Question

Question 1

Iris Corpo Bhd, a pioneer in trusted identification systems, the company designed the world’s first ePassport in 1988 and went to manufacture a variety of smart cards, biometric card readers and automatic gates, among others. It products are used in more than 30 countries. Despite all these achievements, Iris has been bleeding red ink in the past four years.

Financial Performance (RM mil)	2017	2016	2015
Revenue	429.31	519.63	561.95
Profit/(Loss) before taxation	(299.79)	17.81	(18.27)
Fixed Assets	295.38	404.71	608.01
Current Assets	472.30	671.87	712.02
Current Liabilities	406.55	383.90	574.13
Non- current Liabilities	104.63	154.83	181.04
Total Dividend Attributable to shareholders	288.16	550.03	545.10

Source: Annual Reports 2017

Iris also involved in education sector- Stamford Group and Waste Management- Regal Energy. Iris also handed over tow affordable housing projects under Rimbunan Kaseh to Pahang and Melaka, which will help to reduce operating costs. Iris lost money for a few years. It was baffling. The trusted identification digital division was doing RM70 million to RM 80 million revenue consistently every year from 32 countries to date. Iris’ main competitor, registered a net profit of RM67.24 million form RM258.36 million in revenue.

President and managing director, Poh, who first surfaced in Iris in July 2017, acquired a 9.78% stake from the open market, and since raised his stake to about 16%. Other substantial shareholders include the Federal Land Development Authority with a 14.60% stake and Datuk Robin Tan, son of Berjaya’s Vincent Tan, who holds 8.33% stake.

It cash coffers expanded to RM96.71 million as at June 30. Its long-term borrowings stood at RM129.19 million, and it had short term debts of RM44.25 million and accumulated losses of RM 318.67 million.

At last Thursday’s close of 15.5 Sen, Iris share was less than a third of its peak of 61.5 sen in early 2014. There are 2.97 billion outstanding shares in Iris Berhad

Source: The Edge October 8, 2018, New Shareholders, New Lease of Life for Iris. .

1. Describe the strength and weaknesses of Iris financial performance.                [ 15 marks]
2. Based on the information in the case, do you think that Iris Berhad has taken care of their shareholders ?                                                                                                     [ 10 marks]       

Answer 1