PETALING JAYA: Scomi Group Bhd has become a Practice Note 17 (PN 17) company after it triggered Paragraphs 2.1(a) and 2.1(e) of PN17 of the Listing Requirements, whereby its shareholder equity fell below the 25% threshold with modified opinion from its auditors.
The group said it is deliberating on whether to appeal against Bursa Securities’ decision.
“Further announcement will be made to Bursa Securities should there be any development,” it said in a Bursa filing.
Meanwhile, Bursa Securities also rejected Scomi’s application for a waiver from being classified as an affected listed issuer pursuant to Paragraph 8.04(2) and PN17 of the Listing Requirements as there are concerns on the sustainability and growth potential of the existing/remaining business and its ability to generate sufficient revenue and profitability.
The rejection was made after having considered that Scomi has been making consolidated net losses for the past three financial years; and consolidated operating losses for the past five out of six quarters up to September 30, 2019.
Following the deconsolidation of Scomi Engineering Bhd (SEB), Scomi is unable to recognise the revenue and profits generated from the transportation solution business segment, which has been making net losses for the past three financial years. Scomi’s proposed acquisition of Scomi Transit Projects Sdn Bhd from SEB has also yet to be completed.
In addition, Scomi’s growth prospects and profitability are dependent on, amongst others, its ability to commercialise new drilling fluid base oils to increase the revenue stream.
Although it has an outstanding order book as at June 30, 2019 for its oilfield services business segment from umbrella contracts and/or call-out contracts secured for a period of four years till 2023, the segment has been making net losses for the past three years.
Scomi is required to regularise its condition within 12 months, failing which will result in the suspension of the trading of its shares and delisting.
The group said it is formulating a plan to regularise its financial condition and will make futher announcement in due course.
Trading in Scomi shares was suspended this morning pending the material announcement. The stock closed at 6 sen yesterday.
