Book Value and Accounting Principles..Is it Fair?

Continuing from my previous post, Day 4 and Day 5 of the 3rd Phase of the MDP programme focussed on the topic of "Finance Analysis for Managers". Financial analysis is the measurement of the financial impact of the levers of operational decision-making and management control. Being an engineer all my life, this is one topic which I really look forward to out of the so many modules of the MDP that I have to undergo.


The objectives of this module was to acheive a better understanding of financial statements, measure of financial performance and also to improve business performance. I was also hoping to properly understand the meaning of so many financial terms and jargons we normally encounter on daily basis such as ROI, ROA, book values, Income statements, Assets and Liabilities and many more terms which I bet my accountant friends will know it like the back of thier hands. In fact I have to admit, before this course, I always viewed finance as secondary to engineering. This is so especially to me ,from the system security stand-point and also being a die-hard technical man. However, to some extend, this module has somewhat altered my perspective on how we should view finance from a an accountant perspective and understand why certain seemingly unreasonable decisions being made in the company.


Over the years I have so many accountant friends. Some are good and some are better and some already left the company for greener pasture. But for some reason, I have never had the oppurtunity to properly sit down and discuss any issues related to financial statements or balance sheet of the company. Maybe, I was to be blamed because I never asked them or maybe they just thought the we the engineers have no business talking about finance! Well, thats life and our success in this transient world is still being assessed on how much asset or liabilities that we have and that is essentially a role of everyone's to play.


Ok enough for that, the finance module instructor was Mr. Vincent Loh who is an experienced management consultant who runs his own management consulting practice operating from Kuala Lumpur and Hong Kong. He started his carrer in 1976 in London as a qualified chartered accountant. He has over 25 years of knowledge, exposure and management experience in business leadership and general management. His last posting before going on his own was as a Group GM of the Royal Selangor Group which saw thier best performing years during his tenure.For his age, I think Vr Loh is very enthusiastic and energetic person. He has very good english accent and his method of presentation is very lively and spirited. just take a look at the following photo of him in class to get an idea!


Mr Loh stressed that the golden rule of Finance is COMPARE. Our financial result will always be compared to our budgets, historical performance, KPIs Targets, Industry Norms and also, our competitors. Any public listed companies are legally required to issue Financial Statement at least once a year. Financial statement will enable the reader to evaluate the company's performance, it's customers, the suppliers and also, the competitors. The most important items to be read from a Financial Statements are Income Statement, Balance Sheet and Cash Flow Statement. The accountancy world has also some conventions or accounting standards (policies and guidelines) to be followed when reporting the financial statement. In general, the rules are similar such as Annual accouting period of 1 year, Income is recognised when it is earned and not invoiced, liabilities incurred by must be accrued for in accounts, short term (< 1 year) assets, long term asset (>1 year) and written off long-term assets over a period of years depending on thier useful life.



Mr Loh discussed in detail the definitions of Income Statements and Balance Sheet. He used the company's Annual Report since 2004 to get his message cleared to us. Along the way, he also cracked many jokes and also philosopical qoutes that never seized to amaze me. Although he is a very knowledgeable accountant, he has this tendency to blame the accounting worlds on account frauds and also accounting window-dressing activities occured worlwide. He told us that in accounting principle, value of people does not exist. In other words, people are not an asset to any company but they can be libilities except if they are David Beckham or Tiger Woods. Thats why accountants like the idea of corporate restucturing, layy-off and VSS so much when they are the CEOs !

We were also made to evaluate the company's financial performance from to 2004 to 2006 using the common sizing principle. Well, in engineering we would name it the normalise method when you choose a common denominator to get a per unit value. It is very obvious that the company has made so much improvement especially in 2006 when our Return on Equity (Net Profit/Shareholders Funds) is at 10.9% and our Return on Asset (Operating Profit/Total Assets) stood at 6.1%. Our gearing for 2006 is at 1.4 times and this is still below the industry's norm of 1.0. Just for comparison, the ROE of PLUS, YTL and Malakof are respectively at 25.6%, 15.3% and 14.8% which will put our company, very far from the top industry players. What struck me the most about the 2006 Income Statement was on the saving of 1 Billion we made on Fuel cost despite the steep increase in oil price last year. I really think that the management should order a thorough check on this and understand from where all the savings came.


Of course, they are so much that the company's does for the country that cannot be reflected in the accounting book values. As a public listed company with many social responsibilities, we developed people, gave scholarships, build university, build bridges, build communities and so many more that it will all go to expenditure in the income statement. Where or what are the returns for all of these then? well, that's beyond accounting principles. To me a good accountant must not only see success as simple as those shown on the annual balance sheets but also must also view it from the human perspective as well. Without good people, we can never acheive the improved Financial Performance as we got in 2006. I think it's time to really identify the good ones among us and reward them accordingly...

Why Change is Important..

I attended the third phase of the Management Development Programme organised by the company HR from 19-23 March at the Residence Hotel in UNITEN. I was very happy about the choice for the course location this time because driving from home, the travelling time is only about 40 minutes thanks to the LDP and the NKVE highways. I did not have to battle the rush hour traffic in the morning unlike last time when the location was at the MIM building in Jalan Ampang.


The first three days of the MDP programme focussed on the topic of change as the title aptly named "How to Manage and Lead Change with Impact". The instructor for this topic was Dr Lai Chong Teng, an associate consultant to the MIM. Dr Lai has more than 34 years hands-on experience in various management skills such as managerial in leadership development, customer service management, change management, process and quality management. He used to work in Telekom Malaysia and has vast experience working in overseas in particular with Telecom South Africa and Skytel.


Dr. Lai's lectures were geared towards the company's effort to introduce change. He described the T-7 project embarked by the company in a very informative and structured manner. Honestly speaking, before listening to his lectures, I was a bit confused and at times tend to ridicule the company's agenda of change. How could you not be baffled when you see so many posters and billboards telling you to change at places like the toilets everywhere at the office? I was told initially those posters were even sticked at men urinals before finally being removed due to internal complaints! Nonetheless, the T-7 initiative was actually designed with a noble intention but I think the task of communicating the intents to the masses was poorly executed.


We often heard that it is not the changes we take, but it’s the choice we make that determines our destiny.True to some extend but whether we want it or not, change is inevitable. We either change or be changed and the whole change process actually starts with a VISION. As in life, what drives us to continue working hard is the thought of becoming materially or physically better at some point in our life. Sometimes, we work hard just to survive. But to become better, we must change in many ways.



Almost constantly, we need to change our lifestyle or habits and sometimes we may even need to change our perception on others. Like Mahatma Gandhi put it, "Be the change you are trying to create". Change is never easy and there will always be many resistance towards change, even from our ownselves. For the company, the Vision as described by the current management is to be " among the leading corporations in energy and related businesses globally by 2025" and this vision is staggered into three milestones of Becoming the Best in Malaysia by 2007 (T-7), Becoming the Best in the Region (10/10), and becoming a global player by 2025. In order to achieve the vision and the targetted milestones, systematic way to chart the progress and acheivement towards along the way must be formulated.



Dr. Lai described in detail about the change agenda of the company in a very systematic way. According to him, there are basically four steps towards a systematic implementation of a change programme. I like to summarize the four steps in the following manner for the benefit of all.

Envision of Journey-->Light the Path-->Mobilize Resources-->Leverage the Gain

The Envision of Journey consists of 3 main principles involving the following.
Creating a Change Leadership Team--Escalate the Urgency--Clarify Vision

Light the Path is essentially strategizing the steps towards the vision and consists of 4 main principles as following.
Formulate Strategy--Identify Initiative--Develop Roadmap--Communicate Change

Mobilize the Resource is about managing resistance towards change and consists of 3 main agenda listed as following
Formalize Structure--Deliver Result--Manage Resistance and Barriers

Leverage the Gain can only occur after all the above have been achieved and it consists of 2 main ideas:
Increase Change Momentum--Anchor Change in Culture

During the three days, Dr Lai showed us numerous examples of how change in people and culture can have impact to the well being of an organisation. There were also several video presentations on change management and I think those videos are really cool as a training aids.

Out of so many ideas, philosophical thoughts and qoutations thrown to us, the one that struck me the most is on the question about " Should the change in the culture of an organisation comes first before we can change or vice-versa ?". According to Dr Lai, it's better to change the people first. Changing culture is just like changing a habit and bad culture is about bad habit. To change a bad habit, we need to change many things, environment, process, work attitude and also perception. Once those are changed, we will see a new culture being developed and that is what actually any management would like to see. Now I can better understand why the company is nagging on those having thier daily breakfast in the canteen every morning. This habit of taking a break in the canteen is in the management's view points, a bad habit that needs eradication and they also see this as a barrier to thier vision. How do we change this ? I'll leave it to you to ponder.

At the end of the three day course, Dr Lai asked us to eveluate a case study on change management as a group. IMHO, the case study was fairly starightforward and was not really a brain-cracker to say the least. We were also asked to take a simple objective type quiz to test our understanding what had been taught in class. Unfortunately, I could not say that I am proud of what I got in that test :-((...it just showed that I really need a change in my attitude towards managing courses like this in the future..



Well, after three days of intense lecture on change, I can only conclude that change management is all about changing's people attitude towards becoming more organised and desciplined. As long as we are alive and have to deal with people, we will never cease from having attitude problems facing us as we ourselves, are also human. Patience, perseverence and honesty are a must if we are to impact change on others. After all, leadership is not about exerting authority but about effecting our influence on others, and what better way to achieve that none other than we change ourselves first.

Canon's EOS-1D Mark III Shoots Like a Machine Gun

One of the new releases making waves on the PMA show floor recently was the Canon EOS-1D Mark III. It features a live three-inch LCD that shows the direct image through the lens, just as it does through the viewfinder, and shoots a blistering 10 frames-per-second for a 110-frame burst. It's able to process all that information because it has dual Digic III image processors that, combined, can handle more than 100 MP of image data per second. It's also fast out of the gate--it's ready to shoot just 0.2 seconds after hitting the power button. This Canon will start firing some time next month.



~Porter B. Hall, Amazon Current

Beauty in a Small Package..

I have the oppurtunity this weekend to try out my other half's new compact digital camera purchased at Foto Selangor on Saturday afternoon (after the BJ Carnival). I convinced her that for getting the value for money, the best compact camera at the moment is Ricoh Capalio R5. I have been reading many magazines and also did a bit of research on this camera and after actually fondling with this camera at Foto Selangor, I myself was convinced that this is indeed a remarkable small camera. The deal at Selangor Foto was completed within half an hour after we also tested many small compacts such as the Canon G7, S3-IS, and also Olympus 550. In my opinion, the price we paid at RM1080 (including 1GB SD Card) was a bargain considering that this camera is sold for more than 250 Pound Sterling in UK.



A bit on this camera, the new Ricoh Caplio R5 digital camera features a 7.1x optical wide zoom lens (28–200 mm in 35 mm camera format). Combining the Caplio R5’s Ricoh-original CCD-shift vibration correction method and brand new image processing engine greatly expands the range of shooting in low light areas producing high quality images at even higher ISO settings with low noise.

The camera’s macro mode allows close in shooting of objects from a wide macro 1 cm to tele macro 14 cm. This is one feature that I could not find from other units we tested at the shop thus enhanced my confidence on how good this camera is. Another feature that made us fall in love with this camera is on its ability to also capture movie clips. They movie image might not be as good as a DVD quality image but hey, we are more focus on still images here and not into movie making.

So, on Sunday morning, we tested the new compact and here are some results which I would say, quite good for a compact camera. The first four photos were taken using the camera's Macro Mode and the next four basically using the Landscape mode. By the way, the crescent moon in the starting photo was taken using the Macro mode with me holding the camera very close to my telescope eyepiece and I feel satisfied with the result.

OUR VERDICT

The results from our tests convinced my other half that the choice for this compact camera was a good one. The macro capability of this camera is superb and this is helped by the anti-shake mechanism built in the camera making the use of a tripod unnessary. The images are sharp and almost resemble to those produced by my DSLR. However, the telefoto zoom does generate some noise close to maximum zoom when the image is blown up for viewing the details. Well, you can't violate the rule of physics here. Small lens means lesser amount of light can enter the CCD sensor and thus image captured will be less detail as compared to the bigger SLR lenses.

For such a small camera, I think this camera can be a good second to a full-fledge DSLR especially when we want to travel light. But of course, you can't be that creative when using a compact as practically, you will not have any control on aperture or shutter priority functions unlike all DSLRs. Pricewise, this camera is among the cheapest with all those capabiliies.

In short, this camera is very portable and beautiful design with an eye to robustness and quality. I strongly recommend this camera for those intent to start with creative photography but don't have a big budget for a DSLR.

2007 Bukit Jelutong Carnival

On Saturday Mac 24th, I took my other half and my son to the BJ 2007 Carnival. Unlike previous years, the carnival for this year was being held in front of the Guthrie Pavilion along the Persiaran Tebar Layar and facing the undeveloped area in front of this BJ landmark . From the published schedule, the carnival was to start at eleven in the morning but we were already there half an hour early as we were actually on our way to KL.


Since we were quite early, we did not have problem locating a parking space nearby the Guthrie Pavilion. The first thing that we could notice from afar upon approaching the carnival area was the presence of the Guthrie Hot Air Balloon. We could see there were already many people lining up to taketheir turn to 'fly' on the balloon although the line was not that long. I was told that it cost RM10 per person for this ride and also some health declaration form that needed to be filled up for any interested visitors before hopping up on the balloon basket.I initially thought this might be a good idea because if I am up there on the balloon basket, I could get a nice view of the carnival for my photos. However, I didn't fancy the idea of waiting in line and thus decided to abandon this idea.


There were several luxury car promotions under the makeshift tents and we could see cars like Audi TT, Brabus, Jaguar and many more on display. There were also many tents selling food and also many merchandise items on promotion. Many companies like ASTRO , Insurance, and others were also seen to have booths in this event. Carnival atmosphere was omnipresent as there were several clowns entertaining the little ones and giants temporary 'play-pents' could also be seen nearby the golf driving range.


We spent nearly an hour exploring the carnival venue and I think the organiser of this event has done a very good job. Although I did not buy anything or play anything as we are running out of time and in a bit rushing to KL, I can sense that the carnival was a success. Hopefully, Guthrie can continue make this event and annual affair for the joy and benefit ofBJ folks.

MNC-CIGRE 12th AGM...A Reflection

On Tuesday 12th March 2007, the Malaysian National Commitee of CIGRE or MNC-CIGRE held its 12th Annual General Meeting at the Kuala Lumpur Golf and Country Club.


CIGRE (International Council on Large Electric Systems) is one of the leading worldwide Organizations on Electric Power Systems, covering their technical, economic, environmental, organisational and regulatory aspects. A permanent, non-governmental and non-profit International Association, based in France, CIGRE was founded in 1921 and aims to:

* Facilitate and develop the exchange of engineering knowledge and information, between engineering personnel and technical specialists in all countries as regards generation and high voltage transmission of electricity.
* Add value to the knowledge and information exchanged by synthesizing state-of-the-art and world practices.
* Make managers, decision-makers and regulators aware of the synthesis of CIGRE's work, in the area of electric power.

More specifically, issues related to planning and operation of power systems, as well as design, construction, maintenance and disposal of HV equipment and plants are at the core of CIGRE's mission. Problems related to protection of power systems, telecontrol, telecommunication equipment and information systems are also part of CIGRE's area of concern.
MNC-CIGRE was estbilished in Malaysia in 1996 by a group of forward looking engineers from TNB and other industry players and to date it is celebrating the 11th year of its establishment. The MNC-CIGRE is an affiliate to the Paris based CIGRE and it is governed by a constitution with members from the Malaysian power industry and managed by bi-annually elected executive commitee members comprising of a Chairman, Vice-Chairman, Honorary Secretary and an Honorary Treasurer. Traditionally, the Chairman of the MNC-CIGRE also holds the highest executive position in TNB being the leader in the power industry here in Malaysia. Currently, the Chairman of the MNC-CIGRE is Dato Seri Che Khalib Mohamad Nor, the CEO/President of TNB.


On personal note, I have been involved with the MNC-CIGRE since its establishment in 1996. In 2003, I was elected as the Honorary Secretary after the previous secretary, Mr Ahmad Ali of Malakoff Berhad stepped down from this position. My current term (third term) will end next year but having held this position for more than four years now, I have decided to call it a day.


Actually my desire to step down has started last year due to the increase work load and responsibility in the office. The decision finally culminated about three weeks ago when I wrote a personal letter to the Chairman expressing my desire to step down during this years AGM. In my letter, I explained the reasons on why I would like to ask his permission to resign from the secretary position. Essentially, I cited the increase responsibility and the need to focus my attention more in my daily work to ensuring system security and also, to inject fresh air into the management of the MNC-CIGRE. It took about ten days before I finally knew that the chairman has accepted my resignation albeit he regretted the request but have to respect my decision, from his written response to me.



During the AGM after all usual business matters were over, the chairman made a special announcement about the resignation and I was actually touched by his open praises and appreciations to me on whatever little contributions to MNC-CIGRE I have made over the years. In fact, he also jokingly said that my resignation was due to my promotion or in anticipation of a promotion and this got our VP, who was also present, felt uneased a bit. This is something new to me as things like this never happened to me before. After all, its not everyday that you can get appreciated from your bosses let alone your CEO.



The AGM proceeded with a simple election to elect a new Secretary. In my letter to the chairman, I also indicated my choice of a successor and to my surprise he totally agreed and accepted my proposal and announced it in the AGM. Thus, Dr Ridzal Othman was unanimously elected as the new MNC-CIGRE Secretary until next year AGM.


After the AGM was over, all of us proceeded to a special room for a 'high-tea' luncheon. Well, I wouldn't call it 'high-tea' as it was already 7.00 PM by that time. During the luncheon, I sat beside the chairman and chatted with him and others on things not related to the company or work. I could see how comfortable and relax he was when we talked during the luncheon. I guess, being a CEO at such age, he might find talking to people at about his age more relaxing and enjoyable. After all, we don't talk about KPIs or issues related to the company but rather general issues on social behavior and happenings around the nation. Actually, I have spoken to him on few formal occassions before but I really know now that despite his seemingly serious and high social status, he is actually like most of us but you really have to catch him at the right moment and place to discover...

Usual Weekend...

This weekend is probably among the least hectic weekend on my schedule in so many weeks. There was no invitation be it wedding or anything that we have to attend to. Hence, on Saturday, I took my family to Mid-ValleyMegamall to check-out some books at MPH as well as just to window shop at the IT center and the camera store. There was a promotion and a kind of exhibition of a new HondaCRV at the main concourse of the mall. I managed to capture this happening through my 10-22mm lens and you can check it out yourself if you like.



On Sunday, I teed-off for a around of golf with my BJ friends. We started very early in fact at 7.30AM while the morning mist was still covering the fairways and greens. Since surprisingly there were not many people playing, I took theopportunity to snap few photos in between bogeys and blown up holes. Yeah, I did not manage to get any
birdies that day no matter how hard I was trying. Well, I was still recuperating from a mild gout attack the day before if that could be an excuse :-))

Nonetheless, the following are the photos of KRTU (Kelab Rekreasi Tentera Udara) of which I am a member since 2005. KRTU is a tough course but one one thing I like about it is it's located only about 5-minute drive from home. This course was voted as the number 2 toughest course in Malaysia behind Saujana GCC. For the following photos, I was only using the Canon Kit lens and the images might not be to your liking...enjoy