KUALA LUMPUR, July 4 — Government-linked Mara Inc has incurred RM286.30 million in losses due to inefficient business operations, despite its efforts in property management, according to the Auditor-General’s (A-G) 2024 report released today.

The National Audit Department noted that Mara Inc’s overdue loans have impacted its current liabilities, preventing the company from distributing dividends to shareholders since its inception in 2014.

“Mara Inc showed improved financial performance by recording a pre-tax profit of RM11.67 million for the year 2022, compared to losses in 2020 and 2021. This positive performance was partly driven by gains from property investments recorded in 2022. These achievements contributed to a decrease in accumulated losses by 3.8 per cent to RM286.30 million in 2022 compared to 2021,” the report stated.

However, at the company level, Mara Inc recorded shareholder deficits for the assessed periods, with RM115.73 million in 2022, RM114.06 million in 2021, and RM66.82 million in 2020. The adjustment of the intercompany balance of RM48.28 million significantly contributed to reducing accumulated losses in 2020.

“The primary factors contributing to the shareholder deficits were the impairment of investment-related assets in subsidiary companies, intercompany balances, and trade creditors. This increase in deficits reflects the company’s increasingly impacted operational efforts,” the report added.

Over the past three years, Mara Inc’s total assets consistently exceeded its liabilities by amounts ranging from RM23.32 million (8.7 per cent) to RM51.62 million (20 per cent). However, its current liabilities were higher than its current assets, with ratios between 0.11 and 0.13.

The report indicated that Mara Inc might face challenges in meeting its financial obligations promptly due to insufficient financial resources. Current liabilities amounted to RM234.96 million, comprising 87 per cent of the total liabilities, including debts to Mara, Mara Corp, trade creditors, bank overdrafts, and taxes.

“Mara’s loans totalled RM190.60 million as of 2022, representing 81 per cent of the current liabilities. Cash and cash equivalents showed improvement, with Mara Inc holding RM0.74 million in 2022 compared to negative balances in 2020 and 2021,” it added.

Overall, the report highlighted that Mara Inc did not fully adhere to five out of nine best practices in corporate governance, involving the chairman, board of directors, company secretary, company standard operating practices, and audit committee.

The report suggested that the Rural Development Ministry and Mara enhance overall monitoring of the performance of subsidiaries, including Mara Corp and Mara Inc. It also recommended that Mara Inc review its objectives and main activities in profitable property management to benefit Mara Corp and improve management and monitoring of property management agreements with tenants and operators to safeguard subsidiary interests.

“Mara should ensure corporate governance at Mara Corp and its subsidiaries aligns with best practices,” the report concluded.

https://www.malaymail.com/news/malaysia/2024/07/04/a-gs-report-mara-incs-inefficient-operations-lead-to-rm286m-loss/142711