Further to the First Announcement pursuant to Practice Note 17
(“PN 17”) of the Main Market Listing Requirements of Bursa Malaysia Securities
Berhad (“Bursa Securities”) on 8 June 2012, the Board of Directors of Octagon
Consolidated Berhad (“Octagon” or the “Company”) wishes to announce that Octagon’s
External Auditors has expressed a disclaimer opinion in the Company’s latest
audited accounts for the financial year ended 31 October 2012, as set out
below:-
“Basis for Disclaimer of Opinion
(i) As disclosed in Note
2(e) to the financial statements, the Group and the Company incurred net losses
during the financial year ended 31 October 2012 of RM68,653,030 and
RM129,993,080 respectively and, as of that date, the Group and the Company had
net current liabilities of RM190,566,563 and RM132,728,215 respectively. As
disclosed in Note 22, the Group and the Company have defaulted in their
repayment in relation to certain term loans during the financial year ended 31
October 2012. However, the Group has via the Corporate Debt Restructuring Committee
(“CDRC”) submitted a Proposed Rationalisation Scheme (“PRS”) for the financial creditors’
considerations and CDRC has vide its letter dated 9 January 2013 informed the Company
that the financial lenders have approved the PRS and the Company is advised to finalise
and execute the Debt Settlement Agreement (“DSA”) with the financial creditors
within 30 days from CDRC’s letter. The Company is in the midst of finalising
and executing the DSA as at the date of authorisation of the financial
statements. These conditions indicate the existence of a material uncertainty
which may cast significant doubt about the Group’s and the Company’s ability to
continue as going concerns pending the implementation of the PRS.
Should the going concern
basis of preparing the financial statements be no longer appropriate, adjustments
would have to be made to reduce the value of all assets to their estimated
realizable values, and to provide further estimated liabilities that may arise,
and to reclassify property, plant and equipment and other non-current assets
and non-current liabilities as current assets and current liabilities
respectively.
(ii) As disclosed in Notes 6
and 8 to the financial statements, the Group has capital work-in-progress of
RM79,418,650 and development expenditure of RM 71,750,079 as at 31 October 2012
which are attributable to the waste tyre pyrolysis project and the waste to
energy project in Sri Lanka respectively. The Company’s investments in the
relevant subsidiaries are amounting to RM33,600,000 as at 31 October 2012. The
recoverable amounts of these assets are dependent upon the successful
implementation of the projects and the PRS which is still pending finalisation,
which indicates the existence of a material uncertainty. As such, we are unable
to perform sufficient appropriate audit procedures to ascertain the recoverable
amounts of the assets.
(iii) As disclosed in Note 24
to the financial statements, the Group is owing an amount of RM18,861,847 to a
shareholder of a subsidiary. In addition, the directors of the Company also further
disclosed in Note 31 to the financial statements a contingent liability in
respect of the profit element on the outstanding amount which has not been
provided for in the financial statements.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis
for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient
appropriate audit evidence to provide a basis for an audit opinion.
Accordingly, we do not express an opinion on the financial statements.”
As disclosed in the monthly announcement on 1 March 2013, the
Company is in the midst of finalizing the final draft Debt Settlement Agreement
(“DSA”) to record the debt settlement arrangements with the respective
financial lenders.
Premised on the First Announcement, the last day for submission of
the Regularisation Plan by Octagon to the relevant authorities would be by 8
June 2013, which is approximately 3 months from the date hereof.
This announcement is dated 5 March 2013.
