At Long Last, SC Takes Action Against Kosmo MD

Posted on 27 May 2011: At Last Some Justice For Kosmo Fraud Case

Let me reproduce the posting in full.

Back on Oct 2009, I posted Kosmo's Directors Shocking Fine!!

Let me highlight some of the facts again.

Fact 1.

Company said it made 109 thousand in its unaudited account for its fiscal year.
Company actually had LOSSES totalling 141 million according to its audited accounts.

From 109 thousand to a LOSS of 1141 million!!!

Source: here

Blogged here: Kosmo Technology Shocking Deviation Of Accounts
See also : Unaudited and Audited Accounts: UnReal or Real?

What's the major cause of the massive deviation in the accounts? According to the company's own reasoning: here, two major items were 'Impairment Loss of 55.6 million and 'Provision for doubtful debt of 75.9 million' (ps: see the importance not to discount the trade receivables issue?)

Fact 2.

Company had problems in submitting its financial statements: KOSMO TECHNOLOGY INDUSTRIAL BERHAD ("KOSMO" or "the Company") Delay in issuance of 2007 Annual Report

Fact 3.
Back in 2006, it traded as high as 8.50.
It last traded at 1 sen




At the peak, KOSMO had a stock market value of around 1 Billion.

Fact 4.
Kosmo is now delisted!

And so on 30 Oct 2009, Bursa Securities publicly reprimanded and fined two directors of another delisted company, KOSMO TECHNOLOGY INDUSTRIAL Bhd, a total of RM257,300!

From Bursa website.

Paragraph 9.16(1)(a) of the LR requires a listed issuer to ensure that its announcement is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.

Pursuant to paragraph 9.22(1) of the LR, a listed issuer must give Bursa Securities for public release, an interim financial report that is prepared on a quarterly basis, as soon as the figures have been approved by the board of directors of the listed issuer, and in any event not later than 2 months after the end of each quarter of a financial year.

Paragraph 9.23 of the LR states that a listed issuer must ensure that the issuance of the annual audited accounts and annual report by a listed issuer shall be as follows :-
(a) the annual report shall be issued to the listed issuer’s shareholders and given to Bursa Securities within a period not exceeding 6 months from the close of the financial year of the listed issuer; and
(b) the annual audited accounts together with the auditors’ and directors’ reports shall, in any case, be given to Bursa Securities for public release, within a period not exceeding 4 months from the close of the financial year of the listed issuer unless the annual report is issued within a period of 4 months from the close of the financial year of the listed issuer.

Paragraph 16.11(b) of the LR states that a director of a listed issuer must not permit, either knowingly or where he had reasonable means of obtaining such knowledge, a listed issuer to commit a breach of the LR.

KOSMO had breached :-

(a) paragraph 9.23(b) of the LR for failing to submit the Company’s annual audited accounts for the financial year ended 31 December 2007
("AAA 2007") on or before 30 April 2008. The AAA 2007 was only submitted on 30 June 2008;

(b) paragraph 9.23(a) of the LR for failing to submit the Company’s annual report for the financial year ended 31 December 2007 ("AR 2007") on or before 30 June 2008. The AR 2007 was only submitted on 6 August 2008;

(c) paragraph 9.22(1) of the LR for failing to submit the Company’s quarterly report for the financial period ended 31 March 2008 ("QR 1/2008") on or before 31 May 2008. The QR 1/2008 was only submitted on 30 June 2008;

(d) paragraph 9.16(1)(a) of the LR for failing to ensure the Company’s announcement dated 29 February 2008 on the fourth quarterly report for the financial year ended 31 December 2007 ("QR 4/2007") took into account the adjustments as stated in the Company’s announcement dated 30 June 2008, in particular the adjustments pertaining to additional provision for doubtful debts and impairment loss for development cost.
KOSMO had reported an unaudited profit after taxation and minority interest of RM109,000 for the financial year ended 31 December 2007 in the QR 4/2007. However, the Company had on 30 June 2008 reported an audited loss after taxation and minority interest of RM141,715,814 in the AAA 2007. The difference of RM141.824 million between the unaudited and audited results for the financial year ended 31 December 2007 represents a deviation of more than 100 times.

Dato’ Norhamzah bin Nordin and Encik Mohamad Nassir bin Mohd Kassim who were the directors of KOSMO at the material time were found to be in breach of paragraph 16.11(b) of the LR for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the aforesaid breaches.

They were informed of the audit concerns / issues to make provision for doubtful debt and possibility of impairment of development costs since August 2007 but have failed to demonstrate adequate efforts taken to discharge their duties to :-

(i) address the audit issues pertaining to impairment loss of development costs to enable timely submission of the financial statements in accordance with the LR; and

(ii) ensure that the QR 4/2007 made the necessary provision for doubtful debts and impairment loss on development cost to give a true and fair view of the state of affairs of the Company as at the financial year ended 31 December 2007 and in compliance with paragraph 9.16(1)(a) of the LR.

The finding of breach and imposition of the above penalties on KOSMO and the directors are made pursuant to paragraph 16.17 of the LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including in relation to the directors, the roles and responsibilities of the directors in the Company particularly pertaining to the maintenance and preparation of financial statements.

So they were fined 257 thousand and their stock, which at one time was worth ONE Billion, disappeared into thin air with its delisting!

It's now May 2011.

On Star Biz: Kosmo director, accounts manager charged by SC

• Friday May 27, 2011
  
  Kosmo director, accounts manager charged by SC
  
  PETALING JAYA: The Securities Commission charged a director and an accounts manager of Kosmo Technology Industrial Bhd yesterday for providing false information to Bursa Malaysia Securities Bhd.
  
  In a media statement, the regulator said six charges under section 122B(a)(bb) Securities Industry Act 1983 and two charges under section 369(a)(B) Capital Market and Services Act 2007 were preferred against Mohd Azham Mohd Noor and Helen Lim Hai Loon for false statements in the company’s eight quarterly unaudited results for financial years 2006 and 2007.
  
  If convicted, they will be liable to a fine not exceeding RM3mil and imprisonment for a term not exceeding 10 years for each charge.
  
  Azham and Lim were released on bail of RM150,000 with one surety each. Sessions Court Judge Rosenani Abd Rahman further ordered that their passports be surrendered to the court and fixed an application for their trial to be held jointly on June 22.
  

Finally some form of justice!

But is it enough?

According to the report, a fine not exceeding rm3 million and imprisonment for a term not exceeding 10 years for each charge.

But the stock at its peak was worth 1 Billion. And I wonder how much was profited by that incredible stock price back then?

========================================

On Star Biz today: SC brings Kosmo Technology MD to court

Wednesday June 8, 2011

SC brings Kosmo Technology MD to court

PETALING JAYA: The Securities Commission has file a suit against Kosmo Technology Industrial Bhd group managing director Datuk Norhamzah Nordin for allegedly providing false information to Bursa Malaysia Securities Bhd.

The SC preferred six charges under section 122B(a)(bb) of the Securities Industry Act 1983 and another two charges under section 369(a)(B) of the Capital Markets and Services Act 2007 yesterday against Norhamzah for allegedly making false statements pertaining to the company’s eight quarterly reports for the financial years 2006 and 2007.

If convicted, he could be liable to a fine of not more than RM3mil and imprisonment not exceeding 10 years for each charge.

Norhamzah was granted bail at RM200,000 with one surety and was required to surrender his passport to the court.

The charges against Norhamzah followed those against Mohd Azham and Lim Hai Loon at the Sessions Court on May 26.

The court will hear the prosecution’s application for joint trial of Norhamzah, Mohd Azham and Lim on June 22.

Comments: It's great to see that SC had finally taken action against Kosmo MD.

Ok, I could be WRONG here but I am not sure if the fine of not more than 3 million is justifiable or not.

Now at the peak, Kosmo stock is worth about 1 billion in the stock market. Question I would ask is how much did they profit for giving false information to Bursa? Ok, it would be naive for me to assume a value of 1 billion but let's assume that profits were made about one third of the peak or 300 million. Would that not be possible?

Now if that was possible... surely the fine of 3 million is rather small, yes?

Remember the fact no 1.

Company said it made 109 thousand in its unaudited account for its fiscal year.

Company actually had LOSSES totalling 141 million according to its audited accounts!!!

At Last Some Justice For Kosmo Fraud Case

Back on Oct 2009, I posted Kosmo's Directors Shocking Fine!!

Let me highlight some of the facts again.

Fact 1.

Company said it made 109 thousand in its unaudited account for its fiscal year.
Company actually had LOSSES totalling 141 million according to its audited accounts.

From 109 thousand to a LOSS of 1141 million!!!

Source: here

Blogged here: Kosmo Technology Shocking Deviation Of Accounts
See also : Unaudited and Audited Accounts: UnReal or Real?

What's the major cause of the massive deviation in the accounts? According to the company's own reasoning: here, two major items were 'Impairment Loss of 55.6 million and 'Provision for doubtful debt of 75.9 million' (ps: see the importance not to discount the trade receivables issue?)

Fact 2.

Company had problems in submitting its financial statements: KOSMO TECHNOLOGY INDUSTRIAL BERHAD ("KOSMO" or "the Company") Delay in issuance of 2007 Annual Report

Fact 3.
Back in 2006, it traded as high as 8.50.
It last traded at 1 sen



At the peak, KOSMO had a stock market value of around 1 Billion.

Fact 4.
Kosmo is now delisted!

And so on 30 Oct 2009, Bursa Securities publicly reprimanded and fined two directors of another delisted company, KOSMO TECHNOLOGY INDUSTRIAL Bhd, a total of RM257,300!

From Bursa website.

Paragraph 9.16(1)(a) of the LR requires a listed issuer to ensure that its announcement is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.

Pursuant to paragraph 9.22(1) of the LR, a listed issuer must give Bursa Securities for public release, an interim financial report that is prepared on a quarterly basis, as soon as the figures have been approved by the board of directors of the listed issuer, and in any event not later than 2 months after the end of each quarter of a financial year.

Paragraph 9.23 of the LR states that a listed issuer must ensure that the issuance of the annual audited accounts and annual report by a listed issuer shall be as follows :-
(a) the annual report shall be issued to the listed issuer’s shareholders and given to Bursa Securities within a period not exceeding 6 months from the close of the financial year of the listed issuer; and
(b) the annual audited accounts together with the auditors’ and directors’ reports shall, in any case, be given to Bursa Securities for public release, within a period not exceeding 4 months from the close of the financial year of the listed issuer unless the annual report is issued within a period of 4 months from the close of the financial year of the listed issuer.

Paragraph 16.11(b) of the LR states that a director of a listed issuer must not permit, either knowingly or where he had reasonable means of obtaining such knowledge, a listed issuer to commit a breach of the LR.

KOSMO had breached :-

(a) paragraph 9.23(b) of the LR for failing to submit the Company’s annual audited accounts for the financial year ended 31 December 2007
("AAA 2007") on or before 30 April 2008. The AAA 2007 was only submitted on 30 June 2008;

(b) paragraph 9.23(a) of the LR for failing to submit the Company’s annual report for the financial year ended 31 December 2007 ("AR 2007") on or before 30 June 2008. The AR 2007 was only submitted on 6 August 2008;

(c) paragraph 9.22(1) of the LR for failing to submit the Company’s quarterly report for the financial period ended 31 March 2008 ("QR 1/2008") on or before 31 May 2008. The QR 1/2008 was only submitted on 30 June 2008;

(d) paragraph 9.16(1)(a) of the LR for failing to ensure the Company’s announcement dated 29 February 2008 on the fourth quarterly report for the financial year ended 31 December 2007 ("QR 4/2007") took into account the adjustments as stated in the Company’s announcement dated 30 June 2008, in particular the adjustments pertaining to additional provision for doubtful debts and impairment loss for development cost.
KOSMO had reported an unaudited profit after taxation and minority interest of RM109,000 for the financial year ended 31 December 2007 in the QR 4/2007. However, the Company had on 30 June 2008 reported an audited loss after taxation and minority interest of RM141,715,814 in the AAA 2007. The difference of RM141.824 million between the unaudited and audited results for the financial year ended 31 December 2007 represents a deviation of more than 100 times.

Dato’ Norhamzah bin Nordin and Encik Mohamad Nassir bin Mohd Kassim who were the directors of KOSMO at the material time were found to be in breach of paragraph 16.11(b) of the LR for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the aforesaid breaches.

They were informed of the audit concerns / issues to make provision for doubtful debt and possibility of impairment of development costs since August 2007 but have failed to demonstrate adequate efforts taken to discharge their duties to :-

(i) address the audit issues pertaining to impairment loss of development costs to enable timely submission of the financial statements in accordance with the LR; and

(ii) ensure that the QR 4/2007 made the necessary provision for doubtful debts and impairment loss on development cost to give a true and fair view of the state of affairs of the Company as at the financial year ended 31 December 2007 and in compliance with paragraph 9.16(1)(a) of the LR.

The finding of breach and imposition of the above penalties on KOSMO and the directors are made pursuant to paragraph 16.17 of the LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including in relation to the directors, the roles and responsibilities of the directors in the Company particularly pertaining to the maintenance and preparation of financial statements.

So they were fined 257 thousand and their stock, which at one time was worth ONE Billion, disappeared into thin air with its delisting!

It's now May 2011.

On Star Biz: Kosmo director, accounts manager charged by SC

• Friday May 27, 2011
  
  Kosmo director, accounts manager charged by SC
  
  PETALING JAYA: The Securities Commission charged a director and an accounts manager of Kosmo Technology Industrial Bhd yesterday for providing false information to Bursa Malaysia Securities Bhd.
  
  In a media statement, the regulator said six charges under section 122B(a)(bb) Securities Industry Act 1983 and two charges under section 369(a)(B) Capital Market and Services Act 2007 were preferred against Mohd Azham Mohd Noor and Helen Lim Hai Loon for false statements in the company’s eight quarterly unaudited results for financial years 2006 and 2007.
  
  If convicted, they will be liable to a fine not exceeding RM3mil and imprisonment for a term not exceeding 10 years for each charge.
  
  Azham and Lim were released on bail of RM150,000 with one surety each. Sessions Court Judge Rosenani Abd Rahman further ordered that their passports be surrendered to the court and fixed an application for their trial to be held jointly on June 22.
  

Finally some form of justice!

But is it enough?

According to the report, a fine not excedding rm3 million and imprisonment for a term not exceeding 10 years for each charge.

But the stock at its peak was worth 1 Billion. And I wonder how much was profited by that incredible stock price back then?

How Do You Destroy A Market Capital Of 1 Billion!

Posted this morning: Kosmo's Directors Shocking Fine!!

Now do you know that when Kosmo was trading at a high of 8.50, Kosmo number had some 129.296 million shares.

Which meant that Kosmo was trading with a market capital of over 1 Billion Ringgit!

Now Kosmo is delisted!

Oh yeah, how do you make a stock with a market capital of 1 billion disappear?

Oh yeah, two directors were fined 257,300!!!!!!!!!!

Kosmo's Directors Shocking Fine!!

Fact 1.

Company said it made 109 thousand in its unaudited account for its fiscal year.
Company actually LOST 141 million according to its audited accounts.

Source: here
Blogged here: Kosmo Technology Shocking Deviation Of Accounts

See also : Unaudited and Audited Accounts: UnReal or Real?

What's the major cause of the massive deviation in the accounts? According to the company's own reasoning: here, two major items were 'Impairment Loss of 55.6 million and 'Provision for doubtful debt of 75.9 million' (ps: see the importance not to discount the trade receivables issue?)

Fact 2.

Company had problems in submitting its financial statements: KOSMO TECHNOLOGY INDUSTRIAL BERHAD ("KOSMO" or "the Company") Delay in issuance of 2007 Annual Report

Fact 3.

Back in 2006, it traded as high as 8.50. See chart here.
It last traded at 1 sen

Fact 4.

Kosmo is now delisted!

On today's Edge Financial Daily: Bursa fines Energreen, Kosmo directors over RM900,000

• KUALA LUMPUR: Former Bursa Malaysia Securities-listed Energreen Corporation Bhd’s directors have been publicly reprimanded and fined a total of nearly RM650,000 for failure to submit its financial statements by the stipulated deadlines and failure to provide accurate information to investors.
  
  In a statement on Oct 29, Bursa Securities said it had found Energreen and 12 directors to be in breach of several listing requirements (LRs) while the company was listed on Bursa Securities.
  
  They are former chairman Datuk Seri Prof Dr Ibrahim Saad, who was fined RM2,250, former managing director Ang Sun Beng (a total of RM240,000), Choong Khoong Beng (RM4,500), Ong Wee Meng (RM4,500), Datuk Wira Jamaludin Abd Rahim (RM5,000), former audit committee chairman Badrul Hassan Mohamed Kassim (RM16,000), group managing director Datuk Abd Ghani Ali Kadir (RM274,000), Chin Kuet Lee (RM55,200), former chairman Datuk Seri Mohd Shariff Omar (RM9,050), Datuk Chee Hong Leong (RM13,300), Soh Yew Aun (RM17,000) and Dr Roslan A Ghaffar (RM8,500).
  
  Bursa Securities also publicly reprimanded and fined two directors of another delisted company, KOSMO TECHNOLOGY [] INDUSTRIAL [] Bhd, a total of RM257,300 for similar breaches of LRs. Bursa Securities said the breaches were also committed when the company was still listed.

A fine of a mere 257 thousand??????

Of course the deviation of Kosmo's account equated to 'failure to provide accurate information to investors' and hence it should be fined.

But then... look at the SIZE of the deviation!

It went from a profit of 109 thousand to a loss of 141 million!

A deviaton of 100 times! oO

And the company failed to submit its financial statements.

And the company is now delisted.

And the company went from 8.50 to no more! (Kosmo is now delisted!!!!)

And what do we get?

A fine of 257,300???????

Here's the full text of the announcement on Bursa website.

• Paragraph 9.16(1)(a) of the LR requires a listed issuer to ensure that its announcement is factual, clear, unambiguous, accurate, succinct and contains sufficient information to enable investors to make informed investment decisions.
  Pursuant to paragraph 9.22(1) of the LR, a listed issuer must give Bursa Securities for public release, an interim financial report that is prepared on a quarterly basis, as soon as the figures have been approved by the board of directors of the listed issuer, and in any event not later than 2 months after the end of each quarter of a financial year.
  
  Paragraph 9.23 of the LR states that a listed issuer must ensure that the issuance of the annual audited accounts and annual report by a listed issuer shall be as follows :-
  (a) the annual report shall be issued to the listed issuer’s shareholders and given to Bursa Securities within a period not exceeding 6 months from the close of the financial year of the listed issuer; and
  (b) the annual audited accounts together with the auditors’ and directors’ reports shall, in any case, be given to Bursa Securities for public release, within a period not exceeding 4 months from the close of the financial year of the listed issuer unless the annual report is issued within a period of 4 months from the close of the financial year of the listed issuer.
  
  Paragraph 16.11(b) of the LR states that a director of a listed issuer must not permit, either knowingly or where he had reasonable means of obtaining such knowledge, a listed issuer to commit a breach of the LR.
  
  KOSMO had breached :-
  
  (a) paragraph 9.23(b) of the LR for failing to submit the Company’s annual audited accounts for the financial year ended 31 December 2007
  ("AAA 2007") on or before 30 April 2008. The AAA 2007 was only submitted on 30 June 2008;
  
  (b) paragraph 9.23(a) of the LR for failing to submit the Company’s annual report for the financial year ended 31 December 2007 ("AR 2007") on or before 30 June 2008. The AR 2007 was only submitted on 6 August 2008;
  
  (c) paragraph 9.22(1) of the LR for failing to submit the Company’s quarterly report for the financial period ended 31 March 2008 ("QR 1/2008") on or before 31 May 2008. The QR 1/2008 was only submitted on 30 June 2008;
  
  (d) paragraph 9.16(1)(a) of the LR for failing to ensure the Company’s announcement dated 29 February 2008 on the fourth quarterly report for the financial year ended 31 December 2007 ("QR 4/2007") took into account the adjustments as stated in the Company’s announcement dated 30 June 2008, in particular the adjustments pertaining to additional provision for doubtful debts and impairment loss for development cost.
  KOSMO had reported an unaudited profit after taxation and minority interest of RM109,000 for the financial year ended 31 December 2007 in the QR 4/2007. However, the Company had on 30 June 2008 reported an audited loss after taxation and minority interest of RM141,715,814 in the AAA 2007. The difference of RM141.824 million between the unaudited and audited results for the financial year ended 31 December 2007 represents a deviation of more than 100 times.
  
  Dato’ Norhamzah bin Nordin and Encik Mohamad Nassir bin Mohd Kassim who were the directors of KOSMO at the material time were found to be in breach of paragraph 16.11(b) of the LR for permitting either knowingly or where they had reasonable means of obtaining such knowledge the Company to commit the aforesaid breaches.
  
  They were informed of the audit concerns / issues to make provision for doubtful debt and possibility of impairment of development costs since August 2007 but have failed to demonstrate adequate efforts taken to discharge their duties to :-
  
  (i) address the audit issues pertaining to impairment loss of development costs to enable timely submission of the financial statements in accordance with the LR; and
  
  (ii) ensure that the QR 4/2007 made the necessary provision for doubtful debts and impairment loss on development cost to give a true and fair view of the state of affairs of the Company as at the financial year ended 31 December 2007 and in compliance with paragraph 9.16(1)(a) of the LR.
  
  The finding of breach and imposition of the above penalties on KOSMO and the directors are made pursuant to paragraph 16.17 of the LR upon completion of due process and after taking into consideration all facts and circumstances of the matter including in relation to the directors, the roles and responsibilities of the directors in the Company particularly pertaining to the maintenance and preparation of financial statements.
  
  
  

End Of Kosmo Technology As A Stock

On Business Times.

• Kosmo Technology exits Bursa today
  
  Published: 2009/06/09
  
  KOSMO Technology Industrial Bhd will end its stay as a listed concern today.
  The company yesterday announced that its shares will be removed from Bursa Malaysia at 9am today.

Just like that Kosmo Technology ends as a stock.

Blogged previously.

• The Delisting Of Kosmo Technology
• Kosmo Technology Shocking Deviation Of Accounts
• Kosmo Technology Balance Sheet

Let's look back on 01 July 2008: Kosmo Technology Shocking Deviation Of Accounts

• ....Couple days later, the Edge highlighted an article called 12 report accounts deviations in a day and on the Star Bizweek, Erral Oh wrote the following Audit-related issues – a yearly affair and I wrote a blog posting on it, Unaudited and Audited Accounts: UnReal or Real?, and Kosmo Technology was one of the companies mentioned.
  
  This morning, I caught the following news clip, Kosmo: Kosmo: We made a loss in 2007 ::
  
  KOSMO Technology Industrial Bhd has revised its report card, saying it now made a net loss of RM141.71 million in the year ended December 31 2007. In February, Kosmo announced an unaudited net profit of RM1.4 million on RM38.42 million turnover for the recent year. Audited group turnover is at RM44.18 million, Kosmo told Bursa Malaysia yesterday. The company also said its annual report 2007 will be delayed.

From an unaudited net profit of rm1.4 million to a net loss of rm141.71 million!!!!

A freaking incredible deviation net loss of over rm140 million!!!

It was totally unreal isn't it?

Totally shambolic!

And worst still look at the chart of Kosmo.

Yup it used to trade around 8.50!

Kosmo has some 129.296 million shares, which meant that Kosmo was trading with a market capital of over 1 Billion Ringgit!

Kosmo last traded at 1 sen or a market cap of a mere 1.292 million!

Isn't this a truly mind boggling capital destruction???

And now... all we read is Kosmo will be delisted today.

Nothing more on the shocking deviation in its accounts.

Will we ever know what happened?

Sigh!

Second Chance For Kosmo?

Blogged yesterday: The Delisting Of Kosmo Technology

On today's Star Business Kosmo Tech in share sale deal

• KUALA LUMPUR: Kosmo Technology Industrial Bhd has signed a share sale agreement with Kosmo Resources Sdn Bhd to acquire the entire stakes in Sierra Citra Sdn Bhd and Seraya Reka Sdn Bhd for RM75mil.
  
  In a filing with Bursa Malaysia, Kosmo Technology said the acquisition would be satisfied via the issuance of a combination of new ordinary shares in Kosmo and zero coupon three-year irredeemable convertible unsecured loan stock.
  
  Kosmo Technology said the proposed acquisitions were in relation to the proposed regularisation plan to be undertaken by the company. – Bernama

A whole new lease of life for Kosmo???!!!!

And Kosmo is up 50% in active trade!!!!!

Sigh!

The Delisting Of Kosmo Technology

Caught this news clip on the Edge Daily yesterday: 07-01-2009: Bursa Securities starts delisting procedures against Kosmo

• KUALA LUMPUR: Bursa Malaysia Securities Bhd has started delisting procedures against Kosmo Technology Industrial Bhd, an amended practice note 17/2005 company, whose securities will be suspended from trading from Jan 12.
  
  Bursa Securities said Kosmo had failed to submit its regularisation plan to the Securities Commission and other relevant authorities for approval within the stipulated date of Jan 5, 2009. It has served Kosmo to make representations to Bursa Securities as to why its securities should not be de-listed.

Kosmo is now trading at 0.05/0.01!!!

Now I have posted on Kosmo Technology before last year.

Kosmo Technology Shocking Deviation Of Accounts, Kosmo Technology Balance Sheet

Yes, I fully understand and agree that Bursa Malaysia should delist Kosmo Technology however as stated before in the posting Kosmo Technology Shocking Deviation Of Accounts

• This morning, I caught the following news clip, Kosmo: We made a loss in 2007
  KOSMO Technology Industrial Bhd has revised its report card, saying it now made a net loss of RM141.71 million in the year ended December 31 2007. In February, Kosmo announced an unaudited net profit of RM1.4 million on RM38.42 million turnover for the recent year. Audited group turnover is at RM44.18 million, Kosmo told Bursa Malaysia yesterday. The company also said its annual report 2007 will be delayed.

Truly unbelievable!

From a profit of 1.4 million to a net loss of rm141.71 million!

• Totally shambolic!
  
  Given the truly incredible massive capital destruction, perhaps the SC should investigate and find out what on earth is happening here and why is there such a massive deviation in their accounts!
  
  Another truly sad day for Bursa Malaysia.

So what exactly happened in Kosmo?

How and why could the company could go from announcing a profit of 1.4 million to announcing a net loss of rm141.71 million????!!!!

Why such massive deviation?

And on the massive capital destruction of capital? Have a look. This is how Kosmo performed since listing!!!!

Kosmo Technology Balance Sheet

Posted the other day, Kosmo Technology Shocking Deviation Of Accounts

I have decided to take a quick look at Kosmo's balance sheet stated in their quarterly earnings report posted on 30th June 2008.

Utterly shambolic!!!

Cash balances totals only 19 thousand while bank borrowings are more than 82 million!

Sigh!

Kosmo Technology Shocking Deviation Of Accounts

Published on 30-04-2008: Kosmo served with notice of demand for repayment of RM52m loan plus interest

• 30-04-2008: Kosmo served with notice of demand for repayment of RM52m loan plus interest
  
  PETALING JAYA: Kosmo Technology Industrial Bhd was served a notice of demand on April 30 by solicitor acting on behalf of EON Bank Bhd for the repayment of loan together with interests payable amounting to RM52.03 million by May 6.
  
  Legal proceedings will be instituted against Kosmo if it fails to repay the loan by the stipulated deadline.
  
  According to Kosmo, the reason for the issuance of the said notice was the failure by the company to service the interest payment due and payable resulting in a situation of default under the facility agreement dated Sept 9, 2005.
  
  "The default herein has also give rise to a possible recall (cross default) of the loan facility amounting to RM30 million granted by RHB Investment Bank Bhd pursuant to a facility agreement dated Jan 8, 2007.
  
  "However, no claim has been received as yet from RHB Investment Bank. Both the loan facilities mentioned above are unsecured term loan facilities granted to Kosmo," added the company's announcement.
  
  Kosmo said it was currently encountering cash flow problems and had been unable to meet its obligations in payment of loans and to creditors.
  
  The company is planning to embark on a debt restructuring exercise to address the claims by the lenders as well as creditors and has initiated discussions with parties involved in claiming against Kosmo.
  
  It expected discussion to take about two to three months before any concrete restructuring plans could be formalised.

Couple days later, the Edge highlighted an article called 12 report accounts deviations in a day and on the Star Bizweek, Erral Oh wrote the following Audit-related issues – a yearly affair and I wrote a blog posting on it, Unaudited and Audited Accounts: UnReal or Real?, and Kosmo Technology was one of the companies mentioned.

This morning, I caught the following news clip, Kosmo: We made a loss in 2007

• KOSMO Technology Industrial Bhd has revised its report card, saying it now made a net loss of RM141.71 million in the year ended December 31 2007. In February, Kosmo announced an unaudited net profit of RM1.4 million on RM38.42 million turnover for the recent year. Audited group turnover is at RM44.18 million, Kosmo told Bursa Malaysia yesterday. The company also said its annual report 2007 will be delayed.

Truly unbelievable!

From a profit of 1.4 million to a net loss of rm141.71 million!

Holy cow!

And Kosmo last traded at 4 sen!

Now take a look at how much Kosmo was trading at 2 years ago!

And here is a close-up on how Kosmo has fared the past one year!

Totally shambolic!

Given the truly incredible massive capital destruction, perhaps the SC should investigate and find out what on earth is happening here and why is there such a massive deviation in their accounts!

Another truly sad day for Bursa Malaysia.

Unaudited and Audited Accounts: UnReal or Real?

Posted on 30th April 2008, And what about Pentamaster? .

The issue about Pentamaster was the massive variation in between audited and unaudited account. It was not pleasant reading.

Yesterday, the Edge carried the following article, 12 report accounts deviations in a day. Yes, Pentamaster was not the only one!

• KUALA LUMPUR: As many as 12 companies, the majority of which are listed on the Second Board, reported deviations between their unaudited and audited accounts for the financial year ended Dec 31, 2007 on Wednesday.
  
  Topping the list by variance size was Main Board-listed Englotechs Holding Bhd, which reported a 720% deviation between its unaudited and audited FY07 profit after tax figures.
  
  Englotechs reported unaudited net profits amounting to RM3.14 million versus the audited RM19.5 million audited net losses reported for the year.
  
  In a filing to Bursa Malaysia, it said the variances were due to a RM14 million provision of doubtful debts and net unrealised foreign exchange losses.
  
  “The cost of research and development has been expensed off due to failure to fulfil the criteria of Approved Accounting Standards. Taxation decrease was due to deferred taxation overprovided,” the company added.
  
  Second Board firm MESB Bhd announced a deviation of 624.3% with its audited accounts showing a net loss of RM561 million against the unaudited RM107 million net profits for the period.
  
  The company attributed the sizeable variance to the change of accounting policy in relation to the recognition of project costs incurred on construction of telecommunication towers.
  
  The project costs, MESB said, had previously been recognised as contract expenses. The company had since changed its policy to discontinue this recognition, the company said.
  
  Eden Inc Bhd, which was in the news early this month for aborting its planned RM120 million Sukuk Ijarah programme, reported a 77% deviation amounting to RM1.23 million and RM281,000 respectively.
  
  It had made a provision of RM233,000 for gain on dilution of interest in a foreign subsidiary, RM1.07 million on preliminary expenses of a foreign subsidiary inadvertently capitalised, RM100,000 in under provision of depreciation and RM10,000 for other provisions.
  
  Another firm announcing significant variance was Thong Guan Industries Bhd, which reported a 42.4% or RM8.84 million difference.
  
  The company reported higher unaudited net profits amounting to RM12 million. It explained that the deviation resulted from a combination of correction of accounting errors (due to a foreign currency translation error), under provision of taxation, overstatement of inventory and other provisions.
  
  Second Board-listed industrial products player PJ Bumi Bhd reported a 41% variance, with its audited net loss widening to RM18.11 million from the unaudited figure of RM12.84 million.
  
  PJ Bumi listed the provision for doubtful debts, renovation and written off office equipment, provision of income tax and tax penalty, and other provisions as reasons for the deviation.
  
  The remaining seven companies, however, reported considerably smaller percentages of deviations in net profits/losses ranging from between 3% and 20%. They are Limahsoon Bhd, Ta Win Holdings Bhd, Rex Industry Bhd, APP Industries Bhd and Fitters Diversified Bhd, CNLT (Far East) Bhd and Frontken Corporation Bhd.

Today's Star Bizweek, there was one brilliant set of commentary made by Erral Oh, Audit-related issues – a yearly affair

Here are some of the major points made.

• So, it seems that there will always be a small percentage of listed companies whose profits need to be adjusted a lot after the auditors have gone through their books. We can say that such cases are the exception, not the rule, but that doesn't quite address the issue.
  
  The excuse we often hear is that the financial statements in the quarterly reports are management accounts and because they have yet to be audited, they should not be taken as final. Also, it's a standard complaint among the companies' management that in this post-Enron era, the auditors are more likely to err on the side of caution in interpreting financial reporting standards (FRS) and they often press for audit adjustments that will slash revenue and profit figures.
  
  But these are weak arguments. To begin with, the management of every listed company knows that their quarterly results are for public consumption. That calls for great care in preparing the management accounts. It's important to get these accounts right from the get-go. (Yeah, responsibility!)
  
  That means grey areas and disputes regarding accounting treatment should be resolved well before the audits commence. These companies have accountants (or chief financial officers, as we call them these days), whose jobs should include keeping abreast with developments in FRS and liasing with the external auditors.
  
  Let's not forget that the FRS are backed by law and apply to all, and there's little room for subjectivity. The auditors have the final say. Hence, when a CEO grumbles about the auditors insisting on provisions, impairments or write-offs, he's pointlessly swimming against the tide.
  
  Of course, companies have been known to switch auditors after battles over accounting treatment, but that too is a corporate governance concern.
  
  Furthermore, a CEO who rejects the opinions of the accounting experts risks being regarded as either optimistic to the point of ignoring the need for prudence in accounting, or as being reluctant to allow the financial statements to reflect the true state of his business.
  
  Besides, how do you explain the fact that the management accounts of the rest of the listed companies – as at last Wednesday, there are 988 companies whose shares are traded on Bursa Malaysia – are pretty much similar to their audited accounts?
  
  And what does it say when a company has had to explain variances between its audited and unaudited profits more than once in recent years? Among the 20 companies in this year's batch, the repeat cases include KBES Bhd, Liqua Health Corp Bhd, Dolomite Corp Bhd, Pasdec Holdings Bhd, Eden Inc Bhd, Limahsoon Bhd and MESB Bhd.
  
  Bursa Malaysia has made a stand on variances that could not be justified. For example, in April 2005, it publicly reprimanded and imposed fines on Goh Ban Huat Bhd and Supercomal Technologies Bhd after their audited 2004 profits varied significantly from the figures announced in their fourth-quarter reports.
  
  The basis for these actions was that when these companies released their unaudited accounts, they made announcements that did not meet the criteria of the listing requirements.
  
  The problem is, it's unclear how the exchange determines whether a variance is tolerable or not. If Bursa Malaysia doesn't penalise a company for a variance, should we conclude that the company has done all it could to ensure that its management accounts reflected a true and fair view of its financial position? ( Seriously, this is one good suggestion! Punish these buggers! )
  
  And how can we tell that the company has taken steps to ensure that it will not have variances in the future? A little more transparency surely won't hurt.
  
  And what about those companies that fail to meet the deadlines for the submission of audited accounts?
  
  We know about the accounting-related woes at Liqua Health Corp Bhd, Ho Hup Construction Co Bhd, Satang Holdings Bhd, Welli Multi Corp Bhd, Golden Plus Holdings Bhd and Mems Technology Bhd. So, when they say their audited accounts will be late, we just take it as the latest in a cascade of bad news. ( How true!!!!!!!!!!)
  
  
  However, what was unexpected was that other companies too had trouble finalising the audit of their financial statements. Those in the latter group include Nakamichi Corp Bhd, Haisan Resources Bhd, Advance Synergy Bhd, LFE Corp Bhd and Kosmo Technology Industrial Bhd. Bursa Malaysia has consistently acted against the late filing of audited accounts. And rightly so, because these are major failings and are often red flags of bigger problems. Perhaps, it’s time to think of variances as the same things.

One of the key issue in investing is that investing is all about trusting the company, the management and the owner of the stock that we trust in.

If there is no trust, it's so pointless and so brain dead to talk about investment based on yardsticks such as PE, NTA, ROE, ROCE, INTRINSIC VALUE and so on.

How do you value a company that you cannot trust?

Could you ever, ever get a fair value from your investment?

Is there even any value?

And since there is no trust, one may never know when they might be screwed by these rather un-trustworthy people!

Trust is such an important word which many fails to understand. Some would blissfully choose to ignore!

Last but not least, Bursa Malaysia has to do something about this. It's simply not right to see companies announcing such massive deviations in their audited accounts. Bursa simply needs to be more stict in their enforcement of its rules. As it is, it's so clear to see that our local market already lacks investors and if nothing is done to punish all the wrong doer, the end result could see innocent investors losing massive savings in such stock(s), which ultimately leads to more and more destruction of the already shrinking market capital.

Which investor wants to invest in our market when the issue of trust is not there, given the massive deviation in audited and unaudited earnings?

And when there is no trust, sooner rather than later, the investing public would simply lose faith and trust in the exchange!

Needless to say, in the long run, Bursa Malaysia would hurt big time!