Further to the Company's announcement on 25 November 2011 (Reference C&111129-34958) on the embezzlement detected in Zhuhai MS Coating Ltd., the Company wishes to clarify the following matters:
~ impact on the gearing:
As the estimated total loss to the Sersol Group due to the cash embezzlement happend in ZMCL, after taking into consideration minority interests, is only RM0.437 million, it does to have any material impact on the gearing ratio of the Group as at 31 December 2010 or 30 September 2011.
~ why is the announcement made only now:
The announement was made as soon as Sersol was able to ascertain the quantum of total losses sustained by ZMCL, estimated at China RenMinBi ("RMB") 1.756 million, based on internal investigations which commenced since early October 2011, comprising primarily of the reconstruction of ZMCL's books of accounts back from 1 January 2010 until 31 August 2011. However, in order to ascertain the losses incurred during as well as the mis-statements in respect of the relevant prior financial years, the Board of Sersol is of the opinion that the books of accounts of ZMCL need to be reconstructed back from 1 January 2009 which is still in progress. Sersol estimates this exercise to be completed only by 31 January 2012.
~ action taken againtst the former employee:
As per the announcement dated 25 November 2011, the former employee has been handed over to and detained by the Police Authorities for questioning and to facilitate their investigation since 3 October 2011. Since then, police investigation onto this cash embezzlement has been ongoing and is expected to be completed latest by second quarter 2012, if not earlier. Sersol expects the Zhuhai People's Procuratorate to initiate criminal charges against her once sufficient evidence is acquired. Until to date, the former employee remains in the custody of the Police Authorities and their investigation is still ongoing. Sersol intends to take civil action against the former employee to recover the losses sustained due to her fraud and is seeking legal advice on this matter. However, based on the laws of China, such civil action, if any, can only be taken upon the completion of Zhuhai People Procuratorate's persecution.
This announcement is dated 30 November 2011.