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Top Glove says discovery of alleged irregularities in Aspion's accounts led to legal suit

TOP Glove Corporation alleged that based on an interim report by an independent accounting firm, there was overstatement of assets and overvaluation to the tune of RM714.9 million (S$240 million) in Aspion, a company it had acquired from Adventa Capital in April this year.

Top Glove, the largest maker of rubber gloves in the world that is listed on the Malaysian and Singapore stock exchanges said it had undertaken its own investigations and hired an accounting firm to investigate the firm once it it had discovered alleged “irregularities in certain balance sheet items” of Aspion, in particular inventories and plant and machinery, shortly after it took over the firm.

The interim report had discovered that there was an overstatement of assets in Aspion’s accounts amounting to RM74.4 million while the acquisition price of Aspion was overstated by RM640.5 million, alleged Top Glove in a clarification to an announcement it made last Friday that it was suing Adventa Capital and two directors for up to RM714.9 million over an alleged “conspiracy” to defraud Top Glove and its unit in relation to the RM1.4 billion acquisition.

The glove maker added that the litigation will not impact Aspion’s business, which will “continue as usual” and that the group’s operations remained resilient and scalable with a healthy cash flow. It further pointed out that the group made revenue of RM3 billion and profit after tax of RM335.3 million for the nine months ended May 2018.

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“With the combined capabilities of Aspion, the group is confident of continued growth going forward,” it said, adding that while there will always be challenges, it is focused on addressing the issues and will “continue to do the right thing” and uphold business ethics.

Top Glove fell 70 Singapore cents, or 17 per cent, to finish at S$3.40 on Monday.