Iris Corp co-founder cuts stake amid restructuring plan

KUALA LUMPUR (Dec 27): Iris Corp Bhd co-founder, group managing director and chief executive officer Datuk Tan Say Jim has sold a substantial stake in the group, triggering talks of changes at the top.

Last Friday, Iris announced that Tan has ceased to be a substantial shareholder of the group amid plans for a major overhaul of its operations.

It is understood that Tan, 58, who was appointed to the board of directors on June 30, 1996, has been on leave since Nov 1. In his absence, Iris deputy managing director Datuk Hamdan Mohd Hassan has assumed the leading role, taking charge of the group’s operations.

As at press time, Tan could not be reached for comment.

A bourse filing last Friday showed that Tan had disposed of 56.6 million shares, representing a 2.52% stake in the group, via a direct business transaction for RM6.19 million on Dec 22.

Tan sold the shares in two blocks. One block of 41.6 million shares was transacted at 12 sen apiece amounting to RM4.99 million. Another block comprising 15 million was transacted at eight sen each for a total of RM1.2 million.

Following the disposal, Tan’s stake in Iris dwindled to 3.91%.

On Dec 3, 2015, Tan was named Malaysia Ernst & Young Entrepreneur of the Year 2015 and Master Entrepreneur of the Year 2015 in recognition of his efforts at Iris. Since the group’s incorporation in 1994, it has pioneered the world’s first electronic passport and national multi-application smart card with the implementation of the Malaysian electronic passport in March 1998 and MyKad in 2001.

Tan, who was instrumental in the diversification of the group, introduced the Autopot system, an environment-friendly farming solution designed to supply water and nutrients to the exact needs of a plant, in 2006. Iris also ventured into renewable energy, industrialised building systems and education.

However, during a recent interview, Hamdan told The Edge Financial Daily that the trusted identification (ID) solutions provider will be undertaking a major restructuring of its operations next year.

He said Iris will be returning to its roots to strengthen its core trusted ID business, especially after the non-renewal of its contract to supply e-passport chips to the Malaysian government in May this year.

Iris returned to the black in the financial year ended March 31, 2016 (FY16), posting a net profit of RM6.32 million compared to a net loss of RM20.89 million in FY15. However, it fell back into the red in the six months ended Sept 30, 2016, with a net loss of RM25.24 million versus a net profit of RM5.45 million a year ago amid the absence of new contracts.

“Like what has been reported before, we had lost our focus when we invested in the various non-core businesses. And now we are making a move to refocus our priorities and reallocate our resources back into the trusted ID business,” Hamdan said.

Hamdan also noted that Iris’ bankers have responded positively to the group’s plans to restructure, adding that Felda Investment Corp Sdn Bhd — its largest shareholder with a 21.33% stake — was also supportive of the restructuring plans.

“We will be going to the board in January to discuss a few things that we would like to do. We are definitely going to restructure and make the company leaner, more transparent, along with good governance,” Hamdan said.

Iris’ share price has been on a downtrend since Aug 18 this year, and had fallen below its par value of 15 sen towards the end of November. Year to date, the stock had fallen 47.7% from 22 sen on Dec 31, 2015 to close at 11.5 sen last Friday, bringing a market capitalisation of RM258.66 million.

This article first appeared in The Edge Financial Daily, on Dec 27, 2016. Subscribe to The Edge Financial Daily here.