Bursa announced that it:
.... has publicly reprimanded MALAYSIAN AE MODELS HOLDINGS BERHAD (In Liquidation) (MAEMODE) and 6 of its directors for breaching the Bursa Malaysia Securities Main Market Listing Requirements (Main LR). In addition, the Managing Director, Datuk Dr Lim Kee Sinn was fined RM100,000.
MAEMODE was publicly reprimanded for breaching paragraphs 9.03(1) and 9.04(l) of the Main LR read together with paragraphs 2.1(c) and/or (d) of Practice Note 1 (PN1) for failing to make an immediate announcement of the default in payment of the Syndicated Working Capital Facilities of up to RM400 million from RHB Bank Berhad (RHB) and Malayan Banking Berhad to MAEMODE and its subsidiaries, AE Automotion (M) Sdn. Bhd. and Matromatic Handling Systems (M) Sdn. Bhd. (the Syndicated Facility).
Notwithstanding that MAEMODE was de-listed on 2 July 2014, the breach had been committed while MAEMODE was listed on the Official List of Bursa Malaysia Securities.
And further:
MAEMODE had defaulted in payment of the Syndicated Facility which was secured under a debenture as early as / prior to RHB’s letter dated 16 April 2013 which had, amongst others, highlighted the arrears/ overdue position of the Syndicated Facility to MAEMODE.
Subsequently, vide letter dated 4 June 2013, RHB had informed MAEMODE that the financiers had declared the occurrence of an event of default and demanded MAEMODE to pay the total outstanding sum of RM96,082,818.51 due as at 31 May 2013 which represented 39.3% of the Group’s net assets at the material time.
However, MAEMODE only announced the default in payment of the Syndicated Facility on 20 June 2013.
Are the above fine and reprimands sufficient punishment? Is this really a credible deterrent for future violations?
I have blogged several times about Maemode, the worrisome deterioration of its financial situation between 2007 and 2013, the sudden collapse (predicted and explained in detail by blogger "Ze Moola"), the lack of subsequent transparency (the last quarterly report was for the period until May 2013, no other quarterly report followed, nor an audited year report or annual report over the years 2013 and 2014), etc.
Showing posts with label Maemode. Show all posts
Showing posts with label Maemode. Show all posts
Thursday, 13 November 2014
Tuesday, 15 July 2014
Maemode, RIP
From The Edge of July 14, 2014:
Events have really progressed fast for this company that had once a yearly revenue of RM 600 million, and a decent market cap.
It is only about one year ago (June 20, 2013) that the company announced that a receiver and manager was appointed.
On the same day the company became a "Affected Listed Issuer pursuant to Practice Note 1" and the same for Practice Note 17.
What is left is a bunch of general announcements, that don't shed any light on what really happened:
Will the shareholders of Maemode and the public in general ever know about the exact events that led to the rapid collapse of the company? Are they not entitled to know?
Events have really progressed fast for this company that had once a yearly revenue of RM 600 million, and a decent market cap.
It is only about one year ago (June 20, 2013) that the company announced that a receiver and manager was appointed.
On the same day the company became a "Affected Listed Issuer pursuant to Practice Note 1" and the same for Practice Note 17.
What is left is a bunch of general announcements, that don't shed any light on what really happened:
Will the shareholders of Maemode and the public in general ever know about the exact events that led to the rapid collapse of the company? Are they not entitled to know?
Tuesday, 1 July 2014
Maemode, Golden Plus, China Stationary, HB Global
I wrote about the possible delisting of Maemode. I am afraid that nothing has happened (as was expected), the company didn't announce any plans or objection against the delisting, and thus it was announced that Maemode will be delisted on July 2, 2014.
This is in contrast with Golden Plus, about which I wrote here. The company again announced delays in all their financial reporting, but still remains listed (although the share is suspended).
China Stationary announced that Bursa "rejected the Company’s application for a further extension of time of one (1) month from the Extended Deadline till 31 July 2014."
HB Global announced "that the Company requires an additional time of approximately two to three weeks to finalise its Audited Financial Statements for the financial year ended 31 December 2013 (“AFS 2013”) and the Company is expecting the said AFS 2013 will be completed on or before 21 July 2014."
This is in contrast with Golden Plus, about which I wrote here. The company again announced delays in all their financial reporting, but still remains listed (although the share is suspended).
China Stationary announced that Bursa "rejected the Company’s application for a further extension of time of one (1) month from the Extended Deadline till 31 July 2014."
HB Global announced "that the Company requires an additional time of approximately two to three weeks to finalise its Audited Financial Statements for the financial year ended 31 December 2013 (“AFS 2013”) and the Company is expecting the said AFS 2013 will be completed on or before 21 July 2014."
Monday, 23 June 2014
Maemode: accurate predictions by Ze Moola, but why did nobody notice? (4)
I wrote before about Maemode (Malaysian AE Models Holdings Berhad), here, here and here.
I am afraid that my fears regarding Maemode being delisted appear to be come true, according to this announcement:
the securities of the Company will be de-listed on 2 July 2014 unless an appeal against the de-listing is submitted to Bursa Securities on or before 27 June 2014 ("the Appeal Timeframe")
The shares have been suspended for a long time, so it doesn't look like a big deal. But the issue that I have with this is that Maemode's minority shareholders and interested observers might never know what exactly has happened.
The following are the financial results between 2002 and 2012, the company appeared to be nicely profitable, and although margins were not that great, Maemode looked like a pretty decent company. Its accounts were audited and approved by Ernst & Young, one of the top accounting companies.
However, when one digs deeper (and blogger "Where is Ze Moola" did exactly that), a troubling trend appears:
The build up of debt is very troublesome. And why have the receivables grown much faster than the sales? From about 45% in 2002/04 to 77% in 2010/12. If the receivables are "able to receive" in a timely matter, then the loans can be repaid, but what if that is not the case?
In an interesting twist, well-known businessman Tey Por Yee became a large shareholder. With hindsight, that might not have been the best timed investment, to put it mildly.
The 2013 results were not so good until the third quarter (a small loss), and financial troubles started to appear when a subsidiary defaulted on a loan.
But the real shocker came when the fourth quarter results were announced:
In one foul swoop, the company went from a large accumulated profit to an accumulated loss of 69 million.
The explanation offered was (in my opinion) completely insufficient:
The company would not issue its 2013 audited accounts, its year report, nor any other quarterly reports anymore. In other words, we are completely left in the dark what actually has happened.
Unfortunately, the authorities (BM & SC) also did not order an investigative audit, something that I think was very much needed.
The "commentary of prospect" in the last quarterly report looked rather "comical" (writing about the Malaysian and Chinese economy when the company is going under):
Will we ever know what really happened with Maemode and will the authorities take appropriate action?
I sincerely hope so, time will tell.
I am afraid that my fears regarding Maemode being delisted appear to be come true, according to this announcement:
the securities of the Company will be de-listed on 2 July 2014 unless an appeal against the de-listing is submitted to Bursa Securities on or before 27 June 2014 ("the Appeal Timeframe")
The shares have been suspended for a long time, so it doesn't look like a big deal. But the issue that I have with this is that Maemode's minority shareholders and interested observers might never know what exactly has happened.
The following are the financial results between 2002 and 2012, the company appeared to be nicely profitable, and although margins were not that great, Maemode looked like a pretty decent company. Its accounts were audited and approved by Ernst & Young, one of the top accounting companies.
(all amounts in million RM)
However, when one digs deeper (and blogger "Where is Ze Moola" did exactly that), a troubling trend appears:
The build up of debt is very troublesome. And why have the receivables grown much faster than the sales? From about 45% in 2002/04 to 77% in 2010/12. If the receivables are "able to receive" in a timely matter, then the loans can be repaid, but what if that is not the case?
In an interesting twist, well-known businessman Tey Por Yee became a large shareholder. With hindsight, that might not have been the best timed investment, to put it mildly.
The 2013 results were not so good until the third quarter (a small loss), and financial troubles started to appear when a subsidiary defaulted on a loan.
But the real shocker came when the fourth quarter results were announced:
In one foul swoop, the company went from a large accumulated profit to an accumulated loss of 69 million.
The explanation offered was (in my opinion) completely insufficient:
The company would not issue its 2013 audited accounts, its year report, nor any other quarterly reports anymore. In other words, we are completely left in the dark what actually has happened.
Unfortunately, the authorities (BM & SC) also did not order an investigative audit, something that I think was very much needed.
The "commentary of prospect" in the last quarterly report looked rather "comical" (writing about the Malaysian and Chinese economy when the company is going under):
Will we ever know what really happened with Maemode and will the authorities take appropriate action?
I sincerely hope so, time will tell.
Monday, 28 April 2014
Maemode: accurate predictions by Ze Moola, but why did nobody notice? (3)
I wrote twice about Maemode (7075)
Maemode: accurate predictions by Ze Moola, but why did nobody notice?
Maemode: accurate predictions by Ze Moola, but why did nobody notice? (2)
From the latter:
"The Company expects to submit its AFS (Audited Financial Statements) 2013 within six (6) months from the date of this announcement."
That announcement was made on September 25, 2013.
We are now more than seven months further, and the company still has not issued its Audited Financial Statements.
I am scared the AFS might never be issued. My fear comes from the following recent announcement:
Bursa and/or SC should chase the company for its financial statements. A forensic audit is most likely warranted, given the events that have occurred. Minority investors (who must have lost a lot of money on this counter) and interested observers deserve an explanation, what really has happened. The money that has been lost won't come back. But at least, some lessons will be learned, for all involved. And if there is proof of any wrongdoing, then the authorities should take appropriate action.
Maemode: accurate predictions by Ze Moola, but why did nobody notice?
Maemode: accurate predictions by Ze Moola, but why did nobody notice? (2)
From the latter:
"The Company expects to submit its AFS (Audited Financial Statements) 2013 within six (6) months from the date of this announcement."
That announcement was made on September 25, 2013.
We are now more than seven months further, and the company still has not issued its Audited Financial Statements.
I am scared the AFS might never be issued. My fear comes from the following recent announcement:
Bursa and/or SC should chase the company for its financial statements. A forensic audit is most likely warranted, given the events that have occurred. Minority investors (who must have lost a lot of money on this counter) and interested observers deserve an explanation, what really has happened. The money that has been lost won't come back. But at least, some lessons will be learned, for all involved. And if there is proof of any wrongdoing, then the authorities should take appropriate action.
Wednesday, 25 September 2013
Maemode: accurate predictions by Ze Moola, but why did nobody notice? (2)
Since my previous article about Maemode, I wanted to write some more about this puzzling case, but decided to wait for the annual audited accounts. However, it looks like I have to wait somewhat longer, Maemode announced today the following:
"The Board of Directors of the Company wishes to announce that the issuance of AFS 2013 will be delayed mainly due to all the Company’s accounts staff has left since the receivers and managers were appointed and the Company is in the process of recruiting and training the new accounting staff to update all its accounting records and books.
The Company expects to submit its AFS 2013 within six (6) months from the date of this announcement."
Delaying the accounts is always a huge red flag, and I would not be surprised to see more negative news, for instance in the form of more receivables that are not "able to receive", or assets that have to be written down.
"The Board of Directors of the Company wishes to announce that the issuance of AFS 2013 will be delayed mainly due to all the Company’s accounts staff has left since the receivers and managers were appointed and the Company is in the process of recruiting and training the new accounting staff to update all its accounting records and books.
The Company expects to submit its AFS 2013 within six (6) months from the date of this announcement."
Delaying the accounts is always a huge red flag, and I would not be surprised to see more negative news, for instance in the form of more receivables that are not "able to receive", or assets that have to be written down.
Sunday, 4 August 2013
Maemode: accurate predictions by Ze Moola, but why did nobody notice?
Article in The Star (August 3, 2013):
"Malaysian AE Models Holdings Bhd (Maemode) said its wholly owned unit Matromatic Handling Systems (M) Sdn Bhd had, on July 24, received a notice of termination from UEM-Bina Puri joint venture for its services in the baggage handling and sortation system at the main terminal building of KLIA2. Maemode had earlier won the RM62mil sub-contract job for the proposed airport. However, its financial position has deteriorated substantially over the past year. In June, Maemode fell into the PN17 category after defaulting on its RM100mil loan with two local banks. For the period ended May 31, Maemode recorded losses of RM195.13mil, bringing full-year losses to RM207.76mil. A huge part of its losses were due to a substantial increase in holding costs as a result of a delay in installation works on certain major projects such as KLIA2 and Keriangau Coal-Fired Power Plant in Indonesia, which also caused billings to be delayed."
Things have definitely gone downhill very fast with Maemode. The 5-year graph of its shareprice from Bursa's website (on June 28, 2013 the share was suspended):
With hindsight we are all experts, and if I would write now what all went wrong, surely the reader would think why I didn't write that before.
But the sad (or interesting, depending how one looks at the situation) part is, what happened was basically all very accurately forecasted a long, long time ago, by blogger "Where is Ze Moola". All his articles about Maemode can be conveniently found here.
In 2007(!) Ze Moola showed the following picture:
And wrote: "I see the classical debt built-up again."
With classical built-up he meant the typical warning signs for Malaysian listed companies (often they appear together, but not necessarily all together at once):
And with "again" he meant he has seen many Malaysian companies before with similar patterns, and it did very often end badly.
The most (in)famous one is Megan Media, which imploded under allegations of fraud, an implosion that was correctly predicted by Ze Moola. Although all was conveniently reported by Ze Moola, authorities only acted after the company went down.
Continuing with Maemode, in 2009, Ze Moola wrote:
"The margins are still thin. Net debt post increased yet again and the trade receivables are still ballooning at an extremely alarming rate!"
In 2010, Ze Moola gave the following chart and commented:
"And then receivables again. Look at the size of it. 341.319 million! Receivables are what is owed to the company and hey, if Maemode can collect this 341 million, then it wouldn't need that 341.111 million in loans yes? So why can't MaeMode collect its debts? And from the table, these receivables have most likely grown roots in MaeMode's balance sheet! It's so clear these receivables are in there for so long already! Why? Why? Why? What's wrong? And needless to say, if MaeMode cannot collect these debts, MaeMode will have to write these debts off!"
Journalists didn't seem to notice anything wrong at all, Ze Moola wrote this posting citing an article in The Edge, without any critical comment:
.... MAEMode net profit for the second quarter ended Nov 30, 2011 jumped 70% to RM3.34 million from RM1.97 million a year earlier, due mainly to higher revenue and better profit margins from logistics projects. The company said on Tuesday that its revenue for the quarter rose 44.24% to RM165.46 million from RM114.71 million in 2010. Earnings per share was 3.12 sen compared to 1.84 sen a year earlier, while net assets per share was RM2.21. For the six months ended Nov 30, MAEMode’s net profit surged RM7.76 million from RM2.82 million in 2010, on the back of revenue RM317.09 million compared to RM224.33 million a year earlier. On its outlook, the company said it was confident on the improvements of the global economy that may enhance its future profit moving forward. “With the current order book and barring any unforeseen circumstances, the board is optimistic that the group will remain profitable for the remaining quarters of the financial year,” it said.
Ze Moola countered with the following:
"But the most worrying issue is stated on notes B9. Amount payable within next 12 months is 376.997 million!!"
November 2012 the company issued its 2012 Year report, "Expand to new horizons" in which a rather rosy picture was painted.
There would indeed be new horizons for the company, but not exactly as described in this report, not the ones investors like to see.
May 2, 2013 Ze Moola wrote "Time's almost up for Maemode".
And only one month later, on June 20, 2013, time was indeed up for Maemode. Finally, the news came out in the announcement on Bursa's website:
"The Company was served with the Notice of Appointment of Receiver and Manager stating that on 19 June 2013, a Receiver and Manager has been appointed over the charged assets and undertakings of Malaysian AE Models Holdings Berhad under the terms of the Debenture dated 19th April 2012 executed between the Company and and Joint-Lead Arrangers i.e. RHB Bank Berhad (as facility agent) and Malayan Banking Berhad (as security agent)."
Even in its quarterly report on February 28, 2013 which was released on April 30, 2013 (less than two months before the company announced its receivership), the company claimed that it had RM 244 million shareholders equity (RM 132 million of which was "retained earnings"), based on RM 283 million Trade Receivables and RM 320 million "Due from customers".
Was that really a fair and accurate picture of the financial situation? I strongly doubt it.
And why did the authorities (SC, BM and CCM) not look into this situation? The tell tale signals, all described in detail by Ze Moola were all there. The authorities claim they are pro-active, but this case puts some strong doubts on that claim.
And where were the investigative journalists, sifting through the financial information, asking hard questions to the management?
As usual, the minority investors will suffer. Most likely they are looking at a total loss of their investment. On the other side, they should have done a simple "Google" and they would have found the blog postings from Ze Moola, so they only have themselves to blame.
Lembaga Tabung Haji (owning 10.6 million shares) and Atlantis Asian Recovery Fund (3.7 million shares) are two of the larger institutional shareholders of Maemode, according to the 2012 year report.
I hope that, belatedly, the authorities will investigate this case and check what exactly has happened, if the accounts were properly drawn up, and if the auditors (Ernst & Young, who signed off on the 2012 accounts) did do their job diligently.
"Malaysian AE Models Holdings Bhd (Maemode) said its wholly owned unit Matromatic Handling Systems (M) Sdn Bhd had, on July 24, received a notice of termination from UEM-Bina Puri joint venture for its services in the baggage handling and sortation system at the main terminal building of KLIA2. Maemode had earlier won the RM62mil sub-contract job for the proposed airport. However, its financial position has deteriorated substantially over the past year. In June, Maemode fell into the PN17 category after defaulting on its RM100mil loan with two local banks. For the period ended May 31, Maemode recorded losses of RM195.13mil, bringing full-year losses to RM207.76mil. A huge part of its losses were due to a substantial increase in holding costs as a result of a delay in installation works on certain major projects such as KLIA2 and Keriangau Coal-Fired Power Plant in Indonesia, which also caused billings to be delayed."
Things have definitely gone downhill very fast with Maemode. The 5-year graph of its shareprice from Bursa's website (on June 28, 2013 the share was suspended):
With hindsight we are all experts, and if I would write now what all went wrong, surely the reader would think why I didn't write that before.
But the sad (or interesting, depending how one looks at the situation) part is, what happened was basically all very accurately forecasted a long, long time ago, by blogger "Where is Ze Moola". All his articles about Maemode can be conveniently found here.
In 2007(!) Ze Moola showed the following picture:
And wrote: "I see the classical debt built-up again."
With classical built-up he meant the typical warning signs for Malaysian listed companies (often they appear together, but not necessarily all together at once):
- Decrease of cash
- Increase of debt (especially short-term debt)
- Increase of receivables
- Increase of inventories
And with "again" he meant he has seen many Malaysian companies before with similar patterns, and it did very often end badly.
The most (in)famous one is Megan Media, which imploded under allegations of fraud, an implosion that was correctly predicted by Ze Moola. Although all was conveniently reported by Ze Moola, authorities only acted after the company went down.
Continuing with Maemode, in 2009, Ze Moola wrote:
"The margins are still thin. Net debt post increased yet again and the trade receivables are still ballooning at an extremely alarming rate!"
In 2010, Ze Moola gave the following chart and commented:
"And then receivables again. Look at the size of it. 341.319 million! Receivables are what is owed to the company and hey, if Maemode can collect this 341 million, then it wouldn't need that 341.111 million in loans yes? So why can't MaeMode collect its debts? And from the table, these receivables have most likely grown roots in MaeMode's balance sheet! It's so clear these receivables are in there for so long already! Why? Why? Why? What's wrong? And needless to say, if MaeMode cannot collect these debts, MaeMode will have to write these debts off!"
Journalists didn't seem to notice anything wrong at all, Ze Moola wrote this posting citing an article in The Edge, without any critical comment:
.... MAEMode net profit for the second quarter ended Nov 30, 2011 jumped 70% to RM3.34 million from RM1.97 million a year earlier, due mainly to higher revenue and better profit margins from logistics projects. The company said on Tuesday that its revenue for the quarter rose 44.24% to RM165.46 million from RM114.71 million in 2010. Earnings per share was 3.12 sen compared to 1.84 sen a year earlier, while net assets per share was RM2.21. For the six months ended Nov 30, MAEMode’s net profit surged RM7.76 million from RM2.82 million in 2010, on the back of revenue RM317.09 million compared to RM224.33 million a year earlier. On its outlook, the company said it was confident on the improvements of the global economy that may enhance its future profit moving forward. “With the current order book and barring any unforeseen circumstances, the board is optimistic that the group will remain profitable for the remaining quarters of the financial year,” it said.
Ze Moola countered with the following:
"But the most worrying issue is stated on notes B9. Amount payable within next 12 months is 376.997 million!!"
November 2012 the company issued its 2012 Year report, "Expand to new horizons" in which a rather rosy picture was painted.
There would indeed be new horizons for the company, but not exactly as described in this report, not the ones investors like to see.
May 2, 2013 Ze Moola wrote "Time's almost up for Maemode".
And only one month later, on June 20, 2013, time was indeed up for Maemode. Finally, the news came out in the announcement on Bursa's website:
"The Company was served with the Notice of Appointment of Receiver and Manager stating that on 19 June 2013, a Receiver and Manager has been appointed over the charged assets and undertakings of Malaysian AE Models Holdings Berhad under the terms of the Debenture dated 19th April 2012 executed between the Company and and Joint-Lead Arrangers i.e. RHB Bank Berhad (as facility agent) and Malayan Banking Berhad (as security agent)."
Even in its quarterly report on February 28, 2013 which was released on April 30, 2013 (less than two months before the company announced its receivership), the company claimed that it had RM 244 million shareholders equity (RM 132 million of which was "retained earnings"), based on RM 283 million Trade Receivables and RM 320 million "Due from customers".
Was that really a fair and accurate picture of the financial situation? I strongly doubt it.
And why did the authorities (SC, BM and CCM) not look into this situation? The tell tale signals, all described in detail by Ze Moola were all there. The authorities claim they are pro-active, but this case puts some strong doubts on that claim.
And where were the investigative journalists, sifting through the financial information, asking hard questions to the management?
As usual, the minority investors will suffer. Most likely they are looking at a total loss of their investment. On the other side, they should have done a simple "Google" and they would have found the blog postings from Ze Moola, so they only have themselves to blame.
Lembaga Tabung Haji (owning 10.6 million shares) and Atlantis Asian Recovery Fund (3.7 million shares) are two of the larger institutional shareholders of Maemode, according to the 2012 year report.
I hope that, belatedly, the authorities will investigate this case and check what exactly has happened, if the accounts were properly drawn up, and if the auditors (Ernst & Young, who signed off on the 2012 accounts) did do their job diligently.
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