Forty percent of the companies controlled by the Finance Ministry - or 19 out of 47 of these companies - made losses in 2009, according to the Auditor-General’s Report of 2010.

The total losses amount to RM0.71 billion, but since the other 28 companies made pre-tax profits totalling RM93.06 billion, the overall pre-tax profits for the 47 companies amounted to RM92.35 billion.            

audit report 2010 241011 pre tax profit by sector “This amount shows a reduction of RM3.83 billion compared with the overall pre-tax profit of RM96.18 billion in 2008,” says the report.

Among the best performing companies, by pre-tax profit, are Petroliam Nasional Bhd (Petronas), Bank Pembangunan Malaysia Bhd and Cyberjaya landowner Cyberview Sdn Bhd.

The top three losers are public transport operators Syarikat Prasarana Bhd (Prasarana), Keretapi Tanah Melayu Bhd (KTMB) and little-known Assets Global Network Sdn Bhd.

Eight companies insolvent

The six companies posted three years of consecutive pre-tax profits or losses respectively.

“A follow up audit analysis showed that the reasons for the losses are new companies formed that have yet to show results from their operations; companies set up to fulfil social interests; and special purpose vehicles that are not designed for profit and have a reduced revenue and because they could not sustain operation expenses,” the report says.

Overall, 44.7 percent or 21 companies posted a pre-tax profit for three years consecutively while 27.7 percent or 13 companies posted losses between 2007 and 2009.

Of the 47 companies, firms involved in the economic sector collectively posted a pre-tax profit for three consecutive years, from RM77.4 billion in 2007 to RM89.7 billion in 2009.

audit report 2010 241011 debt equity ratio However, firms related to the infrastructure sector, such as Prasarana, collectively posted increasingly bigger losses, from RM253 million in 2007 to RM486 million in 2009.

Based on the debt to equity ratio, it was found that eight companies (18.2 percent) scored negative figures for three years straight ( left chart ).

“This shows that the companies do not have enough funds from shareholders (insolvent) and depend on borrowings to finance its entire operational, general, administration expenses,” says the report.

Dividend income - Petronas’ burden

Meanwhile, the top five contributors in dividends to the federal government are Petronas, Perbadanan Nasional Bhd (PNB), Penang Port Sdn Bhd, Technology Park Malaysia Corp Sdn Bhd and Malaysia Kuwaiti Investment Corp Bhd.

The audit report explains that government-controlled firms must pay a minimum 10 percent dividend to the government every year.

audit report 2010 241011 top 5 earners losers Petronas has been paying a fixed amount of RM30 billion annually for the past three years and is far ahead of the other nine companies, which if combined, amount to just RM33.7 million.

This means that Petronas pays 99.89 percent of the total dividends that government-controlled firms pay into federal government coffers.

The Auditor General’s Report 2010 was released today. It is available on the Auditor General’s website here .

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