Mems Tech Directors Charged!!
Thursday, April 16, 2009
Mems had been featured many times on this blog. In fact, the first posting ever made on this blog was based on this stock, way back in Oct 2005!! :D
If you would indulge with me, let's take a trip back in time.
I had questioned the extremely bullish earnings expectations for the stock from folks like S&P, OSK, and CIMB. Hard to fault them entirely as the company itself was making extremely optimistic statements in press conferences. (see Mems: Part IV ).
And I highlighted very fact that the cash flow balances were so questionable! ( see Mems: Part VI )
Then on 21 November 2007, OSK Research did a rarity by making a warning on MEMS. Yes, it did and I was impressed with what OSK did. (See OSK comments on Mems )
Six days later, all hell broke loose! Update on Mems Accounting Issue
- In light of the above, and after due deliberation, the Board has resolved not to recognize revenue of RM19.72 million. As a result of this, the unaudited consolidated revenue for the financial year ended 31 July 2007 will be revised to RM53.7 million. This will consequently result in the unaudited profit after tax for the financial year ended 31 July 2007 to be reduced from RM21.47 million as announced on 27 September 2007, to RM13.45 million.
The amount was not HUGE at all but the implication was so crucial.
Without the disputed 8.02 million (Mems on that day said its earnings was reduced from 21.47 to 13.45 million), this would mean it changed the whole complexion for the stock.
The stock would HAD NEVER been branded as a GROWTH stock and with it, the higher earnings expectations (see initial posting on Mems on S&P high earnings expectations on Mems in the posting: Mems.. ) and the higher earnings multiple.
In layman terms, the stock should never had traded as high as it did!
And so I wrote on More on Mems Restating of Its Earnings and made another update posting, Regarding Mems Again...
And the point I made was..
- So if the market valuation now is about fair for a company making only 13 million, then Mems is worth only some 163 million. However, due to the overstated earnings, MEMS was valued as much as some 531 million!!!
All thanks to overstating of the earnings by a mere 8.02 million!
And a couple of months later, on 12 Feb 2008, I wrote Unnamed Sources Strikes On Mems!. The stock surged by an incredible 42% thanks to unnamed sources mentioned on the Edge article ( see The said article on Mems ).
- A business weekly reported last weekend, citing unnamed sources, that new information had surfaced that may soon get the company out of the problems it is in
But no OFFICIAL news was released by Mems itself! And on 25 Feb 2008, the stock fell back to 13 sen! See What now for Mems Technology?
And the most glaring issue during this period was AKN Equity disposing tons of Mems shares during this period! ( See Unnamed Sources Strikes On Mems! )
Here's the announcement posted on Bursa: Changes in Sub. S-hldr's Int. (29B) - AKN EQUITY VENTURES SDN. BHD. See the massive disposals made by AKN Equity from 11 Feb 2008 to 13 Feb 2008!!
And on 29th Feb 2008: Mems Technology Will Be Suspended!!!!!!!!
Suspended until further notice!!!!
By April MEMS Tech: Still Unable to Produce Quarterly Earnings!. I even made a review on Mems again. See Mems Technology Again!
A month later, Mems finally announced its quarterly earnings. See A Look At Mems Technology Again
And it was incredible that on 31 May 2008, Mems Asks For Support!!
- Executive director Tan Yeow Teck said its board of directors has explained all the circumstances of the accounting issues to the shareholders present at the meeting.
"On hindsight, we believe this whole thing may not have happened if we've talked to the auditors up front," Tan said, referring to its external auditor KPMG, which raised concerns about certain transactions relating to the firm's revenue, property, plant and equipment last year.
A couple of months later, I wrote A Brief Look at Mems Latest Quarterly Earnings
It was astonishing! All the warnings signs were lit. Trade receivables were insanely high when compared to its sales revenue. Cash depleted to a mere 3.191 million and loans increased by 7.441 million to 50.796 million!
And finally today we read that Mems Tech directors charged!!
- Mems Tech directors charged
Written by Sharon Tan
Thursday, 16 April 2009 12:23
KUALA LUMPUR: Mems Technology Bhd (Mems Tech) directors Ooi Boon Leong and Tan Yeow Teck separately pleaded not guilty in the Sessions Court here today to a charge of furnishing misleading statements to Bursa Malaysia Securities Bhd.
The duo were charged by the Securities Commission (SC) under Section 122 of the Securities Industry Act 1983 for knowingly authorising the furnishing of a misleading statement concerning Mems Tech’s revenue of RM73 million for the 12-month period ended July 31, 2007 to Bursa Securities.
Judge Rosbiahanin Arifin fixed the joint trial for Oct 5 to 9, 2009. If found guilty, Tan and Ooi can be fined a maximum of RM3 million each or jailed up to 10 years or both.
The court set a bond of RM200,000 for each defendant with two sureties. Tan and Ooi were also required to surrender their passports but could make an application to the court for their passports if they were required to travel for business.
Ooi, 48, a director of the Mesdaq Market company, was appointed to the board on Nov 30, 2000. As of Feb 13, 2000, he held a direct stake of 4.82% comprising 31.61 million shares in Mems Tech. Ooi is also a director and group chief executive officer of AKN Technology Bhd.
According to the company’s annual report, Tan, 48, was appointed to the board on June 28, 2006. He is the executive director and also the chief financial officer of the company.
Mems Tech’s substantial shareholders include AKN Equity Ventures Sdn Bhd with a 10.42% stake comprising 68.35 million shares and Lembaga Tabung Haji with a 9.95% stake or 65.25 million shares.
Mems Tech, which is involved in microelectromechanical systems products, had failed to finalise the audited financial statements for financial year ended July 31, 2007 and quarterly report for the period ended Oct 31, 2007. The audited income statement for the year was later announced on April 24, 2008 containing a disclaimer by the company’s former statutory auditors, KPMG.
On Dec 24 last year, Mems Tech announced that the suspension of trading of its securities and the commencement of the delisting procedures against it was deferred pending the decision on its application by Bursa Securities. It is asking for a waiver to submit a regularisation plan. The stock yesterday fell 0.5 sen to 8.5 sen with 1.67 million shares traded.
Earlier in March, the SC charged Tan Chin Han, the former chief executive officer and executive director of Welli Multi Corporation Bhd, for knowingly authorising the provision of a misleading statement to Bursa regarding Welli Multi’s revenue.
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