Manager@Work: CONFESSIONS OF A CEO

TheEdge Daily, Monday, May 29, 2006


Chee Chong Hwa,
CEO, KarenSoft Bhd

My BEST DAY...

After surviving the aftermath (that is, the unwarranted negative sentiment towards KarenSoft) of the share price crash at the end of March 2005, I guess my best day would clearly be Dec 29, 2005, when we officially defeated SAP, SAA World (ex-BAAN) and Microsoft to win a sizeable contract from a major player in the automotive industry for our new Enterprise Resource Planning product ERP4Auto.

Why the euphoria? How did I feel? Well, I felt proud to be Malaysian. Like I always say, Malaysians don’t live on trees... It is no mean feat to defeat the big boys of the ERP world. It was also vindication of KarenSoft’s shift of business focus from the SMEs to the top-tier SMEs and mid-sized non-SMEs. I felt hopeful of a turnaround for KarenSoft and true enough, after four quarters of consecutive losses, KarenSoft reported a profit for quarter one, 2006.

It felt great to hear from customers that they chose KarenSoft ERP4Auto on merit as they could actually understand how our software works. Moreover, we had more modules such as preventive maintenance which is critical to the automotive industry for quality control, something which our foreign competitors lack. Most of all, I looked forward to a great future for KarenSoft given that there are almost 300 potential customers for which our ERP4Auto would be a perfect fit and value for money.

my WORST DAY...

I guess the worst day in recent times had to be May 9, 2006, when we had to announce that we were an affected issuer under the revamped Mesdaq Market Listing Rules as we were caught under Paragraph 21 (b), (c) of the new Guidance Notes 3. The irony was that just a few days back, on May 5, 2006, we had announced a profit for 1Q2006. Apparently, we were caught due to an impairment loss for investment in subsidiaries amounting to RM9.174 million as recommended by [our accountants]. We were told not to worry about this provision as it only affected the accounts of the listed entity, KarenSoft Technology Bhd and had no effect on the consolidated accounts. Apparently, this impairment loss was based on the early adoption of the Financial Reporting Standards.

How did I feel? I felt clearly victimised as we now have to face an additional obstacle in our recovery process just because we agreed to comply early with the new standards that were meant to be enforced only for the financial period starting Jan 1, 2006. I felt silly for listening to the advice of [our accountants] who abandoned us when we did not agree (given that our turnover had dropped significantly) to their minimum audit fees for the year ended Dec 31, 2005. It is horrifying to realise that due to a debit to Profit/Loss and credit to the balance sheet for unrealised losses, we are now a GN3 company!