This article first appeared in The Edge Malaysia Weekly on March 13, 2023 - March 19, 2023
Toyo Ventures Holdings Bhd must have faced the ire of shareholders when the company announced on Jan 31, 2022, that the final single-tier dividend of one sen that it proposed on Nov 30, 2021, had to be withdrawn.
The company, which makes printing inks and other printing materials, had more bad news last Thursday, when Bursa Malaysia Securities Bhd publicly reprimanded it for withdrawing the proposed dividend, as it went against the Main Market Listing Requirements.
The regulator also listed the names of the board members at the time of the breach even though they were not found to have caused it. But it emphasised that it is the “duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance of the main listing requirements”.
When Toyo Ventures announced the proposed dividend, it did so despite suffering a net loss of RM12.92 million for the financial period ended (FPE) Sept 30, 2021. Note that the company had changed its financial year end from June 30 to Sept 30 — after changing it from March 31 to June 30 just prior to that.
Toyo Ventures decided on the proposed dividend as it still had sufficient retained earnings brought forward from previous financial years. Or so it thought.
The company later found out that it had insufficient retained earnings due to certain adjustments made in its audited financial statements for FPE Sept 30, 2021, which it issued on Jan 31, 2022. On the same day, it announced the withdrawal of the proposed dividend.
Earlier filings show that Toyo Ventures’ auditors had issued a qualified opinion on its financial statements for FPE Sept 30, 2021, due to a few issues, including uncertainty arising from a power plant project in Vietnam being undertaken by a subsidiary.
While a withdrawal of a proposed dividend is rare, Toyo Ventures’ public reprimand serves as a lesson to the investing public to be mindful of the difference between a company’s unaudited and audited financials.
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