CAP Still In The Red

China Automobiles Parts Holdings Bhd (CAP) had finally announced its financial results but with a pre-tax loss of remimbi 1.09 million or RM718,039 for the financial year ended June 30, 2020, as compared to remimbi 456,000 (Rm300, 295) losses for the same period previously.

China Automobile shares have been suspended from trading since June 8, 2017, after it failed to release its financial reports within the stipulated time. The company had then not issued its outstanding 2017 and 2018 annual reports, after it last reported a net loss of RM77.12 million in its financial year ended Dec 31, 2016. 

It slipped into PN17 status in January 2018, after its external auditor Messrs PFK expressed an audit disclaimer of opinion in the company’s audited financial statements for FY15 on undisclosed material liabilities.

In July 2021 CAP had attempted to regularise its financial condition, after its plan to inject a property development business fell through in May this year, following another failed bit to acquire Local Assembly Sdn Bhd – a subcontractor assembler of electrical appliance and equipment, and plastic injection moulded components manufacturer.

The auditor’s report said that during the financial period ended June 30, 2017, the Company has deconsolidated its subsidiaries, Quanzhou FenSun Automobile Parts Co., Ltd. (FenSun) and China Automobile Parts (Hong Kong) Holding Limited (CAP HK) as the management has determined that the control over the subsidiaries, FenSun and CAP HK has been lost.

It said that it was unable to obtain sufficient appropriate audit evidence on management’s assessment as the Company continues to have power over FenSun and CAP HK by virtue of the fact that the Company continues to hold 100% equity interest in both of the subsidiaries as at June 30, 2019, and 2020 and as of the date of this report

As such, they are unable to ascertain whether the loss of control is demonstrated but should control remain, the presentation and the basis of preparation of the Group’s financial statements will not be properly reflected as all the assets and liabilities will be reported differently.

“We are unable to determine the appropriateness of the loss of control nor its financial effects arising thereof of these financial statements during the financial year ended June 30, 2019, and 2020.”

In respect of cash balances, it said that it was unable to satisfy “ourselves that the opening balances do not contain misstatements that may materially affect the financial performance, cash flows and financial position of the Group for the financial year ended June 30, 2020.

“Accordingly, we were unable to determine whether any adjustments might have been necessary for respect of the financial performance, cash flows and financial position of the Group for the financial year ended June 30, 2020.”

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