News
MSWG Comments on MP Technology Resources Berhad (MP Tech or The Company)’s Mismanagement by Previous Management of The Group’s and The Company’s Affairs.
29 May 2007
“SHAREHOLDERS, WAKE UP AND UNITE TO DEMAND ANSWERS TO MISMANAGEMENT OF THE COMPANY’S AFFAIRS BY PREVIOUS MANAGEMENT OF MP TECH”
One cannot agree more that shareholders of MP Technology Resources Berhad (MP Tech or the Company) should attend the Company’s upcoming Annual General Meeting (AGM) to be held on Thursday, 31 May 2007 at 9.30 a.m. at its registered office located at Lot PTD 62997, Jalan Belati, Kawasan Perindustrian Maju Jaya, off Jalan Kempas Lama, 81300 Skudai, Johor Darul Takzim.
Chairman’s Statement
The Company Chairman reported mismanagement by previous management of the Company in the Group’s operations. In the Chairman’s Statement in the annual report and audited accounts of the Company for the financial year ended 30 November 2006 he mentioned that he called Group Accountant to conduct an internal investigation into the group accounts when he took over the management of the Group in November 2006.
In the Chairman’s Statement, he highlighted that the internal investigation report revealed full disclosure of doubtful accounts receivables which he informed shareholders, he had already submitted to Bursa Malaysia Securities Berhad. Further to the internal investigation report, the newly constituted Board of Directors led by the Chairman had also lodged several police reports on the financial irregularities as he alleged in his Statement to shareholders. The Board Members were newly appointed some time in November 2006 and May 2007except for one Executive Director.
Based on the findings of the internal investigation report, the Board made huge material adjustments to the group accounts, which accounted for the shareholders funds to turn adverse into a negative of RM58.92 million from a positive of RM82.71 million in the previous year. The Group and the Company are now being categorized as an affected listed issuer under PN17 of Bursa Securities Listing Requirements.
Directors’ Report
The Directors’ Report disclosed that the Group and the Company made net losses for the year of RM142.9 million and RM156.0 million respectively. In the Directors’ Report, the Board disclosed that:
Report of Auditors
The Auditors expressed substantial doubt over the Group’s ability to continue as a going concern. They stated that the Group’s restructuring scheme is still subject to approvals of Securities Commission, shareholders, creditors and relevant authorities.
The Auditors’ Report contained material qualifications as follows:-
To date, the newly constituted Board has yet to finalize or even submit a regularization plan to resolve the PN17 status of the Group and the Company. In the meantime, the Company has been received a petition for winding up under Section 218 of the Companies Act 1965.
Since police reports had been lodged by the newly constituted Board, there is a clear need for timely action and enforcement against the former directors and management for mismanagement.
MSWG is of the opinion that the law is clear as to the duties of directors, not just of the Group and the Company but of shareholders in general, to be held accountable for mismanagement. It is high time that the former directors are swiftly brought to justice, and that their mismanagement and negligence tantamount to misconduct should be penalized, and not to be tolerated. They are expected to be held to account for such heinous misconduct to perform their duties and obligations honestly to the shareholders. Appropriate action under the law should be taken immediately. Moral rules do not exist for their own sake but for the benefit of all of us as stakeholders.
MSWG’S RECOMMENDATIONS
MSWG recommends shareholders to wake up and be united to demand answers at the Company’s upcoming AGM about mismanagement by previous management as alleged in the Chairman’s statement in the Annual Report and Accounts for the year ended 30 November 2006. No listed issuers or directors today can simply violate shareholders’ trust to uphold their fiduciary duties and responsibilities without impunity.
In an ideal world in which every one was honest, in which directors and managers never cut corners, and were scrupulously fair in their dealings with company’s funds and in their reporting to shareholders, there would be no need for all the time to remind directors and stakeholders alike of good corporate governance. Until that glorious day, most shareholders and stakeholders undoubtedly sleep soundly only when they know that independent eyes, such as MSWG and the regulators are watching over their investments and interests.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 29 May 2007
29 May 2007
“SHAREHOLDERS, WAKE UP AND UNITE TO DEMAND ANSWERS TO MISMANAGEMENT OF THE COMPANY’S AFFAIRS BY PREVIOUS MANAGEMENT OF MP TECH”
One cannot agree more that shareholders of MP Technology Resources Berhad (MP Tech or the Company) should attend the Company’s upcoming Annual General Meeting (AGM) to be held on Thursday, 31 May 2007 at 9.30 a.m. at its registered office located at Lot PTD 62997, Jalan Belati, Kawasan Perindustrian Maju Jaya, off Jalan Kempas Lama, 81300 Skudai, Johor Darul Takzim.
Chairman’s Statement
The Company Chairman reported mismanagement by previous management of the Company in the Group’s operations. In the Chairman’s Statement in the annual report and audited accounts of the Company for the financial year ended 30 November 2006 he mentioned that he called Group Accountant to conduct an internal investigation into the group accounts when he took over the management of the Group in November 2006.
In the Chairman’s Statement, he highlighted that the internal investigation report revealed full disclosure of doubtful accounts receivables which he informed shareholders, he had already submitted to Bursa Malaysia Securities Berhad. Further to the internal investigation report, the newly constituted Board of Directors led by the Chairman had also lodged several police reports on the financial irregularities as he alleged in his Statement to shareholders. The Board Members were newly appointed some time in November 2006 and May 2007except for one Executive Director.
Based on the findings of the internal investigation report, the Board made huge material adjustments to the group accounts, which accounted for the shareholders funds to turn adverse into a negative of RM58.92 million from a positive of RM82.71 million in the previous year. The Group and the Company are now being categorized as an affected listed issuer under PN17 of Bursa Securities Listing Requirements.
Directors’ Report
The Directors’ Report disclosed that the Group and the Company made net losses for the year of RM142.9 million and RM156.0 million respectively. In the Directors’ Report, the Board disclosed that:
- Plant and equipment of RM6.01 million (at the Company level, RM985,133), trade and other receivables of RM2.61 million (at the Company level, RM249,307) and inventories of RM674,006 were all written off;
- Investment in an associate of RM6.86 million (at the Company level, RM6.60 million), in other investments of RM16.17 million (at the Company level, RM16.16 million) and in investment in subsidiaries of RM91.01 million at the Company level were written down for huge impairment losses.
- Trade and other receivables were provided for doubtful debts of RM66.37 million (at the Company level, RM34.99 million).
Report of Auditors
The Auditors expressed substantial doubt over the Group’s ability to continue as a going concern. They stated that the Group’s restructuring scheme is still subject to approvals of Securities Commission, shareholders, creditors and relevant authorities.
The Auditors’ Report contained material qualifications as follows:-
- The Auditors were unable to ascertain the fair value of the Group’s freehold land and building that has a carrying value of RM30.91 million. No professional valuations have been conducted;
- The Auditors reported insufficient records and lack of supporting documents of the Group and the Company, making them unable to obtain information for their audit;
- The Auditors reported that the financial statements of a wholly owned subsidiary, Protonic Plastic Industries Sdn Bhd were not audited as well as unavailable for consolidation of the group accounts; and
- The Auditors could not quantify and satisfy themselves (i) all the liabilities including contingent liabilities of the Group; (ii) taxation to be fairly stated; (iii) the results of an associated company were not audited, so no audited financial statements were available; (iv) other investments had no supporting documents as to the amount and disclosure for audit verification; and (v) no physical stock count/stocktaking for inventories.
To date, the newly constituted Board has yet to finalize or even submit a regularization plan to resolve the PN17 status of the Group and the Company. In the meantime, the Company has been received a petition for winding up under Section 218 of the Companies Act 1965.
Since police reports had been lodged by the newly constituted Board, there is a clear need for timely action and enforcement against the former directors and management for mismanagement.
MSWG is of the opinion that the law is clear as to the duties of directors, not just of the Group and the Company but of shareholders in general, to be held accountable for mismanagement. It is high time that the former directors are swiftly brought to justice, and that their mismanagement and negligence tantamount to misconduct should be penalized, and not to be tolerated. They are expected to be held to account for such heinous misconduct to perform their duties and obligations honestly to the shareholders. Appropriate action under the law should be taken immediately. Moral rules do not exist for their own sake but for the benefit of all of us as stakeholders.
MSWG’S RECOMMENDATIONS
MSWG recommends shareholders to wake up and be united to demand answers at the Company’s upcoming AGM about mismanagement by previous management as alleged in the Chairman’s statement in the Annual Report and Accounts for the year ended 30 November 2006. No listed issuers or directors today can simply violate shareholders’ trust to uphold their fiduciary duties and responsibilities without impunity.
In an ideal world in which every one was honest, in which directors and managers never cut corners, and were scrupulously fair in their dealings with company’s funds and in their reporting to shareholders, there would be no need for all the time to remind directors and stakeholders alike of good corporate governance. Until that glorious day, most shareholders and stakeholders undoubtedly sleep soundly only when they know that independent eyes, such as MSWG and the regulators are watching over their investments and interests.
Abdul Wahab Jaafar Sidek
Chief Executive Officer
Minority Shareholder Watchdog Group (MSWG)
Dated: 29 May 2007
