KUALA LUMPUR (Dec 16): Brahim's Holdings Bhd, whose shares went on a dive after it announced PricewaterhouseCoopers PLT (PwC) had voluntarily resigned as its external auditor with immediate effect, said today that PwC's departure is due in part to its board's view that a change of auditors would be good for corporate governance.

"PwC has been the auditor for Brahim's SATS Food Services Sdn Bhd (BSFS) for more than 15 years. BSFS contribute more than 90% of the group's revenue. As part of ongoing good corporate governance initiative, the boards of Brahim's and BSFS are of the view that it would be timely to effect a change of auditors.

"A change of auditors would also enable the company to benefit from fresh perspectives and views of another professional audit firm, and thus, enhance the value of the audit of the group. On Nov 21, 2019, BSFS in their board of directors meeting agreed for change of auditors, subject to the relevant formalities," Brahim's said in a stock exchange filing today.

It stressed that PwC's resignation, which it announced on Dec 12, was after mutual agreement between the parties based on the above, and the fact that the board is actively pursuing the formalisation and implementation of regularisation plan, with the aim of exiting from its Practice Note 17 (PN17) status.

"The regularisation plan requires the appointment of reporting accountants who will be carrying out in-depth financial review and reports. The board believes that it would be expedient to have [it be] the same party as the company and the group's auditors," Brahim's added.

It concluded by saying its board wants to assure shareholders that the change of auditors is in the ordinary course of business and in the best interest of the company and the group.

Messrs Baker Tilly Monteiro Heng PLT replaces PwC as Brahim's new auditor for the current financial year ending Dec 31, 2019.

Brahim's statement today was issued in response to an article entitled Tell Investors Why that was published in The Edge Malaysia for the week of Dec 16-Dec 22, which noted that investors appeared spooked by the sudden resignation of PwC, given the steep fall in Brahim's shares following the announcement.

At 4.22pm, Brahim's shares were trading at 21 sen apiece — down 2 sen from last Friday — for a market capitalisation of RM50.8 million.

The group has lost 24% or RM17.7 million in market capitalisation since it revealed PwC's resignation on Dec 12. At the time, it offered no reason for the resignation, which came seven months after PwC was reappointed its auditor at the annual general meeting on May 4 for FY19.