KUALA LUMPUR (April 15): FSBM Holdings Bhd, via Malacca Securities Sdn Bhd, submitted its proposed plan to Bursa Malaysia on Friday (April 15) to regularise the group's status as an affected listed issuer under Practice Note 17 (PN17).

In a statement, the group said the plan includes a proposed issuance of 60 million new shares, a rights issue with free warrants, disposal of two subsidiaries — FSBM CTech Sdn Bhd and Unos Sdn Bhd — for RM2 million, and a capital reduction to trim its share capital.

The new share issuance will represent 30% of FSBM's enlarged issued shares after the issuance, while the rights issue will involve 250 million shares and be undertaken on the basis of one rights issue for every one FSBM share held, with up to 125 million free detachable warrants to be given out on the basis of one warrant for every two rights shares subscribed on a date to be fixed.

In a statement filed to Bursa Malaysia, the group said its board of directors believes that the proposed regularisation plan will help resolve the going concern considerations of the group that were raised by its external auditor Moore Stephens Associates PLT (MSA) on Thursday, as well as uplift the group's PN17 status.

It also pointed out that the external auditor's Thurday report was released before FSBM submitted its proposed regularisation plan.

On that note, it updated that it had completed its annual audit for financial year 2021 (FY21), and that it incurred a net loss of RM9.3 million for the year, with its current liabilities exceeding its current assets by RM5.3 million, which resulted in a deficit in shareholders' equity of RM2.9 million.

"This is due to a one-off non-recurring bad debt written off of RM8.6 million mitigated by write-backs of liabilities of RM2.3 million," FSBM said, adding these adjustments were based on the review conducted by management during FY21 on the assets, liabilities and equity of the group and company, as most of these balances have been outstanding and/or without movement for many years.

"Following the review, certain assets had been written off and/or written down to their recoverable amounts,
leaving the remaining liabilities stated vide the confirmation exercise conducted, and with provisions and accruals estimated based on the probability of outflow of resources required to settle these obligations. Although these adjustments have been taken as current year adjustments in the statement of comprehensive income for the current FY21, they may or may not be in relation to the current financial year," it added.

FSBM also noted that since MSA's appointment as its external auditor in October 2019, MSA has expressed disclaimers of opinion on the financial statements of the group for FY18 ended June 30, 2018, the 18-month financial period ended Dec 31, 2019 (FPE2019) and FY20.

This was due to, among others, the auditor's inability to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements for the three periods mentioned, as well as on the going concern consideration, it said.

FSBM shares settled 1.5 sen or 4.69% lower at 30.5 sen on Friday, giving it a market capitalisation of RM43.1 million.

Read also:
FSBM's external auditor raises material uncertainty