Astro malaysia financial analysis

Chapter 35 presented a case study on ERM at Malaysia’s Media company Astro. The focus of this case study is to convey how ERM can be used to assess portfolio performance. Provide a brief summary of the case study and discuss how dashboards can be used in ERM monitoring and reporting. Ensure to provide specific examples of how dashboards can be used in ERM reporting and monitoring.

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CHAPTER 35 ERM at Malaysia's Media Company Astro Quickly Implementing ERM and Using It to Assess the Risk-Adjusted Performance of a Portfolio of Acquired Foreign Companies

PATRICK ADAM K. ABDULLAH

Vice President, Enterprise Risk Management, Astro Overseas Limited

GHISLAIN GIROUX DUFORT

President, Baldwin Risk Strategies Inc.

This case study focuses on the implementation and use of enterprise risk management (ERM) to screen proposed investments, assess the risk-adjusted performance of a portfolio of foreign investments, and make key investment decisions at Astro Overseas Limited, the company responsible for all international investments (subsidiaries and joint ventures) for Astro Holdings Sendirian Berhad (herein known as “Astro”). We start by providing some background information on Malaysia, on its corporate governance code and practices, and risk management practices at Astro. We then describe how Astro Overseas Limited uses ERM to assess and filter potential investments, and subsequently, how ERM is implemented at successful investments. Finally, we explain how Astro Overseas Limited combines information from the risk profile and financial performance of each investment, and reflects the performance on a dashboard together with all other investments in its portfolio to make better risk/return investment decisions.

MALAYSIA

Situated between 2 degrees and 7 degrees to the north of the equator, Malaysia is a diversely populated federal democracy of 29.3 million1 Malays, Indians, Chinese, and many other ethnic groups2 who speak Malay (the official language), English, various Chinese dialects, Tamil, Telugu, and Malayalam. Its major religions are Islam, Buddhism, Taoism, Hinduism, Christianity, and Sikhism. The life expectancy of its citizens ranges from 73 years (for men) to 77 years (for women), and the literacy rate is 89 percent.3

Geographically, Malaysia is almost as diverse as its culture (see Exhibit 35.1). Eleven states and two federal territories—Kuala Lumpur and Putrajaya—form Peninsular Malaysia, which is separated by the South China Sea from East Malaysia, where we find the states of Sabah and Sarawak on the island of Borneo and a third federal territory, the island of Labuan.

Exhibit 35.1 Map of Malaysia

Source: U.S. Central Intelligence Agency's World Factbook.

Malaysia's main industrial sectors are rubber and palm oil processing and manufacturing, light manufacturing industry, logging, and petroleum production and refining. Its main exports are electronic equipment, petroleum and liquefied natural gas, wood and wood products, and palm oil. The country's gross domestic product (GDP) per capita is equivalent to U.S. $8,800, and its currency is the ringgit (1 RM being equivalent to 0.3140 USD).4

The country's capital, Kuala Lumpur, is at the center of the Multimedia Super Corridor (MSC), Asia's equivalent of the United States' Silicon Valley. That is where we find the head office of our company, Astro Malaysia Holdings Berhad, more precisely located at the All Asia Broadcast Center, in Technology Park Malaysia.

THE ASTRO GROUP