KUALA LUMPUR (Oct 2): Information and communications technology solutions provider MMAG Holdings Bhd (KL:MMAG) said it has been classified as a Guidance Note 3 (GN3) company.

This comes after its external auditor, Grant Thornton Malaysia PLT, flagged material uncertainty in the company's audited financial statements for the financial year ended March 31, 2023 (FY2023) that would affect its ability to continue as a going concern.

The auditor also highlighted that the shareholders’ equity of the company on a consolidated basis is 50% or less of its issued share capital calculated based on the unaudited financial results as at June 30, 2024.

The GN3 status refers to financially distressed companies that are listed on the ACE Market. On Bursa Malaysia's Main Market, a similarly distressed company would be classified as Practice Note 17 (PN17).

However, MMAG in a bourse filing on Wednesday said it intends to submit an application for a waiver from being classified as an affected listed issuer to Bursa Securities as it has already taken relevant measures.  

It noted that it has completed its rights issue in January, raising RM145.34 million. In addition, the group secured RM92.09 million through the conversion of warrants since January.

"Following the successful completion of the rights issue and the proceeds arising from the conversion of the warrants, the board of directors is of the view that the group’s net assets have strengthened from RM170.62 million based on the audited financial statements for FY2023 to RM220.77 million based on the unaudited financial results as at June 30, 2024," it said, adding that the concerns raised by the auditor stemmed solely from the delay in completing the rights issue.

Furthermore, the group said that its cash position has also improved from RM13.03 million for FY2023 to RM78.86 million as at June 30, 2024. Net current assets — current assets have exceeded current liabilities — have also improved from net current liabilities of RM56.87 million in FY2023 to net current assets of RM39.46 million as at June 30, 2024.

In a separate statement, MMAG said it has also implemented a range of strategic initiatives aimed at driving sustainable revenue growth and enhancing operational efficiency, such as significant investment in infrastructure and facilities, including the development of larger and automated courier and logistics hubs, the expansion of the vehicle and aircraft fleet, and the establishment of an automated cargo terminal and oceanic transshipment hub at the Kuala Lumpur International Airport.

MMAG added that its supply chain solutions arm has secured major contracts, while its aviation arm has established key partnerships, including a collaboration with Menzies Aviation to set up the ground handling business in Malaysia, interline partnerships with MasKargo, Teleport, ANA, and China Southern Airlines, as well as a partnership with Unilode Aviation Solutions for smart unit load devices management solutions.

"Our logistics, courier, and aviation segments are now on a clear path to stabilisation and expansion. Significant infrastructure investments have laid a robust foundation for future revenue growth, and MMAG’s position as the only integrated, full-fledged supply chain group with its own aviation arm provides a distinct competitive advantage," the group's executive director Chin Boon Long said.  

"As we move forward, we expect to build on this anticipated profitability and accelerate growth through operational efficiencies and strategic investments," he added.