In the KPMG Shareholder Value Award 2006, British American Tobacco (M) Bhd (BAT) has, for the fifth consecutive year, emerged as overall winner. Information and communications technology (ICT) companies JobStreet Corp Bhd and Uchi Technology Bhd grabbed the first and second runner-up spots respectively.

Details:

·         ICT industry was the most highly represented with over a third of the companies among the top 100 public-listed companies;

·        New entries to the winners list included IOI Properties Bhd and Nestle (M) Bhd;

·        Economic profit was used to measure the creation or destruction of shareholder value instead of accounting profit, as the former included business risks and opportunity costs in its evaluation. ;

·        The existing sectors included in the rankings are agricultural and fisheries, construction and property, consumer markets, energy and natural resources, financial services, industrial markets, ICT, infrastructure and leisure.;

·        The average EP/IC ratio for the companies ranked in the Shareholder Value Award programme rose to 13.52% from 11.32% a year ago.;

 ·        BAT had the highest economic profit over invested capital ratio (EP/IC) of 50.24%. It was a close fight for JobStreet and Uchi Tech, with an EP/IC ratio of 38.71% and 38.68% respectively.;

 ·        Other winners according to their respective sectors included Hock Seng Lee Bhd, Java Incorporated Bhd, LPI Capital Bhd and Berjaya Sports Toto Bhd.;

 ·        The winners are identified by computing the EP/IC ratio for all companies listed on Bursa Malaysia’s Main Board, Second Board and Mesdaq Market, in which 100 companies with the highest EP/IC ratio would be ranked firstly within sectors, then across sectors to arrive at the overall winner.;

 ·        Economic profit over invested capital is used which basically means that companies should concentrating more on using their capital efficiently as a means to improve their economic profits;

·         Companies therefore need to move up their value chains if they wanted to increase shareholder value.

Examples are:

·        They can not longer just rely on their existing business models. 

·        The need to relocate their capital into more profitable areas, 

·         Make capital repayments to their shareholders or

·        Sell their properties to real estate investment trusts (REITs) 

 [ Pl read topics in the Economic Value Added/EVA category]

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