Stern SC Action Against Oilcorp for Financial Reporting Deficiencies, Company to Reissue Accounts

Kuala Lumpur, 28 March 2005

The Securities Commission (SC) has directed Oilcorp Berhad (Oilcorp) to reissue its financial statements for the year ended 31 December 2003 (including its 2002 comparatives) for failure to comply with Regulation 4 of the Securities Industry (Compliance with Approved Accounting Standards) Regulation 1999 (Regulations).

Regulation 4 requires every listed corporation to ensure that the consolidated financial statements are to be made out in accordance with approved accounting standards.

Oilcorp's breach of Regulation 4 involves the non-elimination of profits arising from intra-group transactions. This treatment is in breach of Financial Reporting Standard (FRS) 127 (previously MASB 11) and has the effect of overstating the consolidated revenue and profits of Oilcorp.

Oilcorp had also classified and presented certain expenses as "Extraordinary" in the Income Statement in breach of FRS 108 (previously MASB 3). Consequently, the presentation of the Company's "Basic earnings per share before Extraordinary Items" is inappropriate pursuant to FRS 133 (previously MASB 13).

In addition to reissuance of its 2003 financial statements, Oilcorp is also required to make the necessary announcement to Bursa Malaysia Berhad in respect of the rectification of its financial statements for the year ended 31 December 2003 together with the reasons and effects (financial or otherwise) thereof.

The SC views non-compliance with the Regulations as a serious matter as high standards of financial reporting are fundamental in promoting market integrity and enhancing investor protection.

The SC also reminds all other listed corporations and their directors on the importance of adhering to all relevant financial reporting standards and disclosure requirements in the interest of the investing public. The SC will not hesitate to take action against listed corporations and their officers for failure to comply with the applicable securities laws or regulations.


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