Hayleys MGT goes for forensic audit; Loss likely

Hayleys MGT Knitting Mills Plc yesterday indicated that on-going investigations into discrepancies in its stock using forensic auditing and required provisioning could lead to a third quarter loss.

In a filing to the CSE, the company said that physical stock verification and the inquiry into the debtors commenced in early November has been completed. However in view of the findings consequent to the physical verification of the inventory and a preliminary verification of the receivables indicating an additional requirement of provisioning has warranted further investigations.

The Hayleys MGT Board has ordered the start of forensic audit to determine further steps that the Company may have to take with regard to discrepancies etc. and a comprehensive verification of the receivable by external auditors.

The Board said that additional provisioning, if required will be made in the third quarter financial statements of the Company which is due to be released in February 2011, “The Board is of the view that such additional provisioning may result in a loss for the third quarter and for the financial year 2010/11,” the filing said.

Shareholders have been assured that all necessary measures have been taken to ensure the sustainability and growth of the Company.

In the first half of 2010/11 financial year, Hayleys MGT reported Rs. 289.5 million profit attributable to equity holders, down by 84% from Rs. 1.8 billion a year earlier. Second quarter figure was Rs. 503 million 57% from the corresponding quarter of 2009/10.