SINGAPORE - Catalist-listed Natural Cool Holdings was hit by a net loss in 2016 due partly to poor performance from its paint division, a segment of its business that is now under review over potential governance breaches.
The air-conditioning firm swung to a net loss of S$8.17 million for the 12 months ended Dec 31, 2016, from 2015's S$6.5 million profit. Earnings fell despite the 18.3 per cent jump in revenue to S$128.95 million.
The results were partly affected by a write-off of goodwill in the paint division, which significantly widened the other expenses item to S$7.25 million last year.
In a separate announcement on Tuesday (Feb 28), Natural Cool flagged that the transactions in the paint division are being reviewed.
"It has recently come to the attention of the board that there may have been irregular transactions and activities entered into and conducted by certain subsidiaries in its paint division, namely Cougar Paint, Loh & Sons Paint and Cougar Paint Industries.
"The nature of these irregularities mainly relate to companies set up by employees (including persons that may be connected to the company's former directors) to operate a competing business using the assets and resources of the paint entities."
This announcement hinted at the internal issues that continue to hamstring the company, which saw its former board thrown out by shareholders in an extraordinary general meeting earlier this month. Only chief executive Tsng Joo Peng remained.
Natural Cool said the irregularities at the paint division are being looked at by an internal investigation committee, and the financial impact of the issues cannot yet be quantified.
But it said the paint division recorded a net loss of S$2.20 million in 2016, representing around a quarter of the group's total loss.
"The pain division currently remains operational and all relevant bank signatories have been or are being changed."
Natural Cool shares had dropped by around 6.7 per cent to 13.8 cents on Tuesday morning, two hours after the results announcement.