PSH IN PERIL

THE STAR’s article today is tolling a death knell for shareholders of POS Malaysia Holdings (PSH). According to Kathy Fong, PSH is now in the cross-hair of the special audit covering the Transmile imbroglio .

If you peruse the Annual Reports of PSH, scant attention is paid to CEN in spite of PSH holding some 42.5% stake in it. To add flavour to it, the other player is Konsortium Logistik Bhd with a 20% holding. Transmile held the other 37.5 %.

Strangely when confronted by StarBiz, PSH said it was unaware that CEN Worldwide owed Transmile RM103 million in spite of having a representative on the Board of CEN. This was before the release of the final report of the special audit by Moores Rowland Risk Management Sdn Bhd on Transmile.

CEN Worldwide is Transmile’s major customer. Sales to CEN Worldwide totaled RM604 million in the past three years. In the final report, Moores Rowland warned Transmile of the possibility of “under-billing or non-billing of genuine sales to CEN Worldwide.”

The report said it had been a loss-making entity in the past three years. As at Dec 31, 2005, the company’s shareholders’ funds were in deficit of RM22.5 million.

PSH retorted that it will review its position in CEN after the completion of two new special audits to be conducted at CEN and CEN Worldwide. It further added that POS had already absorbed the losses in CEN up to the cost of investment of RM4.25million in 2004 via subsidiary Pos Malaysia Bhd. Does that mean it has written off all of its investment n CEN?

Konsortium Logistik also said that the company had written off the investment in CEN a long time ago. A company spokesmen said Transmile never did give them any audited accounts and that they desired to sell their stake to Transmile some time back.

I see worms coming out from Transmile into the other two partners' accounts and accounting practices. What has PSH to say to this since they had board representation? Guy sleeping on the job?

Let us backtrack a bit.

CEN was formed as a marketing arm for Transmile. There were synergistic benefits among the three original shareholders. The company was expected to bring cargo for Transmile from PSH and Konsortium Logistik.

Something definitely went wrong in CEN. Whose fault is it?

PSH shareholders are now in a quandary. The share of PSH has been falling like a rotting durian from the RM4.70 level. Just this morning it lost another 10 sen to RM4.10. As the saga unfolds, expect POS to get similar treatment from the market as Transmile,albeit less harshly. Even though big brother Khazanah is there to mop up shares dumped by aggrieved shareholders, will it stem the gravitational downgrade?

It looks like PSH is definitely not been benchmarked to global standards.Why?

Heartsong