TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) RECURRENT RELATED PARTY TRANSACTIONS

IRE-TEX CORPORATION BERHAD

Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-05052015-00002
Subject TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) RECURRENT RELATED PARTY TRANSACTIONS
Description
RECURRENT RELATED PARTY TRANSACTIONS ENTERED INTO BY ZOOMIC AUTOMATION (M) SDN BHD, A WHOLLY OWNED SUBSIDIARY COMPANY OF IRE-TEX CORPORATION BERHAD WITH:-  (1)	ZESTEK INTEGRATION SDN BHD ("ZI"), AND  (2)	FSP BUSINESS LINK SDN BHD ("FSP")
Query Letter Contents

We refer to your Company’s announcement dated 29 April 2015, in respect of the aforesaid matter.
In this connection, kindly furnish Bursa Securities with the following additional information for public release:-

1) To provide further explanation on how the Impaired Debts arose from the RRPTs together with the reconciliation of the Impaired Debts amounts to the actual RRPTs amount.

2) To provide the basis of opinion by the Board that the recoverability of the Impaired Debts is of concern.

3) To explain on the relationship between Khoo Hun Sniah and Teh Gaik Tiang as well as the relationship between Khaw Kheng Wooi, Teh Eng Huat and Khoo Hun Sniah.

4) To quantify the profit after tax of ZASB for the financial year ended 31 December 2014 after taking into consideration the Impaired Debts of RM5,799,404.40 and also to quantify the profit guarantee of ZASB.

5) In view that the RRPTs are entered into with same group of related parties and pursuant to the requirement of Paragraphs 10.08 and 10.12 of the Main Market Listing Requirements, prior shareholders’ approval is required to be obtained before the RRPTs are entered into. In this respect, please provide the reasons as to why IRETEX did not procure prior shareholders’ approval for the RRPTs.

Please furnish Bursa Securities with your reply within one (1) market day from the date hereof.

 

Yours faithfully,
HENG TECK HENG
Vice President, Issuers,
Listing Division, Regulation
IJ/TEK

Cc : Market Surveillance Dept. , Securities Commission (via fax)

Further to the Company’s announcement on 29 April 2015 and Bursa Malaysia Securities Berhad’s query on 5 May 2015, Ire-Tex Corporation Berhad wishes to provide the following additional information:

1)   To provide further explanation on how the Impaired Debts arose from the RRPTs together with the reconciliation of the Impaired Debts amounts to the actual RRPTs amount.

The Impaired Debts were the outstanding balances owing by ZI and FSP as at 31 December 2014 whereas the RRPTs were transaction for the period from 24 April 2014 (being the date on which ZASB became a subsidiary company of ITCB) up to the date of the announcement on 29 April 2015.

 

2)  To provide the basis of opinion by the Board that the recoverability of the Impaired Debts is of concern.

The Board of ITCB formed the opinion based on the weak financial position of ZASB and hence it was prudent to impair the debts.

 

3)   To explain on the relationship between Khoo Hun Sniah and Teh Gaik Tiang as well as the relationship between Khaw Kheng Wooi, Teh Eng Huat and Khoo Hun Sniah.

Khoo Hun Sniah is a Director of ZASB and Teh Gaik Tiang is an employee of ZASB holding the position of Material Manager. Teh Gaik Tiang is also the spouse of Khoo Hun Sniah. Teh Gaik Tiang owned 70% shareholding in ZI.

Teh Eng Huat and Khoo Hun Sniah are both Directors of ZASB and Khaw Kheng Wooi is an employee of ZASB holding the position of Mechanical Engineer. Khaw Kheng Wooi is also a Director of FSP and he owned 37% shareholding in FSP.

 

4)  To quantify the profit after tax of ZASB for the financial year ended 31 December 2014 after taking into consideration the Impaired Debts of RM5,799,404.40 and also to quantify the profit guarantee of ZASB.

The loss after tax of ZASB for the financial year ended 31 December 2014 after taking into consideration the Impaired Debts of RM5,799,404.40 was RM6,881,440.

The profit guarantee to be paid by the Vendors amount to RM8,815,113 as set out in Attachment 1.

 

 5)  In view that the RRPTs are entered into with same group of related parties and pursuant to the requirement of Paragraphs 10.08 and 10.12 of the Main Market Listing Requirements, prior shareholders’ approval is required to be obtained before the RRPTs are entered into. In this respect, please provide the reasons as to why IRETEX did not procure prior shareholders’ approval for the RRPTs.

FSP & ZI have been two major customers of ZASB making up more than 20% of ZASB’s sales and the relationship commenced even before ITCB acquired ZASB.  The first deal with FSP is through sales on 20/06/13 under invoice number ZA1773B under ZASB account and the first deal with ZI is through sales on 05/04/12 under invoice number ZI2117114 under Zoomic Technology (M) Sdn Bhd’s account.

The vendors of ZASB, Teh Eng Huat and Khoo Hun Sniah inadvertently overlooked the existence of related parties transactions until this was raised by the auditors of ITCB, UHY, in the course of audit recently.

 

 



Please refer attachment below.



Announcement Info

Company Name IRE-TEX CORPORATION BERHAD
Stock Name IRETEX
Date Announced 06 May 2015
Category General Announcement for PLC
Reference Number GA1-06052015-00041