Mtronic ... May12

Metronic Global Bhd’s external auditors have expressed a qualified opinion with regards to some financial statements in its financial year ended Dec, 31 2011 (FY11) “that remained unresolved”.

A company’s accounts are qualified by its auditors when they doubt that the picture of the company’s activities presented is true, complete and fair.

Similar to the previous year’s audit qualification, the auditors are unable to obtain sufficient appropriate evidence about the timing of collection of these receivables, they are unable to determine if any adjustment to the impairment amount and thus the net carrying amount of these receivables.

It was referring to Note 22(A) of the financial statements which showed that the company had long outstanding receivables due from a former related party and certain group of receivables with their carrying amount totalling RM46.6mil as at Dec 31, 2011, of which a total impairment amount of RM21mil has been made.

Referring to Note 16 and Note 18, Unilink Development Ltd’s financial statements and other documentary evidence are not available for their audit and there are no other audit procedures that they can rely on to ascertain the appropriateness of the net carrying amount of the investment, and any further impairment required for the said investment.

Unilink, a former associate of Metronic, had alloted 416 new shares of HK$1 each to Zonemax Holdings Ltd, the other shareholder during the financial year as a result of the exercise of option by Zonemax to convert part of an outstanding loan payable and due from Unilink to new shares.

Metronic said except for the possible effects of the matters described in the basis for qualified opinion paragraph above, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial positions of the group and of the company as at Dec 31, 2011 and of their financial performance and cash flows for the year then ended.

In April 2011, Metronic’s then external auditors, Ernst & Young, had expressed a qualified opinion in their report on the company’s 2010 financials. Ernst & Young subsequently declined to be re-appointed as its auditors for the following year.