KUALA LUMPUR (Nov 27): Technology solutions provider Microlink Solutions Bhd (KL:MICROLN) posted its biggest quarterly net loss of RM85.1 million since its listing on Bursa Malaysia in 2006, no thanks to a software development expenditure write-off and specific provisions made on goodwill upon changes in its business performance.

Net loss on impairment on assets amounted to RM81.98 million in the second quarter ended Sept 30, 2024 (2QFY2024), of which RM78.66 million was for a one-off impairment on its software development expenditure and RM3.33 million for its goodwill impairment. 

Net loss for 2QFY2024 came in at RM14.28 million or 7.93 sen per share, versus a net profit of RM126,000 or 0.01 sen per share a year earlier, Microlink’s bourse filing showed.

In light of the software development expenditure write-off and goodwill impairment, its management has implemented several initiatives to ensure sustainable growth and enhance shareholder value.

These initiatives include costing strategies to streamline operational expenses, improve productivity through process optimisation and technology integration, and concentrate efforts on core competencies in the financial services and distribution segments, said Microlink.

Revenue for the quarter rose 45.5% to RM112.81 million from RM77.53 million last year on higher order fulfilments and progress billings, particularly in the distribution and financial services segment.

The dismal quarterly result saw Microlink log a cumulative net loss of RM89.53 for the first half of FY2024 ended Sept 30 (1HFY2024), against a net profit of RM3.83 million in 1HFY2023.

This was despite revenue for the period rising 29.6% to RM174.32 million, from RM134.47 million in the same period a year ago.

Looking forward, Microlink said it anticipates consistent year-on-year growth in both the distribution and financial services segments. It is also actively seeking to expand its opportunities in the enterprise segment by engaging with local and international customers.

In a separate filing, Microlink announced a decision to abort its planned rights issue of redeemable preference shares (RPS) with detachable warrants. The cash call was supposed to raise RM89.37 million to repay its bank borrowings and finance working capital.

The board has reconsidered the proposed rights Issue of RPS with warrants in its entirety to address the negative cash flow position of the company and its subsidiaries, and has decided to scrap the proposal, it said. 

Subsequently, the group has proposed to undertake a rights issue of up to 536.20 million new shares, coupled with up to 536.20 million free detachable warrants, to entitled shareholders. The group will issue one rights share with one warrant for every two shares held, at an issue price to be determined later.

This exercise aims to raise RM53.62 million based on an illustrative price of one sen per rights share. Of the proceeds, RM20.82 million will be utilised for repayment of borrowings and RM15 million will fund its project expenses.

Another RM10.3 million has been earmarked to fund its working capital and RM5 million for research and development expenses. The remaining RM2.5 million is to defray estimated expenses relating to the proposed rights issue with warrants.

Microlink’s bank borrowings stood at RM43.35 million as at end-Oct 2024, with RM34.24 million repayable within 12 months.

Microlink, which was transferred to the Main Market of Bursa Malaysia last year, saw its share price settle at 11.5 sen on Wednesday, half a sen or 4.5% higher than the day before, valuing the group at RM123 million.

The stock has fallen 87% since the start of the year.

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