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Sunday, June 22, 2008

Petronas 2007 website Annual Report - Where are pages 81 to 165?

With recent explosive news from SAPP's VONC (Vote of No Confidence) and RPK's SD (Statutory Declaration), I had almost forgotten about Petronas.

However, fellow blogger Dali has just written a couple of pieces on Petronas. http://malaysiafinance.blogspot.com/2008/06/petronas-bashing.html

Conceptually, I agree with Dali's view that if one wants to bash Petronas, they should bash Petronas for the right reasons. For example, I think it is not fair to demand Petronas to explain how the dividends paid to the Government has been spent. Why? Because once the monies are paid to the Government, Petronas no longer has control over how the monies were spent. For Khairy to demand Petronas "more details" seems "fishy" to me when I first heard about it, since I immediately thought of "wayang", as a means to divert attention from other more serious problems - http://thestar.com.my/news/story.asp?file=/2008/6/17/nation/20080617174919&sec=nation.


Notwitstanding the above, I have also seen and heard CEO Hassan mentioned several times (yes, more than once) that the annual report is available on their website, and that they have nothing to hide.

Let me reproduce one of his phrases here (http://thestar.com.my/news/story.asp?file=/2008/6/6/nation/21470681&sec=nation):

"... Hassan said the corporation published a very detailed annual report ... “For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standard and Poors, and Moody. We do not hide anything.

Or from the this article (http://thestar.com.my/news/story.asp?file=/2008/6/17/nation/20080617174919&sec=nation)

"Hassan said 5,000 copies of the (annual) report was printed and distributed to various quarters and it was also available on Petronas' website."

My fellow chatters have also informed me that on National Television (TV1), he also reiterates the same thing there, making it at least 3 times, if not more times that he has said so.

Even fellow blogger Dali has mentioned it too in his article ... "Petronas has always published solid annual reports .... It’s all there on their website." (bold italicized mine).

So, it seems more than one person is saying that Petronas full annual report is available from Petronas website.

But is it there really? Is the full 2007 Annual Report really there with nothing to hide? Or just a partial report and playing with words with the intention of hiding certain information?

I had actually blogged before on Petronas. My chief complaint then was that the 2007 Annual Report was incomplete. http://fusioninvestor.blogspot.com/2008/06/petronas-accounts-who-is-external.html.

So, I went to Petronas website here again today. http://www.petronas.com.my/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open

And took a screenshot here:



Unfortunately, it still looked the same to me.

In particular, note the upper left corner, where it says "Annual Report 2007 (5.09 MB)"

This is a hyperlink - click on it to download Petronas Annual Report.

Unfortunately, I remembered the file size is still the same - around 5 MB. I.e. it's the same report with the missing pages from pages 81 to 165.

Anyway, just to verify it for myself, I clicked the link to download the PDF file.

Opened the PDF file and saw the following:




Note 2 things
:

1. Upper left corner. Adobe software says you are currently watching page 1, and it is (1 of 84). In other words, there are only 84 pages in that PDF file that one download from Petronas official website.

2. Lower right corner. The Table of contents says "Financial Statements ..... 81-165". In other words, Adobe should have said there are at least 165 pages, not just 84 pages.

Anyway, I scrolled down to the bottom, and true enough, pages 81-165 are missing!

And it does have the Petronas back-cover too.

Which means, it's not due to corrupt file. I'm 99% sure that the Financial Statement pages 81-165 was intentionally removed.

But then, I'm technologically challenged, so, don't trust me blindly.

Verify it for yourself.

Go to that link. Click on it, download it, and see for yourself.

Make sure pages 81-165 are really missing, before you get excited.

No point for you to get excited if pages 81-165 is really there.

And if you are convinced that pages 81-165 are missing, then, what is Hassan talking about that the full report is really there in his website with nothing to hide???

If there is nothing to hide, shouldn't Hassan order his people to fix the website?

This is a simple task - shouldn't take more than five minutes for an average I.T. person.

If cannot show the full report, don't go to MSM and Television and claim that Petronas has nothing to hide.

Why waste everybody's time with this "wayang"?

___________________

You may wonder why I insist in reading the financial statement pages from pages 81-165.

There are several reasons.

1. To assess if Hassan is someone I can trust or not trust. It is obvious to me that either Hassan doesn't really know his website, or he is someone who isn't afraid to lie repeatedly to the press and the entire world about the "full report" and "nothing to hide".

Maybe he is an okay guy, but I just don't like our Petronas CEO to not know the details but is willing to go public in a big way about something he is not sure or is ass-u-me-ing.

It creates a sense of distrust.

How can I trust him, if he cannot get it right the simple things - like having a complete Petronas Annual Report on his website with nothing to hide?

2. Someone mentioned to me that "maybe" he is forced by the government to only show a partial report.

Personally, I would treat this as merely one of many possible hypothesis. And actually, if true, I would find this hypothesis even more disturbing.

Why? Because it points to a conspiracy between Hassan and the government to hide information from the public at the very least. It also points to collusion at the deepest level. I'll be thinking - if they can collude on minor things like this, what makes you think they can't collude on other things that involves lots of monies which benefits them? It also points to the fact that this "hiding of information" may be an orchestrated "wayang", to divert attention from things that really matter.

But until we have such proof, it's best not to go into that direction at the moment.

To me, the onus is still on Hassan to show the full report with some apology and explanations, or to retract his previous statement that the Full Report is available on his website and explain why only a partial report is available from Petronas website.

3. For me, there are many reasons to see the entire report, and one of these is the Independent Auditor's Report, to see who is the Auditor, and more importantly, to see if the Auditor had put in any "new qualifications" since their last audit. Yes, I know some of you may have seen an older report before, but to me, it is not enough since new problems can always crop up. If I analyze a company, I want to see the full list, including the latest Independent Audit Report, not something that is 2 or 3 years old. Preferably, I want to see the Independent Audit Report for each year over the last 10 years, if such records exist which I would expect from a professional company like Petronas. In fact, not having that, or with just 1 year missing would raise an eyebrow.

4. I'm sure the Financial Statements are "most likely" comprehensive and "most likely" complies with local and "probably" International Accounting Standards. Why? Because it's 85 pages long and that tells you something. But there is a crucial difference between "most likely" or "probably" vs "certainty". An analyst with strong attention to detail will want to make sure that there is nothing fishy, and I mean Nothing. Also, for a new Petronas analyst like myself, there are so many useful details in the Financial Statements - all 85 pages - that will tell me a lot more about the company. It also acts as checks to what the company says, etc. So, to me, there is simply no substitute to seeing the full 85 pages of the Financial Statements. I want to see other things too of course but that's a different story.

And speaking for myself, until I see Petronas amend the website (or some corrective action), then, I still distrust Hassan because his words doesn't conform with what I saw for myself from his website. It's just that simple. Nothing complicated or sinister. If Hassan publishes the full 2007 Annual Report, then, I don't have a strong reason to distrust him if he also owns up to his previous mistake and apologizes, with good reasons why the previous report was incomplete.

However, with every passing day that he does nothing, and with every passing day that he keeps insisting that his report on the website is "complete", then, more brownie points are lost, as time is critical and more lies told.

5 comments:

Salvatore_Dali said...

seng, agreed.... it should be made available... but its actually there in the printed reports, its not like there were no pages 81 to 165 ... i guess the exec compensation must be sensitive ... but with the build up pressure, i am sure they will release them...

Sayuti said...

sir,

the remaining 84 pages (page 81 and 165) are there in the website although not in the same pdf file as the report. the links can even be seen in the screenshot of the website you've taken.

first the group sustainability report (28 pages), the financial highlights (31 pages), the consolidated figures (8 pages), the half-year figures in RM (8 pages) and in USD (8 pages).

so, 28 + 31 + 8 + 8 + 8 = 83. another 1 page must have been the summary of the balance sheet and profit and loss (also on the website).

i'm not an accounting person and i don't know how financial statements supposed to look like but those document sure seems like one.

thanks.

jasonred79 said...

Seng... 2 things. Firstly, if they publish the financial report, anyone with a pocket calculator will be able to calculate price per barrel of oil sold. Which is QUITE likely, from the sounds of it, to be well well below market price, possibly due to the contract to sell oil at USD30 per barrel.
Secondly... as I pointed out in the chatbox. What a lot of people haven't realised is... if oil drops back to around USD50, petronas' profit after tax would drop to around RM10billion, unless they figure out how to cut costs.

Seng said...

Dear sayuti,

It sounds to me that perhaps you may not be familiar with the format and content of Bursa listed company Annual Reports. Do appreciate the fact that Petronas and Bursa Listed Companies are required to comply fully with Accounting Standards Board requirements, or have very, very good reasons for not complying.

I regret to advise that your hypothesis is interesting, but is incorrect.

For me, I had expected Petronas Annual Report formatting to be very similar (if not identical) to Bursa listed companies' Annual Reports.

The Group Sustainability Reports, the Financial Highlights, the Consolidated figures, the Half-Year figures simply does not follow the typical Annual Report format of Bursa listed companies. The differences are simply too huge to even bear similarities.

My short advise is to ask you to check with your accounting friends. If they have experience or are very familiar with Annual Reports that complies fully with the MASB requirements, then, they should be able to tell you that what you suggest is simply incorrect.

Alternatively, you may compare directly with Bursa listed Annual Reports. Simply go to Bursa website and download any of the 1000+ listed company's Annual Reports. You will see that the differences in formatting and content are simply too large.

In short, there are still too many missing data. Here is a simple test. Can you tell me the amortization period for Capital expenditures made by Petronas? The amortization period is readily available in Bursa listed Annual Reports, if they have made capital expenditures.

Or how large is the Accounts Payable for Petronas in 2007? The latter information should be readily available from a full Balance Sheet, but not the summary Balance Sheet that they have in their website.

If they publish pages 81-165, you will immediately see that huge differences.

I trust this is clear.

Seng.

Sayuti said...

oh...

thanks for replying and the advise.

yes, i'm not familiar with the format and content of financial statements. now that you've pointed out my mistake, i'll go and ask around.

thanks again.

:)