REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF NAKAMICHI CORPORATION BERHAD (Co. No H) (Incorporated in Malaysia) AND ITS SUBSIDIARIES

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Antony Benson
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1 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF NAKAMICHI CORPORATION BERHAD REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of NAKAMICHI CORPORATION BERHAD, which comprise the Statements of Financial Position as at 31 December 2014 of the Group and of the Company, 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 year ended on that date, and a summary of significant accounting policies and other explanatory notes as set out on pages 14 to 71. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of the financial statements that give a true and fair view in accordance with Malaysia Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia and for such internal controls as the Directors determine are necessary to enable the preparation of the financial statements that are free from material misstatements, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with approved standards on auditing in Malaysia. Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. 8

2 Basis for Disclaimer Opinion 1. Potential material misstatements in opening balances The financial statements of the Group and the Company for the financial year ended 31 December 2013 were expressed with a Disclaimer Opinion as we were unable to obtain sufficient appropriate audit evidence to verify the existence and accuracy of; (a) (b) (c) (d) (e) (f) (g) (h) (i) the disposal consideration received by the Group and the Company for a motor vehicle amounting to RM92,000; administrative expenses incurred by the Group and the Company amounting to RM90,226 and RM24,979 respectively; finance costs of the Group and of the Company amounting to RM4,625 and RM4,625 respectively; non-trade receivables, deposits and prepayments of the Group amounting to RM11,625, including their recoverability; payments made on behalf of the Group and the Company by Lo Man Heng, a former Director of the Company, amounting to RM85,148, accounted for as advances; non-trade payable balances of the Group and the Company amounting to RM56,249 and RM38,831 respectively, and repayment made in respect of non-trade payables of the Group and the Company amounting to RM19,692 and RM13,050 respectively; accruals of the Group amounting to RM14,043 provided for during the year; amounts previously accounted for as outstanding by the Group and the Company to a Director of the subsidiaries, Tamabina Sdn. Bhd. ( TSB ) and Faktor Juta Sdn. Bhd. ( FJSB ), that have both since been deconsolidated, amounting to RM26,912; and amounts previously accounted for as outstanding in non-trade payable balances of RM163,800 and RM95,886 by the Group and the Company respectively. In addition, the Group deconsolidated the subsidiaries, TSB and FJSB, effective 1 January However, the Company effectively lost control over TSB and FJSB subsequent to the removal of a former Director of the Company from the Board on 29 July The Directors have not been able to obtain the financial information of TSB and FJSB from 1 January 2013 to 29 July 2013 for the purpose of consolidation. We were therefore unable to determine the effect of consolidation adjustment(s) if any to the financial performance and cash flows of the Group for the financial year ended 31 December In view of the above, we were unable to satisfy ourselves that the opening balances do not contain misstatements that may materially affect the financial performance, cash flows, and financial position of the Group and the Company for the financial year ended 31 December Accordingly, we were unable to determine whether adjustments might have been necessary in respect of the financial performance, cash flows and financial position of the Group and the Company for the financial year ended 31 December

3 Basis for Disclaimer Opinion (continued) 2. Material uncertainty relating to the going concern basis In addition, we draw attention to Note 1(c) to the financial statements, which discloses that the financial statements are prepared on the going concern basis which contemplates the realisation of assets and settlement of liabilities in the normal course of business. However, as at the reporting date, notwithstanding the matters raised in the preceding paragraphs, the Group and the Company registered a deficit in shareholders funds of RM13,845,729 and RM13,470,624 and net current liabilities of RM13,845,729 and RM13,470,624. The Group and the Company also incurred a net loss of RM258,851 and RM243,751 during the financial year ended 31 December 2014, thereby indicating the existence of the material uncertainty which casts significant doubt about the Group s and the Company s ability to continue as going concerns. Further to this, on 3 February 2015, a court order was issued for the winding-up of TSB. Pursuant to the Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Malaysia ) in relation to guidelines under Practice Note No. 17 ( PN17 ), the Company had on 29 April 2015 announced that the Company had triggered the criteria of PN17 and is an affected issuer under the guidelines. The Company is therefore required to submit a regularisation plan within twelve months from 29 April In the event the Company fails to submit a regularisation plan by this date, and obtain the relevant approval from Bursa Malaysia, or fails to successfully implement the plan to regularise its financial condition, the Company s shares may be delisted from Bursa Malaysia. At the date of this report, the Group and the Company do not have any significant operations and the Directors have not formalised a regularisation plan for the Group and the Company. As there is insufficient information for us to evaluate the appropriateness of the ability of the Group and the Company to continue as going concerns, we are accordingly unable to determine the reasonableness of the Directors assumption that the Group and the Company are going concerns. Any adjustments or additional disclosures found to be necessary in respect of the above matters, including any related tax impact, will have a consequential significant effect on the financial position of the Group and the Company as at 31 December 2014 and the financial performance and cash flows of the Group and the Company for the year then ended and may have resulted in additional information being disclosed in the consolidated financial statements as to the nature of the transactions and any contingent liabilities, commitments, related party transactions and significant subsequent events related to the Group and the Company. 10

4 Disclaimer Opinion Because of the significance of the matters as discussed in the Basis for Disclaimer 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. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act, 1965 (the Act ) in Malaysia, we also report the following: (a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries, of which we have acted as auditors, have not been properly kept in accordance with the provisions of the Act. These breaches include the following: 1. Section 143 of the Act requires that an Annual General Meeting ( AGM ) be held once in every calendar year and not more than fifteen months after the holding of the last preceding AGM. The Company is in breach of this requirement as the Company has not held an AGM in the previous calendar year and within fifteen months after the last preceding AGM held on 28 June Section 167(1) of the Act requires every company and its Directors and managers to keep such accounting and other records as will sufficiently explain the transactions and financial position of the company and to enable true and fair profit and loss accounts and balance sheets and any documents required to be attached thereto to be prepared from time to time, and cause those records to be kept in such manner as to enable them to be conveniently and properly audited. The Company is in breach of this requirement as the Company has not maintained sufficient accounting records to sufficiently explain the transactions and financial position of the Group and Company to enable true and fair profit and loss accounts and balance sheets in such manner as to enable them to be conveniently and properly audited. 11

5 REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS (continued) 3. Section 167(2) of the Act requires that every company retain the records referred to in Section 167(1) for seven years after the completion of the transactions or operations to which they respectively relate. The Company is in breach of this requirement as the Company does not have the accounting records of the Group and Company prior to 31 May 2013 after the removal of a former Director as disclosed in Note 11 to the financial statements. 4. Section 169 of the Act requires the Directors of every company, once at least in every calendar year at an interval of not more than fifteen months, to lay before the company at its AGM, a profit and loss account for the period since the preceding account made up to a date not more than six months before the date of the meeting. The Group and the Company are in breach of this requirement as the Company has not laid before the Company at an AGM its profit and loss account for the period since the last AGM on 28 June (b) (c) We have not obtained sufficient information to satisfy ourselves that the financial statements of the subsidiaries that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have not received satisfactory information and explanations required by us for those purposes. The auditors reports on the financial statements of the remaining subsidiaries have been expressed with a Disclaimer Opinion on the basis that the auditors were unable to obtain sufficient appropriate evidence to satisfy themselves under Section 174(3) of the Act. OTHER REPORTING RESPONSIBILITIES Our audit was made for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary information set out in Note 33 to the financial statements has been compiled by the Company as required by the Bursa Malaysia Securities Berhad Listing Requirements and is not required by the Malaysian Financial Reporting Standards and International Financial Reporting Standards. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the format prescribed by Bursa Malaysia Securities Berhad. 12

6 OTHER MATTERS This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. PKF AF 0911 CHARTERED ACCOUNTANTS BRIAN WONG WYE PONG 2610/04/17(J) CHARTERED ACCOUNTANT Kuala Lumpur 4 January

- 8 - INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF MALAYSIA PACIFIC CORPORATION BERHAD (Company No: M) (Incorporated in Malaysia)

- 8 - INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF MALAYSIA PACIFIC CORPORATION BERHAD (Company No: M) (Incorporated in Malaysia) - 8 - MALAYSIA PACIFIC CORPORATION BERHAD Report on the Financial Statements We were engaged to audit the financial statements of Malaysia Pacific Corporation Berhad, which comprise the statements of financial