This article first appeared in The Edge Financial Daily on October 15, 2019

KUALA LUMPUR: Malaysian Genomics Resource Centre Bhd (MGRC) shareholders stand to receive a special cash dividend of 22 sen per share following the group’s proposed disposal of its entire clinical pathology services business.

MGRC plans to dispose of the business, held under Mpath Sdn Bhd, to Gribbles Pathology (Malaysia) Sdn Bhd, indirectly owned by Singapore-based Pathology Asia Holdings Pte Ltd.

MGRC told Bursa Malaysia yesterday that the proposed disposal for RM42 million provides an opportunity for the group to unlock the value of its investment in Mpath Group, from which it will net a disposal gain of some RM21.92 million, after accounting for estimated expenses. Its cost of investment in Mpath Group, from May 2012 to September this year, totalled RM20.54 million.

The group said it is still deliberating on the use of the disposal proceeds, but said the board has proposed a special cash dividend of 22 sen a share on an entitlement date to be determined later.

Mpath contributed RM27.46 million or 99% of MGRC’s revenue for the financial year ended June 30, 2019. The group’s net profit during the year was RM229,000.

MGRC said it intends to refocus on growing its existing genetic screening services (GSS) and genome sequencing and analysis (GSA) businesses.

The GSS business, under the brand Dtect, screens a patient’s deoxyribonucleic acid (DNA) for genetic markers and is associated with various diseases or health conditions.

“While the MGRC group currently does not actively market products under its GSA business, its GSA know-how and laboratory equipment are now used in processing its Dtect tests, and in the design and development of new genetic tests and other clinical tests,” it said.

Upon the disposal, MGRC’s remaining revenue from its GSS and GSA businesses contribute less than 5% of MGRC’s share capital, which may trigger the affected listed corporation status pursuant to Rule 8.03A of the listing requirements.

However, the group said it intends to maintain its listing status and that it may seek a waiver from being classified as a cash company under the Guidance Note 2.

MGRC shares closed one and a half sen higher yesterday at 30.5 sen, with a market capitalisation of RM30.02 million.