Saturday, 24 January 2015

Lack of public disclosure by Gunung Capital Bhd?

Gunung Capital Bhd recently announced that it has received award for a service contract amounting to RM165.0m for provision of transportation bus service for the national service trainee program from 26 December 2014 to 25 December 2017.

In less than a month, the Prime Minister announced the temporary suspension of the national service program for 1 year when revising Budget 2015.

Defence Minister tweeted his “guarantee” to National Service stakeholders that the deferment of the government program would not affect the positions of camp operators and trainers. But what about the transportation bus service provider, GUNUNG?

On average, the contract works out to be RM55m a year, which is material considering GUNUNG's annual turnover of about RM80m in recent years.

Shouldn't GUNUNG make an immediate announcement to clarify whether/ how the deferment of national service trainee program affects the financial performance of the group?

According to Bursa listing requirements, a listed company MUST make immediate public disclosure of any material information, if it is reasonably expected to have a material effect on:-

a) the price, value or market activity of any of the listed company; or
b) the decision of a holder of securities of the listed company or an investor in determining his choice of action

Wasn't it the case?

The share price did react to the news and it was widely reported by the media (The EdgeThe Star, The Sun, and others).

Timely public disclosure would minimise the possibility of those privy to the details of the contract having an unfair advantage over the public investors.

2 comments:

  1. I suggest that Gunung knows very well the Bursa listing requirements, and also suggest that Gunung would have discussed with Bursa the requirement to make a Bursa announcement regarding the implications of the relevant Governments' announcement on the Gunung's financials. I would anticipate that Bursa would have recommended a timely announcement upon Gunung receiving a 'black and white' confirmation of the proposal to defer the national service program by the Government (with the actual, dates, details explanations, etc). I also suggest that the announcement by the government was very clear (i.e. defer the program for 2015) and the financial implications to Gunung would also be very clear to all the shareholders of Gunung who receive and read the annual reports, quarterly financial reports and Bursa announcements.

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    Replies
    1. 1. Whenever there is a material event that affects a listed company, such as fire, flood, riot etc, deferment/ termination of contract, the company should make immediate announcement, even though the loss may not be able to be ascertained immediately. A listed company should be as transparent as possible.

      2. If the announcement by the government was "VERY" clear, as claimed by you, why a briefing has to be conducted later by the Department of National Service to discuss in detail the implications of the deferment of the National Service program (in year 2015) to the respective stakeholders?

      3. Do the company announcement, annual reports and quarterly financial reports mention whether Gunung will be compensated for loss of profit from the deferment of the contract, idling buses, idling manpower etc? Without these, how the financial implications to GUNUNG would be clear?

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