Posted by Valerie NG, Year 3 undergrad at the School of Accountancy, Singapore Management University
Posted on 2 September 2014 – 05:38am
Written by Eva Yeong
PETALING JAYA: It is ironic that on the same day that Khazanah Nasional Bhd announced its latest recovery plan for troubled national carrier Malaysian Airline System Bhd (MAS) that, once a designated national cargo carrier, Transmile Group Bhd held its third AGM as a private company.Once the darling of the local aviation industry, Transmile’s fall from grace was well documented, all the more so by an accounting scandal which until today sees key personnel from its former management darken the courts steps.
The air cargo operator which once flew high today has shrunk into a company with no business activity and a few subsidiaries and associates that have long ceased operations and are dormant.
The air cargo service provider was established in 1993 and listed on the second board of Bursa Malaysia back in 1997 before it was transferred to the main board in 2002.
At that time, the company was also involved in charter services, aircraft handling and warehouse services, and its subsidiary Transmile Air Services Sdn Bhd (TAS) was named a designated national cargo carrier by the Transport Ministry in 1996.
The group which once counted personalities such as former Transport Minister and Malaysian Chinese Association (MCA) president Tan Sri Ling Liong Sik as its chairman started its downward spiral in 2007 when it was revealed that its stellar results was the due to massive accounting irregularities.
In July 2007, the group’s former CEO Gan Boon Aun, former CFO Lo Chok Ping and former executive director Khiudin Mohamed were charged with abetting the company in making a misleading statement in its quarterly report.
The charge was related to a statement on the group’s revenue of RM338.4 million for the last quarter of 2006 and RM989 million for the financial year ended Dec 31, 2006 but a special audit revealed the company actually suffered losses up to RM496 million for 2005 and 2006.
In 2006, its losses were RM126.3 million instead of a profit of RM157.5 million and in 2005, its losses were RM369.6 million instead of a profit of RM84.4 milllion as reported.
In 2010, it became a Practice Note 17 company and its securities were suspended and delisted in 2011.
Today Transmile, still counts billionaire Tan Sri Robert Kuok and Pos Malaysia Bhd as its shareholders.
According to a check with the Companies Commission of Malaysia (SSM), Kuok Brothers Sdn Bhd owns a 0.2% stake in the group, while Pos Malaysia owns a 2.4%. Remaining shareholders from the Berhad company own about 14% in the group.
At its AGM held last Friday, with no more than 20 minority shareholders in attendance, the meeting concluded within an hour; a stark difference from its high-flying past when shareholders attended meetings in droves. Directors of the company declined to meet with the media after the AGM.
The group completed the disposal of its wholly-owned subsidiary TAS on July 16, 2013.
The entire sales proceeds of RM40 million were paid to the scheme creditors following which the group and TAS were waived, released and discharged from all claims, guarantees and other obligations as part of its debt restructuring scheme.
It also completed the disposal its 45% equity interest in K-Mile Air Co. Ltd to Farnair Switzerland AG on March 3, 2014.
The sales proceeds of US$2.74 million (about RM8.81 million) was used to meet outstanding and overdue expenses including legal and other professional fees.
Subsidiaries Transmile Aviation Sdn Bhd (aircraft ground handling services) and Viunique Corp Sdn Bhd (leasing of aircraft) were disposed last year in accordance with the debt restructuring scheme.
With the disposal of TAS and K-Mile, the group is now left with subsidiaries and associates namely, Kelana Konsortium Sdn Bhd, Transmile Management Sdn Bhd, Transmile Spares Sdn Bhd, Grouptech Sdn Bhd, CEN Sdn Bhd and CEN Worldwide Sdn Bhd.
Kelana Konsortium is a special purpose vehicle set up for the schemes of arrangements of the group and the company while Grouptech is a dormant company.
Transmile Management and Transmile Spares, which deal in management services and aircraft parts and equipment respectively, have both ceased operations temporarily.
As for CEN and its subsidiary CEN Worldwide in which the group has a 57.5% interest, the group said it is trying to reach an understanding with its other CEN shareholder on the best course of action to be taken.
CEN is an investment holding company while CEN Worldwide is involved in express distribution and logistics management services.
In its annual report, its chairman Liu Tai Shin said the company proposed to amend Article 79 of the Company’s Articles of Association to reduce the requirement of minimum number of directors from four to two as it has no business activity.
The proposed amendment was due to the retirement of two of its directors Mohd Lutfi Mat Lazim and Chiang Teng Guan. he four directors named in the annual report are Liu, Mohd Lutfi, Chiang and Tan Teong Boon.
According to a source however the proposed amendment was rejected by shareholders. It is understood that it was one of three resolutions at the AGM, however the company refused to disclose the other items on its agenda when contacted.