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MESSAGE FROM THE CEO

Now that we are reaching the tail-end of the peak period of the AGM season, it is timely to share some of our observations in relation to corporate governance matters that we have noticed while perusing Annual Reports and CG Reports.

1.   PLCs are required to disclose Alternative Practices when they depart from a Practice in the Malaysian Code on Corporate Governance (MCCG). This is a rule requirement under Paragraph 3.2A(b) of Practice Note 9 of the Main Market Listing Requirements (MMLR).

PLCs must follow the rule, as otherwise, they will be subject to sanctions.

Some PLCs fail to disclose the Alternative Practice.

What must be appreciated is that the disclosure must not be just of ‘an’ Alternative Practice, but that of an Alternative Practice that achieves the Intended Outcome stipulated in the MCCG.

While some PLCs disclose Alternative Practices, what we realise is that that Practice does not achieve the Intended Outcome.

A typical example of this is Practice 7.2 which requires the PLCs to disclose the remuneration component of top five senior management on a named basis including salary, bonus, benefits-in-kind and other emoluments in bands of RM50,000. Many of the Alternative Practices narrated do not achieve the Intended Outcome.

Large Companies (as defined under the MCCG), must, in addition, disclose the timeframe required to adopt a Practice (that it has not already adopted) and must also disclose the measures taken or intended to be taken to achieve the adoption of the Practice. This disclosure requirement is a rule under the MMLR under Paragraph 3.2C (a) (b) of Practice Note 9. This too is not disclosed sometimes.

MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

MULTI SPORTS HOLDINGS LTD (“MSPORTS”)

The Board of Directors of MSPORTS announced that Messrs. RT LLP, the company’s External Auditors, have expressed an audit ‘disclaimer of opinion’ in the Company’s latest Audited Financial Statements for the financial year ended 31 December 2017.

One main reason for the audit ‘disclaimer of opinion’ is that the Company’s current liabilities exceed its current assets substantially. For the FYE 2017, current liabilities were RMB3.445 million while current assets were RMB26,000. The Company was not able to ascertain whether the Company could continue as a ‘going concern’ since the Company had minimal assets which may not be able to sustain it as a ‘going concern’ for the next 12 months from the date of publication of the financial statements.

In addition, the Auditors stated that they were unable to determine whether the opening balances for the subsidiaries in People Republic of China (PRC) as at 31 December 2016 are fairly stated. These matters remain unresolved since the preceding financial year and this too formed the basis for the ‘disclaimer of opinion’ on the financial statements for the financial year ended 31 December 2017.

08.06.2018

MSWG’S AGM WEEKLY WATCH 11 – 15 JUNE 2018

For this week, the following are the AGMs/EGMs of companies which are in the Minority Shareholder Watch Group’s (MSWG) watch list.

The summary of points of interest is highlighted here, while the details of the questions to the companies can be obtained via MSWG’s website at www.mswg.org.my.

13.06.18 (Wed), 02.30 pm - Mudajaya Group Bhd (AGM)

Points/Issues to Be Raised

1)       In 2017, the Group recorded an operating profit of RM59,478,000 compared to an operating loss of RM 217,882,000 recorded in 2016 (page 95 of the Annual Report 2017). However, after including the finance costs (RM44,668,000) and share of loss of equity accounted associates, net of tax (RM137,218,000), the Group’s financial performance plunged a loss before tax of RM122,408,000.    

01 June 2018

MESSAGE FROM THE CEO

On 30 May 2018, the FBM KLCI index saw its biggest one day drop since October 2008, plunging 56.56 points or more than 3% to emerge as  the worst-performing index in the region.

Construction and infrastructure-related counters were the worst casualties with some counters hitting limit down, namely George Kent (Malaysia) Berhad, Gamuda Berhad and HSS Engineers Berhad. Other major losers included YTL Corporation Berhad and Malaysian Resources Corporation Berhad (MRCB). There are four main reasons for the above:

1. The Kl-Singapore High-Speed Rail (HSR) project will be scrapped…unless Singapore could convince Malaysia to proceed with it.
2. The MRT 3 rail project will be scrapped.
3. The ECRL is being reviewed in detail.
4. That all major contracts will be reviewed.

Some listed companies will be affected by these decisions as their order-books will now be lowered substantially.

Share prices may nose-dive further. There will be both rational and irrational selling of shares driving prices much lower. There will be instances where the share price will be substantially lower than the true value (the intrinsic value) of the shares.

In the midst of plummeting share prices, some listed companies may carry out share-buy backs.