English

03 August 2018

MESSAGE FROM THE CEO

Material deviations between audited and unaudited financial statements for a financial year end must be sanctioned more severely by Bursa Malaysia. Often, they come as a rude shock to investors.

Investors often make their investment decisions based on the unaudited quarterly results.

So, when quarterly results paint one picture and the actual audited results are another, investors are in for material movement in share prices. Investors expect the quarterly results to have some degree of integrity.

The Listing Requirements state that a variance of more than 10% is deemed material and requires the  company to make an announcement along with the reasons for the variance.

Asdion Berhad, on 31 July 2018, reported a deviation of more than 10% (in fact, a deviation of 107.55%) between the unaudited financial statements for the financial year ended 31 March 2018 and the audited financial statements for the financial year ended 31 March 2018.

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

TEK SENG HOLDINGS BERHAD (“TEKSENG”)

TEMPORARY CESSATION OF PRODUCTION ACTIVITIES OF A SUBSIDIARY

TEKSENG had on 18 July 2018 announced that TS Solartech Sdn. Bhd. (“TSST”), a 50.69% owned subsidiary of the Company, has decided to temporarily stop its entire production activities which is expected to be in the  3rd quarter of the financial year ending 31 December 2018.

[Source: TEKSENG’s announcement on Bursa Malaysia’s website on 18 July 2018 & 23 July 2018]

MSWG’S COMMENTS:

TSST is a major subsidiary of TEKSENG that contributed 41% of the Group revenue and 61% of the Group profit before tax for the financial year ended 31 December 2017. As such, temporary cessation of its production activities may give rise to various implications, both operational and financial, to the Group. Bursa Securities had on 23 July 2018 issued some queries to the Company on some of the probable implications from the cessation. Investors are advised to monitor the development of the implications, including the financial effects to the Group from the cessation cost, which shall be duly announced by the Company.

MESSAGE FROM THE CEO

Sapura Energy Berhad held its AGM on 18 July 2018 for its Financial Year Ended 31 January 2018.

MSWG attended the AGM and raised some issues. Other institutional investors and retail investors also raised issues. The main issue raised relates to the remuneration of the PGCEO (President/Group CEO). The issue can be better appreciated from the following perspective of alignment of management (and directors) interest with shareholders interest.

In MSWG’s pre-AGM letter to the company, we stated that there is no alignment of interest between shareholders and management.

Alignment, in the company’s instance, mainly involves looking at the remuneration of the PGCEO in the light of the performance of the company.

If we examine the financial statements, we notice that the company is not in the best of health currently. Though the future may seem bright, alignment is about current alignment based on current circumstances.