Pursuant to Rule 9.19(38) of the Ace Market Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors of M3Tech wishes to announce that the Company's External Auditors, Messrs. Ecovis Malaysia PLT had expressed the following qualified opinion in the Company's Audited Financial Statements for the financial period ended 31 March 2021:

A. QUALIFIED OPINION

We have audited the financial statements of M3 Technologies (Asia) Berhad (“the Company”), which comprise the statements of financial position as at 31 March 2021 of the Group and of the Company, and the statements of profit or loss and other comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial period from 1 January 2020 to 31 March 2021, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 14 to 111.

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the accompanying financial statements give a true and fair view of the financial position of the Group and of the Company as at 31 March 2021, and of their financial performance and their cash flows for the financial period from 1 January 2020 to 31 March 2021 in accordance with the Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act 2016 in Malaysia.

Basis for Qualified Opinion

As disclosed in Note 33.2 to the financial statements, the Company has appointed an independent investigative auditor to review specific transactions and related accounting entries in  financial period/year ended 31 December 2017 and 31 December 2018 to ascertain whether there were any fraudulent transactions involved in the business operations of the Company and certain of its subsidiaries and any irregularities involving a former director and the potential financial impact (“alleged dubious transactions”). Based on the Directors’ assessment, impairment losses on trade receivables related to these alleged dubious transactions amounted to RM985,061 have been recognised during the financial year ended 31 December 2019. The Directors also assessed that any potential losses in connection with those alleged dubious transactions have been fully recognised during the financial period/years ended 31 December 2017 to 2019 and all outstanding balances, if any, relating to those alleged dubious transactions have been fully reversed or impaired as at 31 December 2019. Accordingly, the Directors concluded that those alleged dubious transactions would not have material financial impact on current period financial statements.

At the date of approval of the financial statements, the investigative auditor is in preliminary stages of review. Consequently, we were unable to determine the potential financial impact, if any, to the Group and the Company in respect of those alleged dubious transactions and whether any adjustments might be necessary to the impairment losses amounting to RM985,061 recognised by the Group in the financial year ended 31 December 2019, and trade receivables and opening balance of retained earnings as at 1 January 2019.

In view of the matters described above, our opinion on the current period’s financial statements is modified due to the possible effects on the comparability of current period figures and the corresponding figures in respect of impairment losses recognised by the Group for the financial year ended 31 December 2019 and trade receivables and opening balance of retained earnings as at 1 January 2019.

We conducted our audit in accordance with approved standards of auditing in Malaysia and International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

Independence and Other Ethical Responsibilities

We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Key Audit Matters

Please refer to the pages 9 to 10 of the attached Appendix I.

B. STEPS TAKEN OR PROPOSED TO BE TAKEN TO ADDRESS THE KEY AUDIT MATTERS THAT RELATES TO THE QUALIFIED OPINION

At the date of approval of the financial statements, the investigate auditor is in preliminary stages of review. The Company will follow up the investigation conducted by investigative auditor. Any material development in this matter will be disclosed accordingly.

C. TIMELINE

The The Company expects to resolve the issue relating to the matters above within two months from the date of this announcement.

This announcement is dated 30 August 2021.