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Metronic board meets to consider Lee Kim Yew's call for special audit today

KUALA LUMPUR (Oct 16): Metronic Global Bhd’s board of directors will meet today to consider a request by its largest shareholder, Tan Sri Lee Kim Yew, for the appointment of an independent team of auditors to conduct a special audit on several corporate exercises undertaken by the company this year.

Lee, who stated this in a statement yesterday, said Metronic has promised to update his solicitors on the outcome of the meeting today.

Lee, who owns a 29.01% equity interest in Metronic, said he instructed his solicitors to write to the Metronic board on Sept 30 to request the special audit on the executives’ share option scheme exercised in June, a joint venture announced on Aug 7, a proposed private placement announced on Aug 8 and also on the cash flow position of Metronic.

The joint venture was between Metronic’s wholly-owned unit, Metronic Engineering Sdn Bhd, and Zhuhai Singyes New Materials Technology Co Ltd to develop smart city solutions in Malaysia.

As at June 30, the company had RM58.78 million in cash and cash equivalents, while total borrowings stood at RM5.2 million.

Prior to this, Metronic reported its sixth straight quarterly loss. Its net loss for the fourth quarter ended June 30, 2019 (4QFY19) widened to RM9.39 million from RM1.06 million in 4QFY18, despite revenue rising 39.62% to RM11.38 million from RM8.15 million.

For the full year, the company registered a net loss of RM14.87 million on revenue of RM27.21 million.

No comparative figures were provided, as the group had changed its financial year end from Dec 31 to June 30.

Metronic has blamed the bigger loss on a provision for impairment totalling RM6.2 million during the quarter.

“Included in the provision above, was a provision for impairment of its investment property in Beijing amounting to RM15.8 million whereby a total of RM11.8 million was offset against revaluation reserve account. This is in pursuant to the announcement made by the group on June 3, 2019 whereby based on investigation, the said property has been found transferred to a third party without consent and/or board authorisation,” the company said.

The transaction occurred in 2016 during the previous management under Tan Ew Chew and Tan Kian Hong who served as the company’s adviser and director respectively.

The provision for impairment was made as per advice from the group’s auditor in accordance with the approved accounting standards. Notwithstanding that, the company has said it will pursue all avenues under the laws as advised by its legal adviser to recover the property and enforce its interest in the property.

Metronic shares were last traded at five sen with a market capitalisation of RM56.63 million.

This article first appeared in The Edge Financial Daily, on Oct 16, 2019.

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