Hall of Shame

Energy

Serba Dinamik Holdings Bhd (SDH MK)

Year: 2021


Serba Dinamik Holdings Bhd is a Malaysia-based investment holding company, which manages Serba Dinamik group and CSE Global Ltd. The Group is providing information technology (IT) solutions and energy service and engineering solutions mainly to the Oil and Gas (O&G) and power generation industries. The Group's major business activities are classified into three segments: Operations and maintenance (O&M); Engineering, procurement, construction and commissioning (EPCC), and IT solutions. 

The company listed on Bursa Malaysia, the Malaysian Stock Exchange (MYX) on 8 February 2018 and raised MYR672m in its IPO. Additional share offerings, between 2018 and 2021, raised another MYR1.4b (Feb.2017: MYR9.38m, Jan.2018: MYR427.20m, May 2020: MYR456.70m, Jan.2021: MYR508.61m).

On 25 May 2021, the company announced that KPMG, the auditors had raised some issues in relation to the audit. The company was in the midst of appointing an independent firm to commence a special independent review to assess the veracity and accuracy of the issues.

On 27 May 2021, Serba Dinamik suspended trading of its securities.

On 28 May 2021, the company responded to a Bursa Malaysia's query letter, requesting more details on the issues raised and the company's response to the issues.  The issues that KPMG raised were:

  • unable to get some customers’ confirmation relating to sales transactions, trade receivables and material on site balances;
  • questions on some transactions on purchases and trade payables balances on local suppliers where the amounts owed ranged from MYR60m to MYR96m;
  • Issues with information relating to customer and supplier in Bahrain; unable to confirm address and noted that the fax contact number was registered under one of the Group’s employees. The customer had US$101m (MYR417.36m) in sales transactions and US$24m (MYR99.17m) in trade receivables;
  • a number of issues with some trade receivables balances and sales transactions for information technology contracts.

The Company said it has responded to all the issues and took the view that there was no issue with regards to the legitimacy and existence of the contracts as well as the value that would render any material impact to the financial and operational aspects of the Group. It was in the process of appointing an independent committee to look into the issues and would appoint an independent firm to review.

On 31 May 2021 Trading of Shares resumed.

On 11 June 2021, Three new independent director were appointed; Encik Johan Bin Mohamed Ishak, Dato' Mohamed Ilyas Bin Pakeer Mohamed and Puan Masleena Binti Zaid.

On 14 June 2021, Serba Dinamik announced the company had agreed in principle, to appoint Ernst & Young Advisory Services Sdn. Bhd., as the independent reviewer to assess veracity and accuracy of the issues highlighted by KPMG.

On 15 June 2021, Independent Director, Dato' Mohamed Ilyas Bin Pakeer Mohamed, was appointed as Chairman relpacing Dato' Mohamed Nor Bin Abu Bakar.

On 17 June 2021, the Edge Weekly's cover story "Serba Dinamik in the eye of the storm", did a review of the current crisis in the company. The article noted that KPMG took issue with Serba Dinamik’s sales transactions worth MYR2.32b, trade receivables (MYR652m) and material on-site balances (MYR569m). The transactions added up to MYR3.54b. KPMG was also uncomfortable with certain transactions involving trade payables, where the amounts owed ranged from MYR60m to MYR96m — despite the companies having paid-up capitals of only MYR100,000. These transactions were pegged at MYR481m by KPMG. It also questioned the contracts in Bahrain and whether it had related parties involved.

On 19 June 2021, ex-chairman, Dato' Mohamed Nor Bin Abu Bakar, resigned for personal reasons.

On 21 June 2021, the company responded to the Edge Weekly article saying Serba Dinamik would like to confirm that there was no element of related party interest as purported.

On 22 June 2021, Serba Dinamik said it would be taking legal action against KPMG for alleged negligence, breach of contract and breach of statutory duty.

On 24 June 2021, KPMG resigned as Serba Dinamik auditor. KPMG said Serba Dinamik’s decision to take legal action against it over the ongoing statutory audit of the company for the financial period ending June 30, 2021 had compromised the auditors’ ability to independently continue the audit engagement and discharge its professional duties.

On 25 June 2021, four independent non-executive directors resigned, citing differences of opinion over the company’s decision to take legal action against KPMG. The directors who quit were Hasman Yusri Yusoff, Tengku Hasmuddin Tengku Othman, Sharifah Irina Syed Ahmad Radzi and Rozilawati Basir.  One other Independent director, Puan Masleena Binti Zaid, who had been appointed 2 weeks earlier, also resigned but her reason was due to personal commitment. 

On July 26, 2021 the company appointed Nexia SSY PLT as auditors.


Serba Dinamik: Responses to Bursa Malaysia / KPMG, 28 May 2021
The Star: Serba Dinamik shares continue to be suspended, 28 May 2021
The Edge Markets: Serba Dinamik in the eye of the storm, 17 Jun 2021
Serba Dinamik: Clarification on Article 'Serba Dinamik in the Eye of the Storm', 21 Jun 2021
The Edge Markets: The drama at Serba Dinamik continues, 5 Jul 2021
Serba Dinamik: Q4 Report, YE Dec. 2020
Serba Dinamik: Annual Report, YE Dec. 2019
Serba Dinamik: Annual Report, YE Dec. 2018
Bursa Malaysia: Serba Dinamik Holdings - Company Filings


 


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