MAXWELL (5189) - Maxwell: More Mayhem (2)
Maxwell finally published its annual report, bit too late, but better late than never.
The start is promising:
"Moving Forward", interesting motto, but how to move forward when the revenue of the last three quarters has been exactly zero? In other words, the company has ceased all its business.
Regarding its financial position, the company remarks:
"The Group owned a cash and cash equivalents of RM360.673 million
(2015: RM366.713 million) with zero debt as at the end of the financial
year 2016. The Group has been in net cash position for the past 6
financial years since it was listed on the Main Market of Bursa Malaysia
Securities Berhad back in 2011."
That sounds good, RM 361 Million cash, but the accounts are again heavily qualified by the auditors, and again in relation to its alleged cash (among many other items):
As disclosed in Note 10(b) to the financial statements, during the
financial year, Jinjiang Zhenxing Shoes & Plastics Co. Ltd., a
subsidiary company of the Company, placed RM337.21 million (RMB510.00
million) with an asset management company, Jinjiang Jin Chuang Private
Capital Management Co. Ltd., (“Jin Chuang”) (晋江晋创民间资本管理有限公司). The
management of Jinjiang Zhenxing Shoes & Plastics Co. Ltd., are
unable to provide the relevant information and supporting documents to
the Company in respect of the placement of the cash with the asset
management company.
On 26 April 2016, the Company announced that Jinjiang Zhenxing Shoes & Plastics Co. Ltd., had on 6 April 2016 notified Jin Chuang to transfer all the funds. On 19 July 2016, the Company announced that the funds placed with Jin Chuang would be transferred into Jinjiang Zhenxing Shoes & Plastics Co. Ltd.’s bank account or a bank account nominated by Jinjiang Zhenxing Shoes & Plastics Co. Ltd., upon maturity.
We were unable to obtain sufficient appropriate audit evidence on the cash and cash equivalents as at the end of the financial year. Therefore, we could not determine the effect of adjustment, if any, on the financial statements of the Group.
It really seems that the company is dragging its feet in proving that
the funds (RM 337 Million) really exist. One possibility (which
is rather likely, in my humble opinion) is that the cash is simply not
there, it probably never was. It would not exactly be the first time
that this would happen to a company from China.
The company further stated:
On 14 April 2017, the Company announced that the
Company, Jinjiang Zhenxing Shoes & Plastics Co. Ltd. and Maxwell
(Xiamen) Co. Ltd. appointed a legal firm in PRC, namely Shanghai Zinger
Law Office (上海致格律师事务所) to conduct a special due diligence on Advertising
and Promotion Expenses (Note 30.1(1)) and funds placed with Jinjiang
Jin Chuang Private Capital Management Co. Ltd. (晋江晋创民间资本管理有限公司) (Note
30.1(2)) and to issue a special legal opinion thereon. As at the date of
this report, the lawyer has yet to issue any legal advice on this
matter.
I wrote
about this marketing issue 18 months ago, why wait so long to appoint a
legal firm to conduct due diligence? What have the independent
directors and/or the regulators done all this time? Has there been any
activity and/or pressure from their side, or do they let the company
continue in this rather shameful way?
MAXWELL (5189) - Maxwell: More Mayhem (2)
http://cgmalaysia.blogspot.my/2017/05/maxwell-more-mayhem-2.html
