Further to our previous disclosure dated 26 January 2017 and 15 February 2017 concerning the above matter, kindly be advised the Mushrif Trading & Contracting Company K.S.C.P. (MTCC) Board met on 15 February 2017. Based on the Auditor’s report and management recommendation, the Board of Directors concluded the following:

• The aforementioned “cost transfers” were outside normal market practice and considered as ‘Inappropriate Cost Transfers”.
• The effect on the Company’s financials would result in KD 26,669,585 of losses.
• With respect to the above “improper practices”, the board confirmed that it shall explore taking all necessary measures, including legal, to protect shareholders rights.

During the review of the “cost transfers”, the Auditors report highlighted additional matters including:

• A provision of KD 7,900,000 should be taken against a receivable from Mushrif National Construction which is based in the United Arab Emirates (UAE). Management confirmed that this receivable is doubtful to be collected after confirming that all collection methods including legal have been exhausted. The board agreed with this direction.
• A provision of KD 2,704,476 should be taken in respect of old and doubtful receivables. The board expressed reservation and requested that legal action/ opinion in sought regarding the recoverability of these receivables.

The report also highlighted the urgent need to update all project “costs to completion” in order to better forecast the portfolio’s profitability. More so, the report also expressed concerns with respect to the goodwill test of the UAE subsidiaries and implied that these two issues could have a further negative impact on the profitability of the company.

All these amounts to be confirmed as part of the full year audit.

We thank you for your guidance and shall keep you up to date with respect to all major developments.

http://cis.boursakuwait.com.kw/Portal/NewsPDF/639MTCC1932017152223689.pdf