DEVIATION BETWEEN UNAUDITED RESULTS AND AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014

IRE-TEX CORPORATION BERHAD

Type Reply to Query
Reply to Bursa Malaysia's Query Letter - Reference ID IQL-07052015-00002
Subject DEVIATION BETWEEN UNAUDITED RESULTS AND AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Description
IRE-TEX CORPORATION BERHAD (ITCB OR THECOMPANY)   DEVIATION BETWEEN UNAUDITED RESULTS AND AUDITED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2014
Query Letter Contents

We refer to your Company’s announcement dated 5 May 2015, in respect of the aforesaid matter.
In this connection, kindly furnish Bursa Securities with the following additional information for public release:-

1) Nature of the R&D expenses and the reason for the reclassification to cost of sales.
2) Background information on the transaction / asset for which the profit guarantee relate to, and the reason for the reversal.
3) Nature of the trade receivables, other receivables and goodwill subject to impairment and the basis to impair these items.
4) To be more specific on the adjustment of the R&D expenses.

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 5 May 2015 and Bursa Malaysia Securities Berhad’s query on 7 May 2015, Ire-Tex Corporation Berhad wishes to provide the following additional information:

 

The major causes of the variances between the 4Q2014 Results and the AFS 2014 are as follows:-

 

Items

RM’000

Reclassification of R&D from other receivable in cost of sales

636

Reversal of provision of profit guarantee to goodwill in other income

(2,481)

Impairment of trade receivables

(5,799)

Impairment of other receivables

(825)

Impairment of goodwill

(125)

Adjustment of R&D expenses

(346)

Adjustment arising from minority interest

(7)

Total

(8,947)

 

 

 

1)   Nature of the R&D expenses and the reason for the reclassification to cost of sales.

           

      The R&D expenditure in cost of sales was reclassified as admin expenses.

 

2)   Background information on the transaction / asset for which the profit guarantee relate to, and the reason for the reversal.

 

            The profit guarantee was   given by the Vendors of Zoomic Automation (M) Sdn Bhd (ZASB) and Zoomic Technology (M) Sdn Bhd (ZTSB) arising from the sale of their shares in ZASB and ZTSB to ITCB. The profit guarantee due from the Vendors amounting to RM2.481 million was recognized as other income in the 4Q2014 results but subsequently this profit guarantee figure was used to contra off the initial cost of investment in ZASB and ZTSB in the final audited accounts of ITCB.

 

3) Nature of the trade receivables, other receivables and goodwill subject to impairment and the basis to impair these items.

 

The amount of trade receivable impaired amounting to RM5.799 million relates to Impaired Debts arising from recurrent related party transactions of ZASB which is detailed in the announcement on 29 April 2015 and follow up replies to queries explanations announced on 6 May 2015 and 8 May 2015.

 

The amount of other receivable impaired amounting to RM825,000 relates to cancellation penalty arising from cancellation of purchase of machinery from a supplier subsequent to year end. However, the cancellation penalty has been taken up in the audited financial statements.

 

Goodwill in investment in subsidiary company amounting to RM125,000 was impaired.

4)   To be more specific on the adjustment of the R&D expense

                                                                                                                 

Please refer to feedback in question 1.





Announcement Info

Company Name IRE-TEX CORPORATION BERHAD
Stock Name IRETEX
Date Announced 08 May 2015
Category General Announcement for PLC
Reference Number GA1-08052015-00086