh Tong Huat, who was managing director, resigned on March 23, 2007. He was disclosed in the company’s 2006 annual report as having a direct interest in 12.1 million shares, or 27.3% of the company’s equity, and deemed interest in 502,000 shares, or 1.1% of the company’s equity.
  
  It was announced on the same date Goh resigned that he sold 10.8 million shares at RM1.60 each and ceased to be a substantial shareholder, while his wife Lee Siew Kiat sold 500,000 shares at the same price. Goh was deemed interested in the shares that Lee sold.
  
  Most of these shares were apparently sold to Ace Prelude Sdn Bhd as it was later announced that this company bought 11.1 million shares representing a stake of 24.9% in Multico at RM1.60 a share on March 23.
  
  Gordon Toh Chun Toh, a Singaporean who was appointed managing director of Multico the same date that Goh resigned, was disclosed as having deemed interest in Ace Prelude.
  
  Toh, who was 55 last year, was described as a Colombo Plan Scholar, having served in the Singapore civil service and later, several banks. He was managing director of Elliott Gordon Singapore.
  
  Multico shares closed at 84 sen on Monday, down 1.5 sen, and just a shade above its low of 83.5 sen for 2007.

This is utterly terrible!

Another huge cavaet for those who relies on the cash per share yardstick.