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Friday January 22, 2010

Under-declared profits due to complex accounting practice: Naim

jackwong@thestar.com.my

KUCHING: Naim Holdings Bhd, which was recently publicly reprimanded by Bursa Malaysia for breaching listing requirements, said its under-declaration of profits in 2008 was due to a “very technical and complex’’ accounting practice.

Corporate affairs head Ricky Kho said the profit under-declaration, however, had no impact on the company’s cashflow.

He added that Naim was taking immediate steps to improve its corporate governance practices and to comply with Bursa requirements.

“The company is aware of its responsibility to maintain appropriate standards of corporate responsiblity and accountability to achieve greater disclosure and transparency to its shareholders and the investing public,’’ Kho said yesterday when asked to comment on Bursa’s public reprimand.

Naim was reprimanded for its failure to take into account adjustments made to its quarterly financial results in August and October 2008 and February 2009 on its “deemed disposal gain’’ of RM13.935mil from its investment in associate company Dayang Enterprise Holdings Bhd.

“It is a very necessary reprimand as companies should disclose promptly for shareholders to make informed decisions.

“Bursa is taking action in a positive and prompt manner to come out with a public reprimand and training requirement for directors and relevant personnel in relation to compliance with the listing requirements especially pertaining to financial statements,’’ said Minority Shareholder Watchdog Group CEO Rita Benoy Bushon.

The adjustment was only made in Naim’s audited quarterly financial statement announced on April 30, 2009. The company has explained that the difference in profit was due mainly to the dilution of (or deemed disposal of) its equity interest in Dayang. The dilution came about after Dayang issued more than 85 million new shares in conjunction with its listing on Bursa, thereby resulting in the dilution of Naim’s stake in Dayang from 45% to 34%.

Bursa had said Naim was required to carry out a limited review on its quarterly report submissions by the company’s external auditors for four quarterly reports, starting from the quarter ending March 31, 2010.

It was also required to ensure that all directors and relevant personnel attend a training programme relating to compliance with the listing requirements, particularly pertaining to financial statements.

 
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