Maxwell slips into PN17 status on disclaimer opinion

PETALING JAYA: Maxwell International Holdings Bhd triggered the Practice Note 17 (PN17) criteria after a disclaimer opinion in its financial statements ended Dec 31, 2015 by the external auditor Messrs Baker Tilly Monteiro Heng.
Given that the company has not commenced an investigative audit on several issues including the RM57.25 million advertising and promotion expenses, the auditor said it may cast significant doubt about the company’s ability to continue as going concerns.
“Because of the significance of the matters described in basis for disclaimer of opinion paragraphs, we have not been able to obtain sufficient appropriate audit evidence to provide a basis of an audit opinion. Accordingly, we do not express an opinion on the financial statements,” it said.
Pursuant to PN17, Maxwell is required to submit a regularisation plan to the regulators within the next 12 months.
During the financial year, the China-based sports shoe manufacturer incurred an audited net loss of RM65.16 million with a negative cash flow of RM67.47 million.
This however represents a 30.95% deviation against an unaudited net loss of RM49.76 million, mainly due to the reconciliations/adjustments made on impairment of trade receivable, inventories, property, plant and equipment, prepayment and deposit write-off as well as other emoluments for directors.