SINGAPORE (May 9): Trek 2000 reported earnings of US$0.5 million ($0.67 million) for the 1Q ended March, down more than half from its 1Q17 earnings of US$1.2 million due to a fourfold decline in revenue.
Revenue fell 79.9% to US$8.4 million from US$41.8 million previously from reduced revenue in the Interactive Consumer Solutions (ICS) division, which accounted for 89.4% of group revenue in 1Q and has higher gross profit margin when compared to other segments.
The group attributes this quarter’s revenue contraction to an acute strategic component shortage, "board conflicts" and the absence of income post its divestment of Racer in 2017.
Total expenses amounted to US$1.1 million compared to US$5.6 million a year ago on reduced amortisation cost, lower marketing activities regionally, and lower professional fees and staff related costs.
Henn Tan, executive chairman and CEO of Trek 2000, says he does not expect the shortage to persist in the long-term, as the group’s engineering teams are “working feverishly” to redesign their immediate solutions.
Tan’s position as CEO is currently being contested by Singapore Exchange Regulation (SGX RegCo), which in late April issued a notice of compliance against Tan and the group’s president of the operations, sales and customised solutions division, Foo Kok Wah.
See: SGX issues Trek 2000 notice of compliance, objects to appointments of Tan and Foo
Both have been removed as cheque signatories for the company and subsidiaries by SGXRegCo’s audit committee chairman, Chan Yee Meng.
These moves come as Trek 2000 faces investigations into a series of the company’s allegedly suspicious transactions involving round-tripping, phantom sales and digitally altered invoices and credit notes.
See: Trading of Trek 2000 shares halted; evidence of round-tripping, phantom sales and altered invoices by founder Henn Tan uncovered
See: Tracking the financial shenanigans at Trek 2000
“We are relentless in our pursuit of streamlining our operations, tightening cost controls and boosting productivity across the organisation. These efforts have translated to the sustainability of our margins during the challenging quarter,” says Tan of the group’s latest 1Q results.
“Our business remains poised to further penetrate the IoT market in consumer wearable, medical and cloud technologies. By leveraging on our history of R&D capabilities and a track record of innovative solutions, we are confident that our core ICS division will continue to gain traction as we seek to develop disruptive technologies and solutions for our customers… Our relentless pursuit of innovation will continue to set us apart from the competition and pave the way for future success as we continue to deliver value to our stakeholders,” he adds.
Shares in Trek 2000 closed 3.2% lower at 15 cents on Tuesday.
