Living by Number
MarineCorp was the maritime solution provider for the SURIA group of companies. It had two subsidiaries which are Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd. Hafiz Hasyim is the person who is responsible to report financial performance in the company. He is one of the Boards which is CFO in organizational structure for the three companies. Besides, Vessel inspection and vetting was a major business of MarineCorp. MarineCorp also provide consulting services to SURIA and its related contractors that included those for newly built vessel for upstream and downstream oil and gas operations. For Green Port, it major activities included pilotage and marine support, emergency response, port management and operations, navigational safety, and marine services to the Single Buoy Mooring facilities. Last but not least, Sungai Emas major activities included pilotage and marine support, emergency response, port management and operations, and navigational safety. Protagonist/Decision maker
Hafiz Hashim, the Chief Financial Officer of Marine Corp Sdn Bhd and responsible for the financial management of MarineCorp and its wholly-owned subsidiaries which are Green Port Sdn Bhd and Sungai Emas Port Sdn Bhd.
There are some problems that Hafiz face during this financial performance which is he in dilemma situation whether to approach economic earnings that has required by SURIA group, Value Based Management (VBM) or use profits as practised by the company(Marine Corp Sdn Bhd) and its subsidiaries to report financial performance. Also, the Chairman requested specifics action that can improve company’s performance due to financial performance. Other problem faced by the protagonist is pressure from the General Manager of Green Port and also Marine Corp Sdn Bhd where they want to have better performance so they can get higher bonuses. GM Green Port, Anita Osman requested to amortise the dregging cost because Hafiz miscalculated them while GM Marine, Lee Chong Way refused to propose the dividend to the shareholders because of the cash already spend to fund investments. There are also certain accounting issues that arise that give pressure to solve it.
The Major Issue
The major issue occurred when there are two types of opinions that Hafiz has to consider. First is the opinion president of Suria Group so that Value Based Management (VBM) to be used for the SURIA Group and all its subsidiaries and associated companies. Secondly, for the current situation the MarineCorp and it subsidiaries are practicing profit base to measure the company performance. Besides, General Manager (GM) of Green Port requested to change dredging cost by amortizing it. Another issue occurred also in Marine Corp while the GM of the company refuse to propose dividend to their shareholders and use cash to generate interest income on fund investment. Case Exhibits
From Appendix G it shows the companies’ NOPAT, Average Invested Capital and Weighted Average Cost of Capital (WACC) and from these components the performance for each company can be measured. Under the VBM model, both economics earning for Sungai Emas and MarineCorp are positive which are 5,030,563 and 14,274,611 thus it’s shown that these company are creating value for their company. In the other hand, economic earning for Green Port is -14,588,232 (negative) and this indicates that value was destroyed for the company. Besides, under profit based the Green Port company shown the most profitable company compared to Sungai Emas and MarineCorp when the net profit after tax for the Green Port is the highest among them.
Determine the economic earnings of the MarineCorp Sdn Bhd, Green Port Sdn Bhd and Sungai Emas Sdn Bhd. Because the president of SURIA wants to use the Value Based Management (VBM) system, the company would be measured by economics earnings. The table above show economic earnings for each company. Green Port will have negative economic...
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