D’NONCE Technology Bhd is making a turnaround now, despite the bad start for the new management when it took over the reins of the ailing company, according to CEO Tho Yow Yin.
This is also despite the issues that have plagued the company, most notably two lawsuits that the group is currently involved in.
The first is the lawsuit against its former CEO Law Kim Choon, who had been the CEO for 16 years, since 2002.
The lawsuit was filed in December 2018, with the group accusing Law of committing fraud and conspiracy, and of breaching fiduciary duties, which saw him barred from being involved in the management of the group, with the hearing of the case set for July 2020. Law then resigned in July 2019 amid the ongoing probe into the case.
When asked about this, Tho noted that the suit has already been resolved.
“It is actually resolved, and the legal team is working on the technical wording for the court orders. This will all be mentioned on July 14,” he told FocusM.
The second lawsuit involves major shareholder Blackstream Investment Pte Ltd, where the Singapore-based firm is suing the company regarding the legality of the group’s extraordinary general meeting (EGM) in June 2019.
The EGM saw Tengku Ahmad Badli Shah Raja Hussin, then chairman of D’Nonce, staging a walkout following the passing of a motion of adjournment by poll. This saw Blackstream stepping in to carry on with the EGM and pass resolutions.
However, Blackstream’s Lim Siang Kai, who is now chairman of D’Nonce, noted that Tengku Ahmad’s adjournment was illegal, as it was done by poll instead of by a show of hands in accordance with the listing requirements of Bursa Malaysia.
Blackstream took the matter to court in February 2019, claiming alleged conspiracy and abuse of process, after D’Nonce had failed to call for an EGM as requisitioned in December 2018.
An injunction was then filed by shareholder Tan Than Kau to halt the EGM in June 2019, which had been called for by Blackstream and saw the walkout of Tengku Ahmad, though this failed.
D’Nonce’s board of directors then filed a notice of discontinuance for its appeal in September 2019.
Taking over the reins
Tho was brought in as CEO in July 2019 to turn the company around, following the court case involving Blackstream, which had a 24% stake in D’Nonce. He also shared that the company was in bad shape when he took over.
“Most of the segments were in the red, and quick measures were required to turn it around. We implemented the standard procedures. Cost-cutting measures, reviewed expenses, and consolidated businesses to reduce headcount,” he said, adding that closing non-core businesses may happen further down the line.
“Still the focus is reviving what is there. We are looking at how to improve processes, or to change the line of industry for these non-core segments. Thankfully, the patient is now alive and recovering,” said Tho.
Tho noted that the group had actually seen a year of profitability under the new management before being hit in its sixth quarter with a loss of RM530,000.
”The group had actually earned RM5.74 mil over the last 10 months. This was despite the bad start we had when we took over the reins of the group,” he said.
The group’s sixth quarter was solely represented by the month of April, as it was in the process of adjusting its financial year cycle. With it being the end of the financial year, the month also saw write-offs, property revaluations and professional fees further cutting into the profit of the month, which led to the reported loss of RM530,000.
“We closed our operations in Malaysia in April due to pending approvals from the government, as we provide essential items to essential businesses. Of course, we respected and observed the 50% workforce rule, so production came down.”
“At the same time, some of our clients who were in non-essential businesses were not open,” said Tho, adding that these factors led to a 20% drop in revenue in April.
At the end of the trading day, D’Nonce’s shares were last done at 28.5 sen, down half a sen, with 624,600 shares traded. – July 10, 2020
