KUALA LUMPUR (Nov 3): Top Glove Corp Bhd has stressed the shares that it bought back in the open market between September 2020 and February 2021 are not investments, and therefore the question of paper losses does not arise.

In an email to The Edge, the world’s biggest rubber glove maker pointed to MFRS 132 paragraphs 33 and 34 which states that treasury shares are not an investment, but rather an equity which is captured at acquisition costs.

“No subsequent remeasurement is required as these are equity instruments, hence they would not be impaired at any point in time and the question of ‘paper loss’ does not arise,” it said.

Top Glove’s clarification was made with reference to the article entitled 'Top Glove sits on RM860 mil paper loss on massive share buyback' which was published in The Edge Weekly dated Oct 25 - 31, 2021 issue.

Between September last year and February this year, Top Glove spent about RM1.42 billion to buy back 200.17 million shares. Based on the closing price of RM2.49, the block of shares are valued at RM498.4 million, a difference of RM921 million against RM1.42 billion spent.

The value of its treasury shares dropped sharply in tandem with the downward trend on Top Glove’s share price that has more than halved from this year’s peak of RM7.05 on Feb 2.

Top Glove started buying back its shares in September last year shortly after its two-for-one bonus issue, when the share price was adjusted to RM8.37 on Sept 3 from RM26.08 on Sept 2. The manufacturer’s issued share capital was enlarged to 8.13 billion from 2.71 billion shares after the bonus issue.

The shares were bought in the price range between RM5.78 and RM8.01, with the bulk of the shares purchased between Nov 10 and Nov 27, 2020.