KUALA LUMPUR (Oct 4): MMAG Holdings Bhd (KL:MMAG), which has been classified as a Guidance Note 3 (GN3) status company, clarified it is not facing cash flow issues, having raised close to RM240 million via a right issuance and conversion of warrants this year.
MMAG was hit with the GN3 classification, typically assigned to financially distressed companies on Bursa Malaysia's ACE Market, after its external auditor Grant Thornton Malaysia PLT flagged a material uncertainty in the group’s audited financial statements for the year ended March 31, 2023 (FY2023).
As of June 30, 2024, the company's shareholders’ equity on a consolidated basis was 50% or less of its issued share capital, based on unaudited financial results, the auditor highlighted.
In response, MMAG executive director Victor Chin explained that the GN3 status was triggered because of a "timing issue", and that funds have been raised via the rights issue and warrants conversion since the audited financial statement was issued.
“We have no issue with cash flow and are no longer a financially-distressed company," Chin said during the officiation of a strategic partnership between an MMAG unit and Unilode Aviation Solutions.
MMAG completed its six-for-one rights issue of 1.45 billion rights shares at 10 sen apiece in January, raising RM145.34 million. In addition, the group has secured RM92.09 million through the conversion of warrants at 15 sen apiece since January.
Going forward, the company plans to undertake capital reduction to address its shareholders’ equity as raised by auditors.
MMAG's cash and cash equivalent stood at RM78.86 million as at end June 30, 2024, according to its financial statement.
It had borrowings of RM398.84 million, of which RM258.24 million are long-term borrowings. The borrowings refer to lease liabilities for its leasing air fleet, according to MMAG.
MMAG has been loss-making since FY2015. The company posted a net loss of RM116.75 million on the back of revenue of RM648.52 million for the six months ended June 30, 2024.
There are no comparative financial figures, as the company has changed its financial year end to Sept 30, from March 31.
MMAG is mainly involved in distributing mobile devices in Malaysia and as a telecommunication operator’s value-adding partner, while also providing supply chain management services.
On Friday, MMAG announced its aviation arm, MMAG Aviation Consortium Sdn Bhd (MAC) has partnered with Unit Load Device’s (ULD) management firm, Unilode Aviation Solutions Switzerland Ltd, allowing Unilode to provide ULD management to MJets Air Sdn Bhd, the commercial air cargo unit within MAC.
At noon market break, shares of MMAG traded unchanged at 28 sen, bringing the company a market capitalisation of RM647 million.