Maxbiz CEO: RM 50 million is nothing to shout about

I had a look at its latest 2010 year report.

Unfortunately, the cover is the only nice part of the whole report.

An errata of six pages is added containing dozens of corrections, not exactly the hallmark of a company that takes pride in its work.

It is hard to find a company with more red flags than Maxbiz:

[1] Personal changes:

  • Lots of changes in the Board of Directors and especially in the audit committee throughout the years

  • The previous internal auditor did not resume his position as internal auditor and quit on 25 February 2011

  • The (extrernal) auditor also changed in January 2011.

[2] Maxbiz and five directors received public reprimands and fines:

  • MAXBIZ had breached paragraph 9.16(1)(a) of the LR for failing to ensure that the 4th quarterly report for the financial year ended 31 December 2008 ("4th QR 2008") which was announced on 2 March 2009 took into account the adjustments as stated in the Company’s announcement dated 4 May 2009.

  • MAXBIZ had reported an unaudited loss after taxation and minority interest of RM6.227 million for the financial year ended 31 December 2008. However, the Company had on 30 April 2009 reported an audited loss after taxation and minority interest of RM76.926 million.

  • Bursa Securities also found that the directors of MAXBIZ to be in breach of paragraph 16.11(b) of the LR for permitting knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the above breach.

[3] The company is involved in numerous court cases.

[4] Directors own not even a single share:

[5] The accounts of Maxbiz are qualified (both off the company itself and some of its subsidiaries), just two statement from the auditors:

  • “In the event that full impairment and full provisions of the above matters raised, the full impact on the Group for year ended 31 December 2010 would be RM25,936,874 as additional losses, hence the Group losses would have increased from RM2,394,234 to RM28,331,108.”

  • “As at 31 December 2010, the Group and Company’s current liabilities exceeded its current assets by RM16,394,682 and RM7,080,516 respectively.”

[6] Maxbiz appointed Ferrier Hodgson MH Sdn. Bhd. As Investigation Advisor (IA) on 24th February, 2010 to investigate if there were any irregularities and anomalies during the Geahin debt restructuring exercise.

The first of 4 parts of the report was presented to the Audit Committee and the Board of Directors on 28th April, 2010. As announced to Bursa Malaysia Securities Berhad on 30th April, 2010, the contents of the report from Ferrier Hodgson MH Sdn. Bhd. indicates that there is fraud, deception and misrepresentation.

[7] Maxbiz has a “special status” in several ways, but not the ones you like to see:

  • On 18 January 2011 the Company announced that pursuant to Paragraph 2.1(a) of PN 17 of the Main Market Listing Requirements, the Company is considered a PN 17 Company.

  • On October 7 2005 the Company defaulted on its RULS, since then it is considered a PN 1 Company.

  • The company recently received a winding-up petition, its subsidiary had received one on the past.

"Ze Moola" wrote a few interesting articles about MaxBiz:

http://www.whereiszemoola.blogspot.com/search/label/Maxbiz

Yet, dispite all the gloom, the share price suddenly took off:

The buyers must be quite positive about the future of this company. If this is based on any realism, time will tell …..

A strange coincedence is the fact that SJ Asset Management was the 2nd largest shareholder of Maxbiz, an asset management company being examined closely by the Securities Commission (SC) due to irregularities in its accounts.

http://biz.thestar.com.my/news/story.asp?sec=business&file=/2010/7/7/business/6618258

“It was reported by a weekly that SJAM managing director Whai Onn Tan had gone missing, together with several million ringgit from the company.”

It is rather strange to see an asset manager investing in a company like Maxbiz with such poor fundamentals.

When things were still going better with SJ Asset Management, its boss joined in a charity raising event:

http://vimeo.com/8536328