Monday, 8 August 2016

Maxwell: More Mayhem

Maxwell published its annual report and The Star wrote an article about it:

Maxwell to delay capacity expansion on slowdown

Some snippets:

"Li noted that the group had a huge cash reserve of RM366.7mil as at the end of last year.

This, she said, allowed the group to look out for potential business opportunities and to expand beyond the core sports shoes OEM (original equipment manufacturer) and ODM (original design manufacturer) businesses."

Sounds all pretty good, doesn't it?

Unless one realizes that Maxwell's accounts were qualified by the auditors, a "tiny" oversight that the article forgot to mention.

The auditors needed a full eight pages to detail what was wrong, one of the worst lists I have seen for Bursa listed companies.

One of the auditors concerns is exactly the "huge cash reserve" as mentioned by Madam Li:

But unfortunately, it is not all.

The loss over 2015 was much larger (31%) than previously stated, as announced here.

Seven reasons were given, with one rather remarkable one, the salary of Madam Li herself. Apparently it was not known on February 29, 2016 what amount she would receive over 2015?

The remuneration committee should give a proper explanation regarding this matter.

Another matter is that the company has now entered PN17 status.

And then there are still many other concerns about which I have written before.

Malaysian journalists should really put in their effort, do some thorough research before they write about a subject. The above linked article is very disappointing and would leave an uninformed reader with a completely wrong impression about the well being of Maxwell.


  1. I appreciate very much Mr Wind's comments and opinion (especially the last paragraph) posted here. This article, purportedly a news item quoting a just (last Friday) published annual report. With the reality behind the story so stark, this news item would serve the Star's readers much better had it not been published. The reputation of Star is much tarnished, assuming this is a genuine mistake with no hidden agenda on the part of the editors or the journalists.

  2. Thanks Casey for your comment. I don't think there was a hidden agenda, probably just a case of very sloppy reporting. The Star should indeed retract or amend their story, at least that is my opinion.

  3. What is staggering is that the auditors cannot verify the existence of cash purportedly valued at RMB510 million? This is indeed very frightening....

  4. Exactly, also because this is an issue that often crops up with companies from China. What is wrong with just keeping the money in a normal account with a reputable bank?