Media Conference Statement
(2) by Lim Kit Siang in Parliament on Tuesday, 18th
November 2008 at 3pm:
Summary Report of PricewaterHouse Cooper’s
“High-Level Business Review of Pampena Group of Companies” 6th November
2008
Overview of Pempena
In 2005, Pempena established a business plan for 2005-2009 to implement
the following key activities:
(i) Equity participation in tourism related
industries
(ii) Implementation of activities under the Shopping Malaysia
Secretariat
(iii) Placement of funds in the money market and unit trusts.
There were 14 key areas of new businesses
indentified by Pempena for implementation.
Pempena planned to invest a total of RM49.8m over the period of its
business plan (ie 2005 – 2009) representing equity and profit sharing
arrangements.
As at June 2008, Pempena has invested a total of RM54.4m via equity
participation in and advances made to the Investee Companies.
High level financial performance review
Out of the 24 Investee Companies:
(i) 6 Investee Companies do not any financial
information
(ii) 3 Investee Companies have partial financial information.
Most of the 24 Investee Companies have not
been recording operational profits over the last 3 years with the
exception of:
(i) Malaysia Travel Business Sdn Bhd (“MTB”)
(ii) Max Airplay Sdn Bhd (‘FlyFM’)
(iii) Malaysian Restaurant Londan Ltd (“Awana Chelsea”)
(iv) Bistro & Theatre Restaurant Sdn Bhd (“Saloma Theatre
Restaurant”)
Only 4 Investee Companies have positive
shareholders’ funds as at June 2008. They are:
(i) Malaysia My Destination Sdn Bhd (“My
Destination”)
(ii) Dalamasa Sdn Bhd (“Dalamasa”)
(iii) SDCorp Communication (M) Sdn Bhd (“SD Corp”)
(iv) Nathena LIFZ (M) Sdn Bhd (Nathena)
Review of investment process
• Based on our review of Pempena’s documents,
we have not seen any documented policy and procedure governing
Pempena’s investing activities.
• Our review shows that there is a lack of:
(i) Investment analysis setting out
consideration of how long would Pempena hold on to its
investment and how Pempena would potentially exit from its
investment
(ii) Critical assessment of the background, credentials and
relevant experience of the respective Investee Companies’
business partners, financial projections and strategic business
plans.
(iii) Considerations of tourism related initiatives or KPIs for
most of its Investee Companies.
(iv) Documentation which clearly outlines the procedures for
operational and financial review of investments, roles, and
responsibilities for representation on Investee Companies BODs.
• Pempena’s investment process could be enhanced if there is a
clearly defined investment policy and procedure on:
(i) Investment approach
- Determining the approach in setting the tone for the oversight of its
investments
(ii) Investment targets
- Setting of financial, tourism and/or operational KPIs for its
investment via a structured plan
(iii) Investment governance
- Setting out requirements for management and monitoring of investee
companies based on their shareholding structure and ability to influence
decision making.
• Pempena’s investment monitoring mechanism (in respect of the 14
Investee Companies) is primarily focused on historical performance
through:
(i) Review of monthly management reports (without commentary).
(ii) Weekly management meetings chaired by Pempena’s CEO to discuss the
current business activities undertaken by the Investee Companies
(iii) Representation in Investee Companies’ BOD
(iv) Periodic reporting of Investee Companies’ performance and
activities to Pempena’s BOD by Pempena’s Corporate Service Department.
• Based on the existing monitoring mechanism as represented by
management of Pempena, we have not seen any documentation which clearly
outlines the:
(i) Procedures for operational and financial review of investments
(ii) Roles and responsibilities for representation on Investee Companies
BOD
(iii) Requirement for complete and timely information from Investee
Companies
Proposed way forward
• In view that Pempena’s primary objectives of investing in the 14
Investee Companies are focused on creating “tourism value” and there is
expectation by Pempena that these investments would be able to generate
financial returns, the following key considerations and criteria were
used in the development of strategic options for the 14 Investee
Companies:
|
Key considerations |
Criteria |
|
Tourism objective |
Achievement of Pempena’s key tourism objectives in investing
in the 14 Investee Companies |
|
Financial returns |
- Achievement of predetermined financial targets for the
Investee Companies
- Investee Companies’ financial performance trend todate
- Investee Companies financial prospects moving forward
|
|
Adequacy of working capital |
Sufficient funds to sustain operations |
|
Ability of business partner to manage operations |
Experience and capability of business partners in dealing
with management and operational issues. |
• Out of the 14 Investee Companies, the proposed way forward is to
retain and enhance 7 Investee Companies which is as follows:
(i) MTB
(ii) Virtual Malaysia Sdn Bhd (“Virtual Malaysia”)
(iii) Lambaian Maya/Max Airplay
(iv) SD Corp
(v) Malaysia Restaurant Beijing Limited (“Awana Beijing”)
(vi) Pempena Executive Taxi Service Sdn Bhd (“PETS”)
(vii) Sky Vans Sdn Bhd (“Sky Vans”)
• It is also proposed that pempena exit from the following investments:
(i) Malaysia Tourism Executive Sdn Bhd (“Matex”)
(ii) Sri Kebaya Restaurant Sdn Bhd (“Sri Kebaya”)
(iii) Malaysia Restaurant Hyderabad Limited (“Awana Hyderabad”)
(iv) Dalamasa
(v) Nathena
• Should Pempena exit its investments from the 5 companies, the
immediate impact to Pempena’s profit and loss is estimated to be a loss
of approximately RM20 million
• Awana Chelsea has been proposed to be maintained as is whilst My
Destination will be liquidated.
*
Lim
Kit Siang, DAP
Parliamentary leader & MP for Ipoh Timor
http://dapmalaysia.org