PETALING JAYA: The board of directors of MSM Malaysia Holdings Bhd have clarified that its inventory irregularities pertain to an adjustment to write-off inventories amounting to RM36.6mil in MSM Sugar Refinery (Johor) Sdn Bhd.
In a Bursa Malaysia filing yesterday, MSM said the adjustment to write-off inventories was reported in its 2019 financial statements.
“The officer-in-charge has been tasked to conduct a comprehensive review of the production recording and reporting system for MSM Sugar Refinery (Johor). Further announcements shall be made in the event of material developments on this matter, ” said MSM.
MSM had on Tuesday appointed FGV Holdings Bhd group investment officer Fakhrunniam Othman as officer-in-charge to perform the functions of MSM CEO to ensure business as usual. This was following the seven-day leave of absence placed on MSM’s group CEO Datuk Khairil Anuar Aziz, who has been required to explain irregularities relating to inventories of MSM Sugar Refinery (Johor).
Additionally, a board executive committee comprising three MSM directors, Datuk Syed Hisham Syed Wazir, Datuk Dr Abd Hapiz Abdullah and Datuk Haris Fadzilah Hassan, has been established to guide and assist the officer-in-charge during the interim period.
According to CGS-CIMB Research, MSM had disclosed in its 2019 annual report that it lost RM49.4mil due to inventories being written down to a net realisable value and RM1.5mil from inventories written off in 2019.
While the inventory irregularities issue is unlikely to affect MSM’s earnings for 2020, CGS-CIMB Research is still negative on the development as it sheds a negative light on the past governance or management of MSM. The research house highlighted that this was the second time in recent years that MSM appeared to have an issue with its CEO.
“We expect MSM to continue reporting losses, which could affect its ability to attract suitors. We are also concerned about the low utilisation of its Johor refinery, ” it said.
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