Idimension Consolidated falls into GN3 on troubles with three year old subsidiary

PETALING JAYA: Idimension Consolidated Bhd (ICB) has been categorised a Guidance Note 3 company after its external auditors, Messrs BDO expressed an adverse opinion in respect of ICB’s audited financial statements for the financial period Jan 1, 2018 to June 30, 2018 (FPE 2018).

In a separate filing with Bursa , ICB said the adverse opinion from the auditors was due to their disagreement with the decision made by the board of directors (BOD) of ICB to treat its subsidiary, IDB Interactive Sdn Bhd (IDB) as a pure investment (as opposed to a subsidiary to be consolidated), which it stated, is in accordance with the law and financial reporting standards.

ICB’s issue with IDB is part of an ongoing suit filed against the former operational managers of IDB, a company it purchased in March 2015 for RM25 million, essentially seeking return of all business, financial and/or management documents and information belonging to IDB.

ICB said it was unable to obtain access to IDB’s accounting and other records in order to verify the accuracy of the financial information of IDB for FPE 2018, to present a true and fair view of ICB’s financial position and to facilitate ICB’s regulatory filing obligations with the relevant bodies, including Bursa Malaysia Securities Bhd.

This included corroborating sales and purchases transactions of RM44.64 million and RM43.53 million respectively recorded in IDB.

The BOD viewed that ICB has not met the requirements prescribed under the applicable Accounting Standard for consolidation, namely Malaysian Financial Reporting Standards (MFRS) 10 and hence, decided to deconsolidate IDB’s financial statements from the group’s consolidated financial statements.

This led to ICB’s revenue for the 18 month period ended June 30, 2018 falling to RM22.58 million as compared to RM56.88 million for the 12 months period ended Dec 31, 2016, which consolidated IDB’s financial statements.

The group incurred a loss after tax of RM18.47 million for the 18 months period ended June 30, 2018 (as compared to a profit after tax of RM1.13 million for the 12 months period ended Dec 31, 2016) – primarily due to the BOD’s decision to prudently provide in full the goodwill attributable to IDB amounting to RM15.4 million as a loss of deconsolidation of IDB.

Without consolidating IDB’s financial statements into ICB Group’s consolidated financial statements, the group still has RM9.6 million net cash as at June 30, 2018, and recorded a positive cash flows generated from operations of RM1.1 million during FPE 2018.

“In conclusion, the BOD holds a firm view that it has acted in accordance with the provisions of the Companies Act 2016, the general approved accounting standards and in a prudent manner to protect the interests of ICB and its shareholders,” ICB said in its filing with Bursa Malaysia, holding firm that the financial statements prepared by ICB represent a true and fair view of the group.

“The BOD reserves all rights of ICB with regards to the actions and conduct of Messrs BDO in arriving at this adverse opinion,” it said.

In another filing on its GN 3 status, ICB said its board of directors is taking all necessary actions to formulate a regularisation plan to address its GN3 status and will make the necessary announcement on the regularisation plan in accordance with the requirements of the ACE Market Listing Requirements of Bursa Securities.

Source: The Sun Daily

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