A Malaysian air cargo firm, whose shareholders include Malaysia's richest man Robert Kuok, has adjusted downwards its pretax profit for 2004, according to a company statement released on the Malaysian stock exchange website today.

The company, Transmile, had earlier reported that its last two years of profits may have to be restated as losses.

In its latest announcement, the company said revenue totalling RM95 million for the 2004 financial year lacked appropriate documents and that its pretax profit for that year would have to be adjusted downwards.

"For 2004, the audited consolidated profit before taxation of the company will be reduced by RM79 million from RM87 million to eight million ringgit," Transmile said.

The findings were revealed in a final report from Moores Rowland Risk Management, the firm commissioned to carry out a special audit on Transmile.

Moores Rowland reported in its interim findings late last month that the company revenue for 2006 and 2005 could have been overstated by a total of RM530 million - a figure which is now revised to RM527 million, Transmile said.

The overstated revenue came from invoices issued for "purported services" to about 20 companies, it said.

If full provisions and adjustments have to be made, the 2006 pretax profit of RM207 million will turn into a loss of Rm140 million, Transmile said.

For 2005, the pre-tax profit will reverse from RM120 million to a loss of RM67 million, it added.

Accounting woes

Moores Rowland also reported that some of the amounts owed by the 20 companies were settled in the form of payments on Transmile's behalf for purchases of assets that "appear to have been fabricated and/or the property, plant and equipment additions are not substantiated with documentation."

"There appears to be no basis for the addition of 341 million ringgit to the property, plant and equipment of the Transmile group," it said.

The auditor also highlighted the possibility that other Transmile customers may have been under-billed or over-billed for genuine sales, including a major client CEN Worldwide, Transmile aid.

Transmile made sales totalling RM604 million to CEN from 2004 to 2006 and Moores Rowland recommended a special audit to be carried out on CEN, a company in which Transmile has an indirect 37.5 percent interest.

Transmile's accounting woes came to light on May 7 when it announced that it failed to meet the deadline to submit audited financial statements for 2006.

The company has since been raided by the watchdog Securities Commission and its share price has fallen almost 50 percent from RM13.00 in early May to its last traded price of RM6.60.

The shares, which were suspended from trading last week, will requote on Tuesday.

Transmile said it made numerous changes to its boardroom and the audit committee last week.

Along with Robert Kuok, the well-connected firm's shareholders include national postal company Pos Malaysia, JP Morgan, Goldman Sachs and the Singapore government.