KUALA LUMPUR (Dec 19): Smile-Link Healthcare Global Bhd (KL:SMILE), a LEAP Market-listed dental services provider, said its major shareholder has proposed to remove its external auditors, Messrs HLB Ler Lum Chew, following significant delays in the company's financial reporting, which have led to trading suspensions and regulatory scrutiny.
In a filing with Bursa Malaysia, the dental outfit said Smile Link Resources (M) Sdn Bhd, holding 46.36% in the company, had on Dec 12 issued a special notice calling for an extraordinary general meeting (EGM).
The agenda includes the removal of the current auditors pursuant to Sections 276 and 277 of the Companies Act 2016.
Notably, Messrs HLB Ler Lum Chew has not made any representations regarding this proposed removal, the filing read.
This proposed removal of auditors comes after Smile-Link failed to submit its annual audited financial statements for the period ended June 30, 2024, by the deadline on Oct 30.
The company attributed the delay to an outstanding audit fee of RM180,000, which it was unable to settle, resulting in the auditors withholding the release of the financial results.
The company, however, did not elaborate on the reason for not being able to settle the outstanding audit fee.
Consequently, Bursa Malaysia suspended the trading of Smile-Link's shares on Nov 8, due to the company's non-compliance with financial reporting requirements.
The suspension will remain in effect until the necessary statements are submitted, with the exchange warning of potential delisting if compliance is not achieved within six months.
"The proposed removal of auditors are conditional upon approval being obtained from the shareholders at the forthcoming EGM of the company," Smile-Link said in the filing.
"A circular to shareholders containing the details of the proposed removal of auditors together with the notice of EGM will be dispatched to the shareholders of Smile-Link in due course," it added.
Smile-Link reported a net loss of RM4.17 million in the six months ended June 2024, contributing to an 18-month cumulative net loss of RM4.04 million. Revenue for the six months period amounted to RM14.31 million, bringing the 18-month period top line to RM49.66 million.
The company cited increased costs in dental products, imported materials, overheads, and logistics, alongside restructuring expenses related to its dental clinics, as factors impacting its financial performance.
Following the dismal results, Smile-Link explained that it was currently restructuring and relocating its unprofitable clinics, while flagging manpower costs increases.
Smile-Link is present in eight states — Kedah, Penang, Selangor, Negeri Sembilan, Melaka, Johor, Sarawak and Kuala Lumpur, with a total of 56 dental clinics and one dental centre.
Shares of Smile-Link was last traded at 13 sen, giving it a market capitalisation of RM32.8 million.