APFT: why the generous options for directors?

This is the share graph of APFT over the last five years:

And here are the financial results for the last five years:

Next to that, the latest audited accounts have an "emphasis of matter", quoting:

".... there are material uncertainties that may cast significant doubt on the ability of the Group to continue as a going concern."

In short, things have been pretty tough, both for the company and its shareholders.

But still the company announced that Directors would receive millions of options:

The usual reasoning for these kind of options is to allign the interests of shareholders and directors, but that seems to have been lost in the case of APFT.

TDC: ESOS and Digi's 3G licence

Article in The Star "TdC rewards CEO" about Time dotCom, some snippets (my comments in blue):


.... last week TdC granted him [Afzal Abdul Rahim, the CEO] a share option to subscribe to up to 17.22 million new TdC shares or 3% stake at an undisclosed price.

Afzal holds a 75% equity stake in Pulau Kapas Ventures Sdn Bhd, which owns the 36.24% stake in TdC, and Gan holds the remaining 25%.

“So if I am able to raise funds to exercise the option, that is an additional 3% over the next five years,’’ Afzal adds.


I am not in favour of share options and the like, I favour normal wages and a bonus based on realizing long term goals. That is more transparent and more fair, since shares can fluctuate wildly in the short term.

However, if share options are given out, then I would suggest to give it to management that has no stake yet in the company, to align their interest in the company. But Afzal has already a 75% stake in a company holding a 36% stake in Time dotCom, valued at RM 1.25 Billion. Surely someone owning such a large stake doesn't need anymore encouragement nor alignment?


“Had we [Time dotCom Bhd ] kept the 3G spectrum, we would have made a colossal mess of trying to roll it out. It was the right decision to transfer it to an operator [Digi] who knew what to do with it.


This is a rather stunning comment from somebody in the know and reflects badly on the controversial way the 3G licenses were given out in Malaysia in 2006. For some historical perspective, please read this article in The Star:


The government is not against foreigners investing in Malaysia, but "3G spectrum is a scare national resource,'' Lim said, according to the newspaper.

While admitting that the decision was controversial, Lim rejected criticism from analysts that the government had been unfair to DiGi.

"If I had given it to an unqualified company, then it is not fair,'' he was quoted as saying. The companies were evaluated based on their technical capability, financial management and business plans, he said. The Communications Ministry could not be reached Sunday to comment on the report. The two 3G licenses were awarded to fiber-optic operator TIME DotCom and unlisted pay-TV operator MiTV Corp. 

XOX: from bad to worse ..... (2)

I wrote before about XOX's proposals, one snippet:


"In other words, current shareholders (who might include loyal shareholders who bought shares of XOX at its IPO price of RM 0.80), who inject further money to subscribe to the rights issue, and who inject even more money to exercise their warrants, will in total only receive 36% of the enlarged shares in the maximum scenario.

And almost all of the dilution due to the restricted issue and SIS will be done at a price that is only a small fraction of the RM 0.80 that shareholders paid at the IPO.

Is this the way the company wants to reward its loyal shareholders?"


The official circular is out. It is a rather long document (108 pages), but what I completely miss is a proper discussion about the huge dilution that normal shareholders will endure if the proposal is approved. In my opinion, it should have been included in the following paragraph:

I find it dubious to mention enhancing of shareholders value without discussing the dilution that they will face.

If one follows all the numbers that are given in the document, then one should be able to work out the dilution. But why is this not transparently presented, accompanied by a proper discussion about the reasoning behind it all?

I have no problem with the rights issue (in which all shareholders can participate), but very much with the huge Restricted Issue (Private Placement) and the massive SIS (Share Issue Scheme).

The Directors will participate in the SIS, and are thus very much conflicted in this exercise (at least that is admitted in the brochure).

I hope that MSWG will be present at the EGM and will grill the Board of Directors about the huge dilution for the minority shareholders.

Bursa Malaysia and the Securities Commission should revisit the rules regarding Private Placements and ESOS/SIS schemes, and limit them to a decent maximum (like 5% or 10% of the outstanding shares of a company).