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Trek 2000 International reports 56% drop in Q1 profit; independent director resigns

BELEAGUERED technology firm Trek 2000 International reported a near 56 per cent drop year on year in net profit to US$552,000 for the first quarter ended March 31, 2018.

Revenue plunged 80 per cent to US$8.4 million as the group was impacted by a near-term acute supply of strategic components. It said it is diversifying its supplier base to mitigate risks going forward.

Earnings per share fell to 0.17 US cent, from 0.38 US cent previously.

In a separate announcement on Tuesday night, it said that Loh Yih was stepping down as an independent, non-executive director effective immediately, owing to an inability to perform duties "due to difficulties in information verification".

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On April 26, the Singapore Exchange (SGX) slapped a notice of compliance on Trek 2000, demanding that the company hold an extraordinary general meeting as soon as possible to vote on the continued appointment of key executives implicated in a recent forensic review of the company's dealings; these include the continued appointment of chief executive Henn Tan and of Foo Kok Wah, who is president of operations, sales and customised solutions.

The notice of compliance followed the implication of certain key executives in a recent forensic review of the company's dealings, which uncovered potential breaches of various Singapore laws against round-tripping, misappropriation, forgery and fraud.

Trek 2000 had appointed RSM Corporate Advisory in June 2016 to help conduct an independent review of certain interested party transactions as well as review suspicious transactions which were the subject of Commercial Affairs Department (CAD) investigations.

Among other things, RSM flagged issues involving possible round-tripping transactions, fabrication and alteration of transaction documents, as well as possible fraudulent and erroneous claims under the Productivity and Innovation Credit tax scheme.

Mr Tan has denied financial impropriety and said he had not been aware of certain business dealings, including the fabrication of some documents as well as certain transactions that RSM deemed fictitious.