Bursa Malaysia Securities Berhad (635998-W) (Bursa Malaysia Securities) has publicly reprimanded Bina Goodyear Berhad (BGYEAR or the Company) for breaching paragraph 9.16(1)(a) of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR) in respect of the Company’s announcement dated 29 October 2012 on its annual audited accounts for the financial year ended 30 June 2012 (AAA 2012) which was not factual and accurate particularly with regards to the carrying value of the amounts due from customers on contracts and trade and other receivables.
Pursuant to paragraph 9.16(1)(a) of the Main LR, a listed issuer must ensure that each announcement made is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.
The public reprimand was imposed pursuant to paragraph 16.19(1) of the Main LR after taking into consideration all facts and circumstances of the matter and upon completion of due process.
BGYEAR is also required to review and ensure the adequacy and effectiveness of its financial reporting function and carry out a limited review on its quarterly report submissions. The limited review must be performed by the Company’s external auditors for four quarters commencing no later from the quarterly report for the financial period ended 30 September 2014. In addition, BGYEAR must ensure all its directors and relevant personnel attend a training programme in relation to compliance with the Main LR particularly pertaining to financial statements.
While Bursa Malaysia Securities has not found any of BGYEAR’s directors to have caused or permitted the breach by the Company, Bursa Malaysia Securities wishes to highlight that it is the duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance of the Main LR. The Board of Directors of BGYEAR at the material time of the announcement of the AAA 2012 was as follows:-
- Md Azar bin Ismail
- Moo Hean Chong (appointed as Executive Director on 20 December 2011 and re-designated as Managing Director on 30 March 2012)
- Eng Kim Leng (appointed as Executive Director on 29 December 2011)
- Foo San Kan (appointed as Independent Non-Executive Director on 30 March 2012 and re-designated as Non-Independent Non-Executive Director on 26 September 2012)
- Tay Choon Yong (appointed as Independent Non-Executive Director on 23 July 2012)
Bursa Malaysia Securities views the contravention seriously and has reminded BGYEAR and its Board of Directors of their obligation to uphold appropriate standards of responsibility and accountability to shareholders and the investing public.
BACKGROUND
BGYEAR had on 19 November 2012 made an announcement that the Senior General Manager, Finance in charge of the accounts of the Group had brought to the attention of the board that approximately RM29.6 million of the work-in-progress (WIP) was not billable and chargeable to the customers and the Group would need to make a provision for this amount. Prior to this, there was no evidence including from the findings of the Investigative Audit Report announced by BGYEAR on 22 February 2013 that the Board of Directors was aware of such significant unrecoverable WIP.
As a result of the provision which affected the Company’s shareholders’ equity, the Company triggered the prescribed criteria under paragraph 2.1(a) of Practice Note 17 and made the First Announcement on 19 November 2012. The Company’s share price had decreased by RM0.225 / 56.3% from RM0.400 on 19 November 2012 to RM0.175 on 20 November 2012 i.e. the next market day of the First Announcement.
Subsequently, BGYEAR had on 30 November 2012 announced its quarterly report for the financial period ended 30 September 2012 (“QR Sept 2012”) in which the Company had made the following provisions which were related to prior year:-
- Provision for amount due from customers on contracts / WIP amounting to RM43.02 million; and
- Provision for doubtful debts amounting to RM8.60 million.
The impact arising from the provisions was as follows:-
| Item | Based on AAA 2012 RM’000 | Based on the QR Sept 2012 RM’000 | Provision | |
|---|---|---|---|---|
| RM’000 | % | |||
| Amount Due from Customers on Contracts (WIP) | 47,633 | 4,615 | 43,018 | 90.3% |
| Trade and other receivables | 61,130 | 52,526 | 8,604 | 13.2% |
| Shareholders’ equity | 27,620 | (24,002) | ||
| % Shareholders’ equity against paid-up and share capital | negative | |||
