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MeTech: Disposal of electronic waste management business to help it 'continue as a going concern'
THE proposed disposal of MeTech Internatational's electronic waste management (EWM) business is intended to ensure that the company can continue as a going concern. MeTech said this in response to a Securities Investors Association (Singapore) (Sias) query about what the company is doing to ensure it has enough cash to operate, given its S$7.7 million loss in FY2018 and its cash position of S$3 million.
“Without the significantly higher cost of operations in EWM, the company will have adequate cash to continue its other businesses and operations,” the company said in a Singapore Exchange announcement. “The company had been successful in raising capital and obtaining additional funds for working capital in the past and will evaluate various sources of finance where necessary.”
The company also said it expects the company’s financial position to improve. It would also be free of any contingent liabilities arising from the EWM business. Between FY2013 and FY2018, the segment had lost S$11.11 million with an average annual loss of S$2.22 million, and average annual loss was much higher in the five years before 2013, the company also said. It reflected a profit in FY2017 due to some one-off and non-recurring items.“With the EWM business no longer burdening the company, the company would have no need to raise funds urgently to meet short-term commitment related to the EWM business,” it said.
This would also allow the company to focus on its supply chain management business, which it added in FY2015.
Sias had posed seven questions in all about the proposed disposal of the EWM business for a nominal sum of S$1, announced in September. The buyers are MeTech president and group chief executive officer Andrew Eng and MeTechexecutive director Simon Eng through Belle Forte Limited, of which the latter is a 50 per cent shareholder. Sias also asked why the EWM business is valued at S$nil with net liabilities of S$0.73 million as at Sept 30, 2018 according to an earlier SGX announcement, when the entities to be disposed of had assets of S$13.9 million and liabilities of S$7.2 million in the annual report for FY2018.
MeTech said that this was because the valuation included estimated losses for the quarter from July 2018 to September 2018. It said the summary report earlier provided “contains sufficient and relevant information needed for the shareholders to make an informed decision before voting on the said resolution” though it is “happy” to provide more information if asked for at the EGM.
Sias also asked why Simon and Andrew Eng were paid “such substantial renumeration when the company is losing money” — together, they were were compensated between S$400,000 and S$700,000 in FY 2018. MeTech said “the remuneration policy of the company is to offer compensation packages that are at least pegged to market rates and reward good performances”. The company considers their renumeration to be fair, though the company said that it intends to “reorganise its management with the view of reducing the administrative expenses of the group” if the disposal is successful.