presenna@nst.com.my
2010/05/14
For now, executive vice-president of the plantation division, Datuk Azhar Abdul Hamid, is acting group chief executive officer as the board’s nomination committee looks for a new leader
Malaysia’s second most valuable listed group, Sime Darby Bhd, has asked its chief to leave after the conglomerate looks set to book losses of almost RM1 billion for the second half of this year.
Analysts expect its shares to open lower today after the group revealed that it had cost overruns in not one but four projects in its energy and utilities division. For now, executive vice-president of the plantation division, Datuk Azhar Abdul Hamid, is acting group chief executive officer as the board’s nomination committee looks for a new leader.
“Sime Darby will miss its key performance indicator target and there are concerns on its financial performance in the second half of the year,” said CIMB regional research analyst Ivy Ng.
Sime Darby is booking a loss of RM200 million for its Bulhanine and Maydan Mahzam project with Qatar Petroleum, RM159 million for the Maersk Oil Qatar (MOQ) project, RM155 million for building of vessels for the MOQ project
and RM450 million for the Bakun hydroelectric dam project.
However, the conglomerate is still in talks with its clients regarding claims on cost overruns. Sime Darby chairman Tun Musa Hitam said the group’s board of
directors found deficiencies in the management of the group’s energy and utilities division after more than eight months of investigation.
The board first set up a three-member work group, headed by Datuk Seri Andrew Sheng Len Tao, in October, following “questionable positions” in the group’s finances last year and the application of corporate governance.
What started out as a probe into one project later expanded to another three projects when it found “problems and issues”.
Sime Darby has yet to identify if an element of fraud was involved. Although the work group has submitted its report to the board, Musa said the entire probe was still a work in progress.
“Another exercise in terms of action on long-term structural problems that have been identified will be done.”
Part of this will be looking at the management structure, the need for more assistants and having in place proper procedures and a check and balance for management.
As to whether Sime Darby would report more similar losses, group chief financial officer Tong Poh Keow said the group had taken the “most conservative stand” and did not expect any more to arise.
Analysts expect its shares to open lower today after the group revealed that it had cost overruns in not one but four projects in its energy and utilities division. For now, executive vice-president of the plantation division, Datuk Azhar Abdul Hamid, is acting group chief executive officer as the board’s nomination committee looks for a new leader.
“Sime Darby will miss its key performance indicator target and there are concerns on its financial performance in the second half of the year,” said CIMB regional research analyst Ivy Ng.
Sime Darby is booking a loss of RM200 million for its Bulhanine and Maydan Mahzam project with Qatar Petroleum, RM159 million for the Maersk Oil Qatar (MOQ) project, RM155 million for building of vessels for the MOQ project
and RM450 million for the Bakun hydroelectric dam project.
However, the conglomerate is still in talks with its clients regarding claims on cost overruns. Sime Darby chairman Tun Musa Hitam said the group’s board of
directors found deficiencies in the management of the group’s energy and utilities division after more than eight months of investigation.
The board first set up a three-member work group, headed by Datuk Seri Andrew Sheng Len Tao, in October, following “questionable positions” in the group’s finances last year and the application of corporate governance.
What started out as a probe into one project later expanded to another three projects when it found “problems and issues”.
Sime Darby has yet to identify if an element of fraud was involved. Although the work group has submitted its report to the board, Musa said the entire probe was still a work in progress.
“Another exercise in terms of action on long-term structural problems that have been identified will be done.”
Part of this will be looking at the management structure, the need for more assistants and having in place proper procedures and a check and balance for management.
As to whether Sime Darby would report more similar losses, group chief financial officer Tong Poh Keow said the group had taken the “most conservative stand” and did not expect any more to arise.
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