Extol to sustain IT, Net security business

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KUALA LUMPUR: ACE-listed Extol MSC Bhd will continue to maintain its core business in information technology (IT) and Internet security solutions despite the emergence of new shareholders and new board members, said newly appointed chairman Datuk Rahadian Mahmud Mohammad Khalil (pic).

In a recent phone interview with The Edge Financial Daily, Rahadian said the appointment of all-new board members will “breathe a new lease of life” into Extol, which has been in the red since 2009 except for financial year ended September 2012 (FY12).

“Our first strategy to revive Extol is by strengthening the leadership team at both the board and management levels. We have yet to formally appoint a new chief executive officer (CEO), but business runs as usual under the current team,” said Rahadian, who is also CEO of boutique property developer Magna Prima Bhd.

Since his appointment as chairman on July 24, Rahadian said, his immediate plan has been to “put the house in order” following the dramatic removal of the previous board of directors by shareholders.

To recap, Extol’s shareholders, led by Datuk Lai Wen Shian, Datuk Lai Wen Horng, Manjung Untung Sdn Bhd and Crystal Privilege Sdn Bhd, removed chairman Datuk Ahmad Ismail, president and CEO Mohd Badaruddin Masodi, and executive director Mohd Faidzal Ahmad Mahidin on May 28. The High Court on June 9 confirmed the termination of the previous directors.

Extol then appointed Rahadian, Toh Hong Chye, Tan Fie Jen, Ng Kok Wah, Calvert Wong Ngai Peow, Low Kim Leng and Wen Shian to its board of directors.

Since then, Wen Shian has emerged as a substantial shareholder with his stake in Extol increased to 36.7% from an aggregate of 10% previously, while filings with Bursa Malaysia showed Mohd Badaruddin had ceased to be a substantial shareholder with his shares pared to 4.93% from 8.82% previously.

Meanwhile, Rahadian, Tan and Ng, independent non-executive directors, sit on the powerful audit committee that oversees the group’s financials, while Wen Shian and Low are the group’s non-executive directors.

Toh and Wong are designated executive directors, with the latter managing Extol’s day-to-day operations.

Interestingly, Tan, Toh and Low are related to the painting and industrial chemical manufacturer Sersol Bhd. According to Sersol’s website, Tan is the acting managing director and Toh, the executive director, while Low is an independent non-executive director.

Extol opened a new security operation centre or “secured cloud data centre”, in Menara Uncang Emas, Cheras, a month ago while maintaining its research and development (R&D) centre in Cyberjaya.

Extol has two subsidiaries, Extol Corp (M) Sdn Bhd and Extol Ventures Sdn Bhd, which in turn owns Innodium Sdn Bhd, its R&D arm. The former is involved in sales and R&D of security technology while the latter develops and markets software products.

On its business direction, Rahadian said Extol will soon announce a new business division that will focus on consumer mobile space.

“We remain committed in our core business and currently, there is no plan to inject any non-related assets or divest any units. The new business unit is one of the strategies that we embark on to expand our market share and extend our reach to the various market segments,” he said.

For the nine months ended June 2014 (9MFY14), Extol posted a net loss of RM9.83 million from a net loss of RM680,000 a year ago on lower sales volume. Revenue for the period fell to RM8.65 million from RM11 million previously.

On the group’s outlook, Rahadian said that it is “sailing towards profitability”, but declined to disclose any immediate headline key performance indicator and specific timeline for the company to be “fully resurrected and healed”.

Last week, Extol proposed a one-for-one rights issue of up to 138.96 million new shares together with free detachable warrants also on a one-for-one basis. The proceeds will be used to fund R&D activities as well as working capital requirements.

The counter closed three sen or 10.2% higher at 32.5 sen last Friday, giving it a market capitalisation of RM45.2 million.

This article first appeared in The Edge Financial Daily, on September 15, 2014.