True and Fair View of Utusan Malaysia's financial position

Utusan Melayu (Malaysia) Berhad is a listed company on the Bursa Saham Malaysia hence its annual accounts and reports are open for public viewing.

I need not mention that Utusan Malaysia is UMNO’s mouth piece as confirmed by the top 30 shareholders listing as per its annual reports and accounts for the financial year ended 31 December 2009.


The top shareholders include:-

1. RHB Nominees (Tempatan) Sdn Bhd
(Pertubuhan Kebangsaan Melayu Bersatu or UMNO (United Malays National Organisation) 55,113,956 shares (49.78%) - exceeding the bare NEP minimum target of 30%

2. Nilam Setar (M) Sdn Bhd 16,343,000 shares (14.76% )
……..


5. TA Nominees (Tempatan) Sdn Bhd (Pledged Securities Account for Chua Eng Ho Waa @ Chua Eng Wah) 879,900 shares (0.79%)
…….

8. Meng Hin Holdings Sdn Bhd 345,600 shares (0.31%)
9. The Teaw Kee 340,900 shares (0.31%)
10. Cheah Yee Lin 314,500 shares (0.28%)
11. Tan Jin Tuan 291,200 shares (0.26%)

I can see that even some people from Utusan's usual punching bag did not mind investing in Utusan Malaysia. Good business is good business. Perhaps the public should not take what Utusan says too seriously?

After all, we also pay good money to watch powerful movies knowing that the plot delivered are far from reality of life.

According to the Chairman Tan Sri Mohamed Hashim Ahmad Makaruddin's statement:
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FINANCIAL PERFORMANCE
Group

For the financial year under review, the Group recorded total
revenue of RM348.6 million, lower by 6.7% against the previous
year’s revenue of RM373.8 million. The lower revenue is mainly
due to the decline in contribution from advertising. Despite
this, a more effective cost management saw only a slight drop
in pre-tax profit from RM7.8 million in 2008 to RM7.3 million
for the financial year under review.

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The “other expenses” in consolidated income statement decreased from RM53,732,825 in 2008 to RM44,253,718 in 2009. However, if you look at the individual holding company level, the “ other expense" actually ballooned up to RM74,563,651 in 2009, up from RM48,854,351 in 2008.

While the Group recorded a profit of RM7.8 million, the Utusan holding company showed a pre-tax loss of RM18,401,459 for 2009, a reverse of RM30 million compared to pre-tax profit of RM12,012,817 for 2008.

Normally the total expenses of the group should exceed the total expenses of the holding company alone. This anomaly can be explained by looking at note 40 of the accounts which explained that the allowance for doubtful debts relating to subsidiaries amounting to RM27,713,788 was eliminated on consolidation of accounts.

Ah…ignore the problem and then there is no problem. :-)

On a happier note, at group level, employee benefits expense decreased to RM103,136,942 in 2009 from RM111,529,012 in 2008.

According to note 6, the directors' remuneration fell within the following bands below:

Executive directors:
RM250,001 – RM300,000 (2009: 1 director; 2008: nil)
RM650,001 – RM700,000 (2009: 2 directors; 2008: nil)
RM700,001 – RM750,000 (2009: nil; 2008: 2 directors)
RM750,001 – RM800,000 (2009: nil; 2008: 1 director)


Non-executive directors:
Below RM50,000 (2009: 7 directors; 2008: 6 directors)

The directors have taken a hit in their pockets. I wonder if there is anything to do with the quality of the paper's content.

Utusan Group has a very impressive list of properties under their name which occupied 3 pages of its annual accounts and report from page 126 to page 128.

As at 1 January 2009, the group held land and buildings at cost amounting to RM121,746,329, which have appreciated marginally around 10% by RM12,287,700. We all know land and building appreciate fast and given Utusan’s long history, surely this valuation is dubious?

Note 12 of the accounts has this to explain:

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(d) The land and buildings and plant and machinery stated at valuation were revalued on 22 July 1986 by the directors based on professional valuation carried out by an Independent firm of valuers on the fair market value basis for land and buildings and on replacement cost basis for plant and machinery.

Due to the absence of historical records some years ago, the net book value of the land and buildings that is required to be included in the financial statements of the Group and of the Company as at 31 December 2009 at historical cost less accumulated depreciation, is not disclosed.


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I think something happened in 1987....some assets identification and registration exercise after some in-house dispute somewhere....my memory is failing.....

Anyway, in all public companies, there is this standard obligatory paragraph:

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STATEMENT OF DIRECTORS’ RESPONSIBILITY
IN RELATION TO THE FINANCIAL STATEMENTS

This statement is prepared as required by the Listing Requirements of the Bursa Malaysia Securities Berhad.

The directors are responsible for ensuring that the Company maintains accounting records that disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965.
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Breaking the law are we?

One thing puzzles me in Note 9 of the accounts:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Income not subject to tax:

2009 RM10,821,314; 2008 RM12,233,552

Expenses not deductible for tax purposes:

2009 RM10,169,025; 2008 RM16,248,997
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The notes 4 & 8 explaining details of income and expense did not divulge anything on the above.

According to Income Tax Act, 1967, expenses not incurred wholly and exclusively to generate business income are not allowed to be offset against revenue to derive at taxable income, i.e. if the Inland Revenue Board thinks the money you spend got nothing to do with your business, IRB would kick it out of your income and expense income when they compute your tax liability.

As far as I know, expenses not deductible for tax and not a schedule 9 disclosure item per the Companies Act, 1965 includes donations and entertainment expenses.

There is no apparent income from disposal of property which is not subject to income tax...so I have no idea how Utusan can have tax free income of RM24 million over 2 years.

Utusan Malaysia has been consistent in upholding, how they perceived, as Malay rights and the integrity of Islam. I believe they have been steadfast, vocal and proactive in these respects.

According to note 20 to the accounts:
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The advances to employees relate to advances given to employees of the Group to purchase motorcycles and computers under the Staff Motorcycle Loan Scheme and Staff Computer Loan Scheme (‘Loan Schemes’). The Loan Schemes bear interest at rates ranging from 5.0% to 7.0% (2008: 5.0% to 7.0%) per annum and are recovered through salary deductions.

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I am not a religion expert so I can’t comment much but I know that companies can offer interest free-loans since staff remuneration packages and it is entirely at the management’s discretion.

And only motor cycles? Utusan should support project Proton, Che Det's favourite pet. I just wonder if the motor cycle loan scheme runs a bit too close to hire purchase scheme, which we have a Hire Purchase Act to comply with.

After another attention grabbing writing about about murderers and their political affiliation, substantiated or not, Utusan is faced with another law suit threat. The directors are probably numb to all these or know something we don't.

See this notes to accounts from the directors:

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35. CONTINGENT LIABILITIES

Given the nature of the Group and the Company, there are several libel suits which involve claims against the Company of which the outcome and compensation, if any, is currently indeterminable and the directors, based on legal advice, are of the opinion that the probability of the liabilities crystallising is remote.

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Given the balance of cash and cash equivalent of the Group as at 31 December 2009 of RM56.7 million, if the directors are confident and feeling secured, do we need this?

http://www.facebook.com/topic.php?uid=11214944403&topic=5397

Kempen selamatkan Utusan

Ir Mohd Petikan dari UtusanRM32,000 diterima serta-merta

KUALA LUMPUR 12 Okt. – UMNO Bahagian Cheras hari ini melancarkan Tabung Azan untuk bersama-sama akhbar Utusan Malaysia memperjuangkan kebebasan melaungkan azan di masjid dan surau di negara ini.

Ketua UMNO Bahagian Cheras, Datuk Syed Ali Alhabshee berkata, kutipan tabung itu akan digunakan untuk membantu mana-mana masjid dan surau membeli peralatan pembesar suara selain keperluan lain yang berkaitan.

Tambahnya, hasil tabung itu juga akan digunakan untuk membantu program melahirkan muazin muda yang dilihat boleh menjadi pelapis kepada golongan berumur di masjid dan surau.‘

‘Kita wujudkan tabung untuk turut membantu Utusan Malaysia yang disaman Ahli Parlimen Seputeh, Teresa Kok RM30 juta baru-baru ini.

So where did the money go?