Sslee blog
JAKS: Question for the upcoming JAKS 18th AGM
Dear all,
Send
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dari: |
Lee Soon Sheng |
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kepada: |
info@jaks.com.my, |
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cc: |
Aduan Bursa |
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tanggal: |
3 Agu 2020 07.29 |
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subjek: |
Questions submitted in advance for the upcoming JAKS 18th AGM on 15th Sept 2020. [SC Case: SC2020-10946], [SC Case: SC2020-12107] and Bursa Ref: CC/38/20 |
Dear SC and Bursa,
CC: My follow up with the Board and company secretary at the upcoming JAKS 18th AGM on 15th Sept 2020 on below cases:
[SC Case: SC2020-10946] and Bursa Ref: CC/38/20- Official complaint on JAKS AGM minutes reporting did not comply with SC Corporate Governance
SC Case: SC2020-12107] and Bursa Ref: CC/38/20 - Official complaint in seeking Bursa and SC to investigate and reject JAKS revise Rights Issue
Dear Company Secretary and JAKS IR
Please forward my questions submitted in advance for JAKS 18th AGM to the Board and external auditors so that they have time to prepare answers to the questions.
A. Corporate Governance Report
Page 6: Practice 1.4
The board is supported by a suitably qualified and competent Company Secretary to provide sound governance advice, ensure adherence to rules and procedures, and advocate adoption of corporate governance best practices.
Refer:
Where SC encourage shareholders to be prepared and participate effectively at an Annual General Meeting (AGM) with CORPORATE GOVERNANCE CHECKLIST FOR SHAREHOLDERS
Post AGM
1. Have you read the ‘Key Matters Discussed’?
Listed issuers are required to publish the ‘Key Matters Discussed’ on its website which is a description of issues discussed and outcomes decided at the AGM.
2. Do the ’Key Matters Discussed’ reflect the discussions and outcomes of the AGM accurately? The ‘Key Matters Discussed’ should not be a mere listing of resolutions and voting outcomes of the AGM.
3. Are shareholders provided with an accessible and effective mechanism to maintain communication with the company?
Official complaint on JAKS AGM minutes reporting did not comply with SC Corporate Governance
[SC Case: SC2020-10946] and Bursa Ref: CC/38/20
Question 1: Company Secretary have you advised the Board on CORPORATE GOVERNANCE on conducting of AGM and post AGM requirement to publish the ‘Key Matters Discussed’ on its website which reflects the discussions and outcomes of the AGM accurately?
Question 2: Referring to 17th JAKS AGM minutes emailed to me by Xiao Ying on 12th June 2020 which only captured 3 Q&A is unacceptable. Are you now ready to take minutes on?
-
Presentation by the Board
-
Questions submitted in advance by MSWG or shareholders with Board answers
-
Q&A by the attending shareholders during AGM Q&A session.
B. Pacific Star Project and MNH’s Evolve Mall
Refer:
2014 Annual report: The project at Section 13, Petaling Jaya known as Pacific Star had commenced its operation in August 2012 with a GDV of approximately RM1.2 billion and is expected to be completed by next year. It is a mixed development project comprises 2 commercial blocks of 14 storeys (STAR Office Building) and 16 storeys (Signature Office Suites), 3 service apartment blocks of 24 to 33 storeys, 4 storeys of retail spaces, 4 level of basement car park and 4th to 8th floor elevated car park. The STAR Office Building is to be transferred to Star Publications (Malaysia) Berhad for the settlement of the land purchased.
2015 Annual report: The mixed development project at Section 13, Petaling Jaya known as Pacific Star has achieved sales of RM536 million, being 49% of the total GDV of approximately RM1.1 billion. The commercial blocks of 14-storeys Menara Star 2 is expected to be handed over to Star Publications (Malaysia) Berhad, for the settlement of the land purchased, by end August 2016.
2016 Annual report: The current ongoing mixed development project at Section 13, Petaling Jaya known as Pacific Star has achieved sales to-date of RM575 million (2015: RM536 million), being 58% of the total GDV of approximately RM1.1 billion. The expected handover date will be in 2nd half of 2017.
2017 Annual report: The current ongoing mixed development project at Section 13, Petaling Jaya known as Pacific Star has achieved sales to-date of RM915 million (2016 : RM575 million), being 83% of the total GDV of approximately RM1.1 billion. The Pacific Star project is expected to complete by end 2018 and this will reflect our exit from property development for the time being.
2018 Annual report: The current ongoing mixed development project at Section 13, Petaling Jaya known as Pacific Star achieved sales to-date of RM951 million (2017 : RM915 million), being 86% of the total gross domestic value (“GDV”) of approximately RM1.1 billion. The GDV and sales to-date included the Pacific Star Business Hub (“Business Hub”) which was sold to another subsidiary within the Group. The Pacific Star project is expected to complete by end-2019
2019 annual report page 16: The ongoing mixed development project known as the Pacific Star achieved a sales of RM93.6 million in FYE2019 and RM1.044 billion up to FYE 2019 (up to FYE 2018: RM951 million), representing 99.8% of the total gross development value (“GDV”) of approximately RM1.046 billion. The Group targets to complete the development project by the second half of 2020.
Expected handover had been delayed from the original end August 2016 to the second half of 2020.
Question 3: To external auditor: Did auditors visit to Pacific Star worksite to do an audit and verification whether the completion date stated by management is achievable? And if not achievable should auditors raise an alarm in key audit matters? By not highlighting the delay in key audit matters should external auditors be held accountable and answerable that Jaks is now involved in lawsuit with Star and paying millions of LAD to purchasers of the service apartments?
Refer page 46: Others Key Elements of Internal Control
The other key elements of the Group’s internal control systems are described below:
• An organisational structure with clearly defined lines responsibility, accountability, and proper segregation of duties.
Question 4: Aside from the dispute with Star, that Completion Period for JIC to deliver STAR’s entitlement under the SPA is on 20 June 2020. Whose responsibility, accountability and duties to ensure timely delivering of service apartment units to the purchasers? Any action taken / claim against sub contractors found guilty of incompetent and failing/neglectful of duties to deliver these service apartments to purchasers timely?
Question 5: Should the Board of Directors be held accountable and answerable for the delay from original completion of service apartment blocks end August 2016 to the second half of 2020.
Refer:
STAR is claiming:
(a) specific relief for the Company to complete or cause to be completed JIC’s obligations under the SPA namely the completion and delivery of STAR’s Entitlement by 31 October 2019 in full and proper compliance with the terms of the SPA;
(b) damages in the sum of RM43,216,876.71 being Late Payment Interest calculated at the rate of 8% per annum on the Balance Purchase Price of RM134.5 million from 25 October 2015 (“1st Extended Completion Date”) to 31 October 2019;
(c) damages in addition to or in lieu of specific relief to be ordered and assessed by the appropriate Court Officer where necessary;
(d) in default of compliance with payers (a) to (c) above and without STAR having to make any further application, the Company shall pay the sum of RM134.5 million being the Balance Purchase Price and Late Payment Interest in the sum of RM43,216,876.71;
(e) alternative to the claim (a) to (d) above, that the Company be ordered pursuant to the terms of the Corporate Guarantee to indemnify STAR in the sum of RM134.5 million from 25 October 2015 to date of full payment of the Balance Purchase Price;
(f) aggravated and/or exemplary damages;
(g) interest on any sums and/or damages awarded by this Honorable Court;
(h) costs; and
(i) such further and/or other reliefs as this Honourable Court deems fit and proper.
This announcement is dated 3 May 2019
The Company and JIC are claiming against STAR the following reliefs:-
1. a declaration that the Completion Period for JIC to deliver STAR’s entitlement under the SPA is on 20 June 2020;
2. a declaration that STAR has breached the SPA;
3. a declaration that STAR is unjustly enriched;
4. the sum of RM248,242,987.62 to be paid to JIC as liquidated and ascertained damages;
5. the sum of RM297,035,481.00 to be paid to JRB as loss of proceeds from corporate fund raising exercises;
6. the sum of RM50,000,000-00 together with all interests and all related costs incurred thereto pursuant to the Bank Guarantees that is to be refunded and/or returned to JIC within 7 days from the date of the Court Order; and
7. damages.
The Company will make further announcement on the developments of the above matter as and when necessary.
This announcement is dated 31 May 2019.
Question 6: Under what legal basis did the legal team of JAKs based on to come to the legal conclusion that the Completion Period for JIC to deliver STAR’s entitlement under the SPA is on 20 June 2020? And claim of the sum of RM 297,035,481.00 to be paid to JRB as loss of proceeds from corporate fundraising exercises?
Question 7: What are the facts and basis that JAKS will be successful in its claim against STAR? And how much already spent in legal fees so far?
Refer page 104
Investment in Subsidiary Companies:
Proportion of equity interest held by non-controlling interest in:
JAKS Island Circle Sdn. Malaysia Bhd. (“JIC”): 49%
MNH Global Assets Malaysia Management Sdn. Bhd.(“MNH”): 49%
Fortress Pavilion Sdn. Bhd. Malaysia (“FP”): 49%
Question 8: What is the paid up capital of JIC, MNH and FP? Who are the 49% equity holders?
Refer: Page 106; As of 31th December 2019. FP equity is negative RM (7,136,589) and JIC equity is negative RM (140,953,429)
Question 9: Both FP and JIC are PN17 companies. What is the proposed plan to restructure and revive the companies? Any plan of capital injection and can the 49% owners able to come out with their 49% share of capital injection?
C. JAKS Sdn Bhd local construction project
Refer 2018 Annual report page 13:
The current on-going construction projects in Malaysia are:
(i) Four (4) waste water and water-related facilities projects with a total contract sum of RM681.1 million;
(ii) One (1) construction of road-works projects with a contract sum of RM508.5 million;
(iii) One (1) building construction project with a contract sum of RM83.1 million; and
(iv) One (1) property construction works project with a contract sum of RM622.2 million.
The Construction division contributed profit before tax of RM82.1 million to the Group’s profit before tax, of which RM82.6 million of the profit before tax was derived from the Vietnam EPC 2 contract
Refer annual report 2019 page 15:
The current on-going construction projects in Malaysia are:
(i) Four (4) wastewater and water-related facilities projects with a total contract sum of RMRM679.9 million;
(ii) One (1) roadworks construction project with a contract sum of RM508.5 million;
(iii) One (1) building construction project with a contract sum of RMRM90.4 million; and
(iv) One (1) property construction works project with a contract sum of RM490.9 million.
The construction division contributed a PBT of RM162.0 million to the Group, of which RM190.9 million was derived from the Vietnam EPC Contract 2.
Local construction had been loss making for year 2019 (162.0 -190.9) = (28.9) million: Year 2018 (82.1 – 82.6) = (0.5) million
Question 10: Any particular reason why local construction had been loss making for the past 2 years? Any ongoing efforts by management to turnaround local construction jobs and to generate profit from these jobs for FY 2020?
Question 11: Of the 4 local construction projects progress any risk of behind contractual schedule and at risk of late delivery penalty (LAD) or contracts termination?
D. Golden Keen Holdings Limited (EPC 2 contract: USD454.5 million works in Vietnam Power plant)
Refer page 14: Construction of the Hai Duong BOT Thermal Power Plant started in 2016 and officially commenced in the first quarter of 2017 and is progressing well on schedule. As at 31 December 2019, the overall construction works is at 90% completion. To-date, a total revenue of RM1.49 billion was recognised from the Vietnam EPC Contract 2 since 2016, contributing RM366.0 million net profit to the Group. The remaining works are to be recognized progressively in year 2020.
Refer page12: With our outstanding construction order book of RM618.6 million as at FYE2019, including RM338 million from the Vietnam EPC Contract 2 which is proceeding as scheduled,
Balance outstanding EPC2: RM 338 million. Expected profit 338 X 366/1490= RM 83 million.
Refer Q1 end 31th March 2016: Capital contracted but not provided for in respect of shares subscription in Jaks Pacific Power limited, joint venture of the group amounted to approximately USD 110.14 million or RM 431.97 million.
EPC2 construction jobs had contributed net profit of RM 366 million as of 31th Dec 2019 and the balance outstanding RM 338 millions should contribute another estimate of RM 83 million.
Question 12: How much of EPC2 accumulated profit of RM 366 million plus future addition balance estimate of RM 83 millions was used/will be used for shares subscription of Jaks Pacific Power limited? Any of these profits were used for other purposes besides shares subscription of JPP?
E: 1200 MW coal-fired Hai Duong, Vietnam power plant.
Refer: Mong Duong II
BOT1200MW coal-fired power plant, cost of US$1.95bn project with 25 years concession and power purchase agreement with VietNam Electricity (EVN).
75%:25% debt to equity financing: AES (51%), Posco Energy Corporation (30%) and China Investment Corporation (19%)
Operation: April 22, 2015
From AES quarterly financial presentation:
Subsidiary (Mong Duong) Cash Distributions to AES (equity 51%)
2016: Mong Duong: Year to date: US$46 million
2017: Mong Duong: Year to date: US$51 million
2018: Mong Duong: Year to date: US$45 million
2019: Mong Duong: Year to date: US$76 million
Refer page 14:
The commercial operation of the first unit of the power plant is expected to commence in the fourth quarter of 2020, followed by the second unit in first quarter 2021.
Question 13: What is the dividend/cash distribution policy of JAKS Hai Duong Power Company Limited (Distribute ___% of net profit or free cash flow and frequency of distribution: quarterly, half yearly or yearly)?
Question 14: When will JAKS expect the first dividend/cash distribution from JAKS Hai Duong Power Company Limited?
Question 15: Depending on JAKS Hai Duong Power Company Limited operation efficiency and Power demand what will be the expected estimated range amount of dividend/cash distribution per year for 30% equity?
F. General
Refer page 11:
DIVIDEND
The Board is not recommending any dividends for FYE2019 as the Board is of the view that priority shall be given to conserve cash for the purposes of, amongst others, to meet the working capital requirements of the Group as well as to build a sizeable war chest for potential mergers and acquisitions activities in the future, if the opportunities arise. The Board is confident that the continuous reinvestment into the core businesses of the Group will lead to long-term sustainability and growth of the Group.
We are ceasing research coverage of JAKS Resources Berhad (JAKS) to reallocate our research resources. While its power plant in Vietnam is targeted to achieve commercial operation date by end-2020, we remain cautious as its local businesses are still not generating enough cash to support its business. To recap, it has just proposed another cash call via a renounceable rights issue of new ordinary shares together with free detachable warrants to raise proceeds of up to RM160.92m back in May. Our last recommendation for the stock was Underperform with a TP of RM0.77 based on c.60% discount to RNAV.
PublicInvest ceasing coverage after repeat warning, “All told, we are still wary over the various dilutive equity fund raisings done so far to meet its liquidity demands and the poor execution especially on its property business”
Question 16: Should the Board address the issue of various dilutive equity fund raisings done so far to meet its liquidity demands and the poor execution instead of talking about mergers and acquisitions activities and continuous reinvestment into the core businesses of the Group?
Question 17: Attachment: [SC Case: SC2020-12107] and Bursa Ref: CC/38/20 - Official complaint in seeking Bursa and SC to investigate and reject JAKS revise Rights Issue. Has the Board held a board meeting to address the complaint on the RI? I am hoping JAKS Executive Director DATO' RAZALI MERICAN BIN NAINA MERICAN will voice out the revised RI is a bad deal that prompts Dato’ to sell Dato' holding in JAKS.
Question 18: Many JAKS shareholders are looking forward to dividend/cash distribution from JAKS Hai Duong Power Company Limited for the next 25 years and for some of this cash flow into rewarding the JAKS shareholders with a reasonable yearly dividend. Will the Board consider our humble request?
Page 38: Proposed utilisation of Private placement proceeds: Renewable Energy Projects utilized as at 31th Dec 2019: RM 10,000,000
Question 19: Can the Board brief us how this RM 10 million was spent? And what is the outcome of this Renewable Energy Projects feasibility study?
Question 20: External auditors please explain how auditing and verification was carried out to make sure the expenses were indeed for renewable energy projects feasibility study?
Question 21: Will Management publish the answers to my questions in JAKS website as AGM minutes/ ‘Key Matters Discussed’ or email the answers back to me?
Thank you
Best Regards
Lee Soon Sheng
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Discussions
2 people like this. Showing 13 of 13 comments
Dear Aseng,
How are you? Miss you and i3lurker.
My email: sslee2309@gmail.com
DK chat group can go ahead with the group questions as I will still need to send in my questions as follow up to my complaint to SC and Bursa on AGM minutes and my objection to RI.
Thank you
2020-07-31 22:24
Sslee, can you please ask the progress of fund utilization of last RI and what auditor works done to verify the utilization.
2020-07-31 22:47
Dear human,
Refer page 38:
The status of utilisation of proceeds as at 31 December 2019 is as follows.
Proposed utilisation of proceeds Proceeds Utilised as raised at 31.12.2019 RM’000: RM’000: Timeframe for utilisation
(i) Vietnam Power Plant Project: 25,491: 25,491: Within 12 months
(ii) Repayment of Bank Borrowings: 4,335: 4,335: Within 12 months
(iii) Renewable Energy Projects: 10,000: 10,000: Within 12 months
(iv) Estimated expenses for the proposed PP: 1,100: 1,100: Upon completion of Proposed Private Placement
Already ask under questions 18 and 19. RM 10 million on Renewable Energy Projects
2020-07-31 23:34
Dear Aseng,
Just for your information:
Under Company Act 2016
Power to convene meetings of members
310. A meeting of members may be convened by-
(a) The board; or
(b) Members representing at least ten per centum of the issued share capital
311. (3) The directors shall call for a meeting of members one the company has received requisition to do so from
(a) Members representing at least ten per centum of the issued share capital carrying the right of voting at meeting of members of the company.
312. (1) In relation to section 311, the director shall-
(a) Call for the meeting within fourteen day from the date of the requisition: and
(b) Hold the meeting on a date not more than twenty- eight days after the date of the notice to convene the meeting.
With shareholding of 13.5% DK group still have time to make Requisition for EGM to be held immediately after 18th AGM on 15th Sept 2020 with resolution to appoint DK group nominee as the independent director of JAKS.
2020-07-31 23:35
Sslee,
I miss you also.
since we are not in the same boat but still in the same sea ,
it is ok you go ahead with your objection to RI and we go ahead with our demand for the management to answer our questions. we still can communicate later if there is any new development
thank you.
2020-07-31 23:48
Dear Sslee,
Good morning,
How to send our questions for the AGM officially and correctly so that it will made as one of the key matters to be discussed.
Thank you.
2020-08-01 09:29
Sslee, seem to make more sense to ask the fund use for the feasibility studies. Thanks for the clarification.
2020-08-01 10:32
Ask i always says since day 1, jaks is a conman stock, better just stay away loh...!!
Best to sell & switch and all to insas loh...!!
2020-08-01 11:16
Dear Aseng,
There are two way:
1. Register with Tricor and then send your questions to tricor portal JAKS submit AGM questions:
JAKS 18TH AGM - REGISTRATION Notification
Tricor Investor & Issuing House Services Sdn Bhd
Please log-in https://tiih.online/ for more information.
2. Directly email to;
a. JAKS IR: info@jaks.com.my
b. Company secretary: Leong Oi Wah: oiwah@epsilonas.com
c. CC to Andy Ang. You can get Andy Ang email address from OTB
d. CC to Xiao Ying: xiaoying@epsilonas.com
2020-08-01 11:22
Thank you for your initiative and effort to do something for the many suffering minority shareholders of Jaks. Most shareholders agreed that the management of Jaks are not doing things in the best interest of shareholders especially the outside minority and that we need to do something for our common interest.
Well done and thank you again Sslee.
2020-08-03 08:34
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Aseng
I am Aseng. i wish to share with you the questions for the coming jaks AGM we had gathered in DK chat group. DK will email to ALP together with the names of 194 shares holders representing a total shares holding of about 13.05% to request the the management to provide us some guidance for matters that we wish to know more . can you please kindly provide me your email , you me i3 messenger , my ID is "iamxuewen " . thank you.
2020-07-31 21:53