KUALA LUMPUR: Maxwell International Holdings Bhd’s independent directors are considering to engage an independent party to carry out an investigative audit on various material issues highlighted by its external auditor.
The China-based sports shoe manufacturer, replying to Bursa Malaysia’s request for more detail on Thursday’s filing, said that the independent directors had spoken to and met with the management of the company to assist audit firm Ferrier Hodgson Monteiro Heng Sdn Bhd, which had been appointed in December 2015 to do an extended scope of audit on an advertisement expenditure that was said to be the main reason for Maxwell’s third-quarter loss of RM46.253mil.
They are also assisting to “provide all documentary and visual evidence” in relation to the verification of the advertising expenses, Maxwell said.
Elaborating on the expenses, the company said its intermediate subsidiary Maxwell (Xiamen) Co Ltd - a trader of garments and plastic products - had executed six contracts with six marketing agents in China for promoting and setting-up 390 marketing billboards and LED (light-emitting diode) signboards for a period of one year.
The total amount paid for this in 2015 was 92.4 million yuan (RM58.5mil), it said.
Regarding other material issues raised by Baker Tilly Monteiro Heng, Maxwell said on preliminary assessment of the ongoing audit, the auditor also requested that the management provide further information with regards to the cash placed with an asset management company during the third and fourth quarters of last year as well as certain legal matters in China that were “yet to be ascertained at this juncture.”
It said the independent directors were currently awaiting the response from the executive director in China and were therefore unable to disclose further details.
“The investor should note that as the audit process is yet to start and matters raised are yet to be confirmed. Caution should be taken in making any investment decision,” Maxwell said.
Maxwell shares fell 1 sen to close at 6.5 sen on Friday.
See also Maxwell Int’l management urged to do investigative audit
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