Agility auditors warn on US suspension impact
Kuwait, August 15, 2010
A prolonged suspension of US contracts could have a material impact on government-related businesses of Kuwait's logistics firm Agility, the firm's auditors said on Sunday.
Agility, formerly Public Warehousing Co (PWC), is facing US fraud charges for overcharging the military in contracts worth $8.5 billion spanning more than three years.
'Prolonged suspension could have a material impact on the group's government related business and may result in the associated assets being impaired,' auditors Ernst & Young and Kuwait's Albazie & Co said in a report.
Agility is in talks with the US government to settle the charges, but has said there are no guarantees an agreement could be reached.
Separately, the firm said on Sunday in a letter to the Dubai bourse that the US Defense Logisitics Agency has informed it to be prepared to perform the prime vendor 2 contract through Dec 5, 2010, which is the natural end of the contract.
On Thursday, Agility posted a 52-percent fall in second-quarter net profit.
The auditors said that due to inherent uncertainty surrounding the fraud cases, no provision was recorded by the management in its half-year financial statements.
They also said that pending the final outcome of a court case involving its subsidiary, the company should reduce its other current assets by 10.1 million dinars ($35.08 million) and retained earnings attributable to the equity holders by 6.1 million dinars. - Reuters